Türk Telekom Continues to Invest in the Digital Future of Turkey, While Keeping Pace with Technology. We Lay the Foundations Of

Türk Telekom 2010 Annual Report 002 MESSAGE FROM THE CHAIRMAN OF THE BOARD technology, andmoreimportantlyinthehumancapitalofTurkey. total investmentreachedTL9bn.Weinvestininfrastructure, our currentconvergencestrategy.Inthelastfiveyears, of thisfuturebymaintainingourinvestmentsinlinewith while keepingpacewithtechnology.Welaythefoundations Türk TelekomcontinuestoinvestinthedigitalfutureofTurkey, Fiber LinkProjectin2010. International (formerlyInvitelInternational)andlaunchedJADI hub intheregion.Followingthisstrategy,weacquiredPantel with convergent services and to become the main communication leadership incommunicationservicesbycreatingauniquevalue life anywhere.OurstrategyinTürkTelekomistoensureour in ordertomanageandengagepersonal,socialbusiness access informationormediaonanydevice,inacosteffectiveway Our focusistoenablecustomerscollaborate,communicate,and the qualityofservicesprovidedtoourcustomers. we focusoninvestingintechnologyandouremployees,enhance employees last year, mostlyyoung Turkish university graduates. As TL 1.7billionandrecruitedmorethansixthousandnewskilled importantly Turkey’shumancapital.TürkTelekomgroupinvested billion. Ourinvestmentscoverinfrastructure,technologyandmore the last five years, our total amount of investment reached to TL 9 with our current convergence strategy in the most powerful way. In foundations ofthisfuturewithourcontinuinginvestmentsinline continues toinvestinTurkey’sdigitalfuture.AsTürkTelekom,welay While keepingpacewiththetechnology,TürkTelekomgroup growth oftheGroup’soperationswhichreachedtencompanies. as Türk Telekom CEO, which will ensure a strong and sustainable Kanafani asTürkTelekomGroupCEOandMr.K.GökhanBozkurt management ofTürkTelekomGroupandappointedMr.Hakam In 2010,wetookanessentialstepforamoredynamicandefficient solutions andvalueaddedservicestoourcustomers. companies wecontinuedofferingtotaltelecommunication segments. Building on synergies between Türk Telekom group We achievedgrowthbothinourfixedlineandmobilebusiness almost TL11billioninrevenuesand2.45netincome. Our grouphadanoutstandingperformancein2010delivering performance andleadingtechnologyconvergenceinitiatives. telecommunication industry in Turkey with strong operating Türk Telekom and group companies continue to drive life forherpeople. role toenhanceandgrowtheTurkisheconomyqualityof am happy and proud to see that Türk Telekom is playing an integral displayed a remarkableperformance over the last couple of years. I with itsyoungdynamicpopulationandgrowingeconomywhich Turkey continuestobealeadingstaramongemergingmarkets Mohammed Hariri is indeed,anobligationtothisgreatnation. This isnotonlyourfuturedirection,butgeneralmindsetandit and allstakeholderswithourinnovativeproductsservices. our shareholders,customers We willcontinuetocreatevaluefor Telekom Groupin2010. individual contributionstothesuccessachievedbyTürk you toallmembersoftheTurkTelekomfamilyformakingtheir I wouldliketoexpressmysinceregratitudeandwarmestthank- Governance Ratingin2010. Governance IndexsoonafterIPOandimproveditsCorporate the firstandonlytelecommunicationcompanyinISECorporate in accordancewithinternationalstandards.TürkTelekombecame We alsocontinuetoimproveourcorporategovernancepractices Türk Telekomarevisitedby200,000peopleeachday. built byTürkTelekomandabout1,000InternetHousesdonated am happytoseethatthousandofstudentsareattendingschools available inothercountriesandreachedtomillionsofstudents.I became aglobalbrandwithEnglish,SpanishandArabicversions an onlineeducationsupportserviceforstudentsandteachers software servicesdevelopedbyourgroupcompanySebit.Vitamin, education in Turkey.I am especiallyproud of our online education As TürkTelekomgroup,weplacegreatemphasisonsupporting

Türk Telekom 2010 Annual Report 003 MESSAGE FROM THE CHAIRMAN OF THE BOARD Türk Telekom 2010 Annual Report 004 MESSAGE FROM THE GROUP CEO our groupcompanies. convergence products,ourteamspirit,andthesynergybetween from ouradvanceddistributionchannels,strongbrand, We willcontinuetoimproveourservices,gettingstrength Group hasthestrengthtomaintainandincreasethisgrowth. growth in2010’sheavycompetitionenvironment.TürkTelekom Our mobileandbroadband“blocks”showedasignificant AssisTT alsocontributedtoimproving recruitment. opened inErzincanandwithitsotherinvestmentsthecountry, resources andtopnotchcomputersystems. Notablythecallcentre solution provider. Thecompanyinvestedinwelltrainedhuman world, andgrowingrapidly. AssisTTisTurkey’sleadingcallcentre an excitingventure. Sobee’s“ICanFootball”projectisafirstinthe and soonSpanish). OurgaminganimationdeveloperSobeeis countries’ withthelocalcurriculum(inTurkish, EnglishandArabic Turkey andmanyothercountriesaswell. Vitaminisusedindifferent Sebit’s educationsoftwareVitamin,isaprovensuccesscasein well. value forourgroupcustomersinTurkeyandoutsidetheborderas continues tofocusondevelopingtechnologiesthatwillcreate technology. Argela,developedwebTVandfemtocellsolutions Argela addednewproductsforthefuturebydevelopingAvatar and salepurchaseofexchange. load units,andperformvarioustransactionssuchastaxpayment another Innovaproduct“InnovaPayingKiosk”s,userscanpaybills, approach in mobilebanking with PayFlex application. Thanks to the company’sbankingsectorknowledgepioneerednewandfresh Innova’s creativemobilecommunicationstechnologycoupledwith Türk TelekomGroupcrosssellingactivities. increased by8%thankstoinnovativetariffandVASofferings postpaid customersbyalmost10%yoywhiletheblendedARPU and noteworthyservicelevelimprovements.AVEAincreasedits On the mobile side, AVEA has achieved significant EBITDA growth started offeringhigherquotasandspeedstoADSLcustomers. By improving our infrastructure and our service quality, we have increased the number of ADSLconnections by 500,000subscribers. homes. In2010,weenhancedourannualADSLARPUby8%and to the neighborhood (FTTN) which now covers around three million On thefixedbroadbandside,wecontinuedourinvestmentsinfiber demonstrated solidgrowthinthefaceofintensified competition. Our mobileandfixedbroadband“buildingblocks”have progress. own success,ourpeopleareanintegralpartofTurkey’seconomic technologies thathassetthetrendsoffuture.Inspiredbytheir aspirations. Today,wesetasuccessfulcasestudyofconverged the fullrangeofourcustomers’needs,requirements,habitsand communications services. Thosebuildingblockscoverholistically Our vision is about converged building-blocks that encompass all with our“smartgrowth” strategy andefficient corporate structure. of Turkey’sTelecommunicationsandInformationTechnologysector Türk TelekomGroupisanintegratedoperatorthatnowtheleader

Hakam Kanafani and contributiontoTürkTelekomGroup’songoingsuccess. gratitude toourcustomersandbusinesspartnersfortheirsupport Telekom Groupfamilyforajobwelldone.AndIextendmywarmest shareholders andboardIamhonoredtothankallmembersofTürk converged products, team-work and synergies. In the name of our on our advanced distribution channels, strong brand name, we will continue to improve our services to themarket, capitalizing momentum andcontinuetobuildonourrecentgrowthin2011 Türk TelekomGroupisverywellpositionedtosustainthe social responsibilityprojectsandcorporatetransformation. success notonlyonthecommerciallevelbutalsocorporate and warmenthusiasm. Ourpeoplearetheteamthatensuresour customer-oriented productsandserviceswithprofessionalskills Our peopleareourmostvaluableasset.deliver most citiesinTurkey. guidelines. Our HumanResourceplansarenowimplementedin opportunities basedonobjectiverecruitmentguidelinesandfair focus oncontributingtotheTurkisheconomybycreatingcareer employees andisoneofthebiggestemployersinTurkey. We Türk TelekomGroupcurrentlyhasmorethan34thousand

Türk Telekom 2010 Annual Report 005 MESSAGE FROM THE GROUP CEO Türk Telekom 2010 Annual Report 006 MESSAGE FROM THE CEO opportunities providedbybroadband. experience moreinnovativeinternetservicesthankstothe technologies andvalueaddedservices.Turkeyhasstartedto strenghtening ourcompetitivepositionwithconvergence have succeededinglobalizingtheTürkTelekombrand,and Turkey intothetelecommunicationshubofregion.We In 2010,TürkTelekomfocusedoninvestmentstotransform to 16MbpsatADSL2+. and 100 Mbps with VDSL2 technology, and increased our speed up addition, wehavestartedofferingspeedpackagesupto50Mbps have startedofferinghigherquotasandspeedstoADSLusers.In houses. Byimprovingourinfrastructureandservicequality,we to the neighborhood (FTTN) which now covers around 3 million On fixedinternetside,wecontinuedourinvestmentsinfiber after yearsoffixedtomobilesubstitution. which signalsaneweraonTurkishtelecommunicationsmarket compared to2009andPSTNsubscriberdecreasesloweddown and valueaddedservicesfixedphoneusage increased in2010 customers use our Ev Avantaj bundles. Thanks to our new bundles Year campaignshadoutstandingsuccess.Currently,oneinthree (“Nowhere LikeHome”)concept,aswellourholidayandNew tariffs and the value added services under the Ev Gibisi Yok numbers andtrafficin2010.OurEvAvantaj(“HomeAdvantage”) On fixedvoiceside,weaimedtostabilizethePSTNsubscriber customers. and thereforeenhancingthequalityofservicesprovidedtoour HR practicestoenhanceouremployees’careerdevelopment infrastructure andtechnology.Wecontinuedourinnovative Our investmentsfocusedonhumanresourcesinadditionto ensured theintroductionofmoreinnovativebroadbandservices. competitive position;lastly,ourincreasedbroadbandcapabilities and valueaddedservicesensuredthereinforcementofour foundations welaidduring2010andtheconvergencetechnologies internet transformationinTurkeyweretheotherfocusareas.The traffic andtheinvestmentswemadeasleadingplayerat hub intheregion.Ourinnovativepracticestoincreasefixedline Jordan, andSyriamakingTurkeythenewtelecommunication link agreement(JADILink)withleadingoperatorsfromSaudiArabia, International) andsignedaveryimportantterrestrialfiberoptic In 2010,weacquiredInvitelInternational(rebrandedasPantel partners- andforourcountry. for allofourstakeholders-especiallycustomersandbusiness in ordertomakelifeeasierforourcustomersandcreatevalue investments ininfrastructureandtechnology.Weworkveryhard We haveleft behind another year in which we continued our Kamil GökhanBozkurt pay forthestrongperformancetargeted2011. growth momentumachievedbyTürkTelekomin2010willpavethe convergence products and teamspirit. The successful results and to allourstakeholdersandcountrybasedonstrongbrand, In 2011,wewillcontinuetoimproveourservicesandcreatevalue to thefuturegenerations. own businessprocesseswithanaimtoleavealivableenvironment Education”) Project; we started to apply sustainable practices in our name ‘e-invoice forests’ under Eğitime Tam Destek (“Full Support for and theforestrywedevelopedin81provincesofTurkeywith established covering all sports activities from fencing to swimming, we have opened upto now ineachtown of Turkey, 26 sportsclubs 76 education buildings we have constructed, 967 internet houses projects ineducation,environmentandsportsfields.Apartfrom add valuetothesociety.Weacceleratedoursocialresponsibility While achievingthese,wewerealsoinlinewithourobjectiveto Best Content,InnovationandNewProduct. awards byvariousorganizations,suchasBestFixedLineOperator, moreover, wewereawardedwithmanyprestigiousinternational a UK-basedleadingindependentbrandvaluationcompany, “Most ValuableBrandsinTurkey”conductedbyBrandFinance, Turkey” followingthesamesuccessinpreviousyearasurvey In 2010,wewereonceagainawarded“TheMostValuableBrandin

Türk Telekom 2010 Annual Report 007 MESSAGE FROM THE CEO Türk Telekom 2010 Annual Report 008 MISSION, VISION, VALUES, GOALS AND STRATEGY always inordertoincreasecustomerlifetimevalueeffectively • price plansandbyenteringintounder-penetratedmarkets • digital mediaandinformatics • our positioninthemobilemarket • product portfolioandservices • Tostimulatehouseholdcommunicationthroughintegrated Our strategiesthatweapplyinordertorealizesuchgoalsare: data andcontentthroughanydevice. personal, social and business lives, and guarantee their access to the bestcostbytakingintoaccountneedsofourcustomersintheir Our mainfocalpointsaretoprovidecommunicationefficiency in theregion. convergence servicesandbecomemajorcommunicationsprovider Türk Telekomaimstocontinueitsleadershipbyaddingvalue Our GoalsandStrategy • OurStrengthisourSolidarityandTeamSpirit. • ResponsibleandDevoted • Innovative • Reliable • CustomerOriented and identifycharacterofourCompanyare; Our valuesthatrepresentvaluechainmakingourCompanyunique Our Values; to thefutureincommunicationsfield. To becomethemostappropriateaddressthatcarriesourcustomers Vision; communication solutions. in anywhereatanytimebyprovidingcustomerorientedintegrated To give fast, high quality and cost saving services to its customers Mission; integrated communicationsolutionsinanywhereatanytime. cost savingservicestoitscustomersthroughcustomeroriented Türk Telekom’sobjectiveistoprovidefast,highqualityand To utilizeourfixedassetsmoreeffectivelyinordertostrengthen To diversifyourproductportfoliobyenteringintothefieldof To developandgrowinternetserviceviainnovativeproducts, To providehighqualityserviceexperiencetoourcustomers April 9,2009. Executive Committeesince 2008 andastheChairmanof of theBoardsinceApril22, been servingastheChairman 2008 andApril9,2009has Committee betweenJune16, as theChairmanofAudit Mohammed Haririhasserved Telekom on14November2005, Board ofDirectorsTürk Elected asamemberofthe member oftheBoardAvea. air transport.Heisalsoa construction, energyand such astelecommunications, of countriesandindustries Oger subsidiariesinanumber directors ofvariousSaudi or memberontheboardsof He holdsseatsaschairman Saudi OgerLtd.for25years. a partofthemanagement Mohammed Haririhasbeen from theUniversityofOttowa, Management Engineering (1958) Holdingadegreein Chairman Mohammed Hariri them aspertheArticlesofAssociation. Board ofDirectorsserveintheircapacitiessubjecttotheauthoritiesgranted after theendofthisperiod,arepresentedbelow.ThemembersCompany’s members andAuditBoardmembers,whoworkedwithin2010wereassigned member in the Audit Board has changed. Backgrounds of our Board of Directors November 14,2008.During2010,twomembersintheBoardofDirectorsandone Board attheTürkTelekomExtraordinaryGeneralAssemblyMeetinghasbeenon Our company’srecentmemberselectionoftheBoardDirectorsandAudit November 21,2007. General ManagerofTRTsince April 9,2009.Şahinhasbeenthe of ExecutiveCommitteesince June 1,2007,ViceChairman of theBoardDirectorssince and hasbeenViceChairman June 16,2008andApril9,2009 the AuditCommitteebetween and June1,2007,amemberof between December31,2002 Audit BoardofTürkTelekom Şahin wasamemberofthe and asPTTGeneralManager. the MinistryofTransportation, advisor andundersecretaryat Affairs Ministry,workedasan various positionsattheInternal Law, İbrahimŞahinservedin Ankara UniversityFacultyof (1962) Aftergraduatingfrom Vice Chairman İbrahim Şahin April 9,2009. between January7,2009and member oftheAuditCommittee Mr. Kahtaniservedasthe Committee sinceApril9,2009. 2008 andmemberofExecutive Türk TelekomsinceJuly30, of theBoardDirectorsat Kahtani hasbeenamember since 1986.SaadZaferMAl he heldvariousseniorpositions Saudi TelecomCompanywhere of IndividualSectorServicesat is currentlytheVicePresident King SaudiUniversity.Kahtani management/marketing atthe master’s studiesinbusiness M AlKahtanipursued and Minerals,SaadZafer the UniversityofPetroleum degree inengineeringfrom (1964) AfterreceivinghisB.S. Member Saad ZaferMAlKahtani April 9,2009. Executive Committeesince since 14.11.2008andmemberof board memberofTürkTelekom Tivnikli hasbeenservingas of EksimGroup,aswell.Mr. presently inthemanagement Türk ParticipationBank.Heis Board ofDirectorsKuveyt the vicechairmanof a memberandsubsequently Türk ParticipationBank.Hewas the establishmentofAlbaraka Turkey, heactivelytookpartin participation bankingmodelin legal infrastructureforthe in thedevelopmentof by thepublicauthority, his involvement,uponinvitation the sameuniversity.Following business master’sprogramat Abdullah Tivniklicompleteda Istanbul TechnicalUniversity, Mechanical Engineeringfrom (1959) AftergettinghisB.S.in Member Abdullah Tivnikli

Türk Telekom 2010 Annual Report 009 Board of Directors Türk Telekom 2010 Annual Report 010 Board of Directors member. 2011 heservedastheboard July 30,2008andFebruary8, Jeddah, SaudiArabia.Between King AbdulazizUniversityin Engineering Departmentat Member ontheFacultyof Unit. HeisalsoaConsultant President ofEnterpriseBusiness where heiscurrentlytheVice at SaudiTelecomCompany, Vice PresidentofSaudiData Network Operationsand as theGeneralManagerfor PTT Ministry.Hefunctioned senior positionsattheSaudi Arabia. Heservedinvarious University inJeddah,Saudi from theKingAbdulaziz telecommunication engineering got hismaster’sdegreein USA, SamirAsaadOMatbouli the CaliforniaUniversityin in ElectricalEngineeringfrom (1956) Aftergettinghisdegree Member Samir AsaadOMatbouli member. 20, 2010heservedasaboard November 14,2005andOctober Oger International.Between (SOLIDERE), SaudiOgerLtd.and Beirut CentralDistrictsal and Reconstructionofthe Company fortheDevelopment sal (Holding),TheLebanese directors ofYaredGroupMed member seatontheboardsof Paris andBeirut.Heholdsa law outofhisofficesin Beirut, BasileYaredpractices Saint JosephUniversityin (1948) Holdingadegreefrom Member Basile Yared Directors. as memberontheBoardof and March10,2011heserved Between November14,2008 2007 andNovember14,2008. Board betweenNovember7, 2007 andmemberoftheAudit November 14,2005andMay8, of TürkTelekombetween Vice ChairmanoftheBoard Tourism. Havingservedasthe Undersecretary ofCultureand Yılmaz currentlyservesasthe engineer andalegalconsultant. private sectorcompaniesasan various publicinstitutionsand Faculty ofLaw.Heworkedat MA fromMarmaraUniversity University inSwedenandhis from MalmöWorldMaritime Faculty ofLaw.HegothisMSc from IstanbulUniversity Yılmaz receivedaBAdegree Technical University,İsmet Engineering fromIstanbul BSc degreeinMechanical (1961) Aftergettinghis Member İsmet Yılmaz Directors. as memberontheBoardof and March10,2011heserved Aviation. BetweenJune1,2007 the DirectorGeneralofCivil Standards Institute),hebecame Representative forTSE(Turkish university lecturerandRegional After workingasanengineer, Ph.D. fromMarmaraUniversity. Arıduru receivedhisMScand Istanbul University,Dr.Ali Mechanical Engineeringfrom (1959) AftergettinghisBScin Member Dr. AliArıduru 2009 andMarch8,2011. Committee betweenApril9, he servedasmemberonAudit on theBoardofDirectors.Also 8, 2011heservedasmember November 14,2008andMarch of Transportation.Between Undersecretary attheMinistry Assistant Undersecretaryand Safety andShipRescue, Director GeneralattheCoastal General ManagerofPTT, Maritime Affairs,Assistant at theUndersecretariatfor Coordination Department Research, Planningand of CoastalSafety,Head at theDirectorateGeneral Supervision BranchManager Investment Planningand Shipyard. Heworkedasthe Gemi SanayiA.Ş.Camialtı Denizcilik BankandTürkiye served invariouspositionsat Technical University.He Engineering fromYıldız holds adegreeinMechanical (1950) MehmetHabibSoluk Member Mehmet HabibSoluk Argela, Innova,Sebit,AssisTT also servesastheChairmanof 2, 2006andAugust20,2010.He of TürkTelekombetweenMarch Dr. DoanyhasservedastheCEO a memberofAuditCommittee. October 20,2010heisservingas October 20,2010,beginningwith between April9,2009and of ExecutiveCommittee since April22,2008andmember serving asaboardmember of theboardandhasbeen 2008 heservedastheChairman November 14,2005andApril22, in November2005.Between acquisition byOgerTelecom after the55%blockshare Executive Directoroftheboard Dr. Doanyisappointedas Beirut, 1977). Electronics Engineering(AUB, 1978), andBEinElectrical/ (Bradford University,UK, Communications Engineering MSc inDigitalElectronics& (UMIST, Manchester,UK,1981); in CommunicationsEngineering (1955) Dr.DoanyholdsaPh.D. Member Dr. Paul(BoulosH.B.)Doany spectrum techniques. in theapplicationofspread publications, andholdspatents a numberofinternational communications. Hehas terrestrial andsatellite including fixed,mobile, projects inover20countries, worldwide. Hemanaged projects, with3,000employees charge oftelecommunications Al HandasahConsultants,in international consultancy,Dar Director oftheUKofficesan Oger Telecom,hewasManaging subsidiaries. Priortojoining more than36thousandinall excess of40million,andstaff with totalgroupcustomersin position asOgerTelecomCEO, Saudi Arabia.Heretainshis services inLebanon,Jordanand in SouthAfrica,andinternet with operationsincludingGSM position ofCEOsince2002, Telecom since1998,andin He hasbeenwithOger Telekom controls81%. GSM operator,whichTürk and ontheboardofAvea, subsidiaries ofTürkTelekom, and TTNET,thewhollyowned

Türk Telekom 2010 Annual Report 011 Board of Directors Türk Telekom 2010 Annual Report 012 Board of Directors growing ICTenterprises.Then establish successful,rapidly the conglomerate’seffortsto Conglomerate.” Hespearheaded holding company“MMSons Egypt’s oldestrunningprivate Development Directorfor the MiddleEastasBusiness Maryland. Hethenmovedto Flight, NASA,Greenbelt, team basedinGoddardSpace the InformationTechnology upon graduationhejoined College Park,Marylandand the AppleResearchLabin School. Kanafaniworkedin Education atHarvardBusiness he continuedhisExecutive an MBAwitha4.0GPAand Systems. Kanafaniholds in ManagementInformation a B.A.inEconomicsandB.Sc. of Maryland,CollegeParkwith graduated fromtheUniversity from theUnitedStates.He Beta GammaSigmahonors Trustee Scholarandholds Hakam KanafaniisaUniversity Türk TelekomGroupCEO Board Member– Hakam Kanafani 20, 2010. Board ofDirectorsonOctober appointed asamemberofthe in August20,2010.Hasbeen CEO ofTürkTelekomGroup in theArabWord.Hebecame the 100mostinfluentialfigures In 2005,hewasnamedasoneof magazine andotherperiodicals. in theIndependent,Forbes Management. Hewasfeatured Technology andInternational Information Communications He wroteseveralpaperson the WorldEconomicForum. is aYoungGlobalLeaderfor in 2007and2008.Kanafani board ofdirectorsAvea Africa. Healsoservedonthe in TurkeyandCellCSouth Argela, Assist,InnovaandSebit board ofdirectorsTTNET, Non-Executive Directoronthe Group. Kanafaniiscurrentlya financial consolidationforthe led strategy,acquisitionsand of thePalTelGroup,wherehe became ChiefOperatingOfficer cellular network.LaterKanafani Jawwal, Palestine’sfirstprivate he wasappointedCEOof position leftbyDr.Paul(BoulosH.B.)Doany. 2010; HakamKanafani wasselectedasmembertofillvacant assigned asmembers. WiththeresolutiondatedOctober20, Zafer MAlKahtaniandDr.Paul(BoulosH.B.)Doany were İbrahim Şahinto Vice-Chairman,AbdullahTivnikli,Saad Mohammed Hariri wasassignedtoChairmanofcommittee, was createdunderthenameofExecutiveCommittee. Meeting ofApril9,2009,aBoardDirectorsSubcommittee Pursuant tothedecisiontakenduringBoardofDirectors Executive Committee Committees ofBoardOfDirectors from hisdutiesasaBoardMemberonMarch8,2011. by SamirAsaadOMatbouli.MehmetHabibSolukresigned was selectedastheChairmantofillvacantpositionleft Matbouli wasselectedastheHead;in2011,GhassanHasbani the vacantpositionleftbyBasileYared,andSamirAsaadO Dr. Paul(BoulosH.B.)Doanywasselectedasthememberfor Audit Committee;withthedecisiondated20October2010, Samir AsaadOMatbouliwereassignedasmembersofthe Chairman ofAuditCommitteeandMehmetHabibSoluk Meeting ofApril9,2009;BasileYaredwasassignedasthe Pursuant tothedecisiontakenduringBoardofDirectors Audit Committee 2008 andFebruary9,2011heservedasastatutoryauditor. Associate ProfessoratBoğaziçiUniversity.BetweenNovember14, Computer EngineeringfromBoğaziçiUniversity.Heiscurrentlyan from NewJerseyInstituteofTechnology,Newark,NJandaPh.D.in Boğaziçi University,anM.S.inComputerandInformationScience (1971) TunaTuğcuholdsaB.S.inComputerEngineeringfrom Statutory Auditor Assoc. Prof.TunaTuğcu auditor atTürkTelekomsinceNovember14,2008. at thesameuniversity.AydınGülanhasbeenservingasastatutory serves asafacultymemberattheAdministrativeLawDepartment Law no.3194)”.HereceivedthetitleProfessorin2008.currently Approach totheImplementationofArticle18Development thesis “The‘DoughRule’intheTurkishZoningLaw(ATheoretical professor in1996.Hebecameanassociate2000withhis was laterprintedasabook.Heappointedanassistant Regime GoverningtheProceduresforPublicPropertyUse”,which and 1990.In1995,hegothisPh.D.withthesistitled“Legal doctorate researchattheBourgogneUniversityinFrance1989 Institute ofSocialSciencesatIstanbulUniversity.Heconducted Procedures”. Hestartedpursuinghisdoctoratestudiesatthe submission ofhisthesison“PublicServiceandPerformance Law Department.In1987,hegothismaster’sdegreeupon Gülan startedworkingasaresearchassistantatAdministrative (1962) AftergettinghisdegreeinlawfromIstanbulUniversity,Aydın Statutory Auditor Prof. AydınGülan statutory auditoratTürkTelekomsinceMarch12,2008. undersecretary ofPrimeMinistersince2007.EfkanAlahasbeena and TourismMinistryConsultant.Hehasbeenworkingas Affairs Ministry,ManagerofEducationOfficeTourismMinistry Diyarbakır. HeworkedasManagerofEducationOfficeInternal with governinganumberofTurkishcities:Ordu,Tunceli,Batman, includes variousgovernorshippositions.Hewasofficiallycharged from KaradenizTechnicalUniversity.Hispreviousexperience (1965) HeholdsadegreefromIstanbulUniversityandM.A. Statutory Auditor Efkan Ala of theAuditCommitteesinceFebruary9,2011. Transportation since 2003, Aydın has been holding office as Member Manager intheGeneralDirectorateofCommunications,Ministry Ministry ofTransportation.RenderingserviceasAssistantGeneral as DirectorofdifferentDepartmentsinMinistryCultureandthe the variouspositionsindifferentlocalgovernment,heheldoffice Management inPublicEnterprisesatIstanbulUniversity.Following at MarmaraUniversity,hegothismaster’sdegreeinthefieldof (1960) AftercompletinghisBachelor’sdegreeinFacultyofTheology Member ofAuditBoard Lütfi Aydın Committee ofourCompanyon8thFebruary2011. was appointedasMemberoftheBoardandChairmanAudit International OperationsinSaudiTelecomCompany,Hasbani holds thepositionofGroup’sGeneralManagerresponsiblefor one oftheGlobalManagementandConsultancycompanies.Still Communications andTechnologyDepartmentinBooz&Company, American markets.HeheldofficeasDirectoroftheMiddleEast he hasalsoexperienceinEuropean,SoutheasternAsiaandLatin over 10yearsintheMiddleEastRegion.BesidesEast, Nortel NetworksandCable&Wirelessrenderedservicefor leader companiesoftelecomandtechnologysectorincluding Hasbani isacharteredengineer.Ghassanworkedin the InstitutionofEngineeringandTechnologyinGreatBritain, Administration atUniversityofWestminster.Beingamember of HullinUK,GhassanHasbanigothismaster’sdegreeBusiness (1972) HavinghonorsdegreefromEngineeringFacultyofUniversity Board member Ghassan Hasbani after theendofperiod Board memberswhoereassigned Our BoardofDirectorsmembersandAudit

Türk Telekom 2010 Annual Report 013 Board of Auditors Türk Telekom 2010 Annual Report 014 SENIOR MANAGEMENT Please refertoPage12. Türk TelekomGroupCEO Board Member– Hakam Kanafani August 2010. Manager ofTürk Telekomsince rendering service asGeneral Telekom, andhe has been Resources DepartmentinTürk he heldofficeasVPofHuman November 2006andAugust2010, at BirlikInsurance.Between Halkbank andaboardmember Privatization Committeeof was anactivememberofthe During histenure,Mr.Bozkurt International Bankingunits. both FinancialInstitutionand who managedthebank’s the ExecutiveVicePresident In 2006,hewasappointedas Halkbank andPamukbank. managed themergerbetween capacity, hesuccessfully Resources in2004.Inthis Organization andHuman Executive VicePresidentof then joinedHalkbankasthe International AG.Mr.Bozkurt Moscow CJSCandZiraatBank board memberatZiraatBank During thisperiod,hewasa bank’s allfinancialinstitutions. senior manageroverseeingthe joined ZiraatBankasthe private sector,Mr.Bozkurt In 2003,afterseveralyearsin from JohnsHopkinsUniversity. masters degreeineconomics from BilkentUniversityanda has aneconomicsdegree (1971) KamilGökhanBozkurt CEO Kamil GökhanBozkurt December 2010. capacity ofSalesDirectorsince been renderingserviceinthe December 2010,andhehas as OperationsDirectortill Manager in2001,heldoffice Dinçer becameaViceGeneral Telekom in2000,Celalettin Department DirectorinTürk appointed asDataProcessing at thesameplaceandthen as DataProcessingManager Directorate. Laterpromoted engineer inPTTIstanbulRegion ITÜ, hestartedtoworkas Engineering Departmentof Electrical andElectronics (1966) Aftergraduatingfrom VP Sales Celalettin Dinçer TCDD (TurkishStateRailways). on theboardofdirectors currently servingasamember Support Services.ŞükrüKutluis Vice PresidentRegulationand and iscontinuinghisdutiesas as AssistantGeneralManager joined TürkTelekomin2003 Court ofAccounts.ŞükrüKutlu and chiefauditorattheTurkish an assistantauditor, of Law,ŞükrüKutluworkedas from AnkaraUniversityFaculty (1970) Aftergettinghisdegree and Regulations VP HumanResourcesSupport Şükrü Kutlu April 2008. Communications since Telekom VPMarketingand He hasbeenworkingasTürk Telekom inSeptember2007. VP CorporateRelationsofTürk was appointedastheacting the DirectorofMarketing,and Telekom inNovember2006as Membership. HejoinedTürk & MarketingandGrundigBoard General ManagementofSales levels includingAssistant roles ofdifferentmanagement Group, notablyArçelik;andtook international companiesofKoç positions inthedomesticand years heactedinvarious Boğaziçi University;for17 Engineering Departmentin Electrical andElectronic (1968) Upongraduatingfrom Communications VP Marketingand Erem Demircan Telekom in2005. Mehmet KömürcüjoinedTürk New YorkandIstanbulBar.Dr. in 2001and2002.Admittedto Wisconsin-Madison LawSchool assistant attheUniversityof He workedasaresearch Bank Group,in1997and1998. (MIGA), amemberoftheWorld Investment GuaranteeAgency Department ofMultilateral attorney intheLegalandClaims Madison, WI.Heworkedasan the UniversityofWisconsin, Law fromtheSchoolof Ph.D. inPublicInternational International Watersandhis master’s degreeinLawof of Law.Hereceivedanother University, WashingtonCollege Trade LawfromAmerican master’s degreeinInternational Mehmet Kömürcügothis in lawfromAnkaraUniversity, (1970) Aftergettinghisdegree VP Legal Dr. MehmetKömürcü Whosales VPsince2008. He istheInternationaland for SalesandMarketingin2003. the AssistantGeneralManager Candan Toroswasappointedas and TürkTelekom,Mehmet Management DepartmentPTT Communication &Spacecraft and DirectorofSatellite Communications Center Managing DirectorofSatellite Engineer, DeputyManager, serving asSatelliteSystems Department in1988.After Operations andMaintenance engineer atthePTTTechnical he startedhiscareerasan Istanbul TechnicalUniversity, Electronic Engineeringat the FacultyofElectricaland in ElectricalEngineeringfrom (1965) Aftergettinghisdegree Wholesale Sales VP Internationaland Mehmet CandanToros Gazi University. doctorate degreeinFinanceat 2007. In2008,hecompletedhis the HeadofInternalAuditsince 2006. Hehasbeenservingas position hehelduntilNovember for FinanceatTürkTelekom,a General Manager,responsible was appointedastheAssistant University in2008.In2003,he his Ph.D.infinancefromGazi of IllinoisintheUSA.Hegot in financefromtheUniversity received hismaster’sdegree Auditor andChiefAuditor.Burca later promotedtoAccounts the MinistryofFinance.Hewas Accounts AuditorTraineeat Burca startedhiscareerasan from AnkaraUniversity,Nazif in publicadministration (1968) Aftergettinghisdegree Head ofInternalAudit Dr. NazifBurca

Türk Telekom 2010 Annual Report 015 SENIOR MANAGEMENT Türk Telekom 2010 Annual Report 016 SENIOR MANAGEMENT Türk TelekominOctober2009. Marketplace group.Hejoined the directorofYahoo! and hewasmostrecently executive positions with Yahoo!, Research. Asof2005,heheld Management inOperational from MIT,SloanSchoolof Demir holdsaDoctoralDegree Engineering department,Dr. Bilkent UniversityIndustrial (1972) Havinggraduatedfrom Development VP StrategyandBusiness Dr. RamazanDemir business development, systems, businessstrategies, internal audit,financial policies andtaxapplications, his experienceinfinance,tax and expertssince2003with organizations, academicians of civilandnongovernmental composed ofrepresentatives as thePresidentofTaxCouncil He hasbeenrenderingservice Development respectively. and VicePresidentofBusiness President ofFinancialAffairs of FinancialAffairs,Vice Anadolu GroupasCoordinator Mustafa Uysalheldofficein Ministry ofFinancein1976, career asTaxInspectorinthe (1953) Startedhisbusiness Group CFO Acting VPFinanceand Mustafa Uysal Group HeadofFinance. of FinanceandTürkTelekom working astheDeputyofHead Since 01.02.2010,hehasbeen published inDünyanewspaper. articles headed“Arasıra”are Yaklasım Publishing.Mr.Uysal’s Accountants ofTurkey)and and Sworn-inCertifiedPublic Certified PublicAccountants by TÜRMOB(TheUnionof Accounting” hasbeenpublished “Inflation Adjustmentand Other jointstudynamed Foundation andpublished. award bytheTaxInspectors been deemedworthyofan Contemporary Trends”has and AuditintheLightof to RevenueAdministration named “StrategicApproach Joint studyofMustafaUysal management, and restructuring. corporate governance,risk Vice PresidentofOperations. 2010, hewasappointedasActing Department. OnNovember30, restructuring withinOperations 2009 tillNovember2010dueto Cooling Systemsunitsfrom Data SystemsandEnergy- Systems, Transmission & Director managingVAS,NGN Atalay heldofficeasNetwork Networks Directorin2006. as Telecommunications 2004-2005. Hewasappointed Supervisory Councilbetween as aSectorAuditorattheState established Aycell.Heworked 2002. Hewasintheteamwhich of StudyandInvestmentin and hebecameAssistantHead Switchboard ProjectManager worked asSwitchEngineer, transmission engineer.Hethen started workingatPTTasa Technical University,he Engineering fromIstanbul on ElectronicCommunications (1970) Aftergettinghisdegree Acting VPOperations Memet Atalay Exchange, Management Exchange,Management

2010. VP ofTechnologyinNovember TTNET. Hehasappointedasa Manager ofTechnologyin served asaAssistantGeneral 2008 andNovember,2010he VP Operations.BetweenMay, in November2007asadvisorto Valley. HejoinedTürkTelekom technology companiesinSilicon his executivecareeratseveral of California,Irvine.Hebegan doctoral studiesatUniversity He thencontinuedwithhis University ofCalifornia,Irvine. Computer Engineeringat University, andElectrical University, EconomicsatBilkent Engineering atHacettepe graduate degreesonElectrial Bilkent University,hegothis on ElectricalEngineeringfrom (1971) Aftergettinghisdegree VP Technology Timur Ceylan Relations sinceMarch2010. Vice PresidentofCustomer rendering serviceasActing to March2010.Hehasbeen of TTNETfromFebruary2009 as CustomerRelationsDirector Director ofTTNETandworked Telekom GroupasMarketing he movedontoworkatTürk leaving EagleMobilein2008, Mobile Operatorin2008.After at EagleMobile,Albania’s between 2007-2008andworked Management AdvisoratIBM which heworkedasSenior in variouspositions,after at Turkcellbetween1997-2007 department in2001.Heworked master’s degreeatthesame University andcompletedhis Engineering atMarmara department ofIndustrial Haktan Kılıçgraduatedfrom Acting VPCustomerRelations Haktan Kılıç as VPofTechnology. named “Technology”establishedandTimurCeylanappointed With theresolutiondated30.11.2010,anewdepartment position leftbyCelalettinDinçer. Dinçer. MemetAtalay wasselectedasmembertofillvacant appointed asadvisortoCEO.HewasreplacedbyCelalettin With theresolutiondated30.11.2010,AydınÇamlıbel Regulation Division”. be mergedunderthename“HumanResources,Supportand Support ServicesDivisionandHumanResourceswill With theresolutiondatedOctober20,2010;Regulationand appointed asTürkTelekomGroupCEO. With theresolutiondatedAugust20,2010;HakamKanafani Resources, appointedasCEOofourcompany. who hadbeenworkingwithourcompanyasVPHuman With theresolutiondatedAugust20,2010;K.GökhanBozkurt Commercial TransformationDepartment. of CustomerRelationsestablishedinreplacement Manager; andHaktanKılıçwasassignedasActingVP as CommercialTransformationHeadAdvisortoGeneral Commercial Transformation,PaulTaylorwasassigned With theresolutiondatedMarch10,2010;ViceHeadof A.Ş. also betheactingVPofFinanceTürkTelekomunikasyon has beenappointedasCFOofTürkTelekomGroupandhewill With theresolutiondatedFebruary1,2010;MustafaUysal decisions in2010: Our Company’sBoardofDirectorsmadethefollowing CHANGES INSENIORMANAGEMENT2010

Türk Telekom 2010 Annual Report 017 SENIOR MANAGEMENT Türk Telekom 2010 Annual Report 018 TÜRK TELEKOM GROUP IN 2010 Summary financialstatementsandtheiranalyses;detailedfinancialsaregivenattheendofannualreport and equivalents” outstands).Theincreaseinthe assets isfinanced outstanding item)andLiquidAssets (theincreaseinitem“cash “network andotherdevices”outstands), OtherAssets(thereisno in descendingorder;TangibleFixed Assets(theincreaseinitem achieved in 2009. Thecontributory causes of this increase are, million in2010withanincrease of13%whencomparedtoresult Türk TelekomGroup’s consolidated assets reached up toTL15,100 in 2010,annualADSLARPUincreasedby8%whilethenumberof infrastructure andservicequalityonthefixedbroadbandside.Thus, for offeringhigherquotasandspeedstoADSLusersbyimprovingits to theneighbourhood”investmentsstartedinlinewithstrategy The Grouphasreachedto3millionhouseholdsbycontinuingits“fiber been slowdown. compared to 2009, and loss of subscribers and decrease in ARPU has Ev Avantajpackages.Inthisway,fixedphoneusageincreasedin2010 great attentionofourcustomers.Now,oneinthreecustomersuse Ucuz Yolu(“TheCheapestWaytoCallMobile”)campaignsattracted (Home Advantage International Calls at 6.5 Krs), and Cebi Aramanın En 7’ye Bedava (“Free from 7pm to 7am”), Ev Avantaj Uluslararası 6.5 Kuruş subscribers, haveachievedthetargetedsuccess.Especiallyour7’den average minutesofusage(“MoU”)aswelldecreaseinthenumber control thedecreaseinAverageRevenuePerUser(“ARPU”)and Like Home“)concept,developedinlinewiththestrategytogetunder the valueaddedservicesofferedunderEvGibisiYok(“Nowhere On fixed voice side, our Ev Avantaj (“Home Advantage”) tariffsand Financial Highlights Operational Highlights Total EquityandLiabilities Other Liabilities Provision forEmployeeTerminationIndemnities Interest BearingLiabilities Reserves andRetainedEarnings Share Capital Total Assets Liquid Assets Other Assets Tangible FixedAssets Intangible FixedAssets Summary BalanceSheet(millionTL) ARPU NumberofWholesaleSubscribers(million) ADSL Surface Coverage(%) Population Coverage(%) Number ofBaseStations Number ofSubscribers(million) MoU (minute) ARPU (TL) Mobile PSTN LineperPersonnel MoU (minute) Number ofSubscribers(million) ARPU (TL) Fixed voice(PSTN) Major OperationalKPIs 12,659 12,659 10,203 3,424 3,455 1,853 3,260 1,042 2,295 6,588 2,734 2008 2008 26.7 29.5 95.2 12.2 15.6 17.5 24.4 equivalents. is TL 4,199 million total financial debt and TL 1,219 million cash and of NetFinancialDebttoEBITDA decreased from74%to62%.There million, the year-end figure of 2009, to TL 2,980 million where ratio December 2010,theGroup’snet debt declinedby8%fromTL3,220 and OtherLiabilities(thereis no outstanding item). Asof31st mainly by,indescendingorder; ReservesandRetainedEarnings kit (bloodtestetc.)andNearFieldCommunication(NFC). innovative technology products like mobile personal health inspection operator withanR& Türk Telekom Group cross selling activities. AVEA is the only mobile increased by8%thankstoinnovativetariffsandVASofferings customers byalmost10%comparedto2009whiletheblendedARPU network solutionprovidersin2010.AVEAincreaseditspostpaid program worthapproximatelyTL600millioninitiatedwithleading within theframeworkofanetworkimprovementandexpansion stations by13%comparedto2009thankstheinvestmentsmade has alsoenhanced its servicequalitybyincreasing thenumber of base strategy forachievingaprofitablerevenuegrowthonthemobileside, Avea thathasachievedmarkedEBITDAgrowthbyimplementinga 16 MbpsatADSL2+. and 100MbpswithVDSL2technology,increasedthespeedupto strategy, theGrouphasbeenofferingspeedpackagesupto50Mbps connections increasedby500thousand.Withintheframeworkofthis 667 173 587 130 5.8 72

13,401 13,401 11,804 3,371 3,974 2,162 3,260 2,441 6,920 3,286 2009 2009 73.4 96.5 11.8 16.7 16.5 22.4 634 754 242 600 110 6.2

D certificate in Turkey that has developed D certificateinTurkeythathasdeveloped 15,100 15,100 13,344 4,119 4,199 2,915 3,260 1,219 2,929 7,435 3,517 2010 2010 74.4 96.7 11.6 18.5 21.8 607 263 624 111 6.7 32 16

Annual Change Annual Change 2010-2009 2010-2009 (4%) (3%) (2%) (3%) 13% 13% 22% 35% 62% 20% 13% 11% 8% 9% 4% 1% 6% 0% 7% 7% 8% 1% 0% million or0.5314 Kurus persharein2009. Kurus. Ontheotherhand,net incomewasrecordedasTL1,860 The netincomein2010wasrealized asTL2,451millionor0.7002 Net Profit of theincreasedunderlyingprofitability ofthegroup. The highercorporatetaxcharge was recognizedin2010asaresult Corporate Tax FX lossandhigherhedgingcosts. compared toTL438millionrecordedin2009;mainlyattributable The financialexpensewasrealizedasTL184millionin2010 Net FinancialIncome/(Expense) 31%, 400bpshigherthan2009margin. fixed lineandmobilebusinesses;withanoperatingprofitmarginof 18% toTL3,311millionthankstheperformanceachievedbothin Turk TelekomGroup’soperatingprofitforyear2010improvedby Operating Profit in thefixedlinebusiness. reason forthisdecreasewasfullamortizationofsomefixedassets were down by 2% from TL 1,557 million recorded in 2009. The main Total depreciationandamortizationchargesofTL1,524million Depreciation andAmortization margin wasrealizedas13%. reached uptoTL332millionfrom55wheremobileEBITDA EBITDA increased five-fold in 2010 compared to previous year and compared topreviousyearwithanEBITDAmarginof53%.Mobile 45%. The fixed line business segment showed 5% growth in EBITDA compared to2009andresultedinaconsolidatedEBITDAmarginof and Amortization (EBITDA) increased by 11% to TL 4,835 million In 2010,OperatingProfitbeforeInterest,Tax,Depreciation and Amortization(EBITDA) Net OperatingProfitbeforeDepreciation of effectivecostmanagementandlowerinterconnectionexpenses. Net operatingexpensesdecreasedby3%toTL6billionasaresult and Amortization) Net OperatingExpenses(ExcludingDepreciation TL 2,504millionto2,646million). million toTL2,473million)andtheMobilebusiness(upby5.7%,from of therevenuegrowthareADSLbusiness(upby15.6%,fromTL2,140 billion withanincreaseof3%comparedto2009.Themaindrivers The Group’sconsolidatedrevenuein2010reacheduptoTL10.9 Revenues 2009. Consolidatednetincomein2010isTL2,451million. TL 15,100millionwithanincreaseof13%comparedto Consolidated assetsizeofTürkTelekomGroupreached Net ProfitforthePeriod Minority Corporate Tax Net FinancialIncome/(Expense) Interest Operating Depreciation andAmortization Net OperatingProfitBeforeDepreciationandAmortization(EBITDA) Profit Net OperatingExpensesexcludingDepreciationandAmortization Revenues Summary IncomeStatement(millionTL)

(1,632) (5,788) 10,195 10,56810,852 1,723 2,775 2,7983,311 4,407 (502) (673) 2008 125 179122

(1,557) (6,213) 1,860 4,356 (680) (438) 2009 (1,524) (6,018) 2,451 4,835 (799) (184) 2010 Annual Change 2010-2009 (32%) (58%) (2%) (3%) 18% 32% 18% 11% 3%

Türk Telekom 2010 Annual Report 019 TÜRK TELEKOM GROUP IN 2010 Türk Telekom 2010 Annual Report 020 TÜRK TELEKOM GROUP IN 2010 pleased the investors in 2009 as well. pleased theinvestors in2009aswell. cap companiesinTurkey.TürkTelekom’s sharesincreasedby44%and TL 16 billion to TL 22.8 billion, has become one of the highest market increased by55%in2010.TürkTelekom, whosemarketvaluerisenfrom Telekom’s sharepricesdoubledthe performanceofISE100indexand Whereas ISE100indexwitnessed anincreaseof28%in2010,Türk 55% increaseinshareprices respectively; TL0.43,0.45,0.64. investors willhavebeenrealizedasfollowsinyears2008,2009and2010 General Meeting,thegrossdividendyieldpershareofTürkTelekom’s the Board of Directorsrelated to 2010 dividend will be accepted in the the total distributable profit of 2010 fiscal year. In case the proposal of its shareholdersinanamount of approximatelyTL 2 billion244million, convened on25thApril2011formakingadividendpaymentincash to of Directors proposedto the Ordinary General Assembly Meeting to be Intending tocontinuethesamepolicyalsoin2011,TürkTelekom’sBoard distributable profitof2009incash. made agrossdividendpaymentofTL1billion590million,thetotal CMB (CapitalMarketsBoard)regulations,TürkTelekom,inMay2010, total distributableprofittobedeterminedwithintheframework of its recordinthisfieldalso2010.Adoptingapolicyfordistributing million madeincashtoitsshareholders2009,TürkTelekomrepeated Broken arecordwithdividendpaymentamountofTL1billion490 Stock Exchange Dividend distributionmadehistoryinIstanbul has recruitedoversixthousandnewemployeesin2010. thousand 138 employees in terms of employment. Türk Telekom group Group providesagreatcontributiontoTurkisheconomywithits34 recruitment figures;accordingtotheyear-endfiguresof2010, Türk TelekomGroupisalsoamongtheleadergroupsofTurkeyin Over 6thousandnewrecruits Outstanding AgendaItemsoftheYear Capital Expenditures(otherthan3GLicenseFees) Total Debt/Assets(%) Financial Debt/TotalAssets(%) Financial Debt/Total(%) Financial Debt/Equity(%) Net FinancialDebt/EBITDA(%) Total Debt/EquityRatio(%) Return onAssets(%) Return onEquity(%) Major FinancialRatios Total CapitalExpenditures Capital Expenditures(millionTL)

1,756 1,756 2008 2008 148 60 27 46 68 55 13 31

2,020 2,470 2009

1,733 1,733 2010 2009 147 60 30 50 73 74 13 34

Annual Change 2010-2009 (14%) (30%) 2010 145 59 28 47 68 62 16 40 Security Institution. Paying theHighestPremiums”prepared byRepublicofTurkeySocial In 2010,TürkTelekomplacedonthe topofthelist“2009Employers premium payments Türk elekomisalsoTHEleader inSocialecurity taxes paidtothestateandtreasury share. Telekom providedacontribution of totallyTL4,435millionincluding to publicfinancewhiletheywere stillgrowingin2010.In2010,Türk Telekom Groupcompaniescontinuedtheirextensivecontribution Played a pioneering and innovative role in all fields of the sector, Türk Great contributiontopublicfinance and totaldebttoassets1bpsdecreased. financial debttototal3bps,assets2bps net financialdebttoEBITDA12bps,equity5 return onassets3bpsincreasedwhiletotaldebttoequity2bps, enormous successhasbeenachieved;returnonequity6bpsand The Grouphasenhanceditsentirefinancialratiosin2010,where RATIO ANALYSIS have reacheduptoTL9million. in lastyearwherethetotalcapitalexpendituresfor5years The Group invested TL 1.7 billion for fixed line and mobile operations Capital Expenditures ISE 100 TTKOM TTKOM- ISE100ComperativeReturn(2010) - - 20% 10% 10 20 30 40 50 60 70 80 0% % % % % % % % %

T T K OM 27.6% 55.5% ISE 100

Turkish andonline gameplatform“ICanFootball”. each Hansenetcustomer,Accessto theVitamin,educationalcontentin Hansenet customersfrom3TürkTelekom fixedlinestobepreferredby phone callswithTürkTelekom’sfixed lines,limitlessphonecallswith followings arenowpossible;Hansenet customerscanmakelimitless people living in Germany are targeted. With the campaign offered, the (My AliceWorld)attheendofOctober 2010,over3millionTurkish name “BizimAile”(OurFamily)and inGermanyunder“AliceDünyam” service asbroadbandoperatorin Germany, launchedinTurkeyunder With theproject,whichwasdevelopedtogetherwithHansenetgiving Other internationalservicesandco-operations will playasignificantstrategicrole. which willpositionTurkeyasthe“hubcountry”intelecomfield,Pantel activities betweentheMiddleEastandEurope.Indevelopments fiber opticnetwork operator thatiscapable of conductingwholesale The geographicalpositionofTürkTelekommakesitthefirstterrestrial Mediterranean routeandfinishinginItaly,France,SpaintheUK. Japan and India and following the Indian Ocean-Red Sea-Suez Canal- USA bysubmarinefiberopticcablesystemsstartingfromSingapore, be the second most significant connection corridor to be linked to the intercontinental internet,dataandvoicetransmissionJADILINKwill through Mediterranean and Red Seawill be the terrestrial line. In and tremors.Thus,theonlyalternativeofsubmarinecablespass fault linesexistedandthereforeoftensufferedbecauseofearthquakes that already pass through the Mediterranean basin where three big JADI LINKwillprovideasafeandstrongalternativetothecablesystems Jordan TelecomGroupandSyrianTelecommunicationEstablishment, to theco-operationbetweenTürkTelekom,SaudiTelecomCompany, Asia and Far East will play a significant role. Brought into being thanks establishment ofafiberopticnetworkbetweenMiddleEast,South player inthemarketalsoimproves.Inthisinitiative,JADILINKproviding synergy createdbyTürkTelekomGroup,itscurrentpositionasaglobal West EuropeandAmerica.Thisdevelopment,ononeside,enhancesthe / broadbandtrafficconnectingMiddleEastandAsianmarketstothe purchasing proceduresofInvitelInternationalbegantoprovidedata traffic intheMiddleandEasternEuropeRegionbycompleting Pantel underitsumbrella.Turkeywithincreaseddata/broadband an importantsteprelatedtoitsfuturegrowthprojectsbyaddingthe has beenlocatedwhengeopoliticalaspectsconsidered,taken Telekom, beingthe“communicationbridge”inregionwhereit International’s namewaschangedasPantelafteracquision.Türk 27 thousandkilometersfiberopticnetworkin16countries,Invitel on October7,2010.Beingoneofthemajorplayersinitsfieldwith providers inMiddleandEasternEurope,joinedtoTürkTelekomgroup Invitel International,oneoftheleadingdataandwholesalecapacity becoming aRegionalPlayer Türk elekomtakesfirmstepstowards success incorporategovernancewiththeratingof8.272010. be amemberofISECorporateGovernanceIndex,havingprovedits Türk Telekomisthefirsttelecommunicationscompanyqualifiedto

board ofdirectors. shareholders, publicdisclosureand transparency,stakeholdersandthe four maintitleswhichareweighted atdifferentlevels.Thesetitlesare; relevant resolution,iscalculatedbased ontheevaluationmadeunder Corporate Governance score, within the framework of the CMB’s of allitsshareholdersandinterestholderswithoutanydistinction. required intherelevantlegislation,TürkTelekomprotectsinterests transparency principlesdiligentlyevenbearingahigherresponsibility Thus conductingitsactivitiesrelatedtopublicdisclosureand Board ofDirectorsarebasedonsoundfoundations. conducted atthehighestlevelandstructureworkingof are protectedfairly,publicdisclosureandtransparencyactivities in anactivemanner,therightsofshareholdersandstakeholders corporate governanceriskshavebeendeterminedandmanaged established andappliedeffectivelyinTürkTelekom,majorityofthe shows thatgovernanceandinternalcontrolmechanismshavebeen has implementednecessarypoliciesandmeasures.Thisscoreobtained in comingintolinewithCMB’sCorporateGovernancePrinciplesand it high scoreisaclearindicatorevidencinghowTürkTelekomsuccessful (CMB), registereditssuccesswiththeaveragegradeof8.27for2010.This with accordance the CorporateGovernancePrinciplesofTurkishCapitalMarketsBoard in A.Ş. Hizmetleri Derecelendirme Kredi ve Yönetim the independentevaluationstudyconductedbySAHAKurumsal Stock ExchangeCorporateGovernanceIndexin2009asaresultof Türk TelekomthatwasthefirsttelecomcompanyincludedinIstanbul in ISECorporateGovernanceIndex The firstandtheonlyelecomCompanyincluded countries. which hasbeenlaunchedinSaudiArabiarecently,alsootherArabic been started.Moreover,itisaimedtoputintouseArabicVitamin, to putSpanishversionintopracticeinMiddleandSouthAmericahave Adaptive CurriculumputonthemarketinUSA,activitiesorder an internationalproductbyexportstothreeseparateregions.After for manydifferentcountrieshavebeencompletedandithasbecome including English,SpanishandArabic,curriculumalignmentstudies In addition,Vitaminhasbeentranslatedintovariouslanguages of ittotheAmericancurriculums. implementation activitiesforAdaptiveCurriculumbesidesadaptation since 2007.TheOfficeofSebitinArizona,USAconductsdeploymentand a placeinAmericanmarketunderbrandnameAdaptiveCurriculum occupying been has A.Ş Teknolojileri Bilgi ve Eğitim Sebit Furthermore, The firstproductofSebit,AkademediaisinuseChinaandMalaysia.

Türk Telekom 2010 Annual Report 021 TÜRK TELEKOM GROUP IN 2010 Türk Telekom 2010 Annual Report 022 and itsstakeholders: TÜRKTELEKOM value toits customers,itscountry, Turkey hasastrongbrand whichadds

Türk Telekom 2010 Annual Report 023 Türk Telekom THE GROUP THAT HAS CREATED THE HIGHEST VALUE 2010 Annual Report 024 IN COMMUNICATIONS AND INFORMATICS studies, marks an era in the health field and with the participation studies, marksan erainthehealthfieldandwith theparticipation a differenceinfields ofbiotechnologyandnanotechnology withhis UCLA and Dr. Aydoğan Özcan from the same University, who has created Health InspectionKit).Thestudyof UniversityofCaliforniaLosAngeles/ The otherinnovativeprojectofAvea in2010wasMobilTahlil(Mobile and vendingmachines. function inmanydifferent places suchas building gateways, stadiums transportation vehicles(bus,subway, ferryboat,andtrain)alsohas Trink isusedintransportation,new generationNFCusedinpublic they prefertouseforpaymentduringshopping.Inthecitieswhere this new technology, customers can choose between theircardsthat contactless duetoTrinkfeatureintheirmobilephones.Thanks to With thisinnovation,Aveasubscriberscanmaketheirpayments and theycanenjoyopportunitiesofferedbysuchpaymentsolutions. terminals locatedandalsointhousandsofsimilarpointstheworld, their mobilephonesatanypointinTurkeywherecontactlesspayment subscribers areabletomaketheirpaymentsquicklyandeasilywith which’s developmentalsosupportedbyMastercardandGemalto, new NFC-enabledSIMcards.Thankstothismobilepaymentsolution in 2010.Consequently,anewerastartedpaymentsystemsowing to phones mobile all on being into brought been has Bankası Garanti and Near FieldCommunication(NFC)Technology,thejointprojectofAvea to itscorporateandindividualcustomers. innovative servicesitcontinuestoexpanditsserviceportfoliooffered market amongitsresponsibilities,andwithcustomeroriented contribution tocreatefaircompetitionconditionsinTurkey’sGSM preferred” mobilecommunicationscompanyinTurkey”,Aveaseesthat all customer groups. With the vision of “to be “the most admired and to the innovate services which respond to the needs and offered to market sinceitsestablishmentbyraisingthebaronqualitythanks Avea has brought a significant competition environment in the GSM Opinion LeaderoftheSector resources alwaysenhancesitsservicequalityinthisway. both technology and infrastructure besides management and human percent ofTurkishpopulation.Aveamakingcontinuousinvestmentsto generation network,hasacoverageareawhichisabletoserve96.70 mobile communicationscompanyofthesectorAvea,withitsnew subscribers viaits2thousand719employees.Theyoungandinnovative 600 thousandsubscribersasofend2010,Aveagivesservicetoits service for its customers while they are abroad. Having 11 million operators in199countries,thus,itprovidesqualitycommunications percent oftheshares,hasfreecirculationagreementswithalready626 Mobile communicationsoperatorAvea,thatTürkTelekomowns81.37 OPINION LEADEROFTHEMOBILECOMMUNICATIONSSECTOR AVEA a morestrategicstrengthintheregion. International, rebrandedasPantel.TürkTelekomnowhas Türk TelekomGroupcontinuedtogrowin2010,withInvitel

the MiddleEast. East 2010Conference,thelargest telecommunicationsconferenceof co-operation madewithGarantiBankası, intheTelecomsWorldMiddle with NFC-NearFieldCommunication Project,whichhasbeenrealizedby Another awardthatAveaentitled toreceivewas“BestNewProduct” category. been entitled to receive award in “Corporate Social Responsibility” award giving organizations of UK, Avea’s Ideaof My LifeProjecthas Within thescopeof“BestBusinessAwards2010”,onereputable most prestigiousawardsofinternationalbusinessworld. Year” categoriesintheInternationalBusinessAwards2010,oneof “Human ResourcesTeamoftheYear”and“CustomerServices Department oftheYear”categoryandselectedasanhonoree in Avea has been entitled to receive award in “Human Resources applications. Application Categoryinthe2010SAPQualityAwardswithits Avea alsodeemedworthyforSAPQualityAwardinNewBusiness by implementingEUnormsinqualityandinnovationawardedtoAvea. Quality Award”whichisgrantedtobrandssetagoodexample in the 2nd International EU Quality Summit held in Brussels, “2010 EU business applications.InMobileCommunicationandTelecomCategory In 2010,Aveawonmanyawardsowingtoitsqualitymanagementand Avea QualityRegisteredwithAwards applications. response education toentrepreneurshipandemploymentbesidesearthquake terms byrealizingvariousinnovativeprojectswithinawiderangefrom and inlinewiththatvision,italsoinveststhefutureofTurkeysocial projects whichcontributestodevelopmentofthecountryandsociety, that toparticipateinlong-termandsustainablesocialresponsibility area. Aveaconsidersasanintegralpartofitsbasicresponsibilities pioneering projectsthatcreateadifferencealsoinsocialresponsibility such asNFCandMobileHealthInspectionKit,Aveaundersigns Being theopinionleaderofGSMsectorwithitsinnovativeapplications will bemadefromtimeandbiginvestments. conducted viamobilephonesinnearfuture,andbythiswaysavings and identifiedremotelythroughsomeanalysessuchasbloodtest malaria, AIDS,tuberculosisandsimilardiseasescanbediagnosed Inspection KitProject.WithMobileHealthProject, and contributionofAvea,thisstudywillberealizedasMobileHealth Türk Telekom’sShare: 81.37%www.avea.com.tr Year ofEstablishment:2004NumberEmployees: 2719 COMPANY’S IDENTIFICATION: and 2nd rank in the category of On-line Rich Media Adds Category with and 2nd rank in the category of On-line Rich Media Adds Category with in the category of Corporate Websites in the Crystal Apple Digital Class Commercial ProductionintheCrystal AppleSpecialRewards,3rdrank Internet TheOnesFlyingtotheSky, 3rdrankinthecategoryofBest Award Apple Advertising AwardsTelevisionclass with8MbpsADSLfilm.With Crystal Awards. Society Kabataş in InformationTechnologiescategory, inthe22ndCrystalApple to According 2009 of Year Awards.WithTTNETVitamin, BestCommercialFilminthe in theKadirHasUniversity2010 Most GenuineITSpecialistsofthe Golden Awards).MostFavoredBroadband InternetServiceProvider Best LegalDigitalMusicPlatforminthe14thIFAAwards(IstanbulFM Some ofthemare: institutions aswelldirectlyfromconsumersthroughpopularvotes. In 2010,TTNEThaswonmanyawardsfromcompaniesand Awards HonoredTTNET place, MümkünlüTownrepresentingsmallcitiesandtowns. actresses mostadmiredbyTurkishpeopleinanimaginativesettlement most effectivecommunicationdeviceofthisage,throughactorsand campaign, andthesecommercialsexplainthesignificanceofinternet, solutions. ForthispurposeTTNETinitiatedaneffectiveadvertising in linewiththegoalthattomeetcommunicationneedsone-stop for communicationtechnologiesinTurkeyandconductsitsactivities every pointinTurkeyasacompanywhichbearsthepioneeringrole TTNET hassetasitsprioritygoalthattodisseminateinternetuse to age underthemotto“EverythingisPossiblewithTTNET”in2010, individual servicesthatithasdeveloped.Startedanewcommunication them, TTNEThasaleadingroleinthesectorwithcorporateand customers bytakingintoaccountchangingcommunicationneedsof Offering communicationtechnologiesoftodayandfuturetothe with Avea,includingGSMand3G,underthebrandnameTTNETMobil. customers theentirerangeofmobilephoneservicesincooperation via broadbandinternetconnectionwithareceiver,alsoofferstoits generation TVplatformIPtivibuthatoffershigh-qualitybroadcasts which offerscinemaandtelevisioninaportableformnew communications technologies.InthisregardTTNET,besidesTivibu television andtelephonewhicharethreefundamentalelementsof ATM andFrameRelayinternetaccessservices.TTNETownsinternet, access throughco-operationwithiPass,G.SHDSL,MetroEthernet, access, WiFiwirelessinternetaccessandTTNETabroad product portfolioofTTNETincludesADSL/VDSL2high-speedinternet Providing serviceover6 million customersin81provinces of Turkey,the EVERYTHING POSSIBLENOW! TTNET both Directorate of Istanbul Tax Office and Boğaziçi Corporate Tax Tax Corporate Boğaziçi and Office Office awardedTTNET. Tax Istanbul of Directorate both 2009 with the corporate tax amount it paid in 2010. Within this context, Tax Office,TTNETwasthe2ndtaxpayerpaidhighesttaxforyear Corporate Boğaziçi and Office Tax Istanbul of Directorate to According on Ekşisözlük.BlueRibbonintheInteractiveMarketingSummit. Use Categorywiththecampaign“YEStowriteinDictionary”edited Category withTTNETCorporateWebsiteand1strankinBestChannel University. GoldenSpiderWebAwards,1strankinTelecommunications Successful CommunicationsExpertsoftheYear”conductedinMarmara Tivibu interactive banner. Most Successful Sponsor in the pollof “Most Türk Telekom’sShare:%100www.ttnet.com.tr Year ofEstablishment:2006NumberEmployees:457 COMPANY’S IDENTIFICATION:

Türk Telekom THE GROUP THAT HAS CREATED THE HIGHEST VALUE 2010 Annual Report 025 IN COMMUNICATIONS AND INFORMATICS Türk Telekom THE GROUP THAT HAS CREATED THE HIGHEST VALUE 2010 Annual Report 026 IN COMMUNICATIONS AND INFORMATICS Türk Telekom’sShare: %100www.pantel.co Year ofEstablishment: 2010NumberofEmployees: 242 COMPANY’S IDENTIFICATION: seminars andcareerdaysforitspersonnel anduniversityyouth. equipment isused.Pantelalso organizes conferences,educational of security,technology,firstaidand off-roadtrainingswherelatest It makes investment toitsofficersandemployeeswithintheframework into account ethical values in training contents planned for its personnel. One ofthetelecominfrastructuregiants oftheworld, Pantelalsotakes Technical University)andDante. Scientific and Technological Research Council of Turkey), İTÜ (Istanbul in Turkey,italsosponsorssomeinstitutionssuchasTübitak(The strategy. WhilePantelsupportsTurkishFencingFederationforsports an investmenttothefutureofTurkeyinsteadacommunication and sportsfields,Pantelconsiderssocialresponsibilityprojectsas Supporting sponsorshipactivitiesineducation,culture,technology telecoms industry. have establishedthemselvesattheforefrontofwholesale effective techniques and strategies to their wholesale businesses, have beencreatedtorecognizemarketplayers,whothroughapplying Capacity Magazine’sGlobalWholesaleTelecommunicationsAwards innovation andsuccessintherapidlyevolvingwholesalemarket. The coverage. The awards focus on thebusiness techniques needed for performance, scopeoftheofferedproductandgeographical award onNovember2008.Thecriteriaofthiswere;quality, Magazine asthewinnerofannual“BestCEEWholesaleOffering” Before Pantel,InvitelInternationalwasannouncedbyCapacity Awards ReceivedinthePastandesponsibility play asignificantstrategicrole. position Turkeyasthe“centralcountry”intelecomfield,Pantelwill between theMiddleEastandEurope.Indevelopmentswhichwill network operatorthatiscapableofconductingwholesaleactivities position of Türk Telekom makes it the first terrestrial fiber optic name was changed as Pantel after acquision. The geographical kilometer fiberopticnetworkin16countries,InvitelInternational’s 7th October2010.Beingoneofthemajorplayersinitsfieldwith27,000 and SoutheastEurope,InvitelInternationaljoinedtoTürkTelekomon One oftheleaderdataandwholesalecapacityprovidersinMiddle AN INFRASTRUCTUREGIANTCONNECTINGCONTINENTS PANTEL

Türk Telekom’sShare: %100www.innova.com.tr Year ofEstablishment: 1999NumberofEmployees:538 COMPANY’S IDENTIFICATION: one year. and CapabilityDetermination”to which itpreparedforaperiodover after accomplishinganauditprocess “SoftwareProcessImprovement Innova isnow the Turkey’s first company having SPICE certification of Turkeybasedontheperformance itshowedinthelastthreeyears. Information 500research,Innova is the3rdfastestgrowingcompany years in Deloitte Technology Fast50 EMEA Program. According to the EMEA Regionbasedonthetotal performance itshowedinlastfive interruption, Innovaisalsoamongthefastestgrowingcompaniesof Technology Fast50Turkey2010Programinlast5yearswithoutany Among thefastestgrowingtechnologycompaniesinDeloitte enhance operationsoftheGroupinthisregion. company, ArgelahaveestablishedaIVEAinDubaiorderto Antalya, AdanaandErzurum,InnovaanotherTürkTelekomGroup Regions in Istanbul and Ankara besides support offices located in Izmir, processes. HavingmainofficeslocatedintheTechnologyDevelopment combining itstechnologicalbackgroundwithexperienceinbusiness Innova generateswellmanaged,quickandeffectiveprojectsby Bringing together differentspecialization areas within thecompany, to createend-to-endsolutionsandmeetexactneedsofitscustomers. where itisanoutstandingandeffectivesystemintegratorwhichable solutions forinformationtechnologiesputsInnova into a position application developmentandintegrationplayingakeyroleinthe integration, maintenancevaluechain.Thepowerof Innova in covers entireoftheconsultancy,design,implementationdevelopment, models. Innova,withitsservicesindependentofproductandbrand, with astepfurthertoe-businessprocessesthanksitsnewbusiness security andkiosksystemstakesthecompaniesthatInnovaworks enterprise resource planning, operational systems, portals, corporate payment infrastructures, electronic invoice delivery and collection, knowledge. Innova’ssolutionsinvariousfieldssuchaselectronic industry anddistributiontofinancewithitsdeeprootedengineering in variousfieldsfromtelecommunicationstopublicsector, and competitiveadvantagecreatingvaluetoallorganizations field the of-the-art solutions that ensuring high efficiency, cost reduction in company pioneering the of informationsolutionsandservices,offersinnovativestate- A.Ş., Çözümleri Bilişim Innova THE STAROFEMEAREGIONINEND-TO-ENDSOLUTIONS INNOVA

“unknown telephonenumbers”service. Value directory andaddedvalueservices underthisbrandbesides Added and Directory (11818 Services) brandinFebruary2010, AssisTTalsoprovidesnew Hizmetler Değerli Katma ve growth ofcallcentersectorinTurkey. Launched11818Rehberlik for thefirsttimeinTurkeywill alsomakegreatcontributionin 2009. Thisservicewhichwillbeprovided bytheMinistryofHealth Booking System for Hospitals Project” started as a pilot project in within 2010bywinningthebid“TheMinistryofHealthCentral Religious Affairs. AssisTTundersignedanotherenormous success TV Organization), TÜRKSAT(TurkishSatelliteCommunicationsCable E-State, KOSGEB(SmallandMediumIndustryDevelopment (IDO), theMinistryofTransportation,Health, Supreme Council),TurkishAirlines,IstanbulFastFerriesCo.Inc. service tothefollowingcompanies:RTUK(theRadioandTelevision and sistercompaniesTTNET,AveaSebit,AssisTTalsooffers enterprises of Turkey. Besides its parent company Türk Telekom AssisTT’s customerportfolioincludesleadingprivateandpublic Giving VoicetoandHearonbehalfofCompanies in theregionthroughnewinvestmentstheselocations. until theendof2011andcontinueitscontributionstoeconomy provinces. AssisTTaimstorecruit2thousandand200youngpeople people in2010andbythisway,continueditsgrowthalsoeastern AssisTT providedemploymentfortotallyonethousandand46 In thelocationsestablishedinErzincanandErzurum2009, “Customer leading EMEA (Europe,MiddleEastandAfrica)Region. become to aims Satisfaction Center”amongthecallcentershavingactivityin A.Ş. Hizmetleri Müşteri ve Giving service to many large companies in Turkey, AssisTT Rehberlik it starteditsactivities,andhasnow4thousand200employees. number ofitsemployeesby143percentsince2008,theyearthat call centerlocationsthroughoutTurkey,AssisTThasincreasedthe of Turkeyevenithasonlyathree-yearpast.Providingservicein7 center alsoin2010,AssisTTisnowthelargestoutsourcecall Continued thesuccessofbeingTurkey’sfastestdevelopingcall THE FASTESTDEVELOPINGCALLCENTERIN2010 ASSISTT & Operations), TCDD (Turkish State Railways) and Presidency of

Türk Telekom’sShare:%100www.assistt.com.tr Year ofEstablishment:2007NumberEmployees: 4193 COMPANY’S IDENTIFICATION: category. won secondrankandsilvermedalin“BestCustomerServiceAgent” has location Ankara in employee Department ADSL Yılmaz, Serim won firstrankin“IndustryAwardChampion”categorywhileMr. organization, Mr.AdilZEMBAT,GeneralManagerofAssisTThas “Contact CenterWorld”awards.Withintheframeworkofthis call centers providing outsourcing service within the scope of category. AssisTTwasalsoawardedasoneofthebestworldwide was awardedwithbronzemedalin“BestOutsourcingPartnership” in Londonon26thJune2010,AssisTTandTHYwonthirdrank Ranking Performers”contestorganizedamongEMEACountries corporate andemployeebasis.In“ContactCenterWorld2010Top In 2010,AssisTTwasalsograntedwithsomeawardsbothon service. figures, inalllocationsofAssisTT,107disabledstaffisrendering to 25 disabledpeopleto work from their home. According to 2010 life, withits“HomeAgent”applicationwhichgivesopportunity Transportation inordertoinvolvedisabledcitizensthebusiness Varım” (Count Me In), initiated by the Republic of Turkey, Ministry of AssisTT hassupportedthesocialresponsibilityproject“Bende Customer SatisfactionManagementCertificate. IEC 27001:2005InformationSecurityCertificate,ISO10002:2006 in 2010;itobtainedISO9001:2000/2008QualityCertificate,/ given fortheirdevelopment.AssisTTcontinuedtofocusonquality have receivedtrainingcoursesof508thousand664hoursintotal; in linewiththenewinnovationstechnology.Theemployees technologies forachievingastrongerandperfectinfrastructure center infrastructure has been renewed with state-of-the-art its servicequalityandcustomersatisfaction.Inthisregard,call AssisTT carriedoutintensiveactivitiesin2010ordertoenhance Investment toQualityandAwards

Türk Telekom THE GROUP THAT HAS CREATED THE HIGHEST VALUE 2010 Annual Report 027 IN COMMUNICATIONS AND INFORMATICS Türk Telekom THE GROUP THAT HAS CREATED THE HIGHEST VALUE 2010 Annual Report 028 IN COMMUNICATIONS AND INFORMATICS owned. Balkan countries and Saudi Arabia are among the priority owned. BalkancountriesandSaudiArabiaareamongthepriority the sharesandinUSAthroughArgelaUSA,Inc.whichis100percent through IVEASoftwareSolutionsFZLLCthatitowns50percentof Telekom’s globalcompanyArgelacarriesoutitsactivitiesinDubai is locatedinIstanbulandithasresearchlaboratoriesAnkara.Türk that giveacompetitiveedgetooperators.TheheadquartersofArgela those technologies into next generation telecommunication solutions in developingtechnologiesforfuturenetworksbesidestransforming Through R& Competitive EdgetoOperators platform, WebTV,IPTV,networkconvergencegatewayandfemtocell. provides solutionswhichsomeofthemaretargetedadvertising these operators.OwnedbyTürkTelekomon100percentbasis,Argela new and service tomillionsofsubscribersthroughitssolutionsoffered Bilişim technologies ve Yazılım presently inusebymanyoperatorsacrosstheworld,Argelaisgiving innovative Argela produces 2004, generation solutions for telecom operators. Having its products year A.Ş. in activities Teknolojileri its to Started GLOBAL PLAYERINTHEFIELDOFSOFTWAREANDINFORMATICS ARGELA Adaptive Curriculum put on the market in the USA, the activities in Adaptive Curriculum putonthemarketinUSA, theactivitiesin an internationalproductbyexports tothreeseparateregions.After for manydifferentcountrieshave beencompletedandithasbecome including English,SpanishandArabic, curriculumalignmentstudies In addition,Vitaminhasbeentranslated intovariouslanguages curriculums. for Adaptive Curriculum besides adaptation of it tothe American in Arizona,USAconductsdeployment andimplementationactivities ve under brandnameAdaptiveCurriculumsince2007.TheOfficeofSebit Eğitim Sebit market American China. in place a with occupying been has limited A.Ş Teknolojileri Bilgi not is abroad in success Sebit’s in March2000.Inaddition,TianyiisalsousedMalaysiasince2004. education institutionsbytheMinistryofNationalEducationChina line withcurriculumappliedinChinaalsorecommendedforsecondary mathematics, physicsandchemistrylessonsathighschoollevel in of Sebit:Tianyi.Tianyiwhichisaneducationalproductpreparedfor There isalsoChineseversionofAkademediawhichthefirstproduct Vitamin alsototheWorld developments. professional competency by following national and international The aimofthisportalistoencourageteachersinenhancingtheir for teachersemployedatprimaryandsecondaryeducationlevel. (Vitamin Öğretmen Vitamin education. Teacher) isonlineinformationandsharingplatformdesignedbySebit secondary and primary for millions ofstudentsuntilthisdate,Vitaminhastwoseparateproducts curriculum oftheMinistryNationalEducation(MEB).Reachedto service preparedforstudentsandteacherswhichisinlinewith solution crossedtheborders,Vitaminisanonlineeducationsupport visual contentandinteraction.Sebit’smostwidelyusede-education of acustomizedlearningprocessblendedwithmostdeveloped company offeringe-educationsolutionswhichallowexperience Sebit, thefirststudiesrelatedtoitdatingback1988,isaneducation CROSSED THEOCEANSINFIELDOFONLINEEDUCATION SEBİT D studies conducted by its experienced staff, Argela is ahead D studiesconductedbyitsexperiencedstaff,Argelaisahead

Türk Telekom’sShare: %100 Year ofEstablishment:1988NumberEmployees: 218 COMPANY’S IDENTIFICATION: the WorldCommunicationAwards inthecategoryofBestNewService. Uğurlu addition, In Vitamin (VitaminBringingLuck)succeeded inbecomingafinalist Contest. Spider Golden the in also awarded was Educational Website”byInformatics AssociationofTurkeywhileit new awards also in 2010. Vitamin Öğretmen portal considered as “Best them andtheirservicesareevaluated.Sebitfolloweditspathwith operators throughouttheworldandcompaniesworkingwith in theWorldCommunicationAwards,wherealltelecomandmobile other hand,inNovember2009,Vitaminreceived“BestContentService” in theCODiEawardswhichisOscarofinformaticsfield.On institutions inUSAandconsideredas“BestOnlineEducationSolution” In 2009,AdaptiveCurriculumentitledtoreceiveawardsbyvarious Best OnlineEducationSolution countries. which hasbeenlaunchedinSaudiArabiarecently,alsootherArabic have been started. Moreover, it is aimed to put into use Arabic Vitamin, order toputSpanishversionintopracticeinMiddleandSouthAmerica Türk Telekom’sShare:%100www.argela.com Year ofEstablishment:2004NumberEmployees:152 COMPANY’S IDENTIFICATION: Set-top Box,VoiceandVideoCommunicationfeatures. base stations,alsoincludesWirelessADSLModem,HomeAutomation, 3G mobilecommunicationsystemswithoutanyneedforexternal feature creatinganextensivecoverageareawithinthebuildingsfor Industrialists Association.Thisproduct,besideshavingFemtocell in 2010InnovationandCreativityAwardsofTurkishElectronic has wonthe“InnovativeProduct”awardinLargeCompaniescategory With its “Convergent Wireless Home Communication Center”, Argela Telecom ServiceoftheYear”award. put onthemarketbyTürkTelekom,receivedCommsMEA“Best Argela. TheWIROFONservicerunningonthissolution,whichwas convergence serviceshavebeenbuiltisthepatentedinventionof The ‘ConvergenceGateway’platformwhichishostingTürkTelekom’s Awards forInnovativeness Kazakhstan, MoldovaandGeorgia. has customersinSouthAfrica,Korea,Oman,Ukraine,Cyprus, markets ofArgelawhereIndiahasthefirstpriority.Inaddition,italso www.sebit.com.tr

600,000 subscribed usersaccessedtothegamein2010. also subjectmatterofadocumentary onDiscoveryChannelandover was Vakti Kıyamet Istanbul Game), Playing Role Online Multiplayer historical placesof Istanbul. Turkey’s firstMMORPGgame (Massively game, whose“betaversion”was launchedin2006takesplace development yetisalsooneofthe importantprojectsofSobee.The Vakti Kıyamet Istanbul game stillonlineandhashundred ofthousanduserswhichisunder 2005. in completed (Istanbul the Time of Judgment), three dimensional and multi-user was which and time, a threedimensionalmappingandmonitoringinfrastructureinreal background of itin this field, is KANAVA, started in order to develop One of theprojects of Sobee, realized by the company and reflecting 11 xRealTimeGameEnjoyment of thecountry. can develop games and services convenient to culture and sociology become a local company in this market having universal values that much biggerthanthisfigure.Frompointofview,Sobeeaimsto however, pundits in thisfieldsaythat the potential of the sector is Turkish gameindustryisaround100milliondollarsincludingalltypes; been dominatedbyKoreaandChinaintherecentyears.Thesize of dollars withallitsstakeholders.Itisobservedthatthemarkethas in termsofdollarvolume;itsrealsizeisestimatedaround100billion The economicvalueofcomputergamesindustryis50billiondollars Awards ofTurkeyin2010. in thisfieldbroughttoSobeeAchievementAward9thTechnology of peopleworldwidethroughthegamesitdeveloped.Itscompetency brings manynewthingsinthisfiled,itreachestohundredthousands projects onrealenvironmentmodelingandsimulation.WhileSobee dimensional, interactiveandmulti-usergames.Sobeealsoconducts Joined toTürkTelekomin2009,Sobeeisacompanydevelopingthree LOCAL PLAYERHAVINGUNIVERSALVALUES SOBEE

www.albtelecom.al Year ofEstablishment:1992TürkTelekom’sShare: 15.2% COMPANY’S IDENTIFICATION: through CETEL. Türk Telekomisanindirectminor shareholderofALBTelecom interconnection partnershipswith otherruraloperators. its telecommunicationservicesvirtuallynationwidethrough offering servicesacrossallurbanareas.Meanwhile,ithasextended is thelargestfixedoperatingtelephonecompanyincountry “ALBTelecom” withthestatusofajointstockcompany.ALBTelecom company onFebruary5,1992,and16,wasnamed Cards, as well as others. ALBTelecom became an independent Dedicated Internetacc,ADSL,Dial-up,Intranet,andPrepaid certain majorservicessuchasfixedtelephone,ISDNservice, ALBTelecom operatesintheAlbanianmarketwhereitprovides ALBTELECOM Türk Telekom’sShare:%100www.sobee.com.tr Year ofEstablishment:2001NumberEmployees:30 COMPANY’S IDENTIFICATION: besides targetingentertainmentofchildrenunderage13. issues suchassocialresponsibilityandenvironmentalawareness Super Cangamein2011.aimstoengrainchildren’smind Arabia andGermanyin2011.SobeewilllaunchTurkey’sfirstchildhero organized inLondon,thegamewillbeputonmarketSaudi Content ServiceAward”inthe2010WorldCommunicationAwards subscribed users in Turkey within a short time. Received the “Best in November2009,ICANFOOTBALLreachedover750thousand The world’s first 11x11 online football game launched by Sobee

Türk Telekom THE GROUP THAT HAS CREATED THE HIGHEST VALUE 2010 Annual Report 029 IN COMMUNICATIONS AND INFORMATICS Türk Telekom 2010 Annual Report 030 valuable brand ofTurkey. We areproud tobethemost only possible bybeingvaluable. We knowthatadding value is

Türk Telekom 2010 Annual Report 031 Türk Telekom TÜRK TELEKOM, THE HIGHEST VALUED 2010 Annual Report 032 AND MOST POPULAR BRAND OF TURKEY IN 2010 a higher rate. a higherrate. its rankingalsointhisyear’ssurvey, TürkTelekomincreaseditsvotesto category taking29percentofthevotes also in 2009. Besides preserving brands bytheconsumers,TürkTelekom achievedthefirstrankinits 30 percent.Intheresearchwhichdetermines themostfavoreddigital brand inthetelecomindustry”with thevotesofconsumersaround company IpsosKMG,TürkTelekom waselectedasthe“mostpopular In the “Digital Lovemark” survey conducted every year bythe research a significantrole. fields, thecontinuityofinvestmentsitmadeinitsbrandalsoplayed of convergenceproductsandservicesinvoice,data,videocontent position. InthissuccessofTürkTelekom,besidesincreasingthenumber Brand withabrandvalueof1,692billiondollarsandkepttheleading increased evenmore,alsodeterminedastheTurkey’sMostValued Türk Telekomcontinueditssuccess.Telekom,whosebrand value of TürkTelekominthissurvey.In2010researchBrandFinance, value of1,592billiondollarsinyear2009;thefirstparticipationdate Brand conductedbyEnglishbrandvaluationcompanywitha Türk Telekomhadthefirstrankinsurvey,Turkey’sMostValued Turkey andintheworld. has beenentitledtoreceivemanyotherreputableawardsbothin Turkey bytheresearchcompanyIpsosKMG.Inaddition,TürkTelekom industry” inthe“DigitalLovemark”2010surveyconductedeveryyear Türk Telekomwaselectedasthe“mostpopularbrandintelecom company BrandFinance. in 2009,accordingtothesurveyconductedbyEnglishbrandvaluation Türk TelekomhasbecometheTurkey’sMostValuedBrandin2010as Lovemark 2010”surveyconductedbyIpsosKMG. as themostpopularbrandintelecomindustry“Digital corporate socialresponsibilityprojects.TürkTelekomwasawarded are focusedoncustomersatisfaction,itsR& in 2009,withitsinnovativeproductsandservices,practicesthat awarded asthe“MostValuableBrandofTurkey”in2010,well In theresearchconductedbyBrandFinance,TürkTelekomwas Türk Telekomin2010. within the firstyearafteritlaunchedwas oneoftheimportantsuccesses category Relations” “Social in Medal Silver with project Değer such aprestigiouscontestasMagellan Awards, awardingofTürkiye’ye Awards givenbyLeagueofAmerican CommunicationsProfessionals.In roof, wasamongthe“top50communications projects”intheMagellan realized bythecompanythroughout Turkeyforyearsunderthesame to (Value Turkey) project, developed in order tobring together allsocial projects Değer Türkiye’ye Telekom’s Türk LACP MagellanAwards: campaigns in2010.Someoftheseawardsare: to productsandservices,frominvestorrelationscommunication with itsmanyapplicationsandprojectsrelatedtosocialresponsibility international contests,wherethousandsofprojectsparticipated, Türk Telekomreturnedtohomewithover20awardsreceivedfrom services besidesnewinvestmentsinlinewiththeneedsofitscustomers, responsibility projects.Continuedtodevelopaddedvalueproductsand to becomeaneffectiveplayerininternationaldatamarketandsocial convergence andcommunicationsarea,regionalstepstakeninorder strengthened TürkTelekombrandweretechnologiesdeveloped in institutions alsoin2010.Thefundamentalsoftheprocesswhich Turkey, andGroupcompaniesfrommanyreputable Many awardsraineddownonTürkTelekom,whichaddsvalueto Adding ValuetoTurkey Awards RainedDownonTürkelekom, realized inthelasttwoyears. increased brandvalueowingtostrategiesandcontinualinvestments the symbolofchangeandinnovativenessinTurkeyadditiontoits living inthegeographicalregionitserves,TürkTelekomhasalsobecome Bringing significantchangesandinnovationsintothelivesofallpeople D investments, and its D investments,andits by Thomson Reuters and Acclaro, Türk Telekom was entitled to by ThomsonReuters andAcclaro,TürkTelekom wasentitledto Awards:Inthe Turkish InvestorRelationsAwards organizedforthesecondtime Relations Investor Turkish 2010 from Awards Three students werereached. order tobringintoschoolsmodern educationapplications,9million UK. Within the scopeofVitamin Donation projectimplemented in category in the Best Business Awards, the most reputable awards of UK. TheProjectwasentitledtoreceiveawardin“BestInnovation” “Making adifference,itisworthforTurkey”,broughtanawardfrom supporting education and which was realized under the motto Best BusinessAwards:Theproject“VitaminDonationtoSchools” Turkish companyreceivinganawardintheceremony. one oftheTürkTelekomgroupcompanies.wasonly Best ContentServicecategorywithICanFootballdevelopedbySobee, awards, WorldCommunicationAwardsawardedTürkTelekom,inthe World Communication Awards: Considered as Oscar of communication international scale. that TürkTelekomisnotonlyappreciatedinTurkeybutalsothe to thisaward,theprestigiousawardoftelecomindustry,itisproved Türk Telekomas“BestFixed-LineOperatoroftheYear”in2010.Thanks followed withexcitementbytheworldwidetelecomsector,elected communication companiesoftheMiddleEastandAfricawhichis CommsMEA Awards: CommsMEA Awards, bringing together prominent recognized inSouthAsia,MiddleEastandNorthAmerica. the mostsuccessfulandinnovativecompaniesofsectorare East andNorthAmericaTelecommunicationsCouncil)Awards,where Fixed-Line OperatoroftheYear”inSAMENA(SouthAsia,Middle success intheSAMENAAwards.TürkTelekomwaselectedas“Best SAMENA Awards:TürkTelekomhasundersignedanotherinternational of theYear,Fixed-LineOperator,andTelecomInnovationYear. Telekom in the following categories;Fully Integrated Telecom Operator history datingback200years,WorldFinanceMagazineawardedTürk Occupying animportantplaceinthebusinesslifewithitsrooted the world,inordertorecognizebest telecom companies worldwide. Finance Magazine,oneoftheprominenteconomymagazines in threecategoriestheWorldFinanceAwardsorganizedby World FinanceAwards:TürkTelekomwasentitledtoreceiveaward Preşeva, Mustafa around twothousandfrom28countries. editor awarded by succeeded intobedistinguishedamongrecordnumberofapplicants made was montage whose Group, shotbyworld-famousandawardeddirectorSteveBeck publishing of telecom industry. Corporate commercial of Türk Telekom USA centeredpublisherofHolmesReport,onethemostreputable Video categoryintheEuropeanSabreAwardsgivenbyHolmesGroup, Awards: TürkTelekomawardedwithBronzeSabreinCorporate Sabre of NorthAmerica, Europe,LatinAmerica,Asia/Pacific andAfrica. awards are presented to the winners in five different regions consisting Review methodologyandvoting results wereauditedbyKPMG.The The registrantsofIRGRarereviewed andrankedonaregionalbasis. professionals. winners are directly elected by votes of analysts and capital market transparent andindependentorganizations withinthefield,dueto Network andBloomberg.IRGRAwards is recognizedasthe most of IRGRAwardsareTheBankNewYorkMellon,CorporateAsia financial communicationsfirmMZConsulting.Amongthesupporters IR RankingsAwardsisheldbytheleadingglobalinvestorrelationsand (IRGR). comprehensive andprestigiousrankingsystemIRGlobalRankings analysts andcapitalmarketprofessionals,aspartoftheworld’smost Officer” award.Winningcompaniesaredefinedbythedirectvotes of Mr. AbdullahKayahasreceived“Europe’sBestInvestorRelations category. Inaddition,HeadofCapitalMarketsandInvestorRelations Best InvestorRelationsProgram”awardin“Investor’sChoice” countries oftheworldevaluated,TürkTelekomhasreceived“Europe’s the 12thtimein2010.Insurveythat503companiesfromnearly40 across EuropeintheIRGlobalRankings(IRGR)Awards,organizedfor Relations: Investor in IR Global Rankings (IRGR) Awards - Türk Telekom is the Best of Europe of thatjudgment. earnings, andentitledtoreceivetheseprestigiousawardsonthebasis strength, profitability,growthpotential,qualityofmanagementand companies are located, are judged according to the criteria- market banks and research companies in the regions, where the nominated companies whicharenominatedbytheanalystsofleading second place awardin the survey. In theEuromoney survey, the in thesurveyaswellreceiving“MostImprovedManagement” ranked firstin“MostAccessibleSeniorManagement”sub‐category magazine. Accordingtotheresultsofsurvey,TürkTelekomwas Eastern Europe”conductedbyEuromoney,theinternationalfinance two awardsinthesurvey“BestManagedCompaniesCentral& and convergencetechnologiescompany,TürkTelekomhasachieved Two HonoraryAwardsfromEuromoney:Turkey’sleadercommunications professionals. information company, inline with the opinions of investment Survey ispreparedbyThomsonReuters,agloballyleadingfinancial in thefieldofinvestorrelationswereevaluatedindependently.Extel Acclaro andExtel,theefficiencyperformanceofcompanies Relations Officer”category.Inthesurveyconductedunderaudit of Relations, AbdullahKayareceivedthesecondrankin“BestInvestor category andTürkTelekom’sHeadofCapitalMarketsInvestor Paul Doanyreceivedthethirdrankin“BestCEOInvestorRelations” Communication ofFinancialResults”categorywhileTürkTelekomCEO, receive threeawards.TürkTelekomreceivedthesecondrankin“Best Türk Telekom achieved a significant success Türk Telekom achieved a significant success

Türk Telekom TÜRK TELEKOM, THE HIGHEST VALUED 2010 Annual Report 033 AND MOST POPULAR BRAND OF TURKEY IN 2010 Türk Telekom 2010 Annual Report 034 amounts. that’s value Turkey Even thesmallestdifference counts;

Türk Telekom 2010 Annual Report 035 Türk Telekom VALUE TO TURKEY, VALUE TO THE WORLD! 2010 Annual Report 036 SUSTAINABILITY AND CORPORATE SOCIAL RESPONSIBILITY international cooperations. for itscustomers,andsupportspracticeswithnational its carbonemission,providesenvironmentallyfriendlyoptions Telekom reducestheamountofpaperconsumed,decreases according tosustainabilityprinciples.Forthispurpose,Türk are discussed,TürkTelekomrestructuresitsbusinessprocesses natural resources,environmentalpollutionandclimatechange In today’sworldwherehugeproblemssuchasreductionof meetings throughimagecommunicationtechnologyTelepresence the nextgenerations,TürkTelekom,inlast20months,made1,754 services inlinewithitsgoalforleavingahabitableenvironment practices initsbusinessprocessesbesidesdevelopingproductsand companies againstglobalwarming.Tendedtowardssustainable one oftheprecautionstakenbyenvironmentallysensitive communication betweenpersonsastheyareinthesameroomis The meetings performed by use of technologies that enable image Istanbul madesavingbyalmost14thousandflightscanceled. it startedtouseinonelocationAnkaraand2locations for thenextgenerations.TürkTelekomowingtoTelepresencethat makes closerTürkTelekomtoitsgoalforahabitableenvironment persons thatareatfardistancesastheyinthesameroom, Telepresence service,whichallowsimagecommunicationbetween canceled in20months Made savingbyalmost14thousandflights Telepresence helpedclearanceofdistances printed documents. which wouldhavebeenusedforfillingthoseholesissavedinthe characters which do not affect reading. By this way, the ink amount a minimumlevel.Inthisfonttype,therearesmallholeswithinthe is asimplebuteffectivesolutionforreducinginkconsumptionto Received theEuropeanEnvironmentalDesignAwardin2010,Ecofont Times NewsRomanfonttypesinEcofont. are abletotakeprintoutswhichpreparedwithCalibri,Arialand all itsemployeesthroughoutthecountry.TürkTelekom consumption by25percentthroughEcofontfonttypetobeused company in the world using Ecofont, Türk Telekom reduces ink use inthecomputersofTürkTelekomemployees.Thefirsttelecom thanks totheholesinitsstructure,hasbeenautomaticallyputinto Ecofont, whichenables25percentsavingininkconsumption A firstintheworld:LessinkconsumptionithEcofont such activitiesthroughnationalandinternationalco-operations. environmentally friendlyoptionstoitscustomersandsolidified besides carbonemissionratesinitsbusinessprocesses,offered For thispurpose,TürkTelekomhasreducedpaperconsumption options notharmtheenvironmentforitssensitivecustomers. generations while offering product, service and application line withitsgoaltoleaveahabitableenvironmentforthenext sustainable practicesintoitsbusinessprocessesandofficesin with thesustainabilityprinciples.TürkTelekomintroduces companies toreorganizetheirbusinessprocessesinaccordance pollution andclimatechangediscussed,itisessentialforthe problems suchasdepletionofnaturalresources,environmental lives ofthenextgenerationsbetter.Inthisagewheregigantic technologies andproducts,TürkTelekomalsoendeavorstomake Adding value to the lives of people of today through its innovative Adds valuetodayandalsotofuture... Türk elekomandSustainability: application, TürkTelekomtargetstoincreasethisfigure3tons. initiated in2010.Saved2tonsofpaperpermonthowingtothis application Çözüm” “haTTa of scope the within (PDA) phones smart transfer andnewconnectionrequestsmadebyitscustomersover Türk Telekomsavestimeandpaperbyfollow-upphonefailure,line to “haTTaÇözüm” Türk elekomhadmonthly2TONSOFpapersavingthanks companies authorizedbytheMinistryofEnvironmentandForests. besides 12 regional directorates of Türk Telekom are delivered to the the buildings of Istanbulheadquarters and Ankaraheadquarters 480 thousandkilogrampapertorecycling.Thepaperscollectedin thousand 668treesweresavedfrombeingchoppeddownbysending average 40thousandkilogram paper recycled permonth.In2010,7 buildings andofficesunder12regionaldirectorates; by thisway, established recycling systems for the papers used in head office Within thescopeofsustainabilitypractices,TürkTelekomhas 7 thousand668treessavedeveryyear Papers gorecycling amount itachievedduetoe-learning. category intheStarsofInformaticsContestwithhighsaving are produced.TürkTelekom Academy wonFirst rank ine-learning in classtrainings;fromonetreeaverage8thousand333A4sheets material consistedofaverage30sheetsperpersonisdistributed per personisTL2.5inTürkTelekom.InTelekom,published class trainingcostperpersonisTL27,averagee-learning thousand 495treeswouldhavebeenconsumed.Whileaverage 37 millionwouldhavebeenspentandpapercorrespondingto5 was given.Iftheseonlinetrainingswerecarriedoutinclasses,TL 507 usersintotal,1million579thousand425person/hourtraining Within thescopeofe-learninginitiativeaccessibleby69thousand these activities. Türk TelekomAcademysavednearly5thousand495treesthanksto activities withinthescopeofe-learninginitiativeinthisperiod, its employeesonlineforthelast3years.Organized726e-learning Telekom Academycarriesoutitscountrywideroutinetrainingsfor Telekom Groupemployees,dealersandbusinesspartners,Türk Technologies” and”EducationManagementControl”ofTürk Training andDevelopment”,“Personal“Educational Established withinTürkTelekomtoberesponsiblefor“Technical thanks toE-learningtechnology 5 thousand495treessavedin3years three locations. commenced byTürkTelekominApril2009anditisstilluse mbps speedinternetinfrastructure,Telepresencetechnologywas high definition(HD)imagecommunicationopportunityover15 476 hoursTelepresenceinsteadoftraveling.Offeringhighresolution, participation of14,032personssinceApril2009byuse4thousand flights andvehicles.TürkTelekomconvened1754meetingswith and bythisway,itreducedcarbonemissionratebesidesuseof

Türk Telekom VALUE TO TURKEY, VALUE TO THE WORLD! 2010 Annual Report 037 SUSTAINABILITY AND CORPORATE SOCIAL RESPONSIBILITY Türk Telekom VALUE TO TURKEY, VALUE TO THE WORLD! 2010 Annual Report 038 SUSTAINABILITY AND CORPORATE SOCIAL RESPONSIBILITY around 10percent lessfuelin2010comparedto2009. Furthermore, consumed. Throughallthesemeasures, TürkTelekomconsumed GPS use inits vehicles andrealized significant savings in the fuel existing vehicleswithnewgeneration ones,TürkTelekomstarted Also reducing the number of its vehicles besides replacing its last year. kilometers in distance were realized compared to the same period a result of these measures, savings of 700 tons in fuel and 13 million covered andfuelconsumed through theprojects implemented. As them withnewgenerationcars,aswellsavingindistances has alsoreducedthenumberofvehiclesinitsfleet,andreplaced of 2010forthepurpose savings in fuel.In2010,TürkTelekom thousand 330tonsthroughoptimizationrealizedatthebeginning Telekom hasdecreasedthecarbonemissionsofthisfleetby 2 In possessionofoneTurkey’slargestmotorvehiclefleets,Türk fleet reducedby2thousand330tons Carbon emissionquantityofTürkelekom’s trees itsavedthroughpapersavings. contributes toeffortsspentforamorehabitableworldwiththe manner andprovidingabalancedworkforcedistribution. It environment besidesutilizingtimeinaneffectiveandefficient customer increase to aiming satisfaction, TürkTelekomtakessustainablestepssensitiveto application Çözüm” “haTTa With is Çözüm” “haTTa of these smartphonestothefields. application the by distributing 620thousandbusinessordersinmonthlyaveragevia Telekom Türk time. Çözüm” application, and reaches to the related address in shortest requests madebycustomersoverPDAdevicesthanksto“haTTa Site teamsreceivephonefailure,linetransferandnewconnection

Turkey’s leading communicationandconvergence technologies Within theactivitiesofEnergy EfficiencyStudyGroupunderGeSI, Nokia, Erickson,andCisco. members includecompanieslike Microsoft,BritishTelecom,HP, technologies) industryinorder to preventclimatechange,GeSI leverage thepowerofICT (information andcommunication efficient use and saving of energy and e-sustainability. Aiming to which works to organize subjects relating to eco-friendly and the nonprofitorganizationGeSI(Globale-SustainabilityInitiative) Türk TelekombecamethefirstTurkishcompanytobeamemberof Turkish companies Türk elekom,thefirstGe time besidesnon-harmfulmaterialsusedinitsproduction. substantially thankstosignificantenergysavingduringstandby Panasonic KXTG6411phonealsocontributestofamilybudget has beenputupforsaleinallTürkTelekomofficesanddealers. KXTG6411 providingasignificantsavinginenergyconsumption In the campaign of Türk Telekom, eco-friendlyphonePanasonic energy consumptionfeature. customers due to materials used during its production and its less for salebyTürkTelekomprovidesanalternativeeco-sensitive for itseco-sensitivecustomers.Eco-friendlydecthandsetputup Türk Telekomalsodevelopseco-friendlyproductsandservices Eco-friendly phone 2009. in fuel, and 2 thousand 330 tons in carbon emissions compared to 13 percent.Themeasuresresultedinsavingsofaround11.7million the distancescoveredcomparedto2009havealsobeenreducedby

SI memberamong with 100thousand treeshavebeenplanted. Thanks to e-Invoice Forests project, all over Turkey, e-Invoice Forests visited by200personsdaily. Houses havebeenopenedallover Turkey.Eachinternethouseis Thanks toTürkTelekomInternet Housesproject,967Internet been constructedwhere30thousand studentsreceiveeducation. Thanks toTürkTelekomSchoolsproject,76educationbuildingshave stunning indicatorsofthevalueaddedtosociallifeinTurkey: with TürkTelekomandtenthousandsofvolunteeremployeesare The figures received in CSR projects in 81 provinces realized jointly Striking FiguresAchievedinCSR entitled toreceiveSilverAwardin“CommunityRelations”category. American CommunicationsProfessionals–LACP.Theprojectalso top 50communicationprojectsinMagellanAwardsofLeague of After its launching, “Value to Turkey” project took its place among umbrella brand“ValuetoTurkey”. Houses, TürkTelekomSportsClubsande-InvoiceForestsunder nationwide suchasTürkTelekomSchools,Internet Regional Directorates,therearegiganticCSRprojectsimplemented Besides over100localCSRprojectsrealizedbyTürkTelekom regarding theprojectsrealizedin81provincesofTurkey. were madein12RegionsofTürkTelekomwhichpublicinformed Difference, itisWorthtoTurkey”,anumberofpressconferences to launch the umbrella brand created with the motto “Making a Within thescopeofValuetoTurkeyMeetingsrealizedinorder under theumbrellabrandValuetoTurkey. projects, which have been carried out all over Turkey for years, Started a new initiative in 2010, Türk Telekom has united all its CSR environment andsports. Telekom. TürkTelekomalsocarriesoutCSRactivitiesinthefieldsof numbers ineducationbyuseoftechnologiesdevelopedTürk Turkey, TürkTelekomCSRprojectstargettofillthegaprelated extending accesstoinformationandtechnologythroughout Providing supportforimprovementofeducationalinfrastructure, Responsibility (CSR)projects. Telekom solidifiesandextendsthisvaluethroughCorporateSocial besides R&Dandtechnologicalinfrastructureinvestments,Türk Creating valueforTurkeywithitsinnovativeproductsandservices Value toTurkey! Türk elekomandCorporateSocialResponsibility: and regionalorganizationsintheindustry. collaboration oftheleadingelectronicsmanufacturers,operators, worldwide ICTcompaniesfore-sustainability, GeSI aimsforthe Union’s Millenniumobjectives.Establishingglobalpartnershipwith GeSI wasestablishedinBrussels2001,linewithEuropean members forefficientuseofenergyandITequipment. company Türk Telekom exchanges ideas and know-how withother include world’sgianttechnologycompanies. ICT industryinordertopreventclimatechange,GeSImembers energy ande-sustainability.Aimingtoleveragethepowerof subjects relatingtoeco-friendlyandefficientusesavingof of thenonprofitorganizationGeSI,whichworkstoorganize Türk TelekombecamethefirstTurkishcompanytobeamember Innovation” awardintheBestBusiness Awards. Professionals (LACP)in2008;2010, itisentitledtoreceive“Best Process/ Service categories by League of American Communications Communication ProgramandNewest PublicRelationsProduct/ has beenawardedwithblueribbon inBestBusinessDevelopment mebvitamin.com. TürkTelekom,with itsVitamintoChildrenproject, the teachersofpublicprimaryschoolsoveraddress;www. now. Vitamineducationsethasalsobeenpresentedasgiftto 9 millionstudentsutilizedfromVitaminfreeofchargeuntil 950 highschoolsfreeofchargethankstoTürkTelekom.Around being usedin33thousandpublicprimaryschoolsand5 Contributing toideaofequalopportunityineducation,Vitamin is supports extendeduseofeducationaltechnologiesintheschools. group companies, as interactive education software, Vitamin Vitamin toChildren:DevelopedbySebit,oneoftheTürkTelekom be putintoserviceinvariousdistrictsof81provinces. each day.Whentheprojectiscompleted,1000internethouseswill the countryuntilnow.Eachinternethouseisvisitedby200persons internet accessarefoundhavebeenputintoservicethroughout in which average 20 fully equipped computers with broadband charge alloverthecountry.967TürkTelekomInternetHouses Türk Telekomisbuildinginternethousesgivingservicefreeof education and educationcannot be withoutinternet” approach, education fieldinaccordancewithits“futurecannotbewithout Türk TelekomInternetHouses:RealizedeffectiveCSRprojectsin Responsibility Project”byInternationalBusinessAwards. Association (TÜHID)besidesbeingawardedas“Europe’sBestSocial Public RelationsAwardsorganizedbyTurkish Social ResponsibilityinEducationField”8thGoldenCompass telecom industry. In addition it is entitled to receive “Best Corporate publisher of Holmes Report, one of the most reputable publishing of European SabreAwardsgivenbyHolmesGroup,USAcentered as “Most Successful Project in Telecommunications Field” in the Sustainable CommunicationProgram.Theprojectwaselected certificates giveninBestSocialResponsibilityProgramandMost Communications Professionals(LACP)besidesachievement Best CommunityRelationsProgramcategorybyLeagueofAmerican In 2008,TürkTelekomSchoolswereawardedwithblueribbonin until now. students receive educationin76 buildings constructed projects realizedinTurkeyeducationfield,around30thousand the scopeofTürk Telekom Schools project, one of the biggest CSR project realized with the approach of investment to future. Within in allcornersofTurkeywithinthescopeTürkTelekomSchools Türk TelekomSchools:buildseducationbuildings Projects AddingValuetoTurkeyfromürkelekom Vitamin freeofcharge. schools. Untilnow,around9millionstudentsintotalutilizedfrom of Vitaminreleasedin2009wasdonatedto5thousand950high to 33thousandpublicschoolsfreeofcharge.Highschoolversion Türk TelekomprovidedVitamin,interactiveeducationsoftware

Türk Telekom VALUE TO TURKEY, VALUE TO THE WORLD! 2010 Annual Report 039 SUSTAINABILITY AND CORPORATE SOCIAL RESPONSIBILITY Türk Telekom VALUE TO TURKEY, VALUE TO THE WORLD! 2010 Annual Report 040 SUSTAINABILITY AND CORPORATE SOCIAL RESPONSIBILITY Süper Canwillalso contributetogrowingofgenerations sensitive Süper Cancharacterandgame. Targetedahighusernumber, environmental awarenessand in-game trainingmethodsforits used themestobehelpfulinengraining inthemindsofchildren Turkey andintheworldfield ofgameprogramming,Sobee service accordingto2010data. Mentioned fromitsnamebothin home. InalllocationsofAssisTT, 107disabledemployeesrender which givesopportunityto25disabled personstoworkfromtheir citizens to the business life through its “Home Agent” practice Turkey, Ministry of Transportation in order to involve disabled responsibility project“CountMeIn”startedbytheRepublic of of TürkTelekomGroupcompanies,AssisTTsupportedthesocial We canlistsometheseactivitiesandprojectsasfollows:One awareness. AveamakesnameduetoitsversatileCSRprojects. activities engraining in the minds of children environmental disabled peopletothebusinesslifewhereSobeeencourages education with Vitamin, AssisTT conducts activities for involving For example,besidesSebitmakingasubstantialcontributionto they developedandundersignimportantprojectsinthisfield. companies act fully sharing CSR consciousness also in the projects to the sustainability of the central projects of Türk Telekom, group CSR projects. Participating and providing significant contributions Also, companieswithin Türk TelekomGroup actively participates Group companiesareactiveinCSR,too Project” byInternationalPublicRelationsAssociation(IPRA). Business Awards,theprojectwaselectedas“BestPublicRelations Successful EnvironmentProject”awardgrantedbyInternational by TurkishPublicRelationsAssociation.Receivedthe“Most Project” in8thGoldenCompassPublicRelationsAwardsorganized it iselectedas“MostEco-FriendlyCorporateSocialResponsibility Communication” byCharteredInstituteofPublicRelations(CIPR), While E-InvoiceForestsprojectconsideredas“BestCorporate preferred byconsideringtheseasonaldifferencesinTurkey. 100 thousand trees planted, 17 different types of trees have been invoices. InE-InvoiceForestsspreadingalloverthecountryinwhich its customerswhoareusingelectronicbillinginsteadofpaper E-Invoice Forestsprojecthasbeenextendedwiththesupportof a habitableenvironmentandencouragetransitiontoe-billing, Forests:Implementedinordertoleaveourchildren E-Invoice Award” byGeneralDirectorateofYouthandSportsin2010. these, TürkTelekomwasawarded“ContributiontoTurkishSports 22 branchesincludingbasketball,fencing,athletismandtennis.With nearly 6thousandsportspeoplein42sportsschoolsaroundTurkey, has trained28thousandsportspeoplein10years,andstillsupports Türk Telekom,havinginvestedinthesportsinfrastructureofTurkey, “Contribution to Turkish Sports” award given by the Prime Ministry, of sportsfacilities,TürkTelekomhasbeenentitledtoreceive well ascontinuingitscontributionstosportsformodernization sports federations, professional and amateur sports teams as Supporting fourbigfootballteams,sportsschoolsbesidesmany “Contribution investments withinthisframework. Turkey with success, Türk Telekom has made many sports training ofworldwideknownsportspeoplewhowillrepresent inside its brand, extension of these values in Turkey and give hand Started thisjourneyinordertoincludeuniversalvaluesofsports significant socialvaluesofTürkTelekom. fact explainsclearlythatinvestmenttosportsisoneofthemost provides direct resources and contributes to the Turkish sports. This Türk Telekomisthelargestcompanystructureinthisfieldwhich skiing andtennisviaits41sportsclubslocatedinvariousprovinces, different branches from basketball to fencing, from athleticism to levels. Supportingmorethan4thousandsportspeoplein24 become sourceofprideduetothegradestheyachievedatdifferent represented ourcompanyininternationalplatformsandhave young sportspeoplewerealsoinvitedtonationalteamsand in last10yearsthankstotheinvestmentsitmade.Someofthese Telekom hassupportedtrainingof28thousandyoungsportspeople communication skillsofyoungpeoplewiththeirsocialcircle,Türk From thestandingpointofimpactsportsinimproving Türk elekomCreatesValueforurkeyalsoinSports to thefutureofTurkey. earthquake responsepractices,Aveaalsomakessocialinvestments from educationtoentrepreneurshipandemploymentbesides CSR field.Realizinginnovativeprojectsinawiderangeoffields Avea also undersigns pioneering and creating a difference in to theenvironment.BeingopinionleaderofGSMindustry, to TurkishSports” Award toTürkelekom n h Itrainl ea Cşuö Tunmn, n hr team her and became therunner-upinsametournament.Furthermore, Tournament, Coşkunöz Kemal International the in a candidatefor2012Olympicsteam,becamethesecondrunner-up Büşra Varol, also from Trabzon Türk Telekom Sports Club who is also the fifthrankinInternationalGalaktionChikovaniTournament. got Öztürkmen addition, In categories. Ladies Little Cup Children’s Children’s CupJuniorGirlsEpeeandin2010VII.International Öztürkmen has become the champion both in 2010 VII. International 7th InternationalChildren’sCupJuniorGirlsChampionship.Aybüke from TrabzonTürkTelekomSportsClub,becamethechampionof Kemal Coşkunöz Tournament. Fencing sportswoman Aleyna Öztürk, Sports Telekom champion asteambesidesthesecondrankreceivedinInternational Türk Trabzon from Club participatedto7thInternationalChildren’sCupandbecame Kavanoz Yaren and Öztürk Aleyna Kavanoz, Seda Öztürkmen, Aybüke of consisted Team Epee achieved many degrees both as team and as individuals. Women’s Trabzon TürkTelekomSportsClub;in2010,FencingTeamhas Championship. was thesecondrunner-upin2010YoungWomen’sEuropeanBoxing Zonguldak Türk Telekom Sports Club; İrem Civan, from boxing team, Championship. Mehmet KürşatgotthethirdrankinEurope-wideEuropeanStars and Bayrak Oğuzhan players basketball Club; Sports Türk Ankara European CrossChampionship. Çeçen Hakan while athleticism from thesameteamwasrunner-upinCrossTeam2010 in category Youth League, Cross Erzurum TTSportsClub;gotthefifthrankasteaminEuropean successes in2010.Thesearelistedasfollows: Türk TelekomAmateurSportsClubsachievedmanyinternational International successesachievedbyamateurclubs Hall, GaziUniversitySportsHallandHacettepeHall. Nallıhan Sports Hall, Niğde Sports Hall, Nesibe Aydın Okulları Sports Police Department Riot Police Sports Hall, Konyaspor Stadium, provinces. Someofthesupportedsportsfacilitieswere;Ankara provides resourcesforimprovingconditionsofstadiumsinvarious providing technicalequipmentoradvertisementinvestmentsand Türk TelekomsupportssomeAnatoliansportshallsandstadiumsby Second LeagueRedGroup,TürkTelekomVolleyballTeam. Second BasketballLeague,TürkTelekomFootballTeaminSporToto Beko BasketballLeague,YoungTelekomTeaminTurkish own clubsindifferentsportsbranches;suchasAGroupMales General DirectorateofYouthandSports.TürkTelekomalsohasits European Championshipandfifthrankin2010WorldChampionship. Wushu from Şener, Team of Sivas Türk Telekom Sports Club, won the gold in 2010 Furkan Cup. Caucasus 2010 in gold 4 received won thebronzein2010EuropeanChampionship in Adultswhilehe Sivas TürkTelekomSportsClub;EmrullahGül,fromWushuTeam, Başıhoş whocompetedinthesamecupgotsixthrank. team, got the fifth rank in 2010 International Vergina Cup. Hande Muğla Türk Telekom Sports Club; Bengisu Ömeroğlu, from swimming Strokes. team, enteredtheTop10listofhisagegroupin2010Olympic Eskişehir Türk Telekom Sports Club; Ömercan Demir, from swimming from in theFirstInternationalBursaSwimmingChampionship. Kahraman, Oğuzhan Club; swimming team,becametherunner-upofbreaststrokecategory Sports Telekom Türk Eskişehir Championship in63kilograms,howevershewasinjured. Team, representedTurkeyin2010MexicoWorldTaekwondo Taekwondo from Yılmaz, Ayşenur Club; Sports Telekom Türk Konya competitions inAdultscategory. Cup andgettingtheseventhrankinWorldJudorepesage has achievedagreatsuccessbybecomingthewinnerofEuropean Team, Judo from Yılmaz, Nurcan Club; Sports Telekom Türk Erzurum the won bronze inthe17thU21EuropeanJudoCup. Yalçın Güner club, same the from sportswoman Another Cup besidesbeingthethirdfinisherof17thU21EuropeanCup. from thesameclub,wonfifthrankinU21EJUEuropean Team, Yılancı, Hülya Judo Cup. European U21 from 17th the of Gençtürk, finisher fifth the Işıl was Club; Sports Telekom Türk Artvin 2010 VII.InternationalChildren’sCupJuniorGirls. Children’s Cup.InadditionKavanoz,alsobecamethechampionof Yaren Kavanozwasinthesixthranking2010VII.International the champion of 2010VII. International Children’s Cup Junior Girls. in 2010VII.InternationalChildren’sCupJuniorGirlswhilebecame Chikovani Tournament.SedaKavanozwasinthesixthranking Varol becamethesecondrunner-upin2010InternationalGalaktion the runner-upinsametournament.Besidesthese,Remziye became team her and Tournament, Coşkunöz Kemal International Chikovani Tournament. Remziye Varol got the twelfth rank in the Varol became the champion of 2010 International Galaktion

Türk Telekom VALUE TO TURKEY, VALUE TO THE WORLD! 2010 Annual Report 041 SUSTAINABILITY AND CORPORATE SOCIAL RESPONSIBILITY Türk Telekom 2010 Annual Report 042 to technology. services, giving “life” our innovative productsand We addvaluetolifewith

Türk Telekom 2010 Annual Report 043 Türk Telekom ADD VALUE TO LIFE: 2010 Annual Report 044 NEW PRODUCTS AND SERVICES, SPONSORSHIPS requests for transition to e-invoice application thanks to their free their updatedinvoiceanddebt information,andcansendtheir with thatfact,341thousand subscribed customers can learn users. InTürkTelekomOnline Service Center,developedinline business placeshasbecomean essential habitforactiveinternet Carrying out online transactions without leaving their homes or 1 MillionTransactionSover OnlineServiceCenter online gameplatform“ICanFootball” freeofcharge. customer, to access to Vitamin, Turkish education content, and from 3TürkTelekomfixedlinestobepreferredbyeachHansenet Türk Telekomfixedlines,tocallHansenetcustomerswithoutlimit Hansenet customersareallowedtomakelimitlessphonecallswith people livinginGermany.Withinthescopeofthiscampaign, in Germanyasabroadbandoperator,targetsover3millionTurkish and whichwasdevelopedjointlywithHansenetprovidingservice name “OurFamily”andinGermanyunder“MyAliceWorld” The Project,launchedattheendofOctober2010inTurkeyunder Our Family/MyAliceWorld arrival timesofflightsintheairports,pharmaciesonduty. photo albums through Flicker application, viewing departure and weather forecasts,messagingoverTwitter,orderingmeals,viewing television; takingimmediatefootballmatchresults,learning to IPtivibuthefollowingsarealsopossiblewhileyouwatching and foreignfilmscanbeviewedbypayingacertaincharge.Thanks entertainment programs.InHire-Viewservice,awardeddomestic films, popularTVseries,documentaries,children’sandlifestyle- View serviceoffersalltogetherthatpopulardomesticandforeign streaming thankstotheoptionalviewingexperience.Choose- archive insteadoftheprogramofferedtotheminbroadcast Users canwatchanyfilm,TVseriesorprogramsincludedinawide IPtivibu offers three innovations in television viewing experience. like Tivibu,TTNETsubscribersmayenjoythisnewapplication. like, stopfunctionsthatwillofferafreshwatchingexperience.As as pausinglivebroadcast,rewind,watchingfilmswheneverviewers IPtivibu, aslikeTivibu,includessometechnologicalfeaturessuch for IPTVinstallation. in November2010.Asendof2010,thereare150points30provinces and Izmiron4thOctober2010,IPTVputupforsaleinTTOffices completed fullyin2010.SoftlaunchofitmadeIstanbul,Ankara diversity andcontentoptionsthatwillbeessentialforthem,were The infrastructureworksofIPTV,whichwillofferviewerschannel and RichOptions IPTV: MorethanTVwithHighQualityImages documentaries andforeigndomesticfilmDVDarchive. Standard PlusPackageaddsonthatfeaturepopularTVseries, not watchortheywanttoagainforaperiodofoneweek. Furthermore, viewers are offeredto watch anyprogram they could Package haspausinglivebroadcast,resumeandrewindfunctions. technology forstreamingbroadcasts,inTivibu’sStandard is downloadedontothecomputer.UsingMicrosoftSilverlight system, TTNETprovidesthisservicethroughsimplesoftwarethat onto theinternetatfirsthandthroughmonthlysubscription Brought 61differenttelevisionchannelsandarichDVDfilmarchive enables watchingtelevisionandcinemafilmsoverinternet. beyond justbeinganinternetserviceprovider,wasTivibuthat The firstserviceofTTNETin2010,theyearthatitplannedtogo Tivibu BroughtFilmandTVJoytothePC and increaseditsvalueaddedserviceswhicharebusinessoriented. 1 million,whileTürkTelekomimproveditspresenceinthesocialmedia number oftransactionsintheOnlineServiceCenterreached to computer,whileinfrastructureworksofIPTVwerecompleted.The which addvaluetolife.Tivibucarriedthejoyofmovieandtelevision In 2010,TürkTelekomcontinuedtopresentitsproductsandservices the 2010year-end report,1million276thousand 771transactions line transferandfailurereporting canbemadeeasily.Accordingto transactions including new product order, tariff/package change, membership. Furthermore,inOnline ServiceCenter,manyimportant plcto i Bkrö T i 21 i odr o fe pout to products offer to order in 2010 Türk Telekomcustomers innicerandmoreattractive mannerin in TT Bakırköy in application Customer Experience Field project was commenced with a pilot A First:CustomerExperience Field increased, customersfeelathome. has been observed that customer and employee satisfaction will be 154 in 2011 which was 107 in 2010. In the concept offices, where it rooms. Itisplannedtoincrease thenumberofconceptofficesto give servicetocustomersinnicer,morepracticalandcomfortable A new concept started to apply in Türk Telekom offices in order to 107 ConceptOfficespened Türk TelekomOfficesandCallCenter. service fromthemostaccurateplaceandindesiredwayover customers areprovidedwithawaytobenefitfromthenecessary within thisscope.Thankstothesedevelopments,TürkTelekom almost 80 international and wholesale customers are considered Technologies andCommunicationsAuthority).Forthetimebeing, up mandatoryarrangementsrequestedbyBTK(theInformation agreements besidesitsservicesinordertoimplementandfollow- its obligationstowardswholesalecustomersunderprivateoperate TPTN fillsanimportantgapthankstoitsmissionaimingfulfill service conceptandincoordinationwithTürkTelekomoffices.444 to internationalandwholesalecustomerswithasectorbased for thispurpose,444TPTNCallCenterstartedtogiveserviceboth also extendedtowholesalecustomerswithin2010.Established Call Centerserviceforinternationalcustomers,andthis wholesale customers. In 2009, the first step was taken by offering Customer RelationsDepartment/ServiceDeliveryDirectoratefor In 2010, Türk Telekom established Service Delivery Unit under 444 TPTNforInternationalandWholesaleCustomers and positivefeedbacksresoundsinthesocialmedia. activities increasequalityofcustomerrelationsTürkTelekom immediate solutions to potential problems. All these significant sincere manner,makesupdatedannouncementsandprovides in theworld,TürkTelekomcancontactwithitscustomersamore also amongthemostpreferredsocialmedianetworksinTurkeyas requests. ThankstoitspagesonFacebookandTwitter,whichare responses uponcontinuouscontentflow,feedbacksandpossible companies inthesamesectorarepossibleduetoimmediate existing image and achieving competitive advantage over other increasing theirsaleprofits.Gainingcustomerloyalty,improving the companies much more than just gaining new customers or Taking theirplaceinthisimportant“onlineworld”bringsto Around 1billionpeopleintheworldusesocialmediasitesactively. Customer SatisfactiononFacebookandTwitter satisfaction ofTürkTelekom. any problem,alsoincreasesservicequalityandthus,customer out transactionsoverinterneteasilyandwithoutencountering to callcentersitisaround24millionLiras.Besidesthese,carrying Service Centerfor only oneyearisaround 35 million,compared When comparedtotheoffices,financialadvantageofOnline Telekom alsohadanimportantfinancialadvantagethankstothis. were processedsuccessfullyoverOnlineServiceCenter.Türk for customersrequiring highe-mailvolumes.Ascapacity quantityis tariff study,“affordableandflexible packages”havebeenprepared Agreement hasbeendrafted.Within thescopeofe-mailHosting have beencreatedande-mail HostingandWebSite customers. Withine-mailtariff studies, e-mailhostingprocesses services inpackageswhichare linewiththeneedsofcorporate existing tariffsofferedbyTürkTelekom inordertoprovidee-mail E-mail HostingTariffOffer;was anadditionalstudybesidesthe Corporate e-Mail Flexible PackagesinAffordablerices discount whichprovidesasignificantpriceadvantagetoISS. upload capacities.TürkTelekomoffersthisservicewith30percent with 1/1upload/downloadratioforISSDataCentersneedinghigh 7/1 upload/download ratio differing from Metro Ethernet service Asymmetric DataCenterAccess,providesasymmetricservicehaving ISS thatprovidedatacenterservicewithoutoutsourcing.New a competitiveAsymmetricDataCenterAccessTariffPackagefor supports thedevelopmentofhostingideainTurkey,andprovides 2010. WithAsymmetricDataCenterAccessservice,TürkTelekom Service Providers)wherehighaccesscapacitiesareneeded in Asymmetric DataCenterAccessservicestartedforISS(Internet Discounted AsymmetricataCenterccessforISS data accessnetwork. automatic branchexchange(PABX)canprovideoverTürkTelekom service whichprovidesallfeaturesthatadevelopedprivate TT VirtualExchangeproducthasbeenputupforsaleasavoice Virtual ExchangeisontheService TT in2010. Digital Signage displays in154TT2011where thisfigure was 78 advertisement. Thenecessarystudiesarestartedinordertodeploy Its use purposes are; providing information, entertainment or remote contentdeliverytotheelectronicallycontrolleddisplays. Digital Signageisasoftwareandhardwaresystemwhichenables Remote ContentDeliveryoverigitalSignage the signs will ginger up Türk Telekom offices with their appearance. follow-up ofcustomerstotheirnumberinthelineandtransactions, Direction Signs. Functioning by digital imaging in order to facilitate nice-looking, clearcutandelectronicallycontrolledElectronic In 2011,TürkTelekomwillprovideservicetotheircustomerswith Electronic DirectionSigns transaction type,timeandwaitinghavestarted. categories such as office name, customer number, transaction date, related tothissystemthatwillenabletakereportsindifferent offices andfastentheservicesgiventocustomers.Thestudies detailed reportsrelatedtothetransactionscarriedoutinTT Upgrading ofautomaticqueuingmachineswillenableobtaining Queue SystemwillFastenReportingervices by manyTToffices. least 60TTofficesin2011asCustomerExperienceFieldsrequested products. ItistargetedtoopenCustomerExperienceFieldsinat marketing and sales field besides enabling customers to experience

Türk Telekom ADD VALUE TO LIFE: 2010 Annual Report 045 NEW PRODUCTS AND SERVICES, SPONSORSHIPS Türk Telekom ADD VALUE TO LIFE: 2010 Annual Report 046 NEW PRODUCTS AND SERVICES, SPONSORSHIPS areas forcameraordatabaseapplications. additional storageareabesidescompaniesthatrequirebig a sufficientstoragespaceintheirserversthatareneedofan TT Storage provides auseful service for companies not having customers canmaintaintheirdataandaccessthemimmediately. and disc type over Türk Telekom Data Center; by use of this service Gigabyte leveltoTerabytelevel,basedonthedesiredRAIDstructure TT Storageservicemeetsthedataspaceneedofcustomersfrom1 TT Storage:fromGigabytetoTerabyte give opportunitytocustomerscreatetheirvirtualdatacenters. requirements arepreparedinTTBulutt.Especiallypropackages for servers.Variouspackageoptionsinlinewiththecustomer implemented quicklywithoutbearinghighinitialinvestmentcost to useserversmoreefficientlyandprefervirtualizationservice an allocated server. It is an ideal solution for customers who want In TTBulutt,eachvirtualserverrunsindependentlyandasifitis hosting ofmultipleoperatingsystemsonahardware-basedserver. TT Buluttisthetechnologywhichenablesindependentandisolated Türk elekomisovertheCloudswithBULUTT customers. provided by Türk Telekom and which will add value to Türk Telekom hosting ofhiredserversandmaintenance-supportservices operational costs.ServerHiringserviceincludesserverhiring, initial investmentcostforserversandprefermoremanageable optimal alternativeforcompaniesthatdonotwanttobearhigh Server HiringserviceofTürkTelekomhasbeenofferedasan For lowCost,TTServerHiringervice besides pricingflexibilitybasedonenergyuse. provide thecustomerwithachancetocreatehis/herpackage satisfaction were organized. Server Hosting Gayrettepe tariffs has beendraftedandprocessesrequiredforincreasingcustomer the scope of this study, Data Center Subscription Outline Agreement new costsandflexibilityofferedbythelatesttechnology.Within Server HostingTariffstudywascompletedbytakingintoaccount With theestablishmentofTürkTelekomDataCenterGayrettepe, Create YourPackageinTTServer flexibility inuseforthecustomer. of eachuserdependabletothecustomer,thissituationprovides allocated totheusersindesiredratesanddeterminequota making iteasiertoreachinformation. and increasedthenumberofWi-FiHotspotsto8thousands, Türk Telekombroughtintouseserverrentalandvirtual hotspots increasedto8thousandasofyear-endfigures2010. 3G network.Thankstotheinvestmentsmade,numberofWi-Fi Co. Inc.(IDO),asbackhaul,in6ferryboatsWi-Fiservicestartedover Ferryboat) undertheagreementexecutedwithIstanbulFastFerries Gazi Osman Ferryboat, Selim Sultan Yavuz Ferryboat, Özal Turgut Orhan GaziFerryboat,KanuniSultanSüleyman installed inexternallineferriesofIDO(AdnanMenderesFerryboat, the scopeofextendingWi-Ficoveragearea.hotspotswere study wasconductedinordertoprovideWi-Fiserviceover3Gwithin existing WirelessLocalAreaNetwork(WLAN).Inaddition,aproject coin cabinetsandtheywereputintoserviceafterintegratedwith were upgradedin2009.In2010,Wi-Fihotspotfeatureadaptedto700 Istanbul (EuropeanandAnatolianSides),IzmirAdanawhich systems inPOPcentersfivedifferentlocatedAnkara, the coverageareaofWLANnetworkhasbeenextendedoverNMS With newWi-Fihotspotinstallations, Local AreaNetwork(Wi-FiService)in2010. Türk TelekomcontinuedtoextendWireless 8 ThousandNow Wi-Fi HotspotNumberis service. to lostoftime-oute-mailsthatreceivedandgiveuninterrupted7/24 and hostingtheirmailserversinsidethecompany,cannotdare intensive e-mailtraffic,conductalltheirbusinesses through e-mails in thesystem.ETRNisanidealsolutionforenterprisesthathas prevent returningormissingofincominge-mailsduetoanyfailure address inincominge-mailsystemofthecustomerorderto ETRN istheserviceprovidedoverserversidentified as thesecond Uninterrupted e-MailwithTTETRN server ordiscdamage. their data which they do not want to lose due to an error in their service isaproperforthecustomersthatwanttobackup maintained foraperiodthatthecustomerspecified.TTBackUp up devicesofTürkTelekominthelatesttechnology.Back-updata daily, weeklyormonthly periods, and backing up this data back- in theserversontotapesordiscsaccordingtorequeston TT Back Up Service includes automaticcopying of data included Data isSecuredwithTTBackUpervice

for cancelingtheir subscriptions. period are get rid of monthly fees for that period without any need not useinternetaccessservicethat havebeentakingforacertain Flow Accessmodels.Thankstothis service,ISScustomersthatwill based onADSL,ADSL2+,VDSL2technologies viaBuy-SellandData VDSL2 customersoftheISSthatreceiving ADSLandVDSL2services provide short-termlinesuspending service tothe ADSL, ADSL2+, services in2010.InLineSuspending service,TürkTelekomcan Türk Telekomofferedanotherconveniencefortheusersininternet Anyone WhoWantscanSuspendHis/HerLineubscription ! households andmeeteveryonewithinternet. used internet.Thecampaignaimstoincreaseinternetuseinthe any daytheypreferandmakepaymentbasedonthedays them. Thankstothispackageuserscanconnectinternet in service providersonwholesalebasisandtotheendusersthrough Internet Packagestartedin2010whichwasprovidedtointernet Türk TelekomundersignedanoutstandinginnovationwithDaily Daily InternetforAnyoneWhoWants! earnings. increasing importanceofvoiceoverIPserviceand advantages offeredtooperatorsare;increasedcompetition, of convergencetechnologiesandofferpriceadvantage.The uninterruptedly. WithNAKEDDSL,itisaimedtoprovidebenefits their PSTNsubscriptionandtransfertoNAKEDDSL subscription, alsoexistingPSTN+ADSLsubscriberscancancel internet connectionthroughNAKEDDSLwithoutaneedforPSTN in 2010.Newsubscribersforinternetservicescanprovidetheir to broadbandinternetwithoutowningaPSTNline,wasstarted other, NAKEDDSLservice,whichallowsaccessofsubscribers Disconnecting fixedlineandbroadbandinternetfromeach NAKED DSLStarted provinces. was 41 thousand 364 subscribers in total in 503 base stations in48 frequency band.AsofendNovember2010,installedlinecapacity allow voiceandbroadbandinternetaccesswithinthementioned on aTD-SCDMAorOFDMAbasedsolution;thesetechnologies will beoutsidethecitiestoTürkTelekom.Studiesareconducted of technologicallyneutral1890-1920MHzfrequencybandswhich of WTS,formalapplicationtoBTKhasbeenmadeforallocation order toprovidenewtechnologysolutionswhicharealternatives that date,toemptythesebands.Inthelightofthisdevelopment,in bands in whichWTSis used until 31st December 2012, and after Authority (BTK) has taken a decision in order to narrow frequency communication. TheInformationTechnologyandCommunication subscribers areconnectedtotheexchangethroughradio not sufficientduetogeographicalconditions.Inthissystem, in placeswherenetworkinfrastructurecannotbeinstalledor Wireless TelephoneSystem(WTS)isusedtogivevoiceservice not Reachable Wireless TelephoneSystemReachestothePoints

Telekom, circuit speeds havebeendoubledwithout changingthe In “LeasedLines”services provided overTDM network by Türk Speed IncreaseinLeasedines future insidethecountry. traffic theyhavealreadysucceeded inreturning/willreturnthe have 2Gband5MEcircuits,given todatacenters,fortheinternet abroad before,freeMEint.Circuits havebeenallocatedtoISSwhich operating datacentersandgaining backtheinternettrafficflee For thepurposesofdecreasingInternetServiceProviders(ISS) Abroad Before ME INTAllocationforGainingBacktheTrafficFlee from TTSSGtothepremisesofISS. after NNMEandISSSSGrequiredfortransferoftrafficpurchased purchased circuits İnt ME in made was campaign discount percent For thepurposeofdecreasingInternetServiceProviders(ISS),40 40 PercentDiscountinSSGNNME circuits constitutingthecircuitgroup. the customer gives a subscription commitment for two years for all tariff atthesamelevelwithincommitmenttermprovidedthat between sameendaddresseshasbeenincludedtothe622Mbps 155Mbps speedleasedcircuitsandfunctioning/tobeinstalled groups belongtothesamecustomerandconstitutedfrom4pieces infrastructure andservicesforareasonablefee;thepricingofcircuit opportunity of utilizing from electronic communication, network, stimulating serviceusebygivingoperatorsandendusersthe Within thescopeofthiscampaignstartedforpurpose 4 x155Mbpsforthepriceof622 the samecapacity. Center fromstandardtariffpriceandusingMEinternetcircuitin and/ or5GbpscapacityMetroEthernetInternetcircuittotheData allocated to ISSoperating Data Centers, which aregetting 2Gbps for theinternettraffictransferredfromforeigncountrieshasbeen free internetcircuitwhichcorrespondstothecapacitypurchased are DataCenteroperators. Thankstothiscampaign started in2010, Türk TelekomhasconductedametroEthernetcampaignforISSthat Metro EthernetCampaignforISS service fromfixed-lineoperators. September 2010andrestrictedwithsubscribersgettingtypeA in HomeAdvantagetariffvalid between 11th August2010and11th terminated inTürkTelekomexchanges.Thiscampaignwasmade and terminationfeesapplicabletocallscommencedfrom operators wasdiscountsmadeoninterconnectioncommencement in MayandDecember2010.Anothercampaigncoveringfixed-line operators fortheexistinginterconnectionfees(in-siteandoff-site) Türk Telekomcarriedoutadiscountcampaigntoallfixed-line Interconnection DiscountforFixedLineOperators CAMPAIGNS

Türk Telekom ADD VALUE TO LIFE: 2010 Annual Report 047 NEW PRODUCTS AND SERVICES, SPONSORSHIPS Türk Telekom ADD VALUE TO LIFE: 2010 Annual Report 048 NEW PRODUCTS AND SERVICES, SPONSORSHIPS special agreement. netbook modelputupforsaleonly inTT/TTNETchannelundera Mobile Phonecampaignwasorganized. Inaddition,Nokia’ssole Together withlaunchingofTTNET Mobile,HuaweiAndroidU8230 conducted. monthly installmentsanddependableto3Gmodempurchasewere computer purchasingcampaignsenablingpaymentsin24or36 Within thescopeofTTNET3GMobileinternetcampaigns, 3 different 3G MobileInternet campaign organizedin2009continued2010. the end of 2009 also continued in 2010. On the other hand, Dect Wirofon-Enabled LGEigenMobilePhoneCampaignstartedat campaigns weremadein2010ordertodevelopcustomerloyalty. Wirofon-Enabled SamsungOmniaMobilePhoneandiPodTouch Wirofon -EnabledMobilePhoneCampaign customers. June 2011againuponhugedemandsandrequestsreceivedfrom expiry dateofcampaignchangedfrom31stDecember2010to30th due tohugedemandsandrequestsreceivedfromcustomers.The or 36monthlyinstallmentsreflectedtotheTürkTelekominvoices, Business 2010’campaign,startedonOctober2010whichispaidin24 products arealsoincludedtothe‘MicrosoftOfficeHomeand ‘Windows 7HomePremium’and‘OfficeStudent2010’ Microsoft ProductsCampaign ProductCampaigns Telepresence productwasofferedasTTVPNdevice. places spreadovervariouslocations,TeleConferenceRoom- For thepurposeofdecreasingcostscustomershavingbusiness intercity/inner-city tariffs. subscribers. Inaddition,TTVPNproduct’ssalemodelchangedas 50 percentdiscountforthefirst6monthswasmadeTTVPN subscription commitmentfor24months,acampaignproviding operators wastargeted.Againontheconditionthatgivinga new subscribersthetransferoffromalternative subscription commitmentfor24months,wasmadeandbygaining term byTTVPNsubscribers,ontheconditionthatgivinga A campaignproviding free use of thedevice within theagreement For 24MonthsTTVPNSubscription,Deviceisree customers weresuppliedfreeofchargebyTürkTelekom. is given. In case of 24 months commitment, hardware to be used by fees for them provided that a 18 month subscription commitment or sponsoredinordertosupport Turkish sportswere: same year.Someoftheorganizations thatTürkTelekomorganized Federation invarioustournaments andcompetitionswithinthe telecommunication infrastructure supporttoTurkishBasketball fencing Championshiporganized inAntalya2010whileproviding Türk Telekomprovidedtelecommunication infrastructureofWorld Turkey-wide Contestsandhampionships tournament forthefirsttimein2011. officials committeeconsistedof50willparticipateinthe for thispurpose.Thankstodevelopment,aninternational of FIBAofficialsandofficiallyrequestedtousethetournament for Men,organizedwithsuccesslongyears,practicalexam accredited TürkTelekomInternationalU16BasketballTournament Championship in2010,FIBAEuropeanTechnicalCommitteehas and 2013.AfterTurkeysuccessfullyhostedtheWorldBasketball sponsorship ofTürkTelekomwillalsocontinueinyears2011,2012 Tournament contributestointroductionofTurkey.Name prestigious preparationtournamentinagegroup16.Inaddition, with co-operation in held Turkish BasketballFederationistheEurope’sbiggestandmost organization This Tunçeri. Kerem and Türkoğlu Hidayet as such players basketball successful of training are participatingtothistournament,whichwascontributedalso Tournament forMen.U16nationalteamsofEuropeancountries Telekom sponsorship:TürkInternationalU16Basketball in TurkeytogaininternationalexperienceisorganizedunderTürk The tournamentthathashelpedmanysuccessfulbasketballplayers helping bornofstars Türk elekomgaveitsnametothetournament internet overKartaINET,FenerNET,GSNETandTrabzonNETlines. internet servicetothefansoftheseclubs.Now,connect based onrevenuesharingmodelandstartedtoofferaspecial one stepforwardthesupportprovidedtosupportswithitsproject tariffs andservices.Anothergroupcompany,TTNEThascarried its stronginfrastructurewithfootballsupportersthroughspecial GSMobile, Trabzoncell,Fenercell,Kartalcellbrandssuppliedover big footballteamsasavirtualoperatorandbybringingtogether brand used by football fans owing to the support it provided to 4 the numberofitscustomersandearningsbesidesbecominga Şükrü Fenerbahçe in Facilities. Furthermore, thegroup company Aveahasincreased Tribune Telekom Telekom Türk FB Gölbaşı Ankara of opening and Stadium Saraçoğlu Türk of establishment new constructedstadiumofGalatasaraySportsClubinSeyrantepe, Telekom brandthankstotheTürkArenanamegiven Within thisframework,greatcontributionswereprovidedtoTürk making Turkeyamorewell-knowncountryinforeigncountries. Turkish of role active football whichaddsvaluetosociallifeviaitsentiredynamicsand to due (Beşiktaş) BJK and (Trabzonspor) TS big football teams of the country, GS (Galatasaray), FB (Fenerbahçe), Since 2008,TürkTelekomhasbeenprovidingsponsorshipstofour Special Co-OperationswithFootballGiants arena. and culturebesidesimproveTurkey’spositionintheinternational responsibility projectsinordertodisseminatesportsconsciousness sports throughinvestments,sponsorshipsandsocial sports. Also,TürkTelekomcontinuesitscontributionsinTurkish audiences bybenefitingfromsportsandtheirsponsorshipsfor in the world and in Turkey try to reach their customers and target 90 percentofsuchsponsorshipsareforsports.Manybrandsboth in 2010whileitwas23billionUSDollars2001.And,thefactthat of sponsorshipsintheworldisestimatedas45billionUSDollars while sponsorships are increasing every passing day. The volume are livingaperiodwheretraditionalmediausesloosingvalue sponsorships isaround250billiondollarsonannualbasis.We the expendituresofsportsindustryforTV,tickets,advertisingand 70 percentoftheworld’spopulationisinterestedwithsportsand Sportsponsorshipsin2010 top 100. tennis playerinTurkishsportshistory succeededintobelisted become the96thfrom102ndin ranking;heisthefirstTurkish 6 stepsthankstothescorehereceived inthefinalmatchandhe the tournament in the second rank. İlhan’s rank in ATP increased by completed final, the in Card Wild against played who İlhan, Marsel tournament thatTürkTelekom sponsoredforthesecondtime. players intheworld-rankingfrom 41countriesparticipatedinthis tournament wasorganizedforthe thirdtimethisyear.120tennis of TennisProfessionals–ATPandTurkishFederation,the Türk TelekomIzmirCUP2010:JointlyorganizedbytheAssociation through asinglekey. on the internet, and shared their photos and videos on Facebook payphones, basketballfansconnectedtointernet, put theirfiles the newgenerationpayphonesputintoservice.Thankstothese hosted byTurkey,TürkTelekomundersignedanewstudywith participation of giants of basketball from 24 countries that was held between28thAugustand12thSeptember2010withthe Championship: Inthechampionship Basketball World FIBA 2010 become atradition,washeldin2010. Journalists BasketballPhotosCompetition,whichhasalready the worksofartphotojournalists,3rdTürkTelekomPhoto For the purposes of appreciating efforts sports press and introduce Competition: Photos Basketball Journalists Photo Telekom Türk 3rd international tournamentsandchampionships. giants, TürkTelekomgivesfinancialsupporttonationaland social responsibilityprojects.Whilebeingsponsortofootball the helpofitssportsinvestments,sponsorshipsandcorporate strenghtening Turkey’spositionininternationalplatforms,with with theaimofextendingsportsawarenessandculture, Türk TelekomcontinuestocontributeTurkey’ssportsactivities Riga, BeşiktaşCola TurkaandTürkTelekomBasketball ATeam. and 20thSeptember2010withthe participationCibonaZagreb,Vef 3 wasorganizedinSamsunforthe thirdtimethisyearbetween18th Türk Telekom International Cup 3: Türk Telekom International CUP which washeldinÇorumbetween10-11September2010. Basketball ATeamparticipatedtoTürkTelekomAnatolianCup Municipality, MersinMetropolitanMunicipalityandTürkTelekom Metropolitan Antalya Petkim, Aliağa Türk TelekomAnatolianCup: series, asthemainsponsor. is consideredasanimportantstageofProfessionalwomentennis WTA Istanbul CUP: TürkTelekomsupportedthetournament,which

Türk Telekom ADD VALUE TO LIFE: 2010 Annual Report 049 NEW PRODUCTS AND SERVICES, SPONSORSHIPS Türk Telekom 2010 Annual Report 050 Turkey and inEurope. our hugeinvestments in players inthe regionwith becoming oneofthebiggest and theresponsibility of We enjoythehappiness

Türk Telekom 2010 Annual Report 051 Türk Telekom TO PREPARE TURKEY TO THE FUTURE: 2010 Annual Report 052 TECHNOLOGICAL AND INFRASTRUCTURE INVESTMENTS of earthquakes and tremors by establishment of a fiber optic network of earthquakesand tremorsbyestablishmentofafiber opticnetwork where threebigfaultlinesexistedand thereforeoftensufferedbecause the cablesystemsthatalreadypass throughtheMediterraneanbasin Establishment, JADILinkwillprovide asafeandstrongalternativeto Company, JordanTelecomGroup andSyrianTelecommunication being thankstotheco-operationbetween TürkTelekom,SaudiTelecom Eurasia byJADILinkagreementcovering theMiddleEast.Broughtinto Türk Telekomhasbuiltthecommunications bridge that connectsthe thousand kilometersfiberopticinfrastructureofInvitelInternational, Invitel InternationalandincreaseditspowerinEuropethrough27 of MiddleEast.Executedanagreementinordertobuyallshares of JADI Link,thebiggestandfirstmultinationalcableconsortiumproject of InvitelInternationalbyTürkTelekom,continueswithrealization of The processofbeinganinternationalplayer,startedwithacquisition JADI Link:DigitalSilkRoad investments bothinTurkeyandregionsvicinityof2010. Telekom undersigned significant technologic and infrastructure satisfaction. Asatechnologygiantthat“AddsValuetoTurkey”,Türk increasing itsservicequalitywhichleadstoincreaseofcustomer with newgenerationtechnologiesandapplications,consequently Türk Telekomcontinuestoupgradeitscommunicationinfrastructure Southern AsiaandFarEast. constitute afiberopticnetworkbetweenEurope,MiddleEast, of theregionwithJADILink.This“DigitalSilkRoad”will after acquiringInvitel,andhasprovedtobeabigplayer infrastructure inTurkey,hasincreaseditsstrengthEurope Türk Telekom,havinginvestedintechnologyand purpose F/O cable installed in order to increase broadband capacity purpose F/Ocable installedinordertoincreasebroadband capacity in ordertoimprovecommunications infrastructure.In2010,access Türk Telekom also made important investment inside the country Reached Upto133ThousandKilometers Total LengthofFiberOpticforA ccess andTransmissionPurposes risks causedbysubmarinecablesystems. offering highquality,saferandfaster service,reducingthedisruption Europe andbeyond,fromJeddahtotheSouthAsia data andIPservices,providinganadditionalcapacityfromIstanbulto corridors, meetingtherapidincreaseindemandonintercontinental short routeasanalternativetotheMediterraneanandRedSea of JADILinkprojectare;providingacompletelyterrestrial,uniqueand a newintercontinentaldigitalSilkRoadintheregion.Theoutcomes France, SpainandtheUK.Inotherwords,thisgiganticlinewillbring in Ocean-Red Sea-SuezCanal-MediterraneanrouteandfinishinginItaly, starting fromSingapore,JapanandIndiafollowingtheIndian corridor tobelinkedtheUSAbysubmarinefiberopticcablesystems transmission, JADILinkwillbethesecondmostsignificantconnection Sea willbetheoverlandline.Inintercontinentalinternet,dataandvoice alternative of submarinecables pass throughMediterranean and Red between theMiddleEast,SouthAsiaandFarEast.Thus,only being. are madeindividuallyatmanypoints bytheemployees for thetime March 2011,systemidentifications willbemadeautomaticallywhich infrastructure. When the integrationstudieswill be completed in with CRM,TMS,TAS,CBSsystems existedinTürkTelekom’s required for transmission of content to the usersin FTTx applications Furthermore, studiesforintegration ofGPON,AESandHGWsystems commenced. the among are which OSB largest OIZsofTurkeybroadbandinfrastructurestudieshavebeen Kemalpaşa İzmir and Atatürk Çiğli İzmir and Vernikçiler Manisa, Demirtaş, Bursa In completed. Kimyacılar, been have Istanbul in OIZs Mermerciler Tuzla, Uşak, besides Denizli, OIZs Makine İnegöl, IMES Gebze Balıkesir, for studies infrastructure the highest quality that is possible and uninterruptedly. In addition, services overFTTF(Fiber To TheFactory)broadbandinfrastructurein in theseOIZsandeverythingarrangedforcustomerstoreceiveall (OIZ) metwithfibertechnology.Systeminstallationhasbeencompleted Kayseri MimarsinanandSakaryaHendekIOrganizedIndustrialZones Also OrganizedIndustrialZonesMeetwithFiberTechnology conducted throughoutTurkey. thousand 225 new usersaretargetedforyear2011withinthescopeofprojectstobe figure, this to addition In Ağaoğlu. as such companies and realizedthroughtheagreementsexecutedwithconstruction with 839flatsintotalandSapphirehavingover400perblock, in AnthillwhichhasthehighestnumberofflatsablockTurkey thousand 800asofend2010thankstotheFTTxprojectsapplied Within thisframework,thenumberofhomepassesreachedupto12 AES (ActiveEthernetSystem)andHGW(HomeGateWay)systems. and installationofGPON(GigabitCapablePassiveOpticalNetwork), of 2009.In2010,FFTxapplicationsacceleratedthankstofirstdelivery technology, FTTHprojectsreachedto6thousandhomepassuntilend households in2007by using NewGeneration CableAccess FTTH-AE Ankara DikmenParkVadiResidentsconsistedofonethousand205 PRivate settlements,OSB,etc.)inanybandwidth.Startedfirst delivery of data received from any IP/MPLS point to any user (site, FTTx definesabroadbanddatatransmissionplatformdevelopedfor New GenerationCableAccessisinSkyscrapers been set. 500. Therearealready1Million650ThousandxDSLportsthathave installations madein2010,EAScabinetnumberreachedto9Thousand FTTC besidesidentificationofnewsubscriberstoFTTC.Thanksthe by transferring low speed subscribers, which were operated indoor, to speed ingeneralincreasedto9,3Mbpsfrom8,5(asofend2009) performed in 2010;this figure was 12.5 Mbps asofend of2009.Average provided in EAS sites increased to 13.6 Mbps thanks to the installations Access- FTTC).Withinthescopeofthisproject,averagespeedtobe EAS isanapplicationoffibertothecabinet(NewGenerationCable and offeringhigherqualityservicestocustomersstillcontinues; Systems (EAS)TransformationProjectaimingtoshortencopperlines In linewiththeconvergencevisionofTürkTelekom,ExternalAccess whose NumberIncreasedto9Thousand500 Port NumberReachedto1Million650ThousandinEAS change wereperformed. Project, 500 kilometerF/Ocableinstallationand 250 kilometers route reached upto113thousandkilometers.WithinthescopeofTAFICS of 2010,totallengthtransmissionpurposefiberopticcable 3 thousand273kilometersF/Ocableinstalledin2010.Andasofend routes besidesnewtransmissionandforF/Orouteseparation have beencontinuing.Withinthisscope,3rddirectiontransmission Transmission purposefiberopticcableinvestmentsandinstallations Bosphorous, SarayburnuandSalacak-BebekVaniköy. in and İzmit of Gulf crossing for Sea Marmara the in Darıca-Taşköprü installed 34kilometerssubmarineF/OcablebetweenYalovaand to around 20 thousandkilometersatthe end of2010.TürkTelekom FTTB/H. total length of access purpose F/O cable networkreached up and quality;540kilometersforMetroEthernet910

opened for 13 users and system operation tests were made. opened for13usersandsystemoperationtestsweremade. tests. In the demo/test installations made in 2010, test accountswere independent oflocationwasmadeandaftercompletionrelated upon installationofsystemsforflexibleuseCentrexinawiderarea the servicewastaken.Centrexhasbecomereadyforgiving and limitedwiththetypecapabilitiesofexchangefromwhich network forCentrexservicewhichwasrestricted,locationdependant the company.SomemodificationshavebeenmadeinTürkTelekom’s Telekom’s exchangeinsteadofpurchasingatelephonefor service viaobtainingaswitchinganddirectingfromoneofTürk Centrex meansthatifacompanypreferstomeetitsneedforexchange Virtual ExchangeReadytoGiveService 640 channelsbyincreasingconnectioncapacityoftheentireplatform. capacity, whichwas240channels,organizedinordertouse20bin Smart NetworksPlatformin2010andowingtothis,audioconference connected overinternet. The systeminfrastructure transferred to the besides opportunityofmakingpresentationtotheparticipants to audioandvisualconferencing,instantmessagingopportunities The lives of Türk Telekom subscribers becoming easier and richer due It isTimeforeleconferencing Telekom users.Consequently,totalSMStrafficwasaround14million. 8 million211thousand874SMSfromGSMoperatorsweresenttoTürk individual userssend5million783thousand191SMSoverF-SMSCand second. Thankstorehabilitationproject,thisfigurewillbe100.In2010, was increasedto50messagespersecondfrom21 without changingtheirtelephones.InApril2010,systemcapacity their writtenmessagesoverinternetandreceivingvoice sending writtenmessagesbychangingtheirtelephonesor Türk Telekomgivetheircustomerstheopportunityofreceivingand Total SMSNumberIncreasedto14Million After ShortMessageystemPutintoervice, this ratiowillbeincreased100percentonannualbasis. months. Aftertherehabilitationstudiesfinished,itisexpectedthat way, around16millionmissedcallscompletedsuccessfullywithin10 this scope,3millionusersdirectedtothetestingsystemandby equipment toexistingTürkTelekom’slineshasbeenstarted.Within the systemusedforvoicemessagetrafficwithoutincludingadditional Rehabilitation studiesaimingmoreefficientuseofinfrastructure Infrastructure Voice MessageTrafficWas16illionhankstoImproved optical splitterstobeusedinGPONsystems. cables tobeinstalledinsidethebuildingsforFTTHapplicationsand continue. Also,withinthescopeof broadband services,F/Oconnecting operation andcontrolofthemhavebeenmadesuchpurchasesstill from weatherconditionsandmechanicaleffectsincollectionpoints, of opticcablestobeusedinbroadbandservices,protectionthem parts, F/Olinkingcompletionpartsrequiredfor In addition, some purchases for F/O distribution frame, F/O junction

Türk Telekom TO PREPARE TURKEY TO THE FUTURE: 2010 Annual Report 053 TECHNOLOGICAL AND INFRASTRUCTURE INVESTMENTS Türk Telekom TO PREPARE TURKEY TO THE FUTURE: 2010 Annual Report 054 TECHNOLOGICAL AND INFRASTRUCTURE INVESTMENTS within TürkTelekom, nowmeetstherequestsofcustomers. hours Telepresenceinsteadoftraveling. Thissystem,firstexperienced locations inIstanbul,10thousand 648personsused3thousand397 to Telepresencesystemsavailable atonepointinAnkaraandtwo a meetingconductedbetweentwo ormoredistantpoints.Thanks systems” that makesyoufeelasif you arein the sameroom during Telepresence isdefinedas“advanced levelvideoconference Almost FacetowithTelepresence partners sinceagreementdatewerecompletedin2010. out of101projects(TTVPN+VirtualExchange),implementedbysolution executed withsolutionpartnersinordertoprovidesuchservices.61 Solution PartnershipforManageableServicesAgreementhasbeen all overthecountry. of companieshavingdistributednetworkstructurehasbeenprovided alternative directingfeaturesofTTVPNnetwork,businesscontinuity multipoint-to-multipoint, redundancy,highavailability,flexibilityand scalable andcanbeprovidedatdifferentlevels.Owingtoend-to-end, over itandforcorporatecustomers,aservicewhichismanageable, TT VPNisaservicethatcanbeusedtoprovideaddedvalueservices for Corporateustomers Added valueServiceOptionsViaTTVPN cards. and PPC service where it is possible totop-up via UPT, VOT andcredit transfer of0800and444numbers,RBT/SPC,LimitedPostpaidservice, on theSmartNetworksPlatform(IN).Besidespreparationstudiesfor 2020. PreviousTTkartand4448758KONFERANSservicestransferred Service, Sabah IVR serviceand Doritos Campaign over number 0800 200 Yemekteyiz (We’reatDinner)televisionprogram,171HealthConsulting capacity system put into service in March 2010. Televoting servicefor Within this scope,688 E1 and189CAPS (Call Attempt perSecond) (RBT), SponsoredPhoneCall(SPC)includedinTürkTelekomNetwork. some newandrevenuegeneratingservicessuchasRingBackTone Service (UPT), Information Services(PRM)have been increased besides Services (VOT),UniversalAccessNumber(UAN),Personal under limitedcircumstancessuchasFreePhoneService(FTH),Contest Thanks totheinvestmentsmade,capabilitiesofsomeservicesgiven With SmartNetworks Platform, S ervice OptionsIncreasing using TDM,IP,HotSpotandGSMbasestations. customers canreachtotheserviceswithoutchangingtheirdevicesby access point and time. Thanks to this development, Türk Telekom from onecommonplatformindependentofinfrastructure,location, provide continuity of services given over PSTN, IP and GSM networks diversity independentofnetwork.Withtheseprojects,itisaimedto of mobile and fixed networksand consequently, providing service In 2010, Türk Telekom conducted some projects for convergence Uninterrupted CommunicationwithonvergenceTechnology

realized. realized. way, customerorientedandproactive managementmodelwillbe of networkandbackboneequipment withinthesameroom.Bythis performance anderrorlabelsbelong tocustomerservicesindependent Trabzon. Operationalteamswillcarry outmanagementofallerror, and Diyarbakır Samsun, Erzurum, Ankara, are which Telekom Türk of operations centershavebeencompletedin5differentregional Room constructionsandDLPdisplayinstallationsforservice Service OperationsCentersareReady purposes. analysis opened onSMandbasednetwork,datereasonoferror,for module (BO),itispossibletotakedetailedreportsrelatedalllabels alarms startedtoopenonSM-ErrorLabelManagement.Fromreporting alarms forcriticalsituationshavebeengenerated,andlabelsthese xDSL (DSLAM,SSG),ATM(TTnet,TURPAK)networks hasbeenstarted, transmission (SDH,R/L),exchange(DMS,AXE,S12,EWSD),IPMPLS, With OptimaPerformanceModule,performancemonitoring of availability rateofthesaidcircuitcanbecalculated. interrupted due to this failure is within the SLA, monthly and annual systems. If the reason of the failure related tothe service which was regularly accordingtothenewconditionsdevelopedbetween specifications are kept on the SLA module, and they are updated the outcomesofsystem.CircuitbasedSLAsaremadeandrelated service levelcommitmentsandagreementsareamong solved intheshortesttime.Especially,executionandmanagementof errors relatedtothementionederrorwithRCA.Bythisway,are with thedefinedrules,andassociatingcustomererrorsother after openingerrorlabels,basedontherealcausesandinaccordance appointed totherelevantteamsaccordingregioninformation by TEMIPErrorManagementhasbeenstarted.Theerrorscanbe SSG), ATM(TTNET,TURPAK),TDM (DXXTellabs,NEWBRIDGE)networks (SDH, R/L), Exchange(DMS, AXE, S12, EWSD), IP MPLS, xDSL (DSLAM, In 2010,processingofalarmsreceivedfromEMS/NMSTransmission in ServiceOperationsCenter Common ManagementPlatformroject the localgovernments. Internet Housesareestablishedintotally967centersandhandedto and disseminationofinternetuse.Forthetimebeing,TürkTelekom with broadbandinternetaccessarefound,ineachdistrictofTurkey of anInternetHouse,inwhichaverage20fullyequippedcomputers internet byeverybody.Theprojectbasicallytargetsestablishment Türk TelekomInternetHousesprojectaimsaccesstoinformationand no DistrictwithoutInternet! Türk elekomInternetHouses:herewillbe

together with IPMPLS back up in 56 provinces have been made. Totally together withIPMPLS backupin56provinceshave been made.Totally been backedupoverradio.Back upofvoicetrafficallprovinces been putintoservice.Existingleased circuitsofGSMoperatorshave in Erzurum.Within2010,2thousand 500AVRLsystemsintotalhave established andputintoservicefor UniversityWinterGamesorganized systems agreementhasbeenexecuted andatthefirststageitwas and GbEtoTürkTelekomcustomers, continuedin2010.IPbasedRL opportunity ofSTM-1Electrical/Optical startingfromE1,FastEternet Installation ofnewgenerationradiolinksystems,providingthe First StageEstablishedforUniversityWinterGames Short HaulandLongRadioinkystems: DMS they aretransferredtoNGNnetwork. Kazan and Elmadağ exchanges withMSANproductsaftercompletionofsystemtests,and of Transformation Centers. Directorate 8 GSS,2SBC,1IMSCoreand16MGWwereinstalledinRegional Pre-NGN Project: Withinthe scope of providing VoIP and FMC services, systems havebeencompleted. 2010, transformationof approximately 200 thousand lines into MSAN transform 128bigofficeexchangesintoMSANsystems.Asofend of orders including1million140thousandlinesgivenin2010orderto still continue.WithinthescopeofNGNTransformationProject,MSAN Directorate Centers.Theirnetworkintegrationsandsystemtests 1 IMSCore and36MGWwereinstalledin12TürkTelekomRegional MSAN for added value services. Within this scope, 17 GSS, 2 SBC, 4NMS, Softswitches besidesreplacementofalllocalofficeexchangeswith the currentTürkTelekomPSTNinfrastructurewithNewGeneration TTNGN Project:ItisaimedtoreplaceallTDMexchangesexistedin Exchange SystemsbeingTransformed after theirprovisionalacceptancetestsinallprovinces. network, 93SSUandAtomicTime(PRC)assembledputintoservice For thepurposeofsynchronizationsystemsusedinTürkTelekom’s Synchronization Project and installed. management systemsforYN-DWDMandSDHweredelivered (20 million 638 thousand 630 channel terminals). Operating and transmission networks,and340thousand2Mb/saddedtothesystem installed and commissionedin 617 intercity,regional and metropolitan to 543centers.In2010,totallyonethousandYN-SDHterminalswere of 34,1Tb/sbeenachievedbyaddingOnethousand419directions In totalfiguresforallYN-DWDMTransmissionProjects,abandwidth of 6,64Tb/shasbeenachievedbyadding660directionsto282centers. In RegionalYN-DWDMTransmissionProjectapplications,abandwidth to 176centerslocatedinAnkara,Istanbul,IzmirandAdanaprovinces. a bandwidthof10,18Tb/shasbeenachievedbyadding497directions of 17,28Tb/shasbeenachieved.InMetroDWDMTransmissionProject, network, 262directionshavebeenaddedto85centersandabandwidth and increasingservicediversity.InbackboneYN-DWDMTransmission reliable infrastructureservice,usingfiberefficiently operation/direction capabilitiesofnetworks,deploymentamore existing networkcapacities,renewaloftopologies,improving Network andYN-SDHSystems,thefollowingsareachieved;increasing With YN-DWDMTransmissionNetwork,MetroDWDM 419 Directionsto543Centers Transmission NetworkProjects:AdditionofOnethousand Kemalpaşa. sites suchasBursaDemirtaş,İzmirÇiğliAtatürkand it introducesfibertechnologytoTurkey’slargeindustrial new agecableaccesstoskyscrapersinmetropolitans,while buildings andlargescaleworkplaces.TürkTelekomcarried Broadband internetinfrastructureprimarilydevelopsinnew

ranging from5Mbpsto10Gbps. are combinedinordertoprovide data transmissionserviceinspeeds With MetroEthernetaccess,existing opticandEthernettechnologies established inthreeforeigncities; Frankfurt,AmsterdamandLondon. is 79Tbps.Internetconnection abroad isprovidedthroughPOPs points andlinksare10Gbps,installed portcapacityonthenetwork chassis andover54thousand port capacity.Multiplecollection of each other, is Turkey’s biggest network with over two thousand consolidating transmissionlinksforseparatenetworksindependent and variousservicescanbeprovidedtothecustomeroveritby Türk TelekomIP/MPLSnetwork,thathighspeed,quality Six MillionIPinsidetheCountry Turkey’s BiggestMPLSNetworkManages Turkey frotestingpurposesuponpermissionofBTK. provinces havebeencompleted.58MMPinstalledallover of onethousandmultimediadevicesandtheirdistributiontothe Within scopeofMultimediaPayphones(MMP)andKiosks,delivery realized byTürkTelekom. make videocallswiththepersonsusingvideophoneservicehasbeen now. Internetbasedsystemwhereuserscanconnecttointernetand With Multimedia Payphone Project, payphones are more skilled Payphones areMoreSkilledNow failure rates,determiningnewserviceabilitypossibilities. customer problemsfromcenterthroughlinetests,reducingxDSL high speedsbynetworkoptimization,increasinglinestability,solving xDSL networksoundness,takinganalysisreports,reachingto Also equipment and software planning has been made for reporting of different serversexistingonxDSLnetworksoneplatform. operation andpreventionofwasteresourcesareplannedbyuniting replace allATMbasedproductswithIPproducts.Facilitatingof 647 thousand350portsoutofthatfigurearestillinuse.Itisaimedto of NECnetworkconsisting1million870thousandATMports.6 However, thisfiguredeclinedto7million973thousandduetransfer has beenreachedto9million843thousandportcapacityin2010. Providing datatransmissionovercoppertelephoneline,xDSLnetwork Waste ofResourcesinxDSLwillbePrevented equipped mobiledevicestobeusedalloverthecountry. service inordertomeettransmissionoversatelliteneedsoffully extraordinary situations,fivemobilestationshavebeenputinto That willbeneededbyGSMoperatorsandalsoTürkTelekomfor Mobile StationsPutintoervice or insufficientcommunicationsinfrastructure. internet servicestoaround2thousand500villageswherethereareno of UniversalServiceObligationandforprovidingtelephonebasic the agreementwithMinistryofTransportationwithinscope Türk Telekom completed its surveys in 6 provinces after execution of Villages withoutTelephoneProject be centrallycontrolled7/24,and11thousand850AVonlocalbasis. thousand 210AVbeingstoredonthehighreliablebackbonethatcan 15 thousand970AVhasbeenattained;thisfigureisdistributedas4

Türk Telekom TO PREPARE TURKEY TO THE FUTURE: 2010 Annual Report 055 TECHNOLOGICAL AND INFRASTRUCTURE INVESTMENTS Türk Telekom TO PREPARE TURKEY TO THE FUTURE: 2010 Annual Report 056 TECHNOLOGICAL AND INFRASTRUCTURE INVESTMENTS 2011. them wascompletedin2010.Systeminstallationswillbemadewithin in 23provinceswasevaluatedunderthisprojectandbidrelatedto interfered. Ascontinuationofthisproject,thesituation166centers into newgenerationsystemsthatcanberemotelymonitoredand systems whichcanbeusedwererehabilitatedandtransformed centers in31provincesordertoincreaseenergyquality,existed infrastructure re-organizedandnewsystemswereestablishedin415 rehabilitation of energy infrastructure. Within this scope, energy Türk Telekom also made some studies and investments related to Energy InfrastructureBeingRehabilitated achieved inuseofforeignlines. this way,totalcapacityreachedupto100Gbpsand16percentsavings to foreigncontentswithindomesticdistantoverAkamaiservers.By of 418serversin5locationsquarterlyperiodsordertofastaccess Device uplinkconnectionsincreasedfrom10GBto20byinstallation Fast AccesstooreignContentsoverkamai banks’, demandforthisserviceishigh. second halfof2010.TürkTelekom’scorporatecustomers’,especially interlinked micrositeshavebeenprotectedbytheplatformsince and theystartedtogiveservicein2010.TürkTelekomwebsite Türk Telekominfrastructureanditscorporatewerecompleted System installationsrelatedtopreventionofDDoSattackstargeted DDo have beenmanagedinsidethecountry. infrastructure. By making IP/MPLS network readyon ipv6, sixmillion IP in 2010withinthescopeofoptimizationstudiesforimproving topology transformationandchassisredundancywereprovided on whichIPTV,WebTVandNGNprojectswillbetransferred,205ring added. Redundancystudiesforallchassisstillcontinue.Inthenetwork in eachprovince,anadditionaldirectionF/Oalternativeroutewas affected from transmission interruptions, relevant studies started and transmission outputsforeachcenterinordertopreventnetwork Within the scope of 3rd Direction Project which aims minimum three conferencing. business lifebegantosavetimeandmoneywiththevideo SMS trafficreached14million,whilecustomersfromthe world. Afterthefixedtextmessagingservicewasprovided, investments, customersenjoyarichercommunication Thanks toTürkTelekom’songoinginfrastructure S AttacksPreventionlatformEstablished

have beencompleted. installations in30exchangebuildings ineasternprovincesofTurkey Telekom buildingsagainstfirehave beendeployed.Withinthisscope, establishment inthepreviousyears realizedinordertoprotectTürk Applications includingfiredetection andautomationsystems Fire DetectionandAutomation Project be startedin2011. needs oftelecomsystemsandcustomerrooms.Theirinstallationwill type airconditionerstoreplaceexistingequipmentandmeetcooling and itsbidcompleted.Awasconductedforpurchaseof1000split In addition,anotherprojectwasSplitTypeAirConditionerProject, system room.Thementionedequipmentwillbeinstalledwithin2011. results obtainedfromairconditioningofIstanbul-GayrettepeIDC2 needs oftelecomsystemsandinaccordancewiththeenergysaving executed inordertoreplaceexistingequipmentandmeetthecooling double-circuit airconditionerspurchasingagreementhasbeen Air ConditionerProject.150pieces28.000-58.000Kcal/hcoolingcapacity Another stepintheinvestmentscoolingfieldwasSplitFreeCooling cooling needsoftelecomsystems. has beenexecutedinordertoreplaceexistingequipmentandmeetthe cooling capacitysinglecircuitairconditionerspurchasingagreement Precision CoolingSystemsProject.150pieces6.000-20.000Kcal/h Another projectwasSmallScale,SingleCircuitDX(Conventional) systems. replace existingequipmentandmeetthecoolingneedsoftelecom conditioners purchasingagreementhasbeenexecutedinorderto 100 pieces28.000-58.000Kcal/hcoolingcapacitydouble-circuitair Systems Projectwasanotherprojectdevelopedinthisregard. Large Scale, Double-Circuit DX (Conventional) Precision Cooling which wereusedforthefirsttimeinTurkeyhavebeeninstalled. conditions, whencomparedtoconventionalcoolingsystemsand that providesignificantlevelsofenergysaving,dependingonclimate scope oftheproject,20airconditionerswithFreeCoolingfeature Gayrettepe IDC2SystemroomAirConditioningProject.Withinthe Türk TelekomhasprovidedenergyefficiencythankstoIstanbul- Energy fficiencyinCoolingSystems will bereplaced. feature willbefedfromasecondsourceandinsufficientenergypanels and ADSLrooms.Withinthisscope,systemswithdouble-feeding increase infrastructurerehabiliteesystemsinstalledintransmission Transmission andADSLRoomsEnergyProjectisplannedinorderto in thecenters,whereACgridproblemsarehigh,targeted. resources andpreventionofinterruptionsbasedonenergyproblems With SolarEnergySystemsProject,deploymentofrenewableenergy operating costsandminimizingsysteminterruptions. by thiswayprovidingenergysaving,decreasingmaintenanceand energy systemswhichareinsufficientandfilleditseconomiclife, aimed withthisproject;renewalof8thousand800equipmentinDC Transformation ofDCEnergySystemsProject.Thefollowingsare Another developmentinenergyfieldwillberealizedthrough technology solutions toitscustomers. tourism, automotive,retailandconstruction sectorsandprovidedhigh on finance,energy,media,health, education,production,informatics, in 2008,wascompleted2010.Corporate Saleorganizationfocused The structuringofCorporateSale organization, whosedesignstarted and FocusedonTurkey’sLeading Sectors Corporate Salehanneltructuring Completed monitored throughmonthlyevaluations. since July2010.Bythisway,servicequalityperformanceof850dealers in every3monthsDealersChannelchangedtomonthlyevaluation acting incustomerrole.Hiddensurveywhichwasconducted are evaluatedinevery3monthsbytheresearchcompanypersonnel service quality standardsdetermined by TürkTelekom, these points in thethirdquarterof2010for450ContactPoints.Accordingto Another appraisalismadeviahiddencustomerapplicationstarted Questionnaires. have beentakingserviceeverymonthviaCustomerSatisfaction service fromSMEsaleschannel,evaluatecorporatedealersthatthey and developit.InthissurveystartedinAugust2010,customers,getting conducted inordertomeasureservicequalityperformanceperiodically In SMEsaleschannel,“CustomerSatisfactionSurvey”isbeing started inTürkTelekomandTTNETchannels. installment saleofWindows7andOffice2010productshavebeen accountants. Withintheframeworkofco-operationwithMicrosoft, Package has beendevelopedandputup for sale lawyers and In addition,inSMEsaleschannel,businessLawandLegislation households was54thousand216. plazas withwhichMTTSCAssignedwas59thousandwhilenumberof building complexes.ThenumberofbusinessplacesinOIZs,SMsand been executedasfollows;with90OIZs,26SMsandplazas,120 and Buildingcomplexes.Withinthisscope,totally236MTTSCAshave have beenmadeforOIZs,Technoparks,Techno-Cities,SMs,FreeZones 2010. Medium-termtechnicalsaleco-operationagreements(MTTSCA) Türk TelekomestablishedSMERegionalDirectoratesin12regions 12 SMERegionalDirectoratesEstablished infrastructure (DSLAM,Modem,NMS,etc.) Telekom wanttoperformonaccessnetworksandexistingbroadband by thetestsanddevelopmentsthatdepartmentsinTürk tests, thelaboratorywillprovidenecessaryenvironmentrequired to becarriedoutintheabovementionedlaboratory.Besidesthese enterprises includingTürkTelekommustpassfromcompatibilitytests are plannedtobeused in TürkTelekomcopper infrastructurebyall Local Network to Sharing, all systems, equipment and cards that Opening after Especially completed. was Building Exchange Boğaziçi establishment ofAccessNetvvorkDevelopmentLaboratoryinAnkara- operation ofaccessnetworkwithhighestefficiency,thefirststage PSTN, LiteSpan,Modem,Card,etc.)witheachotherbesidesproviding on coppernetwork(DSLAM,IPDSLAM,FES,linemultiplexers,PCM Plan- ANFP studies aiming to reduce the interference of systems Within thescopeofTürkTelekomAccessNetworkFrequency Development LaboratoryforAccessnetworksisopened

of 175dealerswascompletedwithin 2010. to contactpoints.Withinscopeof Dealer ProgressProject,decoration number revised by changing low performance dealers from type A, B, C (including 435contactpoint).Foroptimizing numberofdealers,dealer 383 (including158contactpoints in2009)toonethousand285 to theneeds,andnumberofdealers decreasedfromonethousand were evaluatedbasedontheperformanceandlocationsconvenient Türk Telekom’seffectiveandwidespreaddealersaleschannel,dealers Within theframeworkoftransformationprogramforestablishment of Increasing ServiceQuality Structuring inIndividualalesChannel:Everythingisfor officials ofTürkTelekomanditssubsidiaries. consisting oftopexecutivespublicinstitutionsandbodiesaswell held inAnkaraRixosHotelon26thMay2010with870participants theme “InformationSocietyandTelecommunicationSolutions”was “2010 PublicSectorCommunicationDays”eventhavingthemain mentioned above,infrastructureofCSNSprojectshavebeenprovided. key basisin24provinces;29provincecenters,exceptofthecities City SecurityManagementSystem(CSNS)hasbeenrealizedonturn- projects setastheirgoal. with TürkTelekomgroupcompaniesthattoparticipateinalle-state focused and integrated solutions to many public bodies together Public SectorSaleChannelhaveprovidedmanyturn-key,public channel throughpersonnelcompetentintheirfields. Ministries, from militarybodiestolocalmunicipalities fromasingle services toallpublicbodiesfromPresidencythePrimeMinistryand this channelwaslaunchedinordertoprovidesolutionoriented The structuringofPublicSectorSaleChannelwascompletedin2010; Increased Public SectoralesChanneltructured:Turn-Keyrojects point bycontactingwithcorporatecustomerservices. corporate customerscouldfollowtheiroperationsfromonesingle transformation intoIPbasedserviceshasbeenachieved.And, of entireinfrastructureandsupplyenddevices.Bythisway, become manageablefromendtothankstheestablishment scope of these projects, Broad Band Networks of enterprises have customers withintheframeworkofmanageableservices.Within TT VPNserviceagreementshavebeensignedwithover80corporate campaign editionscreated. used intensivelybyfinancesectorthroughcapacityandequipment and long-termcontractshavebeenmadeforLeasedLineservice offices beingthefinancesectoratfirstrank,havebeenrealized; Fiber opticbasedprojects,offeringhighbandwidthsandcoveringall country overbusinesspartners. this regard, internettraffic was directed from foreign countries to the from foreign countries, to the country with CDN solutions developed. In domestic publishing companies, which were mostly receiving service The firstgoalinsolutionsdevelopedformediasectorwasdirecting Special olutionsAlsoforMediaandFinanceectors transmission fieldsisaimed. integration of automotive sector with EU in communications and data the communicationnetworkspecifictosector.WithENX,full enjoy safedatatransmissioninhighcapacityandspeedoverENX, accomplished. Thankstothissolution,Turkishautomotivecompanies capacity ENXservicesolutionactivatedinEuropeuntiltodayhasbeen solution developed forproduction industry, the sale of highest (TAYSAD) were complete. With ENX (European Network Exchange) Association ofAutomotivePartsandcomponentsManufacturers with TürkTelekom,AutomotiveManufacturersAssociation(OSD)and Exchange (ENX)communicationsystemstartedin2007co-operation this framework,thestudiesrelatedtoaccessEuropeanNetwork create differenceinanenvironmentofincreasingcompetition.Within The organizationalsofocusedonsectorbasedsolutionsinorderto

Türk Telekom TO PREPARE TURKEY TO THE FUTURE: 2010 Annual Report 057 TECHNOLOGICAL AND INFRASTRUCTURE INVESTMENTS Türk Telekom TO PREPARE TURKEY TO THE FUTURE: 2010 Annual Report 058 TECHNOLOGICAL AND INFRASTRUCTURE INVESTMENTS such experience areas planned to deploy in 2011, it is aimed that such experience areas plannedtodeployin2011, itisaimedthat spaces, establishmentof“Customer ExperienceAreas”started.With in offices,especiallyoneshaving ahighvolumeandappropriate carried out.Forcustomerstoexperience newproductandservices are mostimportantfacetoservice channelsofTürkTelekomwere Studies forensuringefficiencyand standardizationinofficeswhich online servicechannels. on routineperformancetrackinginoffices,dealers,callcentersand goals inordertoimprovecustomerexperience.Energieswerefocused practice ineachservicechannelbesidesexistingqualitymeasurement In customerservicelines,newgoalsweredeterminedandputinto studies forPSTNserviceinthisdirection. Türk Telekom has been conducting its technical and customer relation and it is expected from operators that to attain these target values. this framework,someservicequalitymeasureshavebeendetermined with thenationalandinternationalservicequalitystandards.Within operators togiveserviceandoperateinfrastructuresinaccordance into effectinMarch2011.Thepurposeofthisregulationis;ensuring Turkey, nr.27697dated12thSeptember2010.TheRegulationwillcome Authority (BTK) was published in Official Gazetteof the Republic of issued byInformationTechnologiesandCommunicationSector “Service QualityinElectronicCommunicationSectorRegulation” High standardsinCustomerRelations provinces untilendof2010. Totally 116ProductPromotionandSalesExpertsarelocatedin54 and personnellocationstodealerstypeABwerecompleted. Expert Projectwasrealized.Decorationof86dealersin42provinces customer servicequality,PHASE1stepofProductPromotionandSales Started inOctober2010ordertoincreaseproductservicesalesand

repair in a database. repair inadatabase. data such as subscribers, network infrastructure, maintenance and analyzed in an integrated structure by matching with other intersystem verbal data;mapbaseddataispresented aftercollected,queriedand data and spatial superstructure data in digitalenvironment with environment. Thisisasystemthat associatesTelekominfrastructure planning andoperatingofallinventories ofthecompanyindigital Türk Telekom’sTTCBSprojectincludes asystemthattargetstracking, Corporate MemoryRecordedwithTTCBS database thatwillbeusedinstudiesrelatedtocustomers. quality ofCorporateCustomerServicesandforcreatingahealthy segment havebeencollectedunderanupperIDinordertoincrease Public sector,corporateandwholesalecustomerswhichareupper new customershasbeenprepared. Again forincreasingcustomersatisfaction,abookletsayinghelloto relations personnel in many fields from service-friendliness todressing. customers. Thankstothesefilms,informationwasgivencustomer relations personnelinordertoincreasequalityofserviceprovided to Türk Telekomorderedshootingofshortfilmsaimingcustomer basis, andbythisway,countrywideserviceefficiencywillbeensured. channels afterapotentialdataanalysistobeconductedonregional shown onthemaplocationbasis,andgeographicalallocationof face tochannelsbeingofficesanddealersatthefirstrankwillbe channels ofTürkTelekomhasbeenstarted.Withinthescopeproject, A projectforachievingserviceefficiencyfaceto Wirofon toVitamin,fromIPtivibumanyothers. customers tobecomefamiliarwithmanyproductsandservicesfrom

For Ankara MOBESE, this web service is used. For AnkaraMOBESE, thiswebserviceisused. real time and query location information have also been ready for use. modules mentionedabove,webservices thatreachTTCBSdatabasein these results,marketingandsalesreports canbeprepared.Besidesthe network are analyzed bycomparingwitheach other and byuseof speed, actualspeedandthat canbeprovidedorreceivedbythe module developedforMarketingand SalesUnitscustomer’scontract network inventoriescanbetaken. In“DecisionandSupportAnalysis” components canbeanalyzedandqueried,reportsrelatedtoaccess Fiber InfrastructureAnalysismodule,allexistinginfrastructure of decisionsupportapplicationsformaintenance.InCopperand and failureintensityanalysiscanbecarriedoutbesidesdevelopment on TTnetworkcabinet,regionalandprovincedirectoratebasis, module, failuredataandboxreceivedfromTASsystemcanbeviewed and provincedirectoratebasis.InFailureMaintenanceAnalysis from TTSsystemcanbedisplayedthematicallyoncabinet,regional In Revenue Analysis module, customer PSTN revenue data received speed prevision. the customerandallowedtobeusedcandisplayedbesidesVDSL can bequeriedonlineviaPSTNnumbersandthespeedthatisusedby existed forthetimebeing.In“SpeedAnalysis”,Geocodedcustomers Marketing andSalesUnits“DecisionSupportAnalysis”module is and FiberInfrastructureAnalysis”modulesareexistedwhilefor “Revenue Analysis”,“FailureandMaintenance“Copper In TTCBSwebinterface,forAccessUnitsthereare“SpeedAnalysis”, in webapplications. TTS andTASsystems.Thedatatransferredfromthesesystemsisused complete in2011.TTCBSsystemalreadycanexchangedatawithTMS, in 80provinces,transferofotherpartsintothesystemisplannedto environment atthefirsthand.Whileinnercitydatawastransferred In thisregard,accessnetworkdataistransferredintodigital Wirofon, VitaminandIPTivibu. customers learnaboutnewproductsandservices,suchas which areplannedtobeextendedin2011,itisaimedmake to experiencenewproductsandservices.Withthesesites, service channels,inordertomakeitpossibleforcustomers in itsoffices,whicharemostimportantfaceto Türk Telekomestablishes“CustomerExperienceFields” these devices. as ofAugust2010almostthreethousandsitepersonnelstartedtouse and decreasingoperatingcosts.Theuse of PDA devicesstartedin2010; presenting unbalancedworkdistribution,increasingqualityinservice, satisfaction andcorporateprestige,achievingworkforcesavingby out teammanagementandanalyseseffectively,increasingcustomer to theteams.Inaddition,followingshavebeentargeted;carrying from site by automatically directing job orders to PDAs to be provided orders from a single interface, and enable instant access to job orders With Field Force Management Project, it is aimed to get PSTN job PDA for3thousandpersonnelonsite

Türk Telekom TO PREPARE TURKEY TO THE FUTURE: 2010 Annual Report 059 TECHNOLOGICAL AND INFRASTRUCTURE INVESTMENTS Türk Telekom 2010 Annual Report 060 brains ofTurkeywhowillmakechange. we shapethefutureoftechnologywithyoung We believeinresearchanddevelopment,

Türk Telekom 2010 Annual Report 061 Türk Telekom 2010 Annual Report 062 VALUE CREATING THE FUTURE: TÜRK TELEKOM R&D STUDIES productization stage. products byworkingwithR&Dbusinesspartners,andsupporting • Developing prototypes that can be lead to innovative services and co-operation, industry and university for innovation. of scope developing closerelationswithuniversities andgivingclearsupport the Within • and technologieshasthefollowingtitles: above mentionedmission and developmentofinnovative products Long-term strategyfollowedinordertorealizeR&DDirectorate’s business partners. its fieldbesidesastrongR&Decosystemincludingacademicsand of suchtechnologiesbyestablishingaR&Dorganizationbestin can impactgroupactivitiesandprovidecontributiontoadoption the group,envisionandevaluationofadvancedtechnologiesthat developing innovativeproducts,broadeningpatentportfolio of Türk TelekomR&DDirectoratedefinesitsmissionasfollows: studies onnewgenerationtechnologies. area closetoTurkeybycarryingoutresearchesanddevelopment becoming thetechnologyleaderofTurkeyandingeographical R&D Directoratehasthevisionofincreasingcustomersatisfaction in theR&DDirectorateestablishedwithingroup.TürkTelekom Türk TelekomGroupconductsresearchanddevelopmentstudies R&D ISATTHEHEARTOFINNOVATIVEOPINIONS Telekom alsodevelopedbusinesspartnershipprojectswithSMEs. of thefirstapprovedEUProjectTürkTelekom.In2010, collaborate withİzmirInstituteofTechnologywithinthescope from 23universitiesinitsR& relationships withuniversitiesin2010,andincluded19projects Türk TelekomGroupR& D Directorate established close D Directorateestablishedclose D works. Türk Telekom started to D works.TürkTelekomstartedto with IzmirHighTechnology Universityhavebeen started. Evolution forIndividualCommunications Experience);jointstudies first approvedEuropeanUnion project MEVICO(MobileNetworks universities stillcontinue.Within theframeworkofTürkTelekom’s other with negotiations agreement Universities, Özyeğin and Koç Bahçeşehir, with executed been have agreements outline regard, networks, socialvoiceand imageprocessingfields.Inthis been choseninhealth,energy,multimedia, nextgenerationtelecom received fromuniversities;19projectsoutofthosehave These visitshavecreatedeffectiveresults.Manyprojectproposals related to master and doctorate studies supporting programs. presented tostudentsandacademics,informationwasgiven joint projects. In these meetings, Türk Telekom Group R&D projects order todevelopawaymakeco-operationwithuniversitiesand throughout country,seminarsandmeetingswereorganized in prominent universitiesofTurkey.Contactedwith23 In 2010,TürkTelekomR&DDirectoratewasincontactwith 19 Projectsfrom23UniversitiesChosen group. projects. ProcuringthecoordinationofR&Dactivitieswithin competency ofR&DteambyjoiningtomultinationalEUresearch technical increasing and projects research advanced Conducting • of development products andservicesintheR&DCenters. technologies, new of patents, defining technology roadmap, converting opinions into review and Evaluation • the groupmoved toARI4building,havinga surface areaof5 in ordertocontinueitsR&Dstudies2010.InDecember 2010, Türk Telekommovedintotwodeep-rooted universitiesofTurkey R&D Centers successfully. Within thisscope,amultinational EURESCOMprojectcompleted group stillmemberoftheseorganizations, throughtheseplatforms. have beenmadetoworkgroupsinETNOandEURESCOM,thatthe technology companiesplayingactiveroles.Alsocontributions 3 EuropeanTechnologyPlatformsinwhichprominent participants. Furthermore, the group has become the member of the presentationsmade,group’sR&Dstudiesintroducedto represented in5eventsheldbyEuropeanCommissionand in Europe:TürkTelekomGroup in Activities Participation toR&D studies onjointEUFP7projectscontinue. companies of Europe within scope of EU Framework Programs. The started withAtosOrigin,oneofthemostsuccessfultechnology Strategic Co-Operations:AstrategicR&Dco-operationhasbeen projects weresenttotheEuropeanCommission. Again forICTcallofEuropeanUnion7thFrameworkProgram, 7 passing the threshold, however theirrank has notbeendetermined. to health, tourism and smart systems. These 3 projects succeeded in European Union7thFrameworkProgram;theproposalsarerelated total fundingamountofEuro570thousand300havebeengivento EU 7thFrameworkProgram(FP7):3projectproposalshavinga EU ofTürkTelekom. and Ericsson Turkey, is Türk Telekom. MEVICO is the first approved Avea also including consortium, Turkish the of leader The TÜBİTAK. entitled toreceivefundinginanamountofEuro200thousandfrom Experience) projecthasbeenaccomplished,andwehave MEVICO (Mobile Networks Evolution for Individual Communications EUREKA Program:Inthisprogram,participationinCELTIClabeled Union studiesandprojects.Thesecanbelistedasfollows: Türk TelekomR&DDirectorateactivelyparticipatesinEuropean MEVICO, theFirstApprovedEUProject Operating SystemsandApplications”. Semantic Web, Location-Based Services, Mobile Labeling, Mobile prototypes innewgenerationissuessuchas“IncreasedReality, importance suchashealthandenergyresearches for sectorswheretelecommunicationsincreasinglygaining out theiractivitiesintechnocitiesincludedevelopingsolutions The jointprojectsimplementedwiththesecompaniescarrying after evaluatedaccordingtothespecificsubjectstheyworkon. with group’sR&Dstrategieshavebeenincludedtotheecosystem activities inadvancedtechnologyissues,theenterprisesharmony processes continuedwithanincrease.Conductingresearch developing technologyandexperiencedininternationalresearch Within scopeofR&Dstudies,in2010,theco-operationswithSMEs R&D BUSINESSPARTNERSHIPPROJECTSWITHSMEs are Available in Two D eep-Rooted Universities Incubation Centerisplanned. centers, establishment of User Experience Center laboratories and projects withEuropean enterprises andinstitutions. In these partners. Inaddition,studieswillbeconductedonjointresearch development ofR&Dprojectswithuniversitiesandbusiness activities willbeprovidedbesidesbasicR&Dstudiesand In thesecenters,coordinationofTürkTelekomR&DDirectorate (the MiddleEastTechnicalUniversity)technocity. been openedinanotherdeep-rooteduniversityAnkara,ODTÜ Telekom R&DDirectorate.Inaddition,onemorecenterhas In thebuilding,alsoInnovaandSobeeconductactivitybesidesTürk thousand 200squaremeters,inITÜTechnocityleasedfor10years.

Türk Telekom 2010 Annual Report 063 VALUE CREATING THE FUTURE: TÜRK TELEKOM R&D STUDIES Türk Telekom 2010 Annual Report 064 add valueto thefuture. enlighten the world,andwestrive to We knowthateducation will

Türk Telekom 2010 Annual Report 065 Türk Telekom VALUE CREATING VALUE: 2010 Annual Report 066 IN-COMPANY TRAINING - TÜRK TELEKOM ACADEMY as traininganddevelopment performanceistargeted. companies instrategy,budgetand costmanagementfieldsaswell besides centralizingtrainings, creating synergyamonggroup companies in2010:SynergyProject. Withinthescopeofproject, centralizing traininganddevelopment managementofgroup Türk TelekomAcademyhascommenced animportantprojectfor Synergy inTrainingandDevelopment thousand 654hours. Academy alsomade455e-trainingshavingatotaltimeof89 each personreceivedaverage27.5hourstraining.In2010,TT gave actually714thousand814hourstrainingin2010.Therefore, company training field both quantitatively and qualitatively, and Middle EastandAfrica.TTAcademyhasmadegreatstridesinin- responsible fromEurope,CommonwealthofIndependentStates, Nations InternationalTelecommunicationUnionandhasbecome field, TTAcademyannouncedascenterofexcellencebyUnited organized byTurkishInformaticsAssociationinthee-education Being theTurkishwinnerofInformaticsStarse-Conversioncontest 2010, anditalsoachievednationalinternationalsuccesses. activities of the group with its Synergy Project commenced in Türk TelekomAcademyhasofferedanewinsighttotraining ANDDEVELOPMENTMANAGEMENT TÜRK TELEKOMACADEMY:SYNERGYINTRAINING through TürkTelekomAcademyPortal. hour perpersonreached27.5.Thesetrainingsaregiven project, 714,814hoursoftrainingwasgiven,and of TürkTelekomanditsgroupcompanies.Afterthe centralized thetraininganddevelopmentmanagement Türk TelekomAcademystartedSynergyProject,which university students throughout2010.Targeting atreachingto Türk TelekomAcademy’s‘Value totheFuture’projectmetwith ‘Value totheFuture’Metwith UniversityStudents international co-operationnetwork thatever-grows. group’s training and development activities through a national and activities in many fieldswithASTD,ECLFandETSI,supports TT Academy,besidesITU,also carries outvariousco-operation Seminar wasa3threedayevent. participants from many countries, Next Generation Networks after becomingaCenterofExcellence.Havingover25professional In October2010,TTAcademyconducteditsfirstregionalactivity responsible from. as acommunicationchannelbetweenITUandtheregionsthatit is needs inco-operationwithITUbyundertakingthedutyofacting excellent centersandmeetingregionaltrainingdevelopment establishment ofapowerfulcommunicationnetworkwithother Telekom Academyhasbeencarryingoutnecessaryactivitiesfor With itstitle“ITUCentreofExcellence”thatisfirstTurkey,Türk in informationandcommunicationtechnologies. Middle EastandAfricaforthepurposesoftraininghumanresources responsible fromEurope,CommonwealthofIndependentStates, scope ofthisco-operation,TürkTelekomAcademyhasbecome after theco-operationagreementsignedinMay2010.Within “CoE” ofUnitedNationsInternationalTelecommunicationUnion Türk TelekomAcademyhasbecometheITUCentreofExcellence TT Academy,ITU’sCenterofExcellence TTNET, AssisTT,Innova,ArgelaandSebit. service outlineagreementshaveexecutedwithgroupcompanies, updated inordertoincludeallgroupcompanies,andtraining management process was designed, training service agreements Training Management System (TMS), training and development announcement andreportingprocesseswerecarriedoutover Group. Schedulingoftrainingplansforgroupcompanies,their Portal wasupdatedinordertogiveserviceallTürkTelekom After thatwithintheprojectscope,TürkTelekomAcademy group havebeenscheduled. capital ofthegroupintosustainablecompetitiveadvantagefor management, actions to be taken for transforming intellectual companies hasbeenplanned.Thankstotraininganddevelopment group, atrainingserviceagreementmanagementcoveringallgroup management processthathasbeenjointlystructuredbythewhole been putintoservice.Inlinewiththetraininganddevelopment of traininganddevelopmentprocessesfromasinglecenter,has includes allinformationaccessresourcesandallowsautomation has beendecided.Also,TrainingManagementSystem(TMS),that all groupcompaniesanddesignedspecifictoeachcompany Türk Telekom AcademyPortal which will be ableto give service to for realizationofSynergyProject.Accordingly,establishment TT Academydevelopedafourdimensionalimplementationschedule results oftrainings thatitconductswithinthegroup. Carriedoutfor Türk TelekomAcademyhasdeveloped aprojectinordertomeasure Measurement ofReturnPro ject is achieved. jury evaluation,activeparticipation ofinternetusersatalllevels e-health. Byalsoincludingpopular votingtothecontestbesides e-news, e-education,e-tr,e-communication, e-trade,e-serviceand given inthefollowing categories; e-hr, e-finance, e-marketing, and experiences members. In the contest, there are 10rewards the leadershipofaselectioncommitteeconsistedspecialized contest aims to evaluate successful e-conversion projects under on theinternetbesidesincreasinginteresttoe-conversion.The conversion ininternetorwhichcarriedtheirbusinessstructure purposes ofpromotingvariouswebprojectsthatprovided organization heldbyTurkishInformaticsAssociationforthe Informatics Starse-ConversionContestisanindependent process andattheend,becamewinneruponpopularvotes. e-education category, and then included in the popular voting the jury listing in the Informatics Stars e-Conversion Contest in In 2010,TürkTelekomAcademywasfirstelectedtotopthree of Star ofe-Education the University, Universities. Mayıs Ondokuz Sea Technical,KayseriErciyes,AnkaraMiddleEastTechnical Samsun project’s otherstopsin2010wereErzurumAtatürk,TrabzonBlack with Commenced future outlooksarescheduled. information tostudentsforrecenttechnologicaldevelopmentsand to their education and business life, also events aiming to give in whichTürkTelekomexecutivessharetheirexperiencesrelated choose thebestoptionsforthem.Inproject,besidesevents to directtheir interest and energy inorder to provide them to besides informationgivenrelatedtofieldsthatthestudentswant how theywillbegintotheircareeraftercompletingeducation are interpretedbyeducationexpertsandtheytellthestudents Within thescopeofproject,generaltendencystudents Türk of leadership under University Telekom Academy. Mayıs Ondokuz Samsun in ‘Value totheFuture’projectwascommencedon24thNovember young peopleandpreparingthemtothefuture,TürkTelekom’s targeted. for serviceexcellenceandincrease ofcustomersatisfactionwas In thesetrainings,providingcontribution toactivitiesconducted & officialsand1,142dealeremployees through238classtrainings. training were given to 1,744 persons consisted of 602 dealer owners dealers, officesandcallcenters. In2010,totally3,193person/day individual andcorporatesaleschannelsofthegroupsuchas regarding Türk Telekom products, tariffs andcampaigns,for TT Akademyalsoorganizedtrainings,aimingtogiveinformation Continuing TrainingSupporttoaleshannels innovation. were impactonbusinessresults,leaderproductivitycapacityand average oftheparticipatedcompaniesin3fieldsoutfour,which this study, Türk Telekom Academy showed higher performance than results ofthecompaniesparticipatedinproject.Accordingto Accenture andBiocon,includeexecutivedevelopmentprogram companies intheinternationalarenasuchasIntel,GeneralMotors, computing study,conductedwithparticipationofprestigious on LeadershipDevelopment)model.Benchmarksusedinthe and innovationhasbeencomputedbyuseofROLD(Return efficiency, impactonbusinessresults,leaderproductivitycapacity In thisstudy,thecontributionoftrainingtoresourceutilization in international return on education measurement project this year. Academy wastheonlycompanyfromTurkeyinvitedtoparticipate Ashridge BusinessSchoolandBritishTelecom,TürkTelekom jointly developedwithHarvardUniversity,Stanford With TopManagementDevelopmentProgram(EDP) the successofEDPininternationalscale. results obtainedbyinternationalcompanies.Theseproved development washigherthantheaveragewhencomparedwith Management DevelopmentProgram(EDP)projectonleadership the contributionprovidedbyTürkTelekomAcademyTop According totheresultsobtainedinmeasurementsconducted, innovation. dimensions. Theseareeffectiveness,efficiency,productivityand impact ofleadershipdevelopmentonbusinessresultsin4different measurement ofinternalefficiencyandreturnontraining,reviews on LeadershipDevelopment-ROLDproject,besidesstudiesfor computing development in executive development trainings Return

Türk Telekom VALUE CREATING VALUE: 2010 Annual Report 067 IN-COMPANY TRAINING - TÜRK TELEKOM ACADEMY Türk Telekom Number ofsubscribedcustomerswhomake

USD 1BILLION692 MILLION 2010 Annual Report sayılarla Türk Telekom Number ofeducationbuildingswhich Total amountofCapitalExpendituresin2010

068 16,000,000 transactions overonlineservicecenter Fixed linesubscribers Brand valueofTürkTelekomaccordingto“MostValuableBrands ofTurkey”researchby TL 1,733,000 341,000 have beenconstructedunder Türk TelekomSchoolsProject Increase innetprofit in2010 Number ofGSMsubscribers 11,600,000 Number ofTürkTelekomAmateur 32% 76 British brandevaluationcompanyBrandFinance 714,814 Hours Sports Clubs Total traininghoursgivenby 41 Türk TelekomAcademy screens targetedtobeextended Number ofDigitalSignage Total numberofTürkTelekom in TTOfficeswithin2011 channels wereprovidedwithin2010byTTAcademy Group employees 34,138 154 Number ofclassesinwhichtrainingsonsales Ratio ofcustomersgettinginternetservice up to8mbpstotalADSLcustomers TL 2,450,857,000 238 Total numberofinternethousesopenedby Number ofsalesemployeestrainedbythe Türk Telekom’sconsolidatednetincome Number ofdisabledpeoplewhoserve 68% at alllocationsofAssisTT TT Academywithin2010 Türk Telekom 1,744 967 107 Number ofinternational successesTürk sports clubsgained inthelast3years Amount ofcashdividendsproposedtobe TL 2,243,960,909 Türk Telekomsportsclubsgained Number ofnationalsuccesses Number ofe-trainingsmadeby distributed for2010 qualified withWi-Fihotspot Türk TelekomAcademywithin Number ofpayphones 9 quality within2010 in thelast3years 455 47 700 2010 service from444TPTNCallCenter Number ofInternationaland Wholesale Customerstaking Amount ofcashdividendpaidin2010 TL 1,589,712,275 Number ofADSL subscribers Türk Telekomshareprice Number ofpublicprimaryschoolsusing Türk Telekom’sinteractiveeducation Responsibility projectsbroughtintolifeineducationfieldTurkey,iscompleted 6,600,000 increase in2010 Number ofsportspeoplewhohavebeensupportedby 55% Number ofstudentstoachieveamoderneducationenvironmentwhenthe Türk TelekomSchoolsProject,whichisoneofthebiggestCorporateSocial 80 targeted tobeextendedinTTOfficeswithin 33,000 software Vitamin Türk TelekomSportsClubsinlastdecade Number ofConsumerExperienceFields 28,000 60 2011 30,000 Number ofstudentswhoenjoyedVitaminLiseforfree Corporate GovernanceIndexforTürkTelekom Türk Telekom’sconsolidatedrevenues TL 10,852,470,000 training hoursperformedby The rankingwhichclinchpositioninISE Time percapitaoftotal 27.5 Hours 9,000,000 Length offiberopticnetworkin TT Academy 16 countriesofPantel. 27,000 KM 8.27 Number ofWi-Fihotspots as of2010yearend 8,000 Number ofTTsubscriberswhohelpedprotectthe Number ofconceptofficesopenedinordertogive Total timeofe-trainingsgivenbyTürkTelekom Türk Telekom’sinteractiveeducationsoftware service tocustomersinnicer,morepracticaland responsibility of TürkTelekomwerecarriedout Number ofprimaryschoolstudentsusing The numberofcities whereworksofsocial environment byreceivinge-invoices 600,000 89,654 HOURS given freeVitamin2009softwareby Number ofhighschoolswhichwere comfortable roomsin2010 Number oftreesplantedwiththe 12,000,000 Academy in2010 100,000 Vitamin 81 help ofE-Billing 107 Türk Telekom 5,900 Number ofsubscribedcustomerswhomake USD 1BILLION692 MILLION Number ofeducationbuildingswhich Total amountofCapitalExpendituresin2010 16,000,000 transactions overonlineservicecenter Fixed linesubscribers Brand valueofTürkTelekomaccordingto“MostValuableBrands ofTurkey”researchby TL 1,733,000 341,000 have beenconstructedunder Türk TelekomSchoolsProject Increase innetprofit in2010 Number ofGSMsubscribers 11,600,000 Number ofTürkTelekomAmateur 32% 76 British brandevaluationcompanyBrandFinance 714,814 Hours Sports Clubs Total traininghoursgivenby 41 Türk TelekomAcademy screens targetedtobeextended Number ofDigitalSignage Total numberofTürkTelekom in TTOfficeswithin2011 channels wereprovidedwithin2010byTTAcademy Group employees 34,138 154 Number ofclassesinwhichtrainingsonsales Ratio ofcustomersgettinginternetservice up to8mbpstotalADSLcustomers TL 2,450,857,000 238 Total numberofinternethousesopenedby Number ofsalesemployeestrainedbythe Türk Telekom’sconsolidatednetincome Number ofdisabledpeoplewhoserve 68% at alllocationsofAssisTT TT Academywithin2010 Türk Telekom 1,744 967 107 Number ofinternational successesTürk sports clubsgained inthelast3years Amount ofcashdividendsproposedtobe TL 2,243,960,909 Türk Telekomsportsclubsgained Number ofnationalsuccesses Number ofe-trainingsmadeby distributed for2010 qualified withWi-Fihotspot Türk TelekomAcademywithin Number ofpayphones 9 quality within2010 in thelast3years 455 47 700 2010 service from444TPTNCallCenter Number ofInternationaland Wholesale Customerstaking Amount ofcashdividendpaidin2010 TL 1,589,712,275 Number ofADSL subscribers Türk Telekomshareprice Number ofpublicprimaryschoolsusing Türk Telekom’sinteractiveeducation Responsibility projectsbroughtintolifeineducationfieldTurkey,iscompleted 6,600,000 increase in2010 Number ofsportspeoplewhohavebeensupportedby 55% Number ofstudentstoachieveamoderneducationenvironmentwhenthe Türk TelekomSchoolsProject,whichisoneofthebiggestCorporateSocial 80 targeted tobeextendedinTTOfficeswithin 33,000 software Vitamin Türk TelekomSportsClubsinlastdecade Number ofConsumerExperienceFields 28,000 60 2011 30,000 Number ofstudentswhoenjoyedVitaminLiseforfree Corporate GovernanceIndexforTürkTelekom Türk Telekom’sconsolidatedrevenues TL 10,852,470,000 training hoursperformedby The rankingwhichclinchpositioninISE Time percapitaoftotal 27.5 Hours 9,000,000 Length offiberopticnetworkin TT Academy 16 countriesofPantel. 27,000 KM 8.27 Number ofWi-Fihotspots as of2010yearend 8,000 Number ofTTsubscriberswhohelpedprotectthe Number ofconceptofficesopenedinordertogive Total timeofe-trainingsgivenbyTürkTelekom Türk Telekom’sinteractiveeducationsoftware service tocustomersinnicer,morepracticaland responsibility of TürkTelekomwerecarriedout Number ofprimaryschoolstudentsusing The numberofcities whereworksofsocial environment byreceivinge-invoices 600,000 89,654 HOURS given freeVitamin2009softwareby Number ofhighschoolswhichwere comfortable roomsin2010 Number oftreesplantedwiththe 12,000,000 Academy in2010 100,000 Vitamin 81 help ofE-Billing 107 Türk Telekom 5,900

Türk Telekom 2010 Annual Report 069 sayılarla Türk Telekom Türk Telekom 2010 Annual Report 070 MACROECONOMIC OUTLOOK thanks tothesolid consumptionandinvestment spending. 8.9% in 2010, which is the highest annual growth rate since 2004, After thecontractionof4.8%in2009, theTurkisheconomygrewby Growth illslodon uncertainties regardingtheglobal economy. increase theseeconomies’vulnerability andthus,contributetothe rates, andweakgrowthperformances inthedevelopedeconomies On theotherhand,highbudgetdeficits,debtstocks,unemployment estimated as4.4%in2011. economies. Withinthisframework,theworldgrowthrate is in China,8.4%India,6.2%Indonesia,and6.5%thedeveloping developed economies,4.7%inG20economiesexcludingtheEU,9.6% 2.8% intheUS,1.4%Japan,1.6%Euroarea,2.5% According to the IMF forecasts 2011 GDP growth rate would be continue in2011. in emergingeconomies. This trendofdecoupling is expected to and stable improvement, while strong growth rates were observed 2010 wasayearofrecovery.Developedeconomiesshowedslow After theyear2009,whichwasovershadowedbyglobalcrisis, economies duringthepost-crisisera 2010: Decouplingofdevelopedandemerging inflation isexpectedtobeparallelthetarget. unemployment isexpectedtocontinueathighlevelsand In 2011,5percentgrowthrateisexpectedinTurkey,while developing countriesshowedastronggrowthperformance. 2010 wasayearwhentheeffectsofcrisiswererelieved,and 2010, CPIinflation roseto9.6%withthetaxarrangements onfuel The annual CPI inflation closed 2009 at 6.5%. In the first quarter of Inflation inlinewiththetarget 12.0%. costs. TheGovernment forecasts the2011unemploymentrateas pre-crisis levelsforsometimeand continuetocontainunitlabor Central Bank,theunemployment ratewillremainhigherthanits activity and improvements in labor market conditions. As per the from 14.0% in 2009 to 11.9% in 2010 with the recovery in the economic Based ontheyear-average,unemploymentrateeaseddown The unemploymentrateathighlevel may posethreatstotherealizationsoftheseforecasts. levels in2011.Therecentcivilunrestsandtheirimpactonoilprices safe tosaythattheTurkish economy maygrowaround4.5-5.5% growth rateas4.1%and4.5%respectively.Therefore,itwouldbe of 5.3%in2011,whiletheWorldBankandIMFestimateGDP contribute togrowth.ForTurkey,OECDexpectsaGDPgrowthrate (consumption andinvestmentspendingtoincreasefurther) outlook, domesticdemandisexpectedtopreserveitsstrength 2010. Despitetheuncertaintyregardingexternaldemand according to the Medium Term Program published back in October reversed baseeffect.TheGovernmenttargetsa4.5%growthrate In 2011,theGDPgrowthrateisprojectedtoslowdownwith bn levels(around 7%ofGDP). deficit willremainhighin2011and closetheyeararoundUS$50-55 prices willrise,itwouldbesafe tosaythatthecurrentaccount uncertainty regardingexternal demand willprevail,andenergy assumption thatdomesticdemand willmaintainitsstrength,the deficit target for 2011 is US$ 42.2 bn (5.4% of GDP). Still, under the forecast ofUS$39.3bn,the Government’scurrentaccount According totheMediumTerm Program andbasedonthe2010 current accountdeficitbroadenedtoUS$48.6bn(6.6%ofGDP). commodity prices,andtheweaknessinexternaldemand, turned upsidedownwithrobustdomesticdemand,elevated lowest reading observed since 2004. In 2010, however, the picture narrowed downtoUS$14.0bn(2.3%ofGDP)in2009,whichisthe prices, allthankstotheglobalcrisis,currentaccountdeficit With thedeclineinexportsandimportslowercommodity The currentaccountdeficitontherise the monetaryconditionswillnotbeexpansionary. The Bankalsounderlinedthatthenetimpactofthesemeasureson higher requiredreserveratioswouldserveasaneffectivepolicymix. decided thatalowerpolicyrate,widerinterestcorridor,and and USeconomiesexacerbatetheserisks.Inthisregard,theBank developments andmonetarypolicydecisionsintheEuropean regarding financialstability.Furthermore,aspertheBank,recent increase the current account deficit and contribute to therisks demand growthandtherapidcreditexpansion,whichinturn, Bank emphasizedthedivergencebetweendomesticandexternal lending interestratewasraisedfrom8.75%to9.0%.TheCentral rate wasloweredfrom1.75%to1.50%,whereastheovernight reduced from7.0%to6.50%andtheovernightborrowinginterest In December,theone-weekrepoauctionrate(thepolicyrate)was keep thelendinginterestrateconstantat8.75%. the overnightborrowinginterestratefrom5.75%to1.75%and on holdat8.75%.InNovember,theCentralBankdecidedtolower 6.25% to5.75%,whiletheovernightlendinginterest rate waskept In October,theovernightborrowinginterestratewasreducedfrom week repoauctionrateandtheovernightborrowinginterestrate. In otherwords,theBankincreaseddifference between theone- interest ratesfrom6.5%and9.0%to6.25%8.75%respectively. and the Central Bank reduced the overnight borrowing and lending the technicalinterestrateadjustmentprocessbecameoperational In September,astheliquidityshortageincreases,secondstepof overnight borrowinginterestrate. new policyrateanddetermineditas7.0%,byadding50bpstothe Bank declaredtheinterestrateforone-weekrepoauctionsas May butwithinthetechnicalinterestrateadjustmentprocess, borrowing andlendinginterestratesforovernighttransactionsin liquidity shortage into account, the Central Bank didn’t change the 2010 wasanimportantyearforthemonetarypolicy.Taking First policyratecutsinceNovember2009 5.3% and5.9%respectively. forecast introduced in the January 2011 Inflation Report stand at in theMediumTermProgramandCentralBank’slatestinflation inflation target for 2011 is 5.5%, while inflation forecast announced have asignificantimpactontheinflationoutlook.Officialyear-end well as demand conditions and exchange rate developments will In 2011, the course of food, energy, and other commodity prices as of 6.5%-withthedownwardcorrectioninunprocessedfoodprices. The CPIinflationclosed2010at6.4%-inlinewiththeyear-endtarget rose to9.2%mainlyduetheelevatedunprocessedfoodprices. following a flattrend. However, in the third quarter, the CPI inflation and unprocessedfoodinflationcombinedwiththeenergyprices CPI inflationsloweddownto8.4%withthefallinservices sharp increaseinunprocessedfoodprices.Inthesecondquarter, products, alcoholic beverages, and tobacco as well as with the financial sectorpavethewayfor anupgrade. surprise sinceTurkey’sstrongmacroeconomic indicatorsandsolid earlier than envisaged upgrade should not be taken as a total after thegeneralelectionsscheduled inJune2011.However,an The commonviewisthatTurkey’s creditrating may beupgraded confidence. from thecrisis,improvementsinpublicfinances,andincreasing outlook from“stable”to“positive”,reflectingthecountry’srecovery this revision.Finally,inlateNovember,FitchrevisedTurkey’srating levels combinedwithTurkey’seconomicandfiscalresilienceledto showing anunexpectedrobustnessandrecoveringtothepre-crisis “stable” to“positive”.TheagencystatedthattheTurkisheconomy In early October, Moody’s revised Turkey’s rating outlook from reflected lowerdebtburdenandstablefinancialsector. outlook from“stable”to“positive”.Aspertheagency,upgrade raised Turkey’s credit rating from “BB-” to “BB” and revised the second ratingupgradecamefromS&Pinmid-February.Theagency confidence inTurkey’sfinancialshock-absorptioncapacity.The assigning theoutlookas“stable”.Thisupgradereflectedgrowing Moody’s raisedTurkey’screditratingfrom“Ba3”to“Ba2”,while The firstratingupgradecamefromMoody’s.InearlyJanuary, Developments inTurkey’screditrating2010 the debtstock/GDPratioas40.6%in2011. According totheMediumTermProgram,Governmentestimates debt stock/GDPratioremainedbelow60%. has beencomplyingwiththeMaastrichtCriterionsince2004,as to 41.6%thanksthefiscaldiscipline.Moreimportantly,Turkey due totheglobalcrisis.In2010,debtstock/GDPratiodeclined In 2009,theEUdefineddebtstock/GDPratioacceleratedto45.5% 73.7% to39.4%andthen,followedaflattrendin2008with39.5%. During thatperiodtheEUdefineddebtstock/GDPratiofellfrom Criterion, wasindownwardtrendbetweentheyearsof2002-2007. debt stock,whichiscalculatedwithintheframeworkofMaastricht As aratiotoGDP,theEUdefinedgeneralgovernmentnominal Debt stock;positiveoutlook developing economies. EU, 2.1%inChina,9.2%India,1.4%Indonesia,and2.3%the in thedevelopedeconomies,6.3%G20economiesexcluding will be10.8%intheUS,9.1%Japan,4.7%Euroarea,7.0% According to the IMF forecasts, the 2011 budget deficit/GDP ratio of GDP)isforecasted. bn budgetdeficit(2.8%ofGDP)andTL14.0primarysurplus(1.2% and theriseinexpenseswillbekeptundercontrol,for2011,TL33.5 further in2011.Undertheassumptionthatrevenueswillrise The centralgovernmentbudgetperformanceisexpectedtoimprove of GDP)andTL8.7bnprimarysurplus(0.8%wererecorded. out tobebetterthananticipated,asTL39.6bnbudgetdeficit(3.6% of GDP).The2010centralgovernmentbudgetperformanceturned bn budgetdeficit(4.0%ofGDP)andTL5.3primarysurplus(0.5% discipline. For2010,theGovernment’srevisedforecastswereTL44.2 whereas expenseswereputundercontrolthankstothefiscal on therevenueside,withrecoveryineconomicactivity, In 2010,strongperformancewasrecorded in taxcollection and thus, TL 0.4bn. high with TL 52.8 bn (5.5% of GDP), while primary surplus was a mere expenses. Consequently,in2009,budgetdeficitreachedarecord Government’s measurestorevivetheeconomyresultedinhigher total revenues,especiallytaxdecreased,whilethe In 2009,whichwasayearovershadowedbytheglobalcrisis, Fiscal disciplineandlowerbudgetdeficit

Türk Telekom 2010 Annual Report 071 MACROECONOMIC OUTLOOK Türk Telekom TÜRK TELEKOM GROUP AND 2010 Annual Report 072 TURKISH TELECOM SECTOR OUTLOOK ük eeo’ sae ae we b Oe Tlkmnkso A.Ş. by 55%while30% ofitssharesbelongtoTurkish Undersecretariat Telekomünikasyon Oger by owned are shares Telekom’s Türk Albania. Albtelecom whichistheincumbent telecomoperatorbasedin In additiontothat,TürkTelekom hasindirectminoritysharesat shares atAveawhichisoneofthe threeGSMoperatorsinTurkey. AG andsubsidiariesofPantel, Türk Telekomalsopossess81.4% data andcapacityserviceprovidercompanyPantelInternational company AssisTTbesidesowning100%ofthesharesinitswholesale gaming company Sobee and customer services and call center provider Innova,onlineeducationsoftwarecompanySebit, TTNET, convergencetechnologiescompanyArgela,ITsolutions Owning sharesof99.9%atitscompanies;broadbandoperator country. its modernnetworkinfrastructurespreadthroughoutthe its individual and corporate customers in Turkey with The companyprovidesalargeprofileofservicesto million GSMsubscribersasofDecember31,2010. line, 6.7millionADSLline(wholesale)and11.6 Telekom group of companieshas16million fixed and GSMtobroadbandinternetservices.Türk telecommunications servicesfromfixed-line Türk TelekomGroupprovidesintegrated Türk elekomGroup between AsiaandEuropewiththehelpofJadiLinkProject. International, makesTurkeyacommunicationbridge strengthened itsregionalpositionafteracquiringInvitel and 11.6millionmobilesubscribers.TürkTelekomwhichhas 16 millionfixedsubscribers,6.7ADSLsubscribers As of2010yearend,TürkTelekomgroupcompanieshave of Treasury Undersecretariat of Turkey 30% Republic Free Float 15% A.Ş. Telekomünikasyon 55% Ojer available bothin fixedlineandmobilefields. Especially,ever- In the forthcoming period, significant growth opportunities will be their fieldswithsectorbasedand internationalexperience. management ofTürkTelekomconsists ofexecutivescompetentin line isconsideredanditleader fixedlineoperatorofTurkey.Top among itsinternationalpeerswhen thenumberofpersonnelper infrastructure. TürkTelekomisone ofthemostsuccessfuloperators from otherincumbentoperatorsisitsregionalpowerandadvanced One of the mostsignificantfeaturesofTürk Telekom that differs it Asia andbeyond. from IstanbultoEuropeandbeyond,JeddahtheSouth intercontinental capacityservices,providinganadditional the RedSeacorridors,meetingrapidincreaseindemandon unique andshortrouteasanalternativetotheMediterranean of anintegratedgiantmulti-passfiberopticnetworkbetween JADI LINKproject,thefirststephasbeentakenforestablishment Europe byundersigninganotherbigprojectin2010.Thanksto to turnTurkeyintoacommunicationbridgebetweenAsiaand In addition,TürkTelekomGrouphasprovidedagreatcontribution joining totheGroup. of InvitelInternationalwhosenamewaschangedasPantelafter Asian marketstotheWestEuropeandAmericadueacquisition the data / broadband traffic connecting Turkey, Middle East and broadband trafficintheMiddleandEasternEuropeRegion position asaconnectioncenterbyprovidingincreaseddata/ service in19countries.TürkTelekomGroupwillimproveitsregional companies intheregionthankstoitsfiberopticnetworkgiving the leaderindependentwholesaledataandcapacityprovider Invitel International in 2010. Invitel International is among unique geographicalpositionofTurkey,TürkTelekomacquired communication bridgeintheregionbytakingadvantageof Has takenanimportantstepforpositioningitselfasa Stock ExchangeMarket)sinceMay2008. public (TTKOM). Türk Telekom’s shares are traded in IMKB (Istanbul of Treasury.Theremaining15%shareshavebeenofferedtothe the Middle East, South Africa and Far East. Brought to manypurposesformprovidingacompletelyterrestrial, into beingthankstotheco-operationbetweenTürk the existingfiberopticinfrastructure, the project serves Telekom (Turkey), Saudi Telecom Company (Saudi in Italy,France,SpainandtheUK.Realizedbyusing Sea-Suez Canal-Mediterraneanrouteandfinishing Arabia), JordanTelecomGroup(Jordan)andSyrian and IndiafollowingtheIndianOcean-Red Telecommunication Establishment(Syria),the cable systemsstartingfromSingapore,Japan project turnTurkeyintoadooropeningtothe world. Inintercontinentalinternet,dataand be linkedtotheUSAbysubmarinefiberoptic second most significant connection corridor to fiber opticlinelengthof2,530kilometers,isthe voice transmission,JADILINK,whichhasatotal with thetechnology, TürkTelekomisgoingtobe offerservicesto a moredigitalenvironmentiswaiting forus.Whilekeepingpace where technologywillbecomemore convergent,willbeofferedin contents inentertainment, education, health andother fields, our convergence strategy also in the next years. A future in which In linewithourestimationsrelated tofuture,wewillcontinue in ordertoincreasecustomerlifetime valueeffectively. experience service quality high a always customers our Providing • markets through service internet of innovative products,priceplansandbyenteringintounder-reached growth and development Ensuring • digital the into entering by media andinformaticsfield portfolio revenue our Diversifying • our improve to order position inthemobilemarket in effectively more assets fixed our Using • portfolio andservices product integrated through communication household Boosting • Our strategiesforaccomplishmentofthesegoalsare: device toanyinformationareourbasicfocuses. social andbusinesslivesguaranteeingtheiraccessfromany by taking into account needs of our customers in their individual, Providing communicationefficiencyatmostaffordableprices and tobecomethemaincommunicationproviderinregion. and service market by adding value to the convergence services Türk Telekom targetsto continue its leadership in telecommunications Strategic Priorities customers byfocusingongroupsynergymoreintensely. will continuetoincreasequalityoftheservicesitofferedits undersign manyinnovationsinthisfield.TürkTelekomGroup its leadershipinconvergencefieldwillgiveittheopportunityto Pantel andJADILinkagreementswithsimilarprojects.Inaddition, Telekom willcontinueitsregionalstrategythatitimprovedwith a bigpotentialforbothfixed-lineandmobiledataservices.Türk growing importanceofinternetandincreasedatausetodaymean and providedan increaseinthisfigureby1%.Consequently, amore campaigns offeredtothemarket andextensivetariffadjustments, when comparedtotheprevious year owingtothenewtariffsand stopping thedecreaseinaverage communicationtime(MoU) in fixed-lineandmobilefields.In 2010,TürkTelekomsucceededin regard, anditcontinuesitsinvestment withoutinterruptionboth Türk Telekom Group has taken the necessary precautions in this fixed-line phoneuse. which stillcontinuesaffectednegativelyfixed-linevoicetrafficand after thethirdquarterof2008,inmobilecommunication market In 2009,pricewarsbetweenthemobileoperators,startedespecially mobile lineuseincreases.Thistendencyisalsotrueforourcountry. recent years,ithasbeenobservedthatfixed-lineusedecreaseswhile On theotherhand,telecommunicationssectorhassomerisks. In Sector andCompetition our innovativeprojects. better experiencesincommunicationssectorwillguidedirection of Our determinednessforallowingourcustomerstohavealways more focus more intensely on export of such products and services. offer innovativeproductsandservicessuchasinternetTV,we stand next to our customers in every field of the life. We continue to communication. Inaddition,asTürkTelekomGroup,wecontinueto in ordertopreventfleeoffixedlinetrafficintothemobile Our Company offers higher added value products to its customers to gainstrengthinitsregion. telecom companiesinvariouscountries,TürkTelekomwillcontinue region. Thanks tothe co-operations we realize with technology and being an effective player of thetelecommunications industry in our These initiatives are theindicatorsshowingthat weforgeaheadof most powerfulway. investments in line with our current convergence strategy in the Telekom, we lay foundations of this future with our continuing be neededinthedigitalworldoverconvergenceplatform.AsTürk

Türk Telekom TÜRK TELEKOM GROUP AND 2010 Annual Report 073 TURKISH TELECOM SECTOR OUTLOOK Türk Telekom TÜRK TELEKOM GROUP AND 2010 Annual Report 074 TURKISH TELECOM SECTOR OUTLOOK more investments. privatization, suchcircumstances alsoallowedcompaniestomake prominence duetothecircumstances developedinthesectorafter prices andofferingpackageservices tothemarketcameinto The ideaofprovidingbetterquality servicesatmoreaffordable that createsnewopportunitiesfor thetelecommunicationssector. in Turkey’spopulationandhousehold numberoutstandsasafactor country andcontinuinginfrastructure investments.Upwardtrend developing economy,modernnetworkinfrastructurecoveringall in itsregionthankstoyoungpopulationanddemography, Turkey isoneofthemostimportantandfastestgrowingmarkets of telecommunicationssectorinthenextperiod. and consequently this gives positive signals regarding improvement started inthesecondhalfof2009havebecomemoreevident2010, down duetofinancialcrisis,signalspointingeconomicrecovery growth ofmanysectors,includingcommunications,hasslowed thanks to its strongeconomy and financialsystem. Even though Turkey hascomeoutofthelastglobalfinancialcrisiswithlesslosses as reference. Technologies and CommunicationAuthority (BTK) havebeentaken In preparationofthissection,sectorreportsInformation Turkish elecommunicationsMarket AVEA willcontinuetofocusonprofitablegrowthin2011. offering itscustomersinnovativeproducts,tariffsandsolutions, and amortizationfive-foldwhencomparedtopreviousyearby Increased itsnetoperatingprofitbeforeinterest,tax,depreciation profitable growth andhasachieved a considerablesuccess. conditions stillexist.In2010,oursubsidiaryAVEA,focusedon In mobilecommunicationmarket,competitiveenvironment offering addedvalueproductstoourcustomers. in February2010.Furthermore,weaimtogrowADSLmarketby that areenrichedwithWebTVserviceTivibuofferedtothemarket thousand subscribersutilizedourhighqualityinternetservices when comparedtothepreviousyear.Asofyearend,nearly800 way. In2010,uptrendinthenumberofADSLsubscriberscontinued its fixedvoiceanddataactivitiestothecustomersinanenhanced made aninvestmentinamount TL 1,3billion in2010for offering its investmentsnottofallbehindinthecompetition,ourCompany in ourcountryandfacilitatetheirAccesstointernet.Continued growth ofthemarket,makefamiliarwithinternetallindividuals to applypositivepricediscriminationISSinorderallow In 2010,atthebroadbandinternetside,ourcompanycontinued affected financialperformanceshownbyourcompanyin2010. attracted greatinterest.Innovativeproductsofferedpositively under NowhereLikeHomeconceptandAdvantagetariffs in themarket.Atfixed-lineside,addedvalueproductsweoffered higher addedvalueproductsforimprovingitscompetitivestrength was prevented.Furthermore,ourcompanyoffereditscustomer severe decreaseinfixed-linetrafficsharethetotalvoice

and reached to 8.7 million as of end of 2010. In the fourth quarter of and reachedto8.7millionasofend2010.Inthefourthquarter of 18,604 in2003,hasincreasedbyaround460-foldwithinsevenyears, subscribers intherecentyears,andthisnumber,whichwasonly A substantialincreasehasbeenseeninthenumberofbroadband Access toInternetandBroadbandnvestments Advantage packagesintotalcustomersincreasedover35%. increased this time to 111 minutes. As of end of 2010, share of Home time whichhadandecliningtendencyinthelastfewyears,and achieved an upwardtendencyinmonthly average conversation price wereofferedtouseofourcustomers.In2010,TürkTelekom campaigns suchasfreefrom7pmtoamandGSMcallsatreduced city andintercitycallseachmonthforaconstantfee.Especially, customers had the opportunity to make 100, 200, 300 minutes inner- millions ofcustomers.ThankstoHomeAdvantagepackages,our Advantage packagesthatTürkTelekomstartedtoofferits One ofthemostimportantdevelopments2010wasHome in fixed-lineservices. to asignificantportionofpeoplelivinginTurkeyhasbeenachieved around 3.97istakenintoaccount,itconvenienttosaythataccess However, whenthefactthataveragehouseholdsizeinTurkeyis almost 16millionfixed-linesubscribersexisted,isaround22%. infrastructure. Asofend2010,penetrationrateinTurkey,where Turkey isamongtheleadercountriesinfieldofPSTN PSTN Services realized asTL21.6billionofend2010. operators’ totalnetsalesrevenuesincreasedby4.7%yoyand advance, isseen.Withinthiscontext,TürkTelekom’sandmobile especially revenuesfrommobiletelecommunicationsservicesin revenues is reviewed on annualbasis, an increase in revenues, of mobileandbroadbandsubscribers.Whendevelopmenttotal increased andasignificantsizehasbeenattainedinthenumber market intherecentyearsnumberofoperatorshasbeen Depending ontheregulationsmadeinTurkishtelecommunications Million Billion TL 10 15 20 25 0 1 2 3 4 5 6 7 8 9 0 5 20 0. 20 15. 0 03 Number ofBroadband InternetSubscribers 2 05 7

20 0. 5 04 1 20 16.

T 06 e 1 le 20 1.

co 59 05 m

MarketNetSalesRevenues 20 19. 20 2. 07 3 86 06

20 4. 20 20. 61 07 08 4

20 5. 9 08 9 20 20.

09 7 20 6.

78 09

20 21. 20 8. 10 6 56 10

Penetration 10 15 20 25 30 35 40 The userscanusethisserviceforacertainaccessfee. After theregulationsmadebyBTKin2010,nakedADSLservicestarted. subscribers usingotherlimitedandlimitlesspackagesisverylow. package while26%preferwith1Mbpsspeed.Thenumber of It isseenthatalmost64%ofADSLsubscribersprefer8Mbpsconnection was; around88%datadownloadingand12%uploading. downloading) wasalmost293,000TByte.Thedistributionofthisfigure quarter of 2010, total fixed broadband internet use (uploading and Turkey forbroadbandinternetaccessisaround512kbyte/s.Inthelast The minimumspeedofADSLandCableInternetservicesusedin xDSL whileEUaveragerealizedas79%ofJanuary2010. end of 2010, 93.5% of fixed broadband subscribers in Turkey was using ADSL hasbecomethemostcommoninternetaccessmethod.Asof result ofmigrationtoADSLfromdial-upandcableinternetconnection, increased from450thousandlevelsto6.7millionwithinfiveyears.Asa of xDSLserviceprovidingandthus,thenumberADSLsubscribers The investmentsmadebyTürkTelekomsince2005causeddeployment preferred morethanothertechnologies. of broadbandinternetaccessisconsidered;itseenthatDSL at limitedlevels.Whenthedistributionofsubscriptionsbytypes Cable TVplatform,satelliteandfiberarealsousedforinternetaccess copper cablenetwork,anditisfollowedbymobilebroadbandinternet. The primaryplatformusedinbroadbandaccessservicesTurkeyis fiber, cableandothermethods. of end2010.Therestbroadbandconnectiontypesweremobile, realized as6.3%whileTTNET’smarketsharewas71% operators isconsidered;marketshareofalternativewas When thedistributionofbroadbandinternetsubscribersinTurkeyby subscribers wasrealizedas27.9%. internet subscribers. Annual growth of total number of internet depending on the increase especially in fiber, mobile and cable upward trendinthenumberofinternetsubscriberscontinued 2010, internetsubscriptioninTurkeyisalmostupby6.3%yoy;general of January2010. subscribers usexDSLtechnology,whileEUaveragewas79%as widely usedinternetaccesstool.Asof2010yearend,93.5% cable internetaccesstoADSL,ADSLhasbecomeTurkey’smost 6,7 millioninfiveyears.Withthetransitionfromdial-upand the numberofADSLsubscribersincreasedfrom450,000to Thanks totheinvestmentsmadebyTürkTelekomsince2005, 0% 5% % % % % % % %

Denmark Netherlands Sweden Germany France UK Finland

Belgium 24.

EU27 Average 8%

Austria Ireland Spain Italy Czech Rep. Hungary Portugal Poland Bulgaria Romania 9. Turkey 8%

2010. 2010. in TTNETMusic,VideoandGame Portals continuedandincreasedin added value services, it gives for its customers. The interest shown TTNET alwaysenrichingthecontent byaddingnewservicestothe investments. wireless internetaccessalloverTurkey, andTTNETcontinuesthese areas withintheyear.Thereareover 8,000Wi-Fiaccesspointsproviding TTNET alsocontinuedstudiesrelatedtoextendingofWi-Ficoverage daily internetservicehavingdifferentoptions. It brokeanewgroundinTurkey2010andofferedtoourcustomers service forDSLcustomersalsoin2010. TTNET continuedtooffer3Gmobileinternetasasupplementary subscribers wasover60percentasofend2010. 8 Mbps,which was put into service in 2009, in the total number of In this regard, the share of ADSL NET package offering speeds up to increase qualityofinternetexperiencetheuserstomarket. The group company TTNET has offered many innovations that will important stepsinthisfield. Türk Telekomcontinuedbroadbandinvestmentsin2010andtook Being theleaderinwholesaleandretailinternetaccessservices, internet connection. BTK; WiMaxisawirelessbroadbandtechnologyofferinghighspeed The studiesconcerningWiMaxlicensesstillintheworkplansof respectively. Union averagesforthesamerateswererealizedas24.8%and48%, were 9.8%and38.9%,respectively.Ontheotherhand,European broadband penetrationratesinTurkeybypopulationandhousehold of BTK,andbasedonthedatabelongingto4thquarter2010;fixed an opportunityforfixedbroadbandmarket.Accordingtothereport The upwardtrendincomputeruseandownershipTurkeycreates

Türk Telekom TÜRK TELEKOM GROUP AND 2010 Annual Report 075 TURKISH TELECOM SECTOR OUTLOOK Türk Telekom TÜRK TELEKOM GROUP AND 2010 Annual Report 076 TURKISH TELECOM SECTOR OUTLOOK decrease ininterconnectionfees. tariffs thatbecamewide-spreadduetoincreasedcompetitionand share of 10% in 2008 increased to 28% in 2010 thanks to “all direction” In mobilecommunicationsmarket,off-nettraffichavingamarket July 2009. to 19.4 million as of end of 2010 after starting of 3G service offering in 25.3% to30.9%.Besidesthese,thenumberof3Gsubscribersreached within lastoneyear,therateofpostpaidsubscribersincreasedfrom subscribers consistedofprepaidasend2010,and subscribers profileevaluated,itisseenthatnearly69%ofmobile by operatorsaftertelephonenumberportability.Whenthemobile second subscriptionsbytheusersdueto“alldirections”tariffsoffered trend inthenumberofsubscribersresultedfromcancellation 2009 year-end results. It is reviewed thatthe reversing of upward upward trendinpreviousyears,hasdecreasedwhencomparedto subscribers andpenetrationrate,whichwasfollowingalwaysan to apenetrationrateof85.1%.Itisseenthatthenumbermobile were totally 61.8 millionmobilesubscribers in Turkey,corresponding According to2010,fourthquarterreportofBTK,as2010;there of 2010. time, AVEA’sshareinthetotalmobileconversationtrafficwas23%as most mobileoperatorwith263minutesmonthlyaverageconversation reached 13%EBITDAmargin.AVEA,Turkey’smakingpeopletospeak Depreciation andAmortization5-foldcomparedtolastyear 2010, AVEAincreaseditsNetOperatingProfitbeforeInterest,Tax, subscribers. Establisheditsstrategyonincreasingprofitabilityin 3 licensedoperatorsconductbusinessactivitieswithits11.6million a marketshareof18.8%inthemobilecommunicationssectorwhere Established in2004andtheyoungestoperatorsector,Aveahas group companyAvea,inwhichitownsthe81.37percentofshares. Türk Telekomoffersmobilecommunicationservicestogetherwiththe Mobile Communications as ofend2010. documentaries andchildren’s.Ithasalmost800thousandsubscribers types ofvideossuchasfilms,TVseries,lifestyle& internet. Atthesametime,itisaplatformthatincludesmanydifferent service providesaccesstomanyforeignanddomesticfilmsover Web TV service of TTNET, Tivibu was put into service in 2010. Tivibu TTNET customerswhoarewillingtoutilizefromtheseadvantages. internet subscribersandtheirfamiliescanbenefitbesidespotential are putupforsale.FromTTNETMobileadvantages,current services besidesproductpackagesalsoincludingTTNETproducts Under TTNETMobilebrand,mobilecall,3Ginternet,messaging operation betweenTurkey’sleaderinternetproviderTTNETandAvea. In 2010,TTNETMobileserviceofferedtoourcustomersthanksco- mobile subscribersasof2010yearend. of 23%thetotalmobiletrafficin2010.Turkeyhad61.8million Turkey, had263minutesofusagepermonth,whileitgotashare Avea, theGSMoperatorthatmakesitssubscriberstalkmostin Million 10 20 30 40 50 60 70 0

2004

2005 Number of3G

2006

2007 Mo

b 2008 ile Pe n e 2009 tra entertainment, entertainment, tion

2010 0% 20 40 60 80 10 % % % % 0%

Penetration became effectiveon10November 2008. to itscurrentnamewiththeElectronic CommunicationLawthat operation in August 2000 and the name of the board was changed with administrativeandfinancial autonomy;theboardstarted in January2000underthename TelecommunicationBoard which is the regulating authority in thesector, was established Information andCommunicationTechnologiesAuthority(ICTA) reconciliation activitiesaresubjecttothislaw. including frequency, and theregulatory,authorization, control and addition to theplanning and allocating of alllimited resources, of alltypeselectroniccommunicationdevicesandsystems, in network, themanufacture,import,sale,installationandoperation establishing of an electronic communication infrastructure and conducting ofelectroniccommunicationservices,andthe and proceduresrelatedtotheabove-mentionedsubjects.The in theservicesarea,andadditionallytodetermineprinciples network, besidestechnologicaldevelopmentandnewinvestments resources, and to promote the communications infrastructure and throughout thecountry,encourageeffectiveandefficientuse of regulation andcontrol,toprotectconsumerrights,deployservices competition intheelectroniccommunicationssectorthrough on 10thNovember2008.Thepurposeofthelawistofostereffective Electronic CommunicationsLawNo.5809,whichenteredintoforce Telecommunications activitiesinTurkeyarearrangedunder is subjecttoextensiveregulations. Telecommunication sector,inwhichTürkTelekomGroupoperates, Regulating AuthorityandSectoralegulations lines hasbeenstarted. have beenmadeandTLbasedpricingsysteminprepaidmobile completion feesandaverage38%discountinoff-netmaximum take effecton1stApril2010,average52%discountinmobilecall was thedecisionofBTK;pursuanttothiswhichwould One ofthemostsignificantdevelopmentsinsector2010 20 20 20 20 20 20 20 20 To OtherMobile 09- 09- 09- 09- 10- 10- 10- 10- 1 2 3 4 1 2 3 4 0% 7, 14, 63 20, 21, 21, 21, 22, 22,

48 81 11 27 82 12 13

20 % 40 On-Net % 88, 80, 67 72, 72, 73, 71, 71, 71, 84 60

54 24 59 88 34 62

Fixed+Abroad+Other 80 % 6, 6, 6, 4, 6, 6, 5, 3, 25 54 35 68 10 3 5 6 7

0% Within thescopeofthislaw,ICTAhasfollowingauthoritiesandresponsibilities. between the Ministry and operators, including Turkish Telecom, as well as the between theMinistry andoperators,includingTurkishTelecom, aswellthe signed contracts the of terms the that ensure to measures required the Taking • is through telecommunicationnetworks; it whether deciding ended, telephone services, including thenationalandinternationalsoundtransmission, has monopoly of right appropriate for the capital companies other than Turkish Telecom to provide Telecom’s Turkish As • non-conforming equipmentistakenout ofuse; conformity oftheequipmentinuseto the relatedstandardsandensuringthat and principlestobeappliedifanyinterconnection isrequired;establishingthe principles the mentioned underArticle2(a)oftheLaw No.406anddefiningtheprocedures to facilities telecommunications the of conformity the Defining • including telecommunications sectoraswellcompanymergersandtakeovers; Authority, Competition the of decisions the decisionsconcerningexaminationsandinspectionstobemadeon all on opinions Delivering • • Takingrequiredmeasurestoprotecttheconsumerrights; telecommunications the parts todelivertheiropinionsandmakecommentsbeforetheyarepublished; concerning regulations of publication services andinfrastructure,takingtherequiredmeasurestoallowforrelated the Before • the informationanddocumentsinitsareaofauthority; telecommunications of provision telecommunications sector in its owncapacity or upon complaints; demanding the concerning plans andpracticescontradictingwithcompetitionintheseservices issues the services andoperationofinfrastructureaswellexaminingtheconducts, Examining • general budgetupondemand; budget accountsandmakingthedecisiontotransferexcessrevenue account andannualoperationplanoftheAuthority;makingtransferbetween of Financeisnotexceed;confirmingtheannualbudget,finalincomeandexpense Radio Law,providedthatthereevaluationratedefinedeachyearbyMinistry of 27 Article in mentioned prices the canceling or allocating changing, Defining, • radio andTV,aremadefrompreviouslydefinedpointsofemission; antenna systemandfacilitiesinordertoensurethatallbroadcasts,including common of establishment the regarding principles and procedures the Defining • required; related legislation;notifyingtheconcernedbodiesandimposingsanctionswhen the TurkishTelecommunicationsectorwithrespecttotheirconformity inspecting the operators, subscribers and all real and legal personalities affecting and infrastructureoperation,performingotheradministrativetransactions; • Issuing regulations on issues related with its area of telecommunication services a telecommunications areaandconsideringthelatestdevelopments; as considered standards international institutionsconcerning the systems and equipment tobe used in the performance the implementing basis formanufacturingandusingwhilecooperatingwithnational and Defining • encouraging measures. in conformitywiththelawsafullycompetitiveenvironmentandtaking telecommunication equipmentandtoolscancarryouttheirservicesactivities in theoperationofinfrastructureandmanufacturesalesvarious infrastructure and operators, thoseengagedincommercialactivities,theprovisionofservices, services telecommunication to respect with that, Ensuring • required documentsandobservingtheirimplementation; telecommunication networks;examining,evaluatingthetariffs,confirming infrastructure, andotheroperatorsfortheiruseofinterconnectionsbetweenthe issues tobeimplementedfortheusersoftelecommunicationservicesand technical and provisions contract tariffs, price on criteria general the Defining • with thegeneralpermissions;takingrequiredmeasures; said concessionagreementandtelecommunicationlicensestheirconformity permissions; inspectingtheimplementationofprovisionsandconditions Transportation; makingproposalstotheMinistryonpreparationofgeneral in Turkey and on telecommunication licenses tobe issued by the Ministry of services and/orinfrastructureconcerningthecapitalcompaniesestablished telecommunication for signed be to contracts concession the on opinions Giving • and broadcasts illegal unlawful, for required interferences, procedures the Implementing • registration international institutions. and allocation the conducting planning, procedures, consideringthecapacityandbroadcastperiods,incooperationwith frequency of type Any • required bytheMinistryofTransportation. by laws,andpresentinformationtoHigherBoardofCommunicationsasmaybe required implementations, the evaluating and examining controlling, Observing, • concerning thetelecommunicationsarea; support fordomesticproductionandparticipationininternationalactivities in area cooperation withtheuniversitiesandmanufacturingestablishments;providing telecommunications the of technology in developments the Observing • establishments aswellrealandlegalpersonalities; Law and supervisingtherelatedoperationsofconcernedinstitutions Radio the in defined telecommunications a • Performingothertasks andauthorities,asrequiredbylaws. discrimination; • In cases to be defined by the Authority’s regulations, reasonably and without any contradicting theregulationsofAuthority; actions and procedures by defined are charges the that determined is it case In • actual or legal a is operator an that Authority monopoly orithasadominancyintherelated serviceorregionalmarket; the by determined is it case In • services thatitisobligedtoprovideasper theprinciplesofpublicservice; of otherservicesTurkishTelecomoranotheroperator,includingtheminimum costs the with services some of costs the cover to obligation an is there case of In • provision operators’ line andcircuitrentalsinthefollowingcases: the including charges, the the of limits upper and methods calculation the Defining • concerning arrangements infrastructure operation; the telecommunication services and/orchargesthattheymaytakeinreturnfor Making • other and Telecom Turkish framework ofaregulation; that procedures and method operators willuseaspertheprovisionsofArticle2LawNo.406within the Establishing • provisions ofLawNo.4054dated7.12.1994,ifrequired; infrastructure; andtorefertheCompetitionAuthoritywithinscopeof free competitionintheprovisionoftelecommunicationservicesandoperation of tariffs, network interconnections and roaming, do not have resultsthatprevent reference standard the concerning agreements, that ensure to measures Taking • 10 Article agreements; of terms implementation the include of the Law No.406 and the details that bind the interconnection and roaming that regulations the Issuing • to makechangesonthesecharges,ifrequired. included inthestandardprovisionsandrequirementsofrelatedoperators reasonably be may that charges reference interconnection standard Publishing • roaming for responsible and toapplytheCompetitionAuthoritywithintheseprovisions; operators infrastructure and service demands withintheframeworkofprovisionsArticle10LawNo.406 the Defining • for the interconnection agreement in case the parties cannot reach an agreement; interconnection; anddefiningtheprovisions,termspricesdeemedappropriate by theAuthorityconsideringpublicbenefit,upondemandofpartyfor procedures betweenthe parties within thescope of the principles to be defined of three months starting from the time of the first demand, applying the conciliatory maximum a within concluded not is agreement interconnection the case In • are kept, and requiredmeasuresaretakentoensurethatthetradesecretsofparties by operatorsfortheprovisionof interconnection among networks are pursued made be to contracts the that provided agreements these of announcing Public • the per as responsibility interconnection an having regulation tobepublished; operators the Defining • obligations arisingfromsuchcontracts; Turkish telecommunicationsectorand on their use of rights, authorities and contracts whichrequiretherepresentationofRepublicTurkeyaswell telecommunication institutions and their being parties to the international as well as operators of real orlegalpersonalitiesofthetelecommunicationssectorininternational membership the on Ministry the to opinion Delivering • of provision the concerning requirements and special programswitheconomicadvantagesfortheusers; rules principles, the Defining • service licenseorgeneralpermissions; contract foracertaintelecommunicationservice,issuingof requirements fortheoperatorsandtermsrelatedwithsigningofaconcession and principlesconcerningtheimplementationofArticle3LawNo.406,on terms the for Ministry the by issued be to regulations the on opinion Delivering • the by related servicesaredefined; issued licenses, telecommunication provided bytheMinistry,aswellgeneralpermissionsandinwhichtypesof the listing report concession contractsannuallysignedwithinthescopeofinformation a Preparing • required; related conditionsandincasetheMinistrydeemsthatsuchanestablishmentis not definedandmakeademandfromtheMinistryforestablishmentof a telecommunications service,pointoutthattheconditionsforauthorizationare provide to willing those or operators the case in opinion, advisory the Giving • authorization proceduresandprinciples; and howonwhichtermsitwillbemadeaswelltheapplication made be will through concessioncontract,telecommunicationlicenseorgeneralpermission authorization the whether on Ministry the to opinion Delivering • turnover oftheoperatorincasenon-conformity. terms; and imposing an administrative fine reaching the 3% of the previous year’s and concessioncontract,telecommunicationslicensegeneralpermission whether theactivitiesarecarriedoutinaccordancewithrelatedlegislation terms ofthetelecommunicationlicensesareapplied;observingandinspecting

Türk Telekom TÜRK TELEKOM GROUP AND 2010 Annual Report 077 TURKISH TELECOM SECTOR OUTLOOK Türk Telekom 2010 Annual Report 078 IMPORTANT DEVELOPMENTS AFTER THE PERIOD our Companyduring 2010; 9. ReleasingtheBoardDirectorsfor operationsandtransactionsof Board ofAuditors; as oftheappointmentdatefor remainingofficeoftheStatutory same conditions;approvalofthemembership oftheelectedmembers Assembly asperArticle351ofthe TurkishTradeLawandunderthe became vacantbecauseofresignations totheapprovalofGeneral Board ofAuditorstotheStatutoryforposition 8. SubmittingthetemporaryappointmentmadebyStatutory office oftheBoardDirectors; of theelectedmembersasappointmentdateforremaining valid asoftheappointmentdate;andapprovalmembership of theTurkishTradeLawandundersameconditionsinordertobe Article 10oftheArticlesAssociationourCompanyand315 because ofresignationstotheapprovalGeneralAssemblyasper Directors totheBoardofforpositionsbecamevacant 7. SubmittingthetemporaryappointmentsmadebyBoardof loss accountsfortheyear2010; 6. Reading,discussingandapprovingofthebalancesheetprofit/ for theyear2010; 5. Reading of the summary reports of the Independent Audit Company 4. ReadingoftheStatutoryBoardAuditorsreportforyear2010; 3. ReadingoftheBoardDirectorsannualreportforyear2010; General AssemblyMeetingandtheListofAttendees; 2. AuthorizingtheChairmanshipCommitteetosignminutesof 1. OpeningandElectionoftheChairmanshipCommittee; Quarters ofourCompanyinordertodiscussthefollowingagenda: General AssemblyMeetingon25April2011at14.00inAnkaraHead Board ofDirectorsourCompanydecidedtohold2010Ordinary Agenda ofOrdinaryGeneralssemblyMeeting later. be madeasperArticle315ofTurkishTradeLawandannounced have resignedfromtheirpositions.Electionforthevacantseatswill Yılmaz İsmet and Arıduru Ali Soluk, Habib Mehmet Company, our in Three ofourBoardMembersrepresentingTurkishTreasuryshares Resigning BoardMembers Directorate CulturalCenterofourCompany. Union heldon11March2011at11.00aminAnkaraGeneral signed betweenourCompanyandTurkishCommunicationWorkers Opening meetingforthe9thPeriodCollectiveLaborAgreement Start ofCollectiveLaborAgreementnegotiations new ChairmanofAuditCommittee. and assignourBoardofDirectorsmemberGhassanHasbaniasthe approval ofshareholdersinthefirstGeneralAssemblytobeheld; of theTurkishCommercialCodeandofferthisassignmentto for thevacantBoardofDirectorsmembershipasperarticle315 Directors andHeadofAuditCommittee,assignGhassanHasbani Samir AsaadOMatboulifromhispositionasmemberofBoard of ourBoardDirectorsmemberandChairmanAuditCommittee Board ofDirectorsourcompanydecidedtoaccepttheresignation Change inBoardofDirectors Mehmet HabibSolukhaveresignedfromhisposition. approval ofshareholdersinthefirstGeneralAssemblytobeheld. 351 article per as membership of theTurkishCommercialCodeandofferthisassignmentto Board Audit vacant the for Aydın Lütfi assign Tuğcu, Tuna Prof. Ass. Board Audit our of member the Audit BoardofourCompanydecidedtoaccepttheresignation Change inAuditBoard during 2010; 16. InformingtheGeneralAssembly about donationsandaidsmade or itssubsidiaries,undertheCorporate GovernancePrinciples; affected inanywayrelationtothe servicesitdeliverstoourCompany information, andthattheindependence oftheauditcompanyisnot other reportswiththestandards, theaccuracyandprecisionof Company aboutthecompliance ofthefinancialstatementsand 15. the CorporateGovernancePrinciples; 14. InformingtheShareholdersaboutdividenddistributionunder Auditors; 13. DefiningthesalariesofBoardDirectorsandStatutory of AssociationourCompany; published bytheCapitalMarketBoardandArticle17/AofArticles 14 oftheRegulationonIndependentExternalAuditinCapitalMarkets Bağımsız Güney Company’s operationsandaccountsfortheyear2011,asperArticle with agreement which our Company is currently working, for the purpose of auditingour an with company audit independent signing the A.Ş., SMMM ve Denetim on Resolving 12. about distributionoftheprofitgeneratedin2010; 11. DiscussingandresolvingontheproposalofBoardDirectors of ourCompanyduring2010; 10. ReleasingtheStatutoryBoardAuditorsforoperationsandtransactions Reading the written explanations of the Independent Audit Reading thewrittenexplanationsofIndependentAudit 22. and 335oftheTurkishTradeLaw; does suchworks,andtocarryoutother transactions,asperArticle334 own behalforonof others ortobeapartnercompanieswho works within or out of the scope of the Company’s operations on their 21. Resolving on giving permission to the Board Directors to carry out 09.09.2009 oftheCapitalMarketBoard; about revenuesorinterestsgenerated,underDecision28/780dated and mortgagesgivenbyourCompanyinfavorofthirdparties, 20. InformingtheGeneralAssemblyaboutguarantees,pledges mentioned acquisitions; to establishSpecialPurposeVehicle(s)whenrequiredforabove 19. DiscussingandvotingforauthorizingtheBoardofDirectors acquisition; 2011 upto300millionEurowhichwillbeseparatelyvalidforeach acquisitions to be made by our Company or its subsidiaries during or person(s) designated by the Board of Directors for company 18. DiscussingandvotingforauthorizingtheBoardofDirectors the implementationofIFRIC12; Communiqué SerialIVNo.41oftheCapitalMarketBoardandabout 2010 withassociatedpartiesandtheirvaluationsasperArticle5ofthe 17. Comments andclosing. Informing the General Assembly about transactions made during Informing theGeneralAssemblyabouttransactionsmadeduring

Türk Telekom 2010 Annual Report 079 IMPORTANT DEVELOPMENTS AFTER THE PERIOD Türk Telekom 2010 Annual Report 080 Türk TelekomünİkasyonANONİMŞİRKETİ CORPORATE GOVERNANCEPRINCIPLESCOMPLIANCEREPORT

Türk Telekom 2010 Annual Report 081 Türk Telekom 2010 Annual Report 082 CORPORATE GOVERNANCE PRINCIPLES COMPLIANCE REPORT requirements arisingfromcapitalmarketregulationsandcorporate governancepractices. by theCapitalMarketsandInvestorRelationsDirectorAbdullah Orkun Kayawhoholdsrequiredlicenses.Hecoordinatestheexecutionof by investorsandanalysts,carryingouttheactivitiestargeted atincreasingtheCompany’ssharevalue.TheDepartmentissupervised CEO withrespecttostructured maintenance ofrelationships with existingandpotentialshareholders, effectively respondingtothequeries At TürkTelekom,aCapitalMarketsandInvestorRelationsDepartment (“TheDepartment”)hasbeenformedwhichreportsdirectlytothe 1.1. InvestorRelationsUnit 1. Shareholders inviting theBoardofDirectorstoconvene.Nootherformormodeinvitationmeetingisprovidedfor. Pursuant totheTurkishCommercialCode,eachmemberofBoardDirectorsisentitledfileawrittenrequestwithChairmanfor That theArticlesofAssociationdoesnotcontainaclauseenablinginvitationshareholdersandstakeholderstoBoardDirectors: Absence ofaCorporateGovernanceCommittee:ActivitiesforestablishingCommitteearepresentlyinprogress. statutory, andourcompanyisnotauthorizedtoamendtheseprivileges. Presence of voting privileges: The privileges attached the Golden Share held by the Republic of Turkey Undersecretariat of Treasury are regulations isample. Regarding this matter, our companyis of theconviction that theframework provided for by theTurkish Commercial Codeand the CMB That the Articles of Association entitle shareholders to appoint a special auditor, and that there is no additional provision on minority rights: the otherhand,ourcompanyhaschosennottousecumulativevotingsystemsinceitisapracticalsystem. of independentmembersundercertainconditions.OurBoardshallincludeanmemberifandwhentheseconditionsoccur.On Absence ofanindependentBoardmember,andthatcumulativevotingsystemisnotused:OurArticlesAssociationallowfortheelection Reasons fornon-compliedCorporateGovernancePrinciples fully complyingwiththeCorporateGovernancePrincipleswillcontinue. Corporate GovernancePrinciplestoalargeextent,hasputthenecessarypoliciesandprecautionsintoeffectourCompany’seffortsfor This ratingassignedtoTürkTelekombasedontheCorporateGovernancePrinciplesisaclearsignthatourCompanycompliantwithCMB Total Board ofDirectors Stakeholders Public DisclosureandTransparency Shareholders Sub Categories principles. Breakdownofourcorporategovernanceratingundermajorcategoriesisasfollows: and Transparency,Stakeholders,BoardofDirectors)weighteddifferentlywithintheframeworkCMB’sCorporateGovernance Corporate GovernanceRatingwasdeterminedasaresultoftheexaminationmadeunderfourmajortopics(Shareholders,PublicDisclosure from 8.01to8.27. Corporate GovernanceandCreditRatingCompanyincorporatedbyCMB.Thus,ourCompany’shasincreased Türk Telekom successfully received an overall Corporate Governance rating of 8.27 as a result of an independent assessment by SAHA Relations Department. Telekom corporatewebsiteconstantlykeptup-to-date,aswellthepossibilitytodirecttheirqueriesCapitalMarketsandInvestor them availabletoitsshareholderssatisfythesaidprinciples.ShareholdershaveaccesscomprehensiveinformationthroughTürk Capital MarketsBoardofTurkey(“CMB”).TheCompanyupdatesitsannualandinterimactivityreportscorporatewebsite,makes Türk Telekomünikasyon A.Ş. (“Türk Telekom”) pays utmost attention for implementing the Corporate Governance Principles published by the Statement ofCompliancewithCorporateGovernancePrinciples % Weight 100 25 15 35 25 2009 8,01 8,27 6,56 8,72 9,15 8,98 7,69 7,94 2010 6,73 9,22 shareholders representingonetwentieth oftheCompany’ssharecapitalareentitledtoexercisethis right. right. However,pursuanttoarticle 348/2oftheTurkishCommercialCode,CapitalMarketLaw andapplicablelegislation,minority The Company’s Articles of Association contain no provisions stipulating the request for appointment of a special auditor as an individual did notrequesttheappointmentofaspecialauditor. shareholders period, reporting the In A.Ş. SMMM ve Denetim Bağımsız Güney of entity legal the under services said performs which Young, proposal bytheBoardofDirectors.Independentauditandfinancial consultancyservicesfor2010activitieswereprovidedbyErnstand Company activitiesareperiodicallyauditedbyindependentauditors andstatutoryauditorsappointedbytheGeneralAssemblyupon Content’ below. accessible atwww.turktelekom.com.tr is periodicallyupdated.Furtherdetailsarepresented under theheading‘CorporateWebsiteandits portion ofthisinformationisprovidedonthewebsitebothinTurkish andEnglishlanguages.Thewebsitecoveringtherelateddocuments provided under the following headings on the website so as to ensure rapid and easy access to information about Türk Telekom. A large In additiontotheforegoing,withincontextofshareholders’ exerciseoftheirrighttoobtaininformation,dataandinformationare and Englishlanguages.Theyarealsoregularlycommunicatedtothose registeredtoourdatabaseviaemails. Telekom thatareofinteresttoshareholdersregularlycommunicatedtheconcernedpartiesbycorporatewebsitebothinTurkish Türk Telekomintherelevantperiodwereanswered.Furthermore,currentandretrospectiveinformationdevelopmentsrelatingto possible uponcontactingtherelevantpersonwithhighestauthorityonrelatedmatter.Over1000informationrequestsreceivedby Markets andInvestorRelationsDepartmentbyletter,phone,emailothermeansareansweredinthefastestmosteffectiveway Queries, otherthanthoserelatingtotradesecretsandundisclosedinformation,receivedfromshareholdersanalystsbytheCapital 1.2. Shareholders’ExerciseoftheirRighttoObtainInformation teleconferences, therebycommunicatingwithover200shareholdersand/oranalysts,ensuringthatallquerieshavebeenfullyrespondedto. representatives fromover330investmentcompanies.Inaddition,theDepartmentheld70internalinvestormeetingsandaround50 participated in 24 international and 3 domestic investor conferences in the same period, during which contacts were made with over 330 The Departmentreceivedover1000informationrequestsbyphoneandemailduring2010,allofwhichwereanswered.Company Please contactSüleymanKısaçandElaGözdeTellioğluforquestionsrelatedwithdi Ayça Sincan Zehra Saygın Bayram VeliSalur Lütfi KeremAkıllı Furkan Onat Eren Öner Elif Küçükçobanoğlu Ela GözdeTellioğlu Dr. RasimÖzcan Ziya Parıltılı Yunus EmreÇiçek Süleyman Kısaç Abdullah OrkunKaya Full Name Contact informationforemployeesworkingintheCapitalMarketsandInvestorRelationsDepartmentisasfollows: investor and conferences in participating • MonitoringpublicdisclosuresmadepursuanttotheCompany’sdisclosurepolicyandapplicablelegislation. by Markets Capital Turkish the and Telekom meetings, Türk on informed regularly investors Keeping • access toaccurateandcompleteinformation, regarding reports activity interim and annual and financial andoperationalresultswithinvestorsthepress;updatingcorporatewebsiteregularlytoensurethatshareholdershave releases press presentations, investor statements, year-end and interim the Sharing • and guaranteeingthatreportsforinvestorsarepreparedinanaccuratecompletefashion, • Responding to information requests timely, by analysts researching about the a Company; ensuring proper and in optimum promotion of the strategies Company and standing financial activities, Company’s accurate andcompletemanner, the on informed regularly investors potential and existing Keeping • • IntroducingandpresentingtheTürkTelekomGrouptodomesticforeignindividualcorporateinvestors, related processesforensuringcompliancewithCorporateGovernancePrinciples, monitoring and disclosures external and internal necessary handling and Regulations, Market Capital the of requirements the Performing • Primary activitieshandledbytheDepartmentareasfollows: Team Assistant Assistant Associate Assistant Associate Associate Associate Associate Associate Associate Advisor Manager Manager Manager Director Title 0212 30680 Phone number vidends, GeneralAssemblyandtransferofshares. [email protected] E-mail address

Türk Telekom 2010 Annual Report 083 CORPORATE GOVERNANCE PRINCIPLES COMPLIANCE REPORT Türk Telekom 2010 Annual Report 084 CORPORATE GOVERNANCE PRINCIPLES COMPLIANCE REPORT It wasresolvedthatTürkTelekomünikasyon A.Ş.2009AnnualReportshallbeapproved. • Resolutionno.22datedMarch 8, 2010 opinions oftheAuditCommittee,shallbesubmittedtoGeneral Assembly. It wasresolvedthattheapprovalofsigninganewcontractwith Ernst&Young,anindependentauditcompany,in2010onthebasisof • Resolutionno.9datedFebruary11,2010, Caddesi No:15Kat:234367Elmadağ-Şişliİstanbul. 6. 141,471,228 shallbesetasideandtheremainingTL1,236,746,731 bedistributedascashseconddividend. dividend base),TL352,965,545ascashfirstdividend,inaccordancewith“CMBCommuniqueSerialIVNo:27”.Thesecondlegalreserveof 5. 1,764,827,723 shallbethebaseforfirstdividend. distribution), remainingTL1,731,183,503shallbethedistributableprofitof2009.Addingdonationsmadein200933,644,220, 4. reserves, tosetasideTL100,546,497asfirstlegalreservesfor2009. 20% ofthepaidincapital.Sincereserveamountwillreachtocapital,bysettingasideTL100,546,497asfirstlegal 3. distribution, 2. Commercial CodeclausesandTaxProcedureLawisTL2,746,613,306, with “CMBCommunique About Financial Reporting inCapitalMarketsSerial:XINo:29”isTL1,831,730,000and according totheTurkish 1. held onApril6,2010; The detailsoftheproposaltoGeneralAssemblyarefollowing,ItisresolvedfordecisionourCompany’sbe gross cashdividendpereachshareworthfor1Kurusnominally. set asidewhichisTL1,589,712,275totheGeneralAssemblybeheldonApril6,2010.Thisamountcorresponds0.4542035Kurus(%45.42035) It was decided to recommend to distribute the 100% of the remaining profit of 2009 ascash dividend after first and second legal reserves are • Resolutionno.5datedFebruary11,2010 Independent Auditors. International FinancialReportingStandardsundertheTurkishCapitalBoardCommuniqué20SerialNo.XIandwasapprovedby Approval oftheconsolidatedfinancialstatementsregardingperiodbetween01.01.2009–31.12.2009whichwaspreparedasper • Resolutionno.4datedFebruary11,2010 authority forabovementionedpositions. be acting as Türk Telekom Finance VP until a new Finance VP for TT is appointed, and Mustafa Uysal will be given the Group D signature and ofrequiredworkstransactions;FinanceVPsTürkTelekomitssubsidiariesshallreporttohim;MustafaUysalalso It has been resolved that Mustafa Uysal is appointed as TT Group CFO, in charge of financial coordination of Türk Telekom and its subsidiaries, • Resolutionno.3datedFebruary1,2010 bid forthePackagesAandC,asdefinedinrelevantTenderSpecifications. 1st Leaguebroadcastingrightsinrespectof2010-2011,2011-2012,2012-2013,and2013-2014footballseasons(the“TenderProcess”)submit Our CompanyshallparticipateintothetenderprocessinitiatedbyTurkishFootballFederation(“TFF”)fortransferofSuperLeagueand • Resolutionno.1datedJanuary11,2010 Main Resolutionsmadewithin2010areasfollows: 1.3. BoardMeetings The distribution of the cash dividends to our shareholders shall begin on May 24, 2010, at Merkezi Kayıt Kuruluşu A.Ş. Süzer Plaza Askerocağı shareholdersandtotalgrosscashdividenddistributionamount shallbeTL1,589,712,275. b) Accordingly0.4542035Kurus(%45.42035)grosscashdividendper eachshareworthfor1Kurusnominallyshallbedistributedtoour a) TotalcashdividendamounttobedistributedofTL1,589,712,275 shallbecoveredbycurrentperiodnetprofit. Although theminimumdividendpayoutratiodeterminedbyCMBfor2009is0%,itdecidedtodistribute20%ofTL1,764,827,723(first After settingasidethefirstlegalreserveofTL100,546,497fromconsolidatednetprofit1,831,730,000(baseamountfordividend In accordancewithArticle466ofTurkishCommercialCode,itisobligatorytosetasidefirstlegalreservesuntilthereserveamountreaches According totheCMBannouncementdatedJanuary27,2010,profitaftertaxamountofTL1,831,730,000isbasefordividend Our company’s net profit of the fiscal year 2009 according to the independently audited consolidated financials prepared in accordance such acquisitionincludingprovision offundingfortheacquisition,includingpowertodelegate suchauthoritiestoanyofitsmembers. negotiate and sign agreements and other documents; decide on the final offer; make the final offer and make all transactions related to Hungary-based InvitelInternational whoisaleadingindependentwholesaledataandcapacityprovider inMiddleandSoutheasternEurope; It hasbeenresolvedthattheExecutive Committeeshallbeauthorisedtocarryoutallworksand transactionsrelatedtoacquisitionof • Resolutionno.33datedApril20, 2010 CMB CommuniqueSerial:XI,No:29fortheperiodbetween01.01.2010 –31.03.2010andtheinterimactivityreportforsameperiod. It hasbeenresolvedthat,ReviewandapprovalofourCompany’s consolidatedfinancialstatementswhichwaspreparedaccordingtothe • Resolutionno.26datedApril20,2010 “Customer established recently the of VP Acting as Relations Department”. appointed be shall Kılıç Yaşar Haktan removed; be shall position former his for given It hasbeenresolvedthatPaulTaylorshallbeappointedasChief AdvisortoCEOforCommercialTransformationandsignatureauthority • Resolutionno.24datedMarch10,2010 19. Wishesandclosing. articles 334and335oftheTurkishCommercialCode; the Company’sfieldsofactivityortoparticipateincompaniesengagedsuchbusinessesandperformotheractsaccordancewith 18. Deciding on permittingthemembersof BoardofDirectors to carryout businesses directly or onbehalfofotherswithin outside of or thederivedincomeinterestthereof,inaccordancewithDecisionofCMBdated09/09/2009andnumbered28/780; 17. GivinginformationtotheGeneralAssemblyregardingguarantees,pledgesandmortgagesprovidedbyCompanythirdparties 16. GivinginformationtotheGeneralAssemblyregardingtransactionsmadewithrelatedpartiesduring2009; 15. GivinginformationtotheGeneralAssemblyregardingdonationsmadeduring2009; 14. GivinginformationtotheGeneralAssemblyregardingdisclosurepolicypreparedbyBoardofDirectors; independency intheservicesprovidedtoourCompanyanditssubsidiaries/affiliates; with thestandards,accuracyandintegrityofinformationthereinnon-existenceanyissueshinderingitsoraffiliates’ 13. ReadingthewrittenexplanationofIndependentAuditCompanyoncompliancefinancialstatementsandotherreports Principles; 12. GivinginformationtotheGeneralAssemblyregardingdividenddistributionpolicyinaccordancewithCorporateGovernance Corporate GovernancePrinciples; 11. GivinginformationtotheGeneralAssemblyregardingcodeofethicspreparedbyBoardDirectorsinaccordance with the Markets issuedbytheCapitalMarketBoardandArticle17/AofArticlesAssociationCompany; the operationsandaccountsofCompanyforyear2010asperArticle14RegulationonIndependentExternalAuditinCapital offering that the Independent Audit Company Güney Bağımsız Denetim ve SMMM A.Ş. (Ernst&Young) shallcontinueitsauditassignmenton 10. DiscussinganddecidingontheBoardofDirectors’proposal,givenpursuanttorecommendationCompany’sAuditCommitee, 9. 8. 7. 6. 5. 4. 3. 2. 1. agenda attheaddressofTürkTelekomünikasyonA.Ş.HeadQuartersCulturalCenter,TurgutÖzalBulvarı06103AydınlıkevlerAnkara. The Ordinary General Assembly Meeting for the year 2009 shall be held on April 06, 2010 (Tuesday) at 10.30 a.m. to discuss the below mentioned • Resolutionno.23datedMarch8,2010 Discussing anddecidingontheporposalofBoardDirectorsregardingdividenddistributionforyear2009; Release oftheAuditBoardmembersfromoperationsandactionsCompanyduringyear2009; Release ofthemembersBoardDirectorsfromoperationsandactionsCompanyduringyear2009; Reading, discussingandapprovingofthebalancesheetprofit/lossaccountsforyear2009; Reading oftheIndependentAuditCompany’sreportsummariesforyear2009; Reading oftheAuditBoardreportforyear2009; Reading oftheBoardDirectorsannualreportforyear2009; Authorization oftheChairmanshipCommitteetosignminutesGeneralAssemblyMeetingandListAttendees; Opening andElectionoftheChairmanshipCommittee;

Türk Telekom 2010 Annual Report 085 CORPORATE GOVERNANCE PRINCIPLES COMPLIANCE REPORT Türk Telekom 2010 Annual Report 086 CORPORATE GOVERNANCE PRINCIPLES COMPLIANCE REPORT Committee. shall beappointedastheChairmanofAuditCommittee,and Mr.Dr.BoulosH.B.Doany shallbeappointedasamemberoftheAudit Upon theresignationofMr.BasileYaredfromhisdutiesasChairman andmemberoftheAuditCommittee,Mr.SamirAsaadOMatbouli • Resolutionno.47datedOctober20,2010 appointed tothispositionasamemberoftheExecutiveCommittee. Upon the resignation of Dr. Boulos H.B. Doany from his duty as the member of the Executive Committee, Mr. Hakam Kanafani, shall be the approvalofshareholdersinnextgeneralassembly shareholders. appointed to this position as a member of the Board of Directors pursuant to Article 315 of the Turkish Commercial Code, and submitted to Upon theresignationofMr.BasileYaredfromhisdutyasmember oftheBoardDirectors,Mr.HakamKanafani,TTGroupCEO,shallbe • Resolutionno.46datedOctober20,2010 Standards withintheframeworkofCMBCommuniqueno.29serialXI,andinterimactivityreportforsameperiod,shallbeapproved. Our Company’sinterimfinancialstatementsdated30.09.2010whichhavebeenpreparedaccordingtotheInternationalFinancialReporting • Resolutionno.45datedOctober20,2010 (General Manager)andTürkTelekomManagementinasubsequentmeeting. The ExecutiveCommitteeshallbeauthorizedtodeterminetheauthoritylimitsgrantedTürkTelekomGroupCEO,CEO - Theappointment,withimmediateeffect,ofMr.KamilGökhanBozkurtasTürkTelekomCEO(GeneralManager)shallbeapproved. Telekom GroupCEO; - TheestablishmentofaTürkTelekomGroupCEOpositionandtheappointment,withimmediateeffect,Mr.HakamKanafani asTürk - TheresignationofDr.BoulosH.B.Doany,dated20August2010,fromhispositionasTürkTelekomGeneralManager; It hasbeenresolvedthat: • Resolutionno.44datedAugust20,2010 No: 29fortheperiodbetween01.01.2010–30.06.2010andinterimactivityreportsameshallbeapproved. It has been resolved that our Company’s consolidated financial statements which was prepared according to the CMB Communique Serial:XI, • Resolutionno.43datedJuly19,2010 7. Closing. 6. Wishes, 5. DiscussingandvotingofauthorizingtheBoardDirectorstoestablishSPV(s)whenneededinrelationsuchacquisitions; company(s) withintheyear2010uptoEUR300,000,000(threehundredmillion)foreachacquisition; 4. DiscussingandvotingofauthorizingtheBoardDirectorsand/orperson(s)tobedelegatedbyforacquisition EuroWeb RomaniaS.A.; entire issuedsharecapitalofInvitelInternationalAG(includingitssubsidiaries),AT-INVITELGmbH,HungaryKftandS.C. approval oftheacquisitionInvitelHoldingsA/S’sinternationalwholesalebusiness(“InvitelInternational”collectively),comprising 3. PursuanttoParagraph(g)ofArticle21/6“InvitationMeetingandQuorum”theArticlesAssociationourCompany, 2. AuthorizingtheChairmanshipCommitteetosignminutesofExtraordinaryGeneralAssemblyMeeting,andListAttendees; 1. OpeningandElectionoftheChairmanshipCommittee; agenda attheaddressofTürkTelekomünikasyonA.Ş.GenelMüdürlükKültürMerkezi,TurgutÖzalBulvarı06103AydınlıkevlerAnkara. It isdecidedtoholdtheExtraOrdinaryGeneralAssemblyMeetingat14:00,onTuesday,08thofJune,2010discussbelowmentioned • Resolutionno.36datedMay7,2010 transaction), although notforeseeninthebudget; • Enteringintoa contract orundertakingthatmight incurexpensesfortheGroupCompany inexcessofUSD50million (foreach k) Unlessapproved pursuanttoArticle12oftheArticles ofAssociation,thefollowing decisionsconcerningtheBoard ofDirectorsMeetings: set outinArticle30oftheArticles ofAssociationconcerningDividendPaymentTimingand j) TheCompany’smakingordeclaring aprofitsharedistributionorundertakinganyother inrelationtotheshares,saveforthose i) Effectingamaterialchangetothe natureofthebusiness; h) Discontinuinganymajoractivity relatingtothebusiness; g) TheCompany’smergingwithanother companyoracquiringasubstantialportionofanothercompany; shares andothersecuritiesbythe Company; f) Decreasingthecapitaloraltering therightsenjoyedbyanyshareclass,orredemption,purchase orotherwiseacquisitionofCompany participate inthesharecapital,orconvertinganydocumentinto shares orsecuritiesotherthanintobonusshares; e) Making alterations inthe share capital,orcreating, allocating or issuing shares orother securities, or grantingoption rights or the rightto d) ChangingtheCompany’sfiscalyearoraccountingpolicies,save forthoseimposedlegally; c) MakingalterationstotheCompanyname; b) Makingmodificationstothesearticlesofassociation; a) Filingawrittenapplicationforliquidation; adopted bytheGeneralAssembly”asfollows: subject tothelaw,relatingCompany’sbusinessaffairs.”Article 21oftheArticlesAssociationlists“MaterialDecisionstobe Article 19oftheArticlesAssociationreadsasfollows: “The GeneralAssemblyis the decision-making body possessing all kinds of authorities, 1.4. InformationaboutGeneralAssemblyMeetings It hasbeenresolvedthatfive-yearbusinessplanoftheCompanyand 2011Budgetshallbeapproved. • Resolutionno.52datedNovember30,2010 - SalesVPAydınÇamlıbelshallbeappointedasConsultanttotheCEO. - TimurCeylanshallbeappointedasTechnologyVP; - NetworkDirectorMemetAtalayshallbeappointedasactingOperationsVP; - OperationsVPCelalettinDinçershallbeappointedasSalesVP; Departments, andtoredefineroles,authoritiesresponsibilitiesoftheOperationsTechnologyDepartments; - TheCEOshallbeauthorisedtoreviseandannouncetheorganizationchartfordirectorpositionsunderOperationsTechnology works andoperationsexistingpersonnel; - NetworkDirectorate,AccessDirectorateandNATOTAFICSshallbetransferredtotheOperationsDepartmenttogetherwith together withitsworksandoperationsexistingpersonnel; - InformationTechnologies,NetworkArchitectureandServiceManagementDirectoratesshallbetransferredtotheTechnologyDepartment - AnewdepartmentatVPlevel,namelyTechnologyDepartment,directlyreportingtotheCEOshallbeestablished; It hasbeenresolvedthat; • Resolutionno.51datedNovember30,2010 within 1year. “Human Resources,SupportandRegulationsVicePresidency”,reevaluatethenecessityfornominatingchangestothisHRorganisation and Logistic Support Directorate”, and transferring Facilities Management and Logistic Support Directorate under a direct report link to transferring itscurrenttaksandemployeestothisDirectorate,changingthenameofDirectorateas“FacilitiesManagement - Mergingthe“LogisticSupportDirectorate” under RegulationandSupportVicePresidencywith“FacilitiesManagementDirectorate” with Estate Directorate”tonewlyestablished“HumanResources,SupportandRegulationsVicePresidency”, Vice PresidencyDirectorates;“RegulationsComplianceDirectorate”,andCompetition“Construction-Real Directorate”, “TTAcademy“HRStrategyandTalentManagementDirectorate”followingRegulationSupportServices - TransferringthecurrenttasksandemployeesoffollowingHumanResourcesVicePresidencyDirectorates;“LabourRelations “Labour RelationsDirectorate”;“Recruitment,Compensation&TalentManagementDirectorate”to“HRStrategyandManagement”, - ChangingthenamesoffollowingHumanResourcesVicePresidencyDirectorates:“IndustrialandBusinessRelationsDirectorate”to Vice PresidencywithHumanResourcesPresidency, - Establishing a newVice Presidency called “Human Resources, Support and Regulations” by mergingthe Regulation And Support Services Efficiency andcontinuationoftheCorporateTransformationDirectoratewithitsactivitiesunderadirectlinktoCEO. - ChangingthenameofOrganizationandProcessManagementinHumanResourcesVicePrecidencytoCorporateTransformation - ContinuationoftheInternalCommunicationDirectoratewithitsactivitiesunderadirectreportlinktoCEO, • Resolutionno.48datedOctober20,2010

Türk Telekom 2010 Annual Report 087 CORPORATE GOVERNANCE PRINCIPLES COMPLIANCE REPORT Türk Telekom 2010 Annual Report 088 CORPORATE GOVERNANCE PRINCIPLES COMPLIANCE REPORT applicable legislation. decided bytheGeneralAssembly uponproposalbytheBoardofDirectors,inaccordancewith provisions oftheCapitalMarketLawand As statedintheCompany’sArticles ofAssociation,thedatesandmannerdistribution annualprofittotheshareholdersare liabilities ofgroupcompanies,and conditionsofthosecontractsthataresignedwithcreditors. the otherhand,whendetermining thedividenddistributionproposal,BoardofDirectorsalsotakes intoaccounttheshorttermfinancial dividend polciyweresubmittedto theshareholders’sinformationin2009OrdinaryGeneralAssembly MeetingconvenedonApril6,2010.On Our Companyadoptsapolicyofdistributingthewholeamountdividends thataredistributableasperCMBregulationsandourCompany’s periods oftimebyapplicablelegislation. however, holder of the Class C share does not receive any share from the profit. Türk Telekom dividends are paid within the legally prescribed The ArticlesofAssociationgrantnoprivilegesregarding participation intheCompany’sprofit.Eachshareisentitled to equalprofitshare; 1.6. DividendDistributionPolicyandTiming 2010. discretion of publicly held joint stock companies by the relevant CMB communiqué, this system was not implemented by the Company in There arenocrossshareholdinginterestsintheCompany’sshare capital.Sincetheimplementationofcumulativevotingrightisleftto of thepaid-incapital.However,minorityshareholdersarenotrepresented ontheBoardofDirectors. The Company’sArticlesofAssociationcontaintheprovisionthatminority rightsaretobeexercisedbyshareholdersrepresentingatleast5% share foratermofofficethreeyearsandresignedonMarch8,2011. General Assembly Meeting of November 14, 2008, Mehmet Habib Soluk was elected as the Board member to represent the Class C golden Türk Telekom to represent the golden share. Holder of the Class C golden share may not participate in capital increases. At theExtraordinary As required by the Company’s Articles of Association, holder of the Class C golden share will have one member on the Board of Directors of c) Registrationofanytransferregisteredsharesintheshareledger. b) Transferofanyregisteredshareswhichwouldresultinachangethecontrolmanagement; a) AmendmentstotheArticlesofAssociation; at theBoardofDirectorsorGeneralAssembly.Otherwise,anytransactionsoperformedwillbedeemednullandvoid. national security,thefollowingmaynotbecarriedoutwithoutaffirmativevoteofClassCgoldenshare,irrespectiveitsbeingvoted All sharesofTürkTelekom,savefortheoneClassCgoldenshare,canbesold.Inordertoprotectnationalbenefitsinrelationeconomyand 1.5. VotingRightsandMinority Minutes ofourGeneralAssemblyMeetingaremadeavailableforuninterruptedaccessbyshareholdersatwww.turktelekom.com.tr of 06.04.2010and08.06.2010. addition, therelevantRegulatoryDisclosuresofMaterialEventmadebyourCompanywasalsopublishedonPublicDisclosurePlatform 20.04.2010 andExtraordinaryGeneralAssemblymeetingwerepublishedontheTurkishTradeRegistryGazetteNo.7586dated16.06.2010.In Particulars relatedtosaid2009OrdinaryGeneralAssemblyMeetingwerepublishedontheTurkishTradeRegistryGazetteNo.7547dated the Company. to participateintheGeneralAssemblyMeetingconvenedaftermathofpublicofferingandsubmittedtheirCustodyStatements applicable legislation,andhadthenecessarygeneralassemblycustodyproceduresperformedbeforeCentralRegistryAgency inorder their rightsarisingfromshareholding,fulfilledthenecessaryproceduresforparticipationinGeneralAssemblymeetingspursuantto whereas theremainingsharesarebearershares.TheGeneralAssemblyMeetinghasbeenattendedbyshareholderswhowishedto exercise The Company’s Class A shares held by Ojer Telekomünikasyon A.Ş. and Class C shares held by the Undersecretariat of Treasury are registered, on GeneralAssemblymeetings,theiragendas,invitationlettersandsampleproxyformsarealsopostedthecorporatewebsite. Article 368oftheTurkishCommercialCodeandsoastoinformshareholdersinadvanceGeneralAssemblymeetings.Information the dates of announcement and meeting, in the Turkish Trade Registry Gazette (TTRG) and two national newspapers in accordance with website. AccordingtoArticle31thereof,GeneralAssemblymeetingsareannouncedatleast21daysinadvanceofthemeetingdate,excluding Assembly meetings are covered in Türk Telekomünikasyon A.Ş. Articles of Association which is publicly disclosed and posted on the corporate of theCompanyshareswererepresentedinproxyand0.000058%person.TherulesgoverningCompany’sGeneral proxy and0.000058%wererepresentedinpersonanExtraordinaryGeneralAssemblyMeetingconvenedonJune8,2010where89.57% During 2010,2009OrdinaryGeneralAssemblyMeetingconvenedonApril6,2010where89.52%oftheCompanyshareswererepresentedin the Company. of name the in act to AVEA) or Company the for (except Company Group any of assembly general the to sent be to proxy a of Appointment • (except foranymanagementcontractassetoutinArticle12(g)oftheArticlesAssociation); which (x)isnotonanarm’slengthbasis,or(y)involvestransferofmoney,goodsandservicethevalueexceedsUSD30,000,000.- Compan • Proxysample • Minutesandattendancesheetof theGeneralAssemblymeeting • DateandagendafortheGeneral AssemblymeetingandGeneralinformationdocument • Investorcalendar(currentandpast) • Investorrelationsnews • Investorpresentations • Pressreleases • Financialdata,annualandinterimactivityreports • Traderegistrationdata • TheCompany’sArticlesofAssociation • InformationonthemembersofBoardDirectorsandCompany’s seniormanagement • InformationonGroupCompanies • Companyownershipstructure • Vision,missionandvalues • Detailedinformationoncorporateidentity information containedonthewebsiteisprovidedbothinTurkish and English.Themainheadingscoveredonthewebsitearelistedbelow: with theCapitalMarketlegislation,CMBandISErulesregulations, andCMB’sCorporateGovernancePrinciples.Alargeportionofthe Türk Telekomwebsiteaccessibleatwww.turktelekom.com.tr is activelyusedinachievingtransparencyand publicdisclosureinparallel 2.3. CorporateWebsiteandItsContent of failuretocomplywithmaterialeventdisclosurerequirements. require anyadditionalexplanationsinrelationtomaterialeventdisclosures,norweretheresanctionsimposedbytheCMBonaccount communicated bye-mailtodomesticandinternationalinvestorstheCapitalMarketsInvestorRelationsDepartment.TheISEdidnot in 2010relationtothemattersaffectingCompanyanditsoperations.Thematerialeventdisclosuresmadearealsoregularly Pursuant totheCMBCommuniquéonPrinciplesGoverningDisclosureofMaterialEvents,TürkTelekommade32materialeventdisclosures 2.2. RegulatoryDisclosuresofMaterialEvents closely withtheBoardofDirectorsinfulfillmenttheseresponsibilities. the namesanddutiesofrelevantresponsibilityownersarelistedunderheadingInvestorRelationsUnit.Theseindividualscooperate section. The Capital Markets and Investor Relations Department is responsible for the monitoring and development of the said policies, and policy ispostedonthecorporatewebsite-www.turktelekom.com.tr-under‘CorporateGovernance’headingInvestorRelations General AssemblyMeetingconvenedonApril6,2010.Thedisclosure were submittedtotheshareholders’sinformationin Directors and Events Serial:VIII,No:54andCMB’sCorporateGovernancePrinciples.Thepolicyhasbeenapprovedputintoeffectbythe Board of Türk TelekomdisclosurepolicyhasbeenformulatedinlinewiththeCMB’sCommuniquéonPrinciplesGoverningDisclosureof Material 2.1. CompanyDisclosurePolicy 2. PublicDisclosureandTransparency Articles ofAssociation,theoneClassCgoldensharemaynotbesold. Furthermore, pursuanttothesupplementalArticle17ofTelegramandTelephoneLawno4066,paragraph4Company’s any timeandatpriceinlinewiththeLaw406,toemployeesmentioned406“smallsavingsholders”. that areequalto5%orlessoftheCompany’stotalsharesattimetransferinasingletransactionseriestransactions 2. HolderofClassBsharesmayadditionallytransfer,withoutbeingsubjecttotherestrictionsetoutinfirstparagraph,itsown stock exchangeatanytimewithoutbeingsubjecttotherestrictioninprecedingparagraph. 1. In the context of the public offering of the Company’s shares, only the Treasury may have all or part of its shares quoted and sold on the unreasonably withheld. during thecourseofStrategicUndertakingPeriodwithoutpriorconsentholderClassAshares,whichwillnotbe Subject to the provisions of the following two paragraphs, holder of Class B shares may not transfer to a third party all or part of its shares pledge andencumbranceonlyuponpriorwrittenconsentoftheTreasury,whichwillnotbeunreasonablywithheld. encumbrance iscashedbytherelevantfinancialinstitution,samemaybeabletotransferClassAshareholder’ssharessubject pledge ofsharesintime,asguaranteeformoneyborrowedtheacquisitionsuchorotherwise.Ineventthat Holder ofClassAsharesmaycreatepledgeorencumbranceinfavorafinancialinstitutionoveritswhichwillnotbesubjectto Class AsharesforitsintheCompany,whicheveroccurslater. time after either the expiration of the Strategic Undertaking Period, or after the date of full payment of the amount payable by the holder of Holder ofClassAsharesmaytransfer,alwayssubjecttovetoingbytheCgoldenshare,allorpartitsathirdpartyatany The provisionscontainedintheCompany’sarticlesofassociationthatareanaturetorestricttransfersharesasfollows: 1.7. TransferofShares

Türk Telekom 2010 Annual Report 089 CORPORATE GOVERNANCE PRINCIPLES COMPLIANCE REPORT Türk Telekom 2010 Annual Report 090 CORPORATE GOVERNANCE PRINCIPLES COMPLIANCE REPORT paid-in capitalamongtheshareholdersisshownbelow: Not subjecttotheauthorizedcapitalsystem,CompanyhasashareofTL3,500,000,000whichisfullypaid-in.Thedistribution 2.4. Companyownershipstructure • Frequentlyaskedquestions • Telecomglossary • Codeofethics • Dividendpolicyandinformationondividenddistribution Report,CorporateGovernanceRatingReport • ActivitiescarriedoutwithintheframeofcorporategovernanceprinciplesandTürkTelekomCorporateGovernancePrinciplesCompliance • Regulatorydisclosureofmaterialevents • InformationonTürkTelekom’sCorporateSocialResponsibilityprojects • ContactinformationfortheCapitalMarketsandInvestorRelationsDepartment • TürkTelekomCallCenterandContactInformation • PublicOfferingSubscriptionCircularandProspectus • Analystcoverage • Shareperformanceandcalculator • ListofInsidersWithAdministrativeResponsibility • Disclosurepolicy Total D D C Treasury B A Class Free Float TR Undersecretariatof Ojer TelekomünikasyonA.Ş. Shareholder 3.500.000.000,00 525.000.000,00 78.750.000,00 0,01 971.249.999,99 1.925.000.000,00 Share Capital(TL) 100 15 30 55 Share (%)

Fahd AlHariri,NazekHendHaririwithrespectivesharesof50%,15.95%,9.62%,8.48%. Rawad TelecommunicationCompany2.8%share.TheshareholdersofSaudiOgerLimitedareasfollows;SaadadenAlHariri,Ayman 80.1% share in OgerTelecom Saudi Arabia Limited whereas AH Holding WLL holds6.7%, Dr. Nasser Al Rashid6.5%, Sara Holding 3.92% and Organization forSocialInsurance,PublicPensionAgency,withrespectivesharesof70%,6.46%,6.16%,17.38%.SaudiOgerLimitedhas is whollyownedbySaudiTelecomCompany.Company’sshareholdersareasfollows;PublicInvestmentFund,TheGeneral in OgerTelecomLimited,whereastheremaining14.67%isheldbyotherpersonsholdinglessthan5%share.STCTurkeyHoldingLimited 1%. by Limited Oger Saudi and 99% by STC TurkeyHoldingLimited,OgerTelecomSaudiArabiaandLimitedhaverespectivesharesof35%,26.07%24.26% Limited Telecom Oger by owned is A.Ş. Telekomünikasyon Ojer Company, the in stake 55% Holding The realandlegalpersonsdirectlyorindirectlyholdingastakeintheCompany’ssharecapitalarelistedbelow: Saadeden Al Hariri Saudi OgerLimited 24,26% 80,1% 1% 50% Free float Oger T Ojer T elecom SaudiArabiaLimited Oger T elekomünikasyon A elecom Limited Ayman Al Hariri AH HoldingWLL 99% 26,07% 15,95% 6,7 % .Ş 15% 14,67% Dr 35% . NasserAlRashid F ahd AlHariri 55% 15,95% 6,5 STC T % Shareholders urkey Holding Minority Limited 30% 100% Na Sara Holding zek AlHariri Turkish UndersecretariatofTreasury 3,92% 9,62% STC Rawad T Hend AlHariri 17,38% 6,46% 6,16% elecommunication Company 70% 8,48% 2,8 % Public Investment Organization for Social Insurance Public P T he General Agency Public Fund ension

Türk Telekom 2010 Annual Report 091 CORPORATE GOVERNANCE PRINCIPLES COMPLIANCE REPORT Türk Telekom 2010 Annual Report 092 CORPORATE GOVERNANCE PRINCIPLES COMPLIANCE REPORT Mehmet HabibSoluk, Dr. AliArıdudu, İsmet Yılmaz, Doç. Dr.TunaTuğcu, Aydın Çamlıbel, Samir AsaadOMatbouli, Basile Yared, People withadministrativeresponsibilityincludedinthelistwithin 2010butdelistedafterwards: Tahsin Yılmaz, TTNET Erkan Akdemir, AVEA Süleyman Eken, Abdullah OrkunKaya, Yavuz Türkmen, Nurhan Kılıç, Bülent Taş, Mehmet ZaferPınarcık, David Cook, Dr. NazifBurca, Mehmet CandanToros, Şükrü Kutlu, Dr. MehmetKömürcü, Haktan Kılıç, Celalettin Dinçer, Erem Demircan, Dr. RamazanDemir, Timur Ceylan, Memet Atalay, Mustafa Uysal, Kamil GökhanBozkurt, Lütfi Aydın, Prof. Dr.AydınGülan, Efkan Ala, Ghassan Hasbani, Abdullah Tivnikli, Saad ZaferMAlKahtani, Dr. Paul(BoulosH.B)Doany, Hakam Kanafani, İbrahim Şahin, Mohammed Hariri, development andcommercialtargetsofthecompany: People whohaveadministrativeresponsibilityconsistofthefollowingpersonsareauthorizedtomakedecisionsaffectingfuture 2.6. ListofInsidersWithAdministrativeResponsibility starts withtheSilencePeriodandendsonebusinessdayafterPeriod. weeks priortoreleaseanddisclosureofthequarterlyoperatingresults,endsaftersuchreleasesdisclosures.TheBlackoutPeriod results ofthecurrentperiod.ThisSilencePeriodstartssixweekspriortoreleaseanddisclosureyear-endoperatingortwo to insiderinformationareprohibitedtradethesharesofTurkTelekombeforeofficialreleaseandstatementaboutoperating obligated to refrain from disclosing or otherwise providing information to public and a“Blackout Period” when the people whohave access prevention oftheirimproperuse.TürkTelekomappliesa“SilencePeriod”duringwhichtimetheCompanyrepresentativesandofficersare Declaration isreceivedfromallthelistedemployeesregardingtheyareawareoftheirobligationsonprotectiontheseinformationand maintains alistofthosewhohaveaccesstoinsiderinformationandmonitorstheindividualsonthislist. devised undertheTürkTelekomDisclosurePolicy.Withinscopeofsaidpolicy,CapitalMarketsandInvestorRelationsDepartment In ordertoachievecompliancewiththeCapitalMarketsLawandapplicablelegislation,apolicyconcerning“insidertrading”hasalsobeen 2.5. BlackoutPeriodforthosewhomayhaveAccesstoInsiderInformation Member oftheBoardDirectors, MemberoftheAuditCommittee Member oftheBoardDirectors Member oftheBoardDirectors Member oftheBoardAuditors VP Sales Member oftheBoardDirectors,AuditCommittee Member oftheBoardDirectors,ChairmanAuditCommittee TTNET ChiefExecutiveOfficer AVEA ChiefExecutiveOfficer Director ofBudgetPlanningandAnalysis Capital MarketsandInvestorRelationsDirector Financial Controller Treasury Director Tax ManagementDirector TT GroupFinancialController Finance Director Head ofInternalAudit VP InternationalandWholesale VP HumanResourcesSupportandRegulations VP Legal Acting VPCustomerRelations VP Sales VP MarketingandCommunications VP StrategyandBusinessDevelopment VP Technology Acting VPOperations TT GroupCFO,ActingCFO CEO Member oftheBoardAuditors Member oftheBoardAuditors Member oftheBoardAuditors Member oftheBoardDirectors,ChairmanAuditors Member oftheBoardDirectors,ExecutiveCommittee Member oftheBoardDirectors,ExecutiveCommittee Member oftheBoardDirectors,Auditors Member oftheBoardDirectors,ExecutiveCommittee,TTGroupCEO Vice ChairmanoftheBoardDirectors,ExecutiveCommittee Chairman oftheBoardDirectors,ExecutiveCommittee ng to be held. Commercial Code andthattheseassignmentsbesubmitted totheapprovalofshareholders inthefirstGeneralAssembly Meetingtobeheld. that respectively HakamKanafaniandGhassanHasbani beassignedforBoardmemberships inaccordancewith Article 315oftheTurkish The Company’s Board of Directors has accepted resignations of Board Members Basile Yared and Samir Asaad O Matbuoli and resolved Ghassan Hasbani,Member Abdullah Tivnikli,Member Saad ZaferMAlKahtani,Member Dr. Paul(BoulosH.B.)Doany,Member Hakam Kanafani,Member(TTGroupCEO) İbrahim Şahin,ViceChairman Mohammed Hariri,Chairman The structureofourcompany’sBoardDirectorsisasfollows: 4.1. StructureoftheBoardDirectors 4. BoardofDirectors also atwww.turkiyeyedeger.com.tr available is information Detailed website. corporate the via also public the with shared are projects Değer” “Türkiye’ye the on Information in particular,education,cultureandarts,technology,environment andsports,besidesthetelecommunicationsfieldinwhichitoperates. Türk Telekomcreatesvaluesundertakingvarioussocialresponsibility activitiesfocusingonthenation’seconomicandsocialneedsincluding, and infrastructureaswellhumanresourcecreatingvalues among itspreferentialgoals. Turkey’s leadingcommunicationandconvergencetechnologiescompanyconsiderscontributingtothecountrybyinvestingintechn ology put intopracticeacrossTurkeyunderasingleroofnamed“Türkiye’yeDeğer”in2010. Türk Telekomwhoaddsvaluestoitscustomers’liveswiththeproductsandservicesitdevelopesgatheredallsocialresponsibilityprojects 3.5. SocialResponsibility benefits toourcustomers,therebytryingincreasethebenefitcustomersderivefromTürkTelekom. usage behaviors,andtheyareprovidedwithadvisoryonthissubject.Inaddition,informationisofferedcampaignsthatprovideoptimum enhancing thesatisfactionfromservicesofTürkTelekom,ourcustomersareguidedtotransfertariffthatbestsuitstheirtelephone center contactourcustomersinanefforttounderstandtheproblemstheyarefacedwithandsolvetheirissues,ifany.Asastepaimedat Within thescopeof“CustomerRetentionManagement”projectperformedwithaviewtoenhancingcustomersatisfaction,teamsat thecall 3.4. RelationswithCustomersandSuppliers as beingcustomerfocused,trustworthy,innovative,responsibleanddedicated. values, adheringtothecorporateculturebuiltandmaintainedonbasisofrespectsharing,aswellitsprincipleswhichareidentified Türk Telekommakesitagoaltoestablishanongoingrelationshipwithitsemployeesandstakeholdersbuiltonrespect,trustndethical Working Culture process, TürkTelekomAcademysupportsthedevelopmentofemployees. corporate goalsbyenhancingtheloyaltyofits“humanresources”,whichisdeemedasmostvaluableasset,toCompany.Withinthis management conceptfocusedonconstantdevelopmentwherebytheemployeeswillbeabletorealizetheirfullpotential,andaimssupport Türk Telekom targets to provide opportunities for the personal andprofessional development ofitsemployees so as tocreate a performance Development resources alignedwiththecorporatecultureandvaluesinlineitsfuturestrategiestargets. Türk Telekom aims to be themostadmiredcompanyin Turkish telecommunications sector, toattractand recruit the qualifiedhuman Recruitment There wasnocomplaintregardingdiscriminationfromouremployeesin2010. 3.3. HumanResourcesPolicy are keptinformedviaregularmeetingssuchasdealersandcommunicationetc. Although therearenospecificrulesgoverningstakeholderparticipationinmanagement,oursubsidiaries,employeesandotherstakeholders 3.2. StakeholderParticipationinManagement or complaints,andprovidesolutionsforcustomerproblems.TheInternalCommunicationDepartmentkeepstheemployeesinformed. Vice PresidencyandCallCenterefficientlyhandleTürkTelekomcustomers’informationrequestsaboutservicesproducts,theircomments Türk Telekomshareholdersandinvestorsarekept informed inlinewiththepublic disclosure principles.TheCompany’sCustomerRelations 3.1. KeepingStakeholdersInformed 3. Stakeholders

Türk Telekom 2010 Annual Report 093 CORPORATE GOVERNANCE PRINCIPLES COMPLIANCE REPORT Türk Telekom 2010 Annual Report 094 CORPORATE GOVERNANCE PRINCIPLES COMPLIANCE REPORT The CompanyhasadoptedpracticesthatarealignedwithArticles 334and335oftheTurkishCommercialCodeinthisrespect. 4.7. ProhibitiononDoingBusinessandCompetingwiththeCompa ny 15 businessdaysinadvanceofthemeeting. General SecretariatoftheBoard.Inthisframe,meetingdate,agenda andrelevantdocumentsaresenttoBoardmembersfortheirreview Company’s affairs, but holds at least four meetings annually. The activities and formalities of the Board of Directors are handled by the Within theframeofprovisionssetoutinArticlesAssociation, theBoardofDirectorsmeetsasandwhennecessitatedby 4.6. OperatingPrinciplesoftheBoardDirectors The dutiesandauthoritiesofthemembersBoardDirectorsarecoveredindetailArticle11Company’sArticlesAssociation. 4.5. AuthoritiesandResponsibilitiesofBoardMembersExecutives functions areunderway. Activities forestablishingaseparateCorporateRiskManagementDepartmentwithintheCompanysoastofulfillriskmanage ment effectively ornot.Riskmanagementandperformanceoftherelatedreducingfunctionsareincharge units. the reducingfunctionswithrespecttotheserisksandperformingassessmentswhetherriskmanagementareimplemented The InternalAuditDepartmentisresponsibleforidentifyingtherisksinbusinessprocesseswithrelatedmanagementunits,evaluating Inspections andinquirieswithintheCompanyarealsoperformedbyInternalAuditDepartment. Directors. TheInternalAuditDepartmentconductsauditsandcoordinatesauditactivitiesatthegroupcompanies,aswhennecessary. the accuracyoffinancialstatementsandconformityactivitiestolawreferringauthorizationgrantedthembyBoard control vulnerabilitiesidentifiedintheseareas,andcontrolsmonitorsthetimelyimplementationofactions,aswellcontrolling areas posinghighrisks,evaluatestheeffectivenessofcontrolsdeterminedinbusinessprocesses,developsactionplanswithrespectto mainly performsregularriskassessmentswithintheorganization,carriesoutfinancial,operationalandcomplianceauditsinrelationto Internal Audit Department reports to the Audit Committee as the surety of its independence and objectivity. The Internal Audit Department and developingtheeffectivenessofriskmanagement,controlgovernanceprocessesCompanygroupcompanies. The Türk Telekom has a modern and active internal audit department engaged in assurance and consultancy activities with the object of assessing firms, andregularlysupervisestheactivitiesofauditfirm. makes evaluationstotheBoardofDirectorsonaccuracyandauthenticityfinancialdatabedisclosed;selectsindependentaudit internal audit,controlandriskmanagementfunctionsonbehalfoftheBoardDirectorsshareholders.TheCommit tee also accordance withCMBregulations.TheAuditCommitteeisassignedthemonitoringofeffectivenessandadequacyCompany’s Türk TelekomhasanAuditCommitteeconsistingofmemberselectedfromamongnon-executiveontheBoardDirectors in 4.4. RiskManagementandInternalControlMechanism website. TürkTelekom’sperformancewithrespecttoachievementofstrategicgoalsisconstantlymonitoredbytheBoardDirectors. The Company’smission,visionandvaluesstrategymanagementarepubliclydisclosedunderthe‘AboutUs’sectiononcorporate 4.3. Mission,VisionandStrategicGoalsoftheCompany the qualificationsofBoardMembers. The requiredqualificationsofBoardMembersaredeterminedintheArticle9ArticlesAssociationandthisprovisionisimplementedfor 4.2. QualificationsofBoardMembers 30% but15%ormoreoftheCompany’ssharecapital,itwillbepossibletohaveanindependentmemberonBoardDirectors. elected asanindependentBoardmemberuponreachingamutualagreement,providedthattheUndersecretariatofTreasuryholdslessthan Article 8oftheArticlesAssociationstipulatesthatholderClassAsharesandTreasurywillbeentitledtonominateindividuals these provisionsoftheArticlesAssociation,currentlytherearenoindependentmembersonBoardDirectorsTürkTelekom.Since it holds30%ormoreoftheCompany’ssharecapital.TheClassCisrepresentedbyonememberonBoardDirectors.Inlinewith the BoardofDirectorsmembers,andUndersecretariatTreasury,holderClassBshares,tomakethreenominationssolongas Pursuant toArticle8ofTürkTelekom’sArticlesAssociation,holderClassAsharesisentitledmakesixnominationsintheelection The Company’sBoardofDirectorshasacceptedresignationsBoardMembers;MehmetHabibSoluk,İsmetYılmazandAliArıduru.

the shuttlebus. Employees making use of the shuttle bus service will not keep the bus waiting for personal reasons and will not disturb the other people on Shuttle Buses rules willbebornebytheindividuals towhomvehiclesareallocated. persons otherthanthemselvesdrive theallocatedvehicles save forexceptional circumstances.Trafficfinesresultingfromviolationoftraffic Employees whoareallocatedmotorvehiclesbytheCompanywill paythenecessaryattentionandcareintheirusewillnotletthird Company Vehicles will bespentnottousesuchdataforanypersonalpurposewhatsoever andnottodisclosethemanythirdparty. Attention willbepaidtotheconfidentialityofdataanddocuments pertainingtotheCompany,employeesandcustomers,everyeffort Protection ofConfidentiality be paidtokeepprivatephonecallsshort. purposes. Alsoeffortswillbespentnottousetelephones,faxequipment, theInternetandsimilartoolsforpersonalreasons.Attentionwill Electronic mailingwillbeusedstrictlyasameansofcommunication. Attentionwillbepaidnottouseelectronicmailfornon-business Communication Tools against theftandunauthorizeduse. Company employeesareobligedtoimplementallnecessarysecurityproceduresandprotectcomputerhardwareelectroniceq uipment documents, recordsandfixturesetc.giventohimorherfortheperformanceofhisjob. An employeeleavingthecompanyisobligedtoreturnanyandallnegotiable,non-negotiableinstruments,files,writteninforma tion, taken outoftheCompany.Utmostcarewillbepaidtosavingprinciplesintheirinternaluse. Stationery, printeddocumentsandallkindsoffixturesownedbytheCompanyaretobeusedstrictlyforaffairsmu st notbe Use ofFixturesandStationary Company’s tangibleandintangibleassets. Company, attempting to derive personal benefits and observing personal benefits in the contracts made constitute indirect use of the Entering intopersonalfinancialrelationshipwiththecustomersandindividualsorganizationsdoingbusinessonbehal f ofthe used forpersonaluse,interests,expenses,normaytheybegivenasgifts,donatedorawaypoliticalincentives. Utmost attentionwillbepaidintheuseofCompany’salltangibleandintangibleresourcesitsbrandname.Thesemaynot Use ofResources The CodeofEthicsbywhichtheCompanyemployeesareobligedtoabideisspelledoutbelow: • NotifyanyknownorsuspectedviolationoftheCodeEthics,ifany,tochairmanAuditCommitteepromptly. • Fullyabidealllaws,rulesandregulationsapplicabletotheCompanyrelationshipbetweenitsshareholders; entities andboardsorotherwisepubliclydisclosedbytheCompany; • Ensure full, fair, accurate, timely and intelligible disclosure of all reports and documents that will be submitted to the Company; ISE and other authorized all at interest of conflicts future or existing of times, whichmayarisebetweentheirownpersonalrelationsorfinancialandcommercialinterestsresponsibilitiestowardsthe handling ethical including decisions and actions their in consistency and honesty Display • the Company,andhavinganopencommunicationwiththem; • Provide an environment where employees feel comfortable coming to them for ethical issues as well as problems regarding the operation of Code ofEthics,andtrytodevelopaculturedeeplyespousedbytheorganizationinaccordancewithlawcorporatepolicies; they areobligedtoabide.Theystrivemakesurethattheiractivitiesalignednotonlywiththewordingbutalsothespiritof which by principles and values norms, the espouse employees that ensuring and culture corporate the of establishment the towards Work • • AdopttheprincipleofestablishmentandmaintenancetheCodeEthicsfirstlyinunitstheyarechargeof; • Setrolemodelsforotheremployeeswiththeiractionsandthoughts; • FirstandforemostrecognizetheimportanceofCodeEthicsabidebythem; end, ourexecutives; It istheresponsibilityofourexecutivestocreateanenvironmentthatinconformitywithCodeEthicsacrossCompany.Tothis Principles. other employeestoactincompliancewiththeseprinciples.TheCodeofEthicsisacomplementarynatureTürkTelekomDisciplinary Code of Ethics is a body of rules that must be abode by the Company executives in particular, and all employees in general, while also leading Board ofDirectorsandsubmittedtotheshareholders’sinformationin2009OrdinaryGeneralAssemblyMeetingconvenedonApril6,2010.The The codeofethicsthatisthekeyforCompany’ssuccess,aswellpersonalsuccessouremployees,hasbeenapprovedby 4.8. CodeofEthics

Türk Telekom 2010 Annual Report 095 CORPORATE GOVERNANCE PRINCIPLES COMPLIANCE REPORT Türk Telekom 2010 Annual Report 096 CORPORATE GOVERNANCE PRINCIPLES COMPLIANCE REPORT duties impartially, and spend every effort to this end. duties impartially,andspendeveryefforttothisend. Must actequallyandfairlytoallpartiesinvolvedinthecaseofaconflict ofinterestbetweencustomers/suppliers.Theyalsomustfulfilltheir customers/suppliers, andmaynotbeinstrumentalinanytransfer ofprofitsbywaymediatingbetweencustomers/suppliers. Shall notyieldtoanypressurethatmaygiveriseeventswhich aredetrimentaltotheshareholders,maynotpersonallyprofitfrom Our employees,ExecutivesandMembersoftheBoardsDirectors andAuditors; forthwith. services maynotbeusedtoderivepersonalbenefits.Inthecaseof aconflictofinterest,guidancewillbesoughtfromtheimmediatemanager suppliers. PersonalinterestsmaynotbeheldaboveCompanyinterests. ThepositionintheCompany,informationonCompanygoodsand A conflict of interest is an inverse relationship between the Company’s interests and personal interests, and the interests of customers or Conflict ofInterest for extraordinaryandexceptionalcases. Personal visitorswillnotbeacceptedduringbusinesshours.Anemployee’smeetingwithexternalexceed10-15minutes,save Employees willmakeoptimumuseoftimeandnotspareforpersonalbusiness(exceptemergencies)during hours. Time Management that maybeexercisedbyanyone. Objective criteriasuchasbenefitvs.costandsoonwillbetakenthebasisinselectionofcompanies,withoutyieldingtoanyinfluence those havingabusinessrelationshipwiththeCompany. Feedback willbesoughtfromtheLegalDepartmentandotherconcernedunitswithrespecttoagreementsprotocolsmade and transactionswillbecarriedoutaccordingtopredefinedprinciples. Those havingabusinessrelationshipwiththeCompanywill,asmatterofprinciple,beidentifiedaccordingtoregulations,andacts presented belowwillbetakenintoaccountwhenenteringtheseagreements: subcontractors, etc.willbehandledwithinthescopeofapplicablelegislation,andcorporatepoliciesprinciples.Theconsiderations Product/service agreementswiththosehavingabusinessrelationshiptheCompany,includingbutnotlimitedtocontractors , relationship withourCompany,aswellcustomers. All employeesmustpayattentiontobeaccurate,consistent,trustworthy,helpfulandpunctualintheirrelationswiththosehavingabusiness Relations withIndividuals,EnterprisesandEstablishmentswhichthereisaBusinessRelationship the Company.Inanycase,suchdonationandaidofferswillbeinformedtoimmediatemanager. Accepting AidsandDonations:Donationsaidsmaynotbeacceptedfromanypersonand/orentityhavingabusinessrelationshipwith have beenobtained. not contradictwiththeCompany’spoliciesandinterests,providedfurtherthatwrittenorverbalconsentofimmediatemanagershall Invitations: Businessmeetings may beattended,providedthatsuchmeetings will notinfluencetheattendee’s decisionsandwill Accepting accepted uponnotificationoftheimmediatemanager.ThetotalworthpresentsthatmaybeassuchinnowayexceedTL500. under anyobligation.PresentsworthinexcessofTL50,whicharedeemednottohaveaninfluenceonthedecisionsbemade,may presents, money,checks,freevacations,specialdiscounts,etc.maybeacceptedwhichmightputtheCompanyandrecipientofpresent Accepting Presents: Presents may notbe asked for from customers, subcontractors, and/orsuppliers,norsucharequest maybe implied. No approval oftheCEO. relatives, friendsandacquaintances,etc.AidsordonationscanbemadetoanorganizationonbehalfoftheCompanystrictlysubject principles setbytheCompanymanagement.However,attentionwillbepaidnottousepresentsforpersonalrelationshipssuchas Presents maybegiventocustomers,businesspartnersorsuppliers’representativesonbehalfoftheCompany,inaccordancewith Giving orAcceptingPresents,InvitationsDonationsonbehalfoftheCompany nature, mustnotbeleftonthedesksoroutinopenoutsidebusinesshours. Goods andservicesapartfromthoseallowedmaynotbetradedinthebuildings.Anydocuments,papers,etc.,whichofaconfidential Posters, fliersorready-madenotesotherthanthoseallowedbythemanagementmaynotbepostedinCompany’ssharedworkspaces. Shared WorkSpaces loan throughthirdpersons,norhaveanyguaranteesbeenprovided suchassuretyshipintheirfavor. The CompanyhasneverlentmoneyorextendedloanstoanyBoard memberorexecutive,nocredithasbeengivenunderthenamepersonal Board membersisTL5,500.Therenoperformancemeasurement and performance-basedrewardingsysteminplacefortheBoardmembers. Commercial CodeandArticle8oftheCompany’sArticlesAssociation. Accordingly,themonthlysalarydeterminedatGeneralMeetingfor Remuneration of the members of the Board of Directors isdetermined by the General Assembly inaccordance with Article 369 of the Turkish 4.10. RemunerationoftheBoardDirectors Department. aimed atachievingcompliancewiththecorporategovernanceprinciplesarebeingcarriedoutbyCapitalMarketsandInvestorRelations A CorporateGovernanceCommitteehasnotbeenformedattheCompany,buteffortsforcreatingsuchcommitteeareunderway.Acti vities resolution dated20.10.2010. M. AlKahtaniandDr.Paul(BoulosH.B.)Doanywereelectedasitsmembers.HakamKanafanireplacedDoan y with Zafer Saad Tivnikli, Abdullah and vice-chairman its as elected was Şahin İbrahim while committee, this of chairman the as elected was Hariri A BoardofDirectorssubcommitteetitledExecutiveCommitteewassetupatthemeetingheldonApril9,2009.Mohammed and isalsoentitledtoholdadditionalmeetings.Themeetingsareorganizedeachquarterfollowingthedisclosureoffinancialstatements. a boardmemberonMarch8,2011.AsperArticle10oftheAuditCommitteeRegulation,meetsatleastfourtimesyear, Ghassan HasbaniwaselectedastheChairmantoreplaceSamirAsaadOMatbuoli,MehmetHabipSolukhasalsoresignedfromhisdu ties as as boardmembertoreplaceBasileYaredandSamirAsaadO.MatbuoliwaselectedtheChairmanwithresolutiondated20.10.201 0; in2011 committee, whileMehmetHabibSolukandSamirAsaadO.Matbuoliwereelectedasitsmembers.Dr.Paul(BoulosH.B.)Doanywas elected An AuditCommitteewassetupattheBoardofDirectorsmeetingheldonApril9,2009.BasileYaredelectedaschairman ofthis 4.9. Numbers,StructuresandIndependenceofCommitteeswithintheBoardDirectors manner, withtheenvironmentalimpactthereofminimized. Executives andemployeesmustpracticenecessarycautionattentiontocarryontheCompany’sactivitiesinhealthiestandsafest Protection ofHealth,SafetyandtheEnvironment Department. in addition,employeesmayleaveoutallsuperiorsandsubmittheircomplaintdirectlytotheHumanResourcesDepartmentor Legal violating theserules,uptoandincludingterminationoftheemploymentcontract.Nocomplaintsaboutthismattermaybeobstr ucted; gender, maritalstatus,religionandsect,politicalaffiliationorphilosophicalbelief,etc.TheCompanymayimposesanctionsuponthose whatsoever manner.Noindividualmaybeexposedtodiscriminatorytreatmentforreasonssuchasage,language,race,nationality,health, Executives andemployeesmustactfairlyequallytowardseveryonewithoutanyprejudices.Theynotallowdiscriminatio n in Discrimination Executives andemployeesmustnotpracticemobbingagainsteachother.Theycauseanydiscomforttooneanotherinthissense. Mobbing • influencepromotionorrewardingdecisionsconcerningspousescloserelativesworkingfortheCompanyitssubsidiaries. Company isinquestion,subjecttoapprovalbytheimmediatemanager). the of favor in interest an if established be may relationship business (a friends and relatives spouses, with relationship business into enter • her authoritytoderiveadvantagesfromthecustomer’s/supplier’sfieldofactivitywhichgobeyondpurposeorregularpractices. or his use not and part, their on obligation an to rise give might that value and nature a of gifts uncustomary customers’/suppliers’ accept • without theknowledgeandapprovalofimmediatemanager. covered, partially or fully are which of expenses the customers/suppliers, with vacations trips, domestic/international invitations, attend • • enterintoadebtor-creditorrelationshipwithcustomers/suppliers,notactastheirsuretyandacceptsuretyship. In ordertoavoidconflictsofinterest,ouremployeesdonot:

Türk Telekom 2010 Annual Report 097 CORPORATE GOVERNANCE PRINCIPLES COMPLIANCE REPORT Türk Telekom 2010 Annual Report 098 Türk TelekomünİkasyonANONİMŞİRKETİ DIVIDEND DISTRIBUTION

Türk Telekom 2010 Annual Report 099 Türk Telekom 2010 Annual Report 100 DIVIDEND DISTRIBUTION Caddesi No:15Kat:234367Elmadağ-Şişliİstanbul. 6. The distribution of the cash dividends to our shareholders shall begin on May 30, 2011, at Merkezi Kayıt Kuruluşu A.Ş. Süzer Plaza Askerocağı shareholders andtotalgrosscashdividenddistributionamountshallbeTL2,243,960,909. b. Accordingly0.6411316Kurus(64.11316%)grosscashdividendpereachshareworthfor1nominallyshallbedistributed toour a. TotalcashdividendamounttobedistributedofTL2,243,960,909shallcoveredbycurrentperiodnetprofit distributed ascashseconddividend. Communique SerialIVNo:27”.ThesecondlegalreserveofTL206,896,091shallbesetasideandtheremaining1,750,104,383 shallbe 5. It is decided to distribute 20% of TL 2,469,282,630 (first dividend base), TL 493,856,526 ascash first dividend, in accordancewith “CMB donations madein2010ofTL18,425,630to2,450,857,000distributableprofit2010. 4. Accordingtotheconsolidatedfinancialtables,TL2,469,282,630shallbebaseforfirstdividendwhichisreachedwithadding any firstlegalreservesfor2010, Article 466ofTurkishCommercialCode,asthecapforfirstlegalreserveshasbeenreachedinpreviousyearsitisdecidednottosetaside 3. Althoughitisobligatorytosetasidefirstlegalreservesuntilthereserveamountreaches20%ofpaidincapitalaccordancewith distribution, 2. AccordingtotheCMBCommuniqueSerialIVNo:27,profitaftertaxamountofTL2,450,857,000isbasefordividend Commercial CodeclausesandTaxProcedureLawisTL2,957,704,161, with “CMBCommuniqueAboutFinancialReportinginCapitalMarketsSerial:XINo:29”isTL2,450,857,000andaccordingtotheTurkish 1. Ourcompany’snetprofitofthefiscalyear2010accordingtoindependentlyauditedconsolidatedfinancialspreparedinaccordance It isresolvedforthedecisionofourCompany’sGeneralAssemblytobeheldonApril25,2011; The detailsoftheproposaltoGeneralAssemblyarefollowing, gross cashdividendpereachshareworthfor1Kurusnominally. aside whichisTL2,243,960,909totheGeneralAssemblybeheldonApril25,2011.Thisamountcorresponds0.6411316Kurus(64.11316%) It isdecidedtorecommenddistributethe100%ofremainingprofit2010ascashdividendafterfirstandsecondlegalreservesareset Board RecommendationDividendDistribution

20) 19) 18) 17) 16) 15) 14) 13)

12)

11) is thebaseofcalculationfirstlegalreserves 10) 9) Donationsmadeduringtheyear(+) 8) NETDISTRIBUTABLEPROFIT(=) 7) FirstLegalReserves(-) 6) PriorYears’Losses(-) 5) NetProfitforthePeriod(=) 4) TaxExpenses(-) 3) ProfitforthePeriod DISTRIBUTION OFTHEPROFITFORPERIOD If thereisinformationaboutprivilegeindividenddistributionaccordancewiththe AoA 2) 1) - OtherDistributableReservesinaccordancewithlegislation - ExtraOrdinaryReserves - PriorYears’Profits Other DistributableSources EXTRA ORDINARYRESERVES Special Reserves Status Reserves Second LegalReserves Second Dividend Dividend paidtoİntifaSenediowners Dividends paidtotheBoardMember Dividend paidtopreferenceshares - Total - Share - Cash First Dividend Net disributableprofitincludingdonationsthat

Total LegalReserves(inaccordancewithstatutoryrecords) Paid /IssuedCapital (10*the minimumratedeterminedbyCMB) 5-(6+7+11+12+13+14+15+16+17+18) accordance withthearticles (Amount ofthedividendfor privileged shareholdersin ((8)-(H4*0,05))/11 ((5SR-6SR)*0,05) of Association) (5-6-7) (8+9) (3-4)

Divident DistributionofTürkTelekomünikasyonA.Ş.(TL) 1,750,104,383 2,469,282,630 2,450,857,000 2,450,857,000 3,249,440,000 Acc. toCMB 206,896,091 493,856,526 798,583,000 18,425,630 0 0 0 0 0

Acc. toStatutoryRecords(SR) 2,957,704,161 2,957,704,161 3,686,152,163 1,735,201,852 3,500,000,000 728,448,002 (TL) 0 0

Türk Telekom 2010 Annual Report 101 DIVIDEND DISTRIBUTION Türk Telekom 2010 Annual Report 102 DIVIDEND DISTRIBUTION Dividend PayoutRatioInformation Group Dsharesaresubjecttowithholdingtax. “limited resposible,fullyresponsible,realpersonorlegalperson”.Grossandnetdividend calculationforthisgroupismadeontheassumptionthatallof rest oftheshares,whichconstitute15%totalcapitalaretradedinIstanbul StockExchange,ourCompanyisnotabletoidenfifyshareholdersas **** GroupDsharesofourCompanyconstitute17.25%thetotalcapital.2.25% these sharesareownedbytheTurkishTreasuryandnon-public.As Association. *** Thereis1GroupCshare,whichownedbytheTurkishTreasuryanddoesnothave the righttogetdividendpaymentaccordingourArticlesof ** GroupBsharesofourCompanyareownedbytheTurkishTreasuryandsubject towithholdingtax. dividend payment. *Group AsharesofourCompanyareownedbyOgerTelecom.AsTelecomisafully responsiblecorporation,therewillbenowithholdingtaxinthe 2,243,960,909.00 DIVIDEND DISTRIBUTEDTOSHAREHOLDERS(TL)THERATIOOFNETDISTRIBUTABLEINCOMEINCLUDINGDONATIONS(%) THE RATIOOFDIVIDENDDISTRIBUTEDTONETDISTRIBUTABLEINCOMEINCLUDING DONATIONS NET GROSS DIVIDEND PERSHARE DIVIDEND PAYOUTRATIOINFORMATION TÜRK TELEKOMNİKASYONA.Ş.(2010) TOTAL D**** C*** B** A* TOTAL 2,243,960,909.00 D C B A GROUP 90.87 2,092,493,547.64 329,020,768.28 0 529,294,279.41 1,234,178,499.95 0.64113 387,083,256.80 0.64113 0 622,699,152.25 1,234,178,499.95 (TL) TOTAL DIVIDENDAMOUNT

0 DIVIDEND TOBEDISTRIBUTEDFOREACHSHARETRADEDWITHANOMINALVALUEOFTL1

0.54496 0.54496 0 0.54496 0.64113 0.64113 AMOUNT (TL) 0.64113 54.50 54.50 0 54.50 64.11 64.11 64.11 0 PERCENTAGE (%) 64.11 64.11 Group FinancialController Mehmet ZaferPınarcık Kind regards, Company isfacing. of thebusinessandconsolidatedfinancialsituationCompanyalongwithrisksuncertaintiesthatfat financial standingandprofitslossesoftheCompany,thatAnnualReportfaithfullyreflectsdevelopmentperformance tables, whichhavebeenpreparedinaccordancewithapplicablefinancialreportingstandards,faithfullyreflecttheassets,liabilities, 3. prove tobemisleadingbecauseofthedatedisclosure, Financial TablesandtheAnnualReportdonotcontaininimportantmattersanyinaccuratedisclosures,orshortcomingswhichmay 2. AccordingtoinformationwhichwehaveaccessasapartofourdutiesandresponsibilitieswithintheCompany,Consolidated Decision No.20of04/04/2011, the Board of Directors Decision No. 11 of 08/02/2011; and the Board of Directors Annual Report for 2010, approved by the Board of Directors Capital MarketsBoardCommuniquéSerial:XI,No:29on“PrinciplesforFinancialReportingintheMarket,”andwasapprovedby was preparedinaccordancewiththeInternationalAccountingStandards/InternationalFinancialReportingStandardspursuantto 1. WehavereviewedtheConsolidatedFinancialTablesofourCompanybelongingtoaccountingperiodendingonDecember31,2010,which We herebystatethat; OUR STATEMENTASPERARTICLE9OFSECTION3CAPITALMARKETSBOARDCOMMUNIQUÉSERIAL:XI,NO:29 RESOLUTION NO:20 RESOLUTION DATED:04/04/2011 ANNUAL REPORTAPPROVEDBYTHEBOARDOFDIRECTORS RESOLUTION NO:11 RESOLUTION DATED:08/02/2011 FINANCIAL TABLESAPPROVEDBYTHEBOARDOFDIRECTORS According toinformationwhichwehaveaccessasapartofourdutiesandresponsibilitieswithintheCompany,consolidatedfinancial Acting CFO Mustafa Uysal CEO Kamil Gökhan Bozkurt

Türk Telekom 2010 Annual Report 103 RESPONSIBILITY STATEMENT Türk Telekom CONSOLIDATED FINANCIAL STATEMENTS AND 2010 Annual Report 104 INDEPENDENT AUDIT REPORT Türk TelekomünİkasyonAnonmŞİrket CONSOLIDATED FINANCIALSTATEMENTSAND and ItsSubsidiaries INDEPENDENT AUDITREPORT İstanbul, Turkey 8 February2011 Metin Canoğulları,SMMM A memberfirmofErnst&YoungGlobalLimited Güney BağımsızDenetimveSerbestMuhasebeciMaliMüşavirlikAnonimŞirketi financial statementsarenotintendedtopresentthepositionandresultsofoperationsinaccordancewithIFRS. respect to the application of inflation accounting and also for certain disclosures requirement of the CMB. Accordingly, the accompanying statements differfromInternationalFinancialReporting Standards (“IFRS”)issuedbytheInternationalAccounting Standards Boardwith As at31December2010,theaccountingprinciplesdescribedinNote2.1(definedasCMBAccountingStandards)toaccompanyingfinancial Additional paragraphforconveniencetranslationtoEnglish: standards publishedbytheCapitalMarketBoardinTurkey. as at31 December 2010andtheir financial performance and cashflows for theyearthen ended inaccordance with financial reporting In our opinion, the accompanying financial statements present fairly the financial position of Türk Telekomünikasyon A.Ş. and its Subsidiaries Opinion audit opinion. We believethattheauditevidencewehaveobtainedduringourindependentissufficientandappropriatetoprovideabasisfor management, aswellevaluatingtheoverallpresentationoffinancialstatements. also evaluatingtheappropriatenessofaccountingpoliciesusedandreasonablenessestimatesmadebyCompany’s the relationbetweenfinancialstatementspreparedbyCompanyanditsinternalcontrolsystem.Ourindependentaudit includes of internalcontrolsystem,buttodesignindependentauditproceduresthatareappropriateforthecircumstancesinorder identify assessments, the Company’s internal control system is considered. Our purpose, however, is not to express an opinion on the effectiveness assessment oftherisksmaterialmisstatementfinancialstatements,whetherduetoerrorand/orfraud.Inmakingthoserisk disclosures inthefinancialstatements.Theindependentauditproceduresselecteddependonourprofessionaljudgment,including An independentauditinvolvesperformingprocedurestoobtainevidenceabouttheamountsand and performedtoobtainreasonableassurancewhetherthefinancialstatementsarefreefrommaterialmisstatement. standards onauditingissuedbytheCMB.Thoserequirethatethicalrequirementsarecompliedandindependentauditisplanned Our responsibilityistoexpressanopiniononthesefinancialstatementsbasedouraudit.auditwasconductedinaccordancewith Independent Auditors’Responsibility that arereasonableinthecircumstances. misstatement, whetherduetoerrorand/orfraud;selectingandapplyingappropriateaccountingpolicies;makingestimates and maintaininginternalcontrolrelevanttothepreparationfairpresentationoffinancialstatementsthatarefreefrommaterial reporting standardspublishedbytheCapitalMarketBoardinTurkey(theCMB).Thisresponsibilityincludes;designing,implementing The Company’smanagementisresponsibleforthepreparationandfairpresentationoffinancialstatementsinaccordancewith Management’s ResponsibilityfortheFinancialStatements explanatory notes. of changesinequityandconsolidatedstatementcashflowsfortheyearthenendedasummarysignificantaccountingpolicies December 2010andtherelatedconsolidatedincomestatement, consolidated statementofcomprehensiveincome, 31 at as Subsidiaries its and Company) (the A.Ş. Telekomünikasyon Türk of sheet balance consolidated accompanying the audited have We To theShareholdersofTürkTelekomünikasyonAnonimŞirketi; (Convenience translation ofareportoriginallyissuedin Turkish -Seeadditionalparagraph belowforconveniencetranslation andNote2.1) Independent auditors’report

Türk Telekom CONSOLIDATED FINANCIAL STATEMENTS AND 2010 Annual Report 105 INDEPENDENT AUDIT REPORT Türk Telekom CONSOLIDATED FINANCIAL STATEMENTS AND 2010 Annual Report 106 INDEPENDENT AUDIT REPORT (Convenience translation ofareportoriginallyissuedin Turkish -Seeadditionalparagraph belowforconveniencetranslation andNote2.1) The accompanying policiesandexplanatorynotesonpages 112through177form an integralpartoftheseconsolidated financialstatements. Asset heldforsale Other currentassets Inventories Other receivables Financial investments -Othertradereceivables -Duefromrelatedparties Trade receivables Cash andcashequivalents Current assets Assets Consolidated balancesheetasat31December2010(Currency-inThousandsofTurkishLira(“TL”)) Total assets Other non-currentassets Deferred taxasset Goodwill Intangible assets Property, plantandequipment Investment property Financial investments Other receivables Other financialassets Trade receivables Non-current assets Notes 15 13 12 17 10 15 14 18 21 20 19 16 12 17 8 6 8

31 December2010 Current period 15.100.021 11.387.756 10.556.763 3.712.265 3.712.265 1.586.921 1.219.007 3.516.788 7.161.063 Audited 655.963 134.513 258.650 274.237 81.444 34.417 57.681 43.181 52.873 11.840 48.890 2.148 3.586 - -

(Restated Note2.2) 31 December2009 Prior period 13.401.362 12.659.446 2.844.599 2.844.599 2.991.120 1.396.175 1.324.986 3.286.440 2.734.374 6.629.328 6.277.125 Audited Audited 507.510 414.147 753.693 1.041.982 245.125 272.894 291.001 310.654 62.920 49.080 33.309 67.188 90.992 92.944 49.172 48.735 11.840 676 669 - 793 - - - 7.360 (Restated Note2.2) 31 December2008 Prior period 2.998.480 9.660.966 Audited Audited 4.675 (Convenience translation ofareportoriginallyissuedin Turkish -Seeadditionalparagraph belowforconveniencetranslation andNote2.1) The accompanying policiesandexplanatorynotesonpages 112through177form an integralpartoftheseconsolidated financialstatements. Current liabilities Liabilities Non-current liabilities Other currentliabilities Provisions Income taxpayable Other payables -Othertradepayables -Duetorelatedparties Trade payables Other financialliabilities -Obligationsunderfinanceleases -Bankborrowings Financial liabilities Total liabilitiesandequity Net incomefortheyear Retained earnings/(accumulateddeficit) Restricted reservesallocatedfromprofits Currency translationreserve -Sharebasedpaymentreserve -Actuariallossarisingfromemployeebenefits -Hedgingreserve -Fairvaluedifferencearisingfromacquisitionofsubsidiary -Minorityputoptionliabilityreserve Other reserves Inflation adjustmentstopaidincapital Paid-in sharecapital Equity attributabletoparent Equity Other non-currentliabilities Deferred taxliability Provisions foremployeeterminationbenefits Provisions -Otherpayables -Duetorelatedparties Other payables Trade payables -Derivativefinancialinstruments -Minorityputoptionliability Other financialliabilities -Obligationsunderfinanceleases -Bankborrowings Financial liabilities Consolidated balancesheetasat31December2010(Currency-inThousandsofTurkishLira(“TL”)) Notes 15 22 32 12 10 17 23 24 22 23 11 23 23 15 14 22 22 12 10 17 11 8 9 7 8 9 7

31 December2010 Current period 15.100.021 1.267.044 1.863.186 4.820.529 2.450.857 1.446.210 6.174.757 3.500.000 2.300.849 4.104.735 (201.884) (308.634) (582.848) (239.752) Audited (37.711) 878.182 282.396 142.405 149.982 291.518 129.106 208.777 301.551 606.606 525.894 44.061 46.011 58.835 13.761 27.779 80.561 29.628 5.726 9.885 (188) 9.528 9.329 -

(Restated Note2.2) 31 December2009 Prior period 13.401.362 12.659.446 2.154.838 1.285.578 4.664.947 3.548.688 1.859.748 1.724.919 1.204.192 1.231.408 5.421.966 5.113.606 3.500.000 1.777.309 2.122.904 3.314.449 3.997.152 (128.826) (100.808) (308.634) (294.065) (488.749) (386.719) (239.752) Audited (86.441) (169.957) 861.104 699.850 248.595 232.075 304.269 329.234 858.058 881.319 101.088 (160.891) 252.638 338.504 634.171 667.148 543.103 586.439 23.820 21.517 48.179 209.515 36.483 41.527 5.446 5.233 9.528 7.139 5.126 6.485 9.559 8.942 16.094 - 336 - (Restated Note2.2) 31 December2008 Prior period Audited 93.882 (57) -

Türk Telekom CONSOLIDATED FINANCIAL STATEMENTS AND 2010 Annual Report 107 INDEPENDENT AUDIT REPORT Türk Telekom CONSOLIDATED FINANCIAL STATEMENTS AND 2010 Annual Report 108 INDEPENDENT AUDIT REPORT Sales Continuing operations Financial income Attributable toequityholdersoftheparent Attribution ofperiodincome Cost ofsales(-) Financial expense(-) Minority interest Gross profit -Periodtaxexpense Tax expensefromcontinuingoperations Profit beforetaxfromcontinuingoperations theparentfromcontinuingoperations(infullKuruş) Earnings pershareattributabletoequityholdersof Marketing, salesanddistributionexpenses(-) -Deferredtaxincome theparentfromcontinuingoperations(infullKuruş) Earnings perdilutedshareattributabletoequityholdersof General administrativeexpenses(-) Profit fortheyear Research anddevelopmentexpenses(-) Other operatingincome Other operatingexpense(-) Operating profit (Convenience translation ofareportoriginallyissuedin Turkish -Seeadditionalparagraph belowforconveniencetranslation andNote2.1) The accompanying policiesandexplanatorynotesonpages 112through177form an integralpartoftheseconsolidated financialstatements. Consolidated incomestatementforyearended31December2010(Currency-inThousandsofTurkishLira(“TL”)unlessotherwiseindicated)

Notes 14, 32 5, 28 5, 28 5, 28 5, 28 5, 30 5, 30 31 31 23 32 23 23 5

31 December2010 1 January2010- Current period (4.917.512) (5.081.802) (1.571.606) (1.302.532) (1.493.116) (1.695.001) 10.852.470 10.568.461 3.311.166 2.798.343 2.328.423 1.680.275 2.450.857 1.859.748 3.127.006 2.359.967 5.934.958 5.486.659 (608.565) (733.814) (122.434) (179.473) (765.343) (731.035) Audited (33.240) 51.343 (23.633) (29.332) (98.704) (155.032) 424.405 295.438 563.267 493.581 0,7002 0,5314 0,7002 0,5314 31 December2009 Audited Restated Audited Restated 1 January2009- Prior period (Note 2.2) Minority interest Attributable toequityholdersoftheparent Appropriation oftotalcomprehensiveincome: Total comprehensiveincome Other comprehensiveincome/(loss)(aftertax) Deferred taxeffectofactuarialloss Actuarial lossarisingfromemployeebenefits Change incurrencytranslationdifferences Change infairvalueofderivativefinancialinstruments Fair valuelossonhedgeinstrumentstransferredtoconsolidatedincomestatement(Note17) Other comprehensiveincome: Profit fortheyear (Convenience translation ofareportoriginallyissuedin Turkish -Seeadditionalparagraph belowforconveniencetranslation andNote2.1) The accompanying policiesandexplanatorynotesonpages 112through177form an integralpartoftheseconsolidated financialstatements. Consolidated statementofcomprehensiveincomeforyearended31December2010(Currency-inThousandsTurkishLira(“TL”)) 31 December2010 1 January2010- Current period 2.436.602 1.915.115 2.325.294 1.755.180 2.328.423 1.680.275 (111.308) (159.935) Audited (91.336) (35.002) (24.452) (1.980) (3.129) 74.905 18.065 6.754 10.073 (131) 84.521 105.264 31 December2009 1 January2009- Prior period Audited

Türk Telekom CONSOLIDATED FINANCIAL STATEMENTS AND 2010 Annual Report 109 INDEPENDENT AUDIT REPORT Türk Telekom CONSOLIDATED FINANCIAL STATEMENTS AND 2010 Annual Report 110 INDEPENDENT AUDIT REPORT (Convenience translation ofareportoriginallyissuedin Turkish -Seeadditionalparagraph belowforconveniencetranslation andNote2.1) Consolidated statementofchangesinequityfortheyearended31December2010(Currency-ThousandsTurkishLira(“TL”)) The accompanying policiesandexplanatorynotesonpages 112through177form an integralpartoftheseconsolidated financialstatements. (previouslyreported) Balance asat31December2008 Accounting policychange(Note2.2) Balance asat31December2008(restated) Net profitfortheyear Other comprehensiveincome/(loss) Total comprehensiveincome Transfer toretainedearnings Transfer torestrictedreservesallocatedfromprofits allocatedfromprofits(Note23) Transfer ofaccumulateddeficittorestrictedreserves putoptionliability(Note23) Minority interestbeforeclassificationtominority Minority putoptionliability rateinasubsidiary Difference duetothechangeinshareholding Dividends paid(Note23) Balance asat31December2009(restated) Balance asat31December2009(restated) Net profitfortheyear Other comprehensiveincome/(loss) Total comprehensiveincome reservesallocatedfromprofits(Note23) Transfer ofaccumulateddeficittorestricted minorityputoptionliability(Note23) Minority interestbeforeclassificationto Minority putoptionliability Dividends paid(Note23) Balance asat31December2010 3.500.000 3.500.000 3.500.000 3.500.000 3.500.000 Paid-in Paid-in capital share share ------in capital Inflation Inflation (239.752) (239.752) (239.752) (239.752) (239.752) to paid to paid adjustment ment ------Restricted Restricted allocated allocated 1.204.192 1.446.210 1.231.408 1.231.408 1.204.192 reserves reserves (288.991) 242.018 261.775 profits from from ------put option put option Minority Minority (488.749) (582.848) (386.719) (386.719) (102.030) (488.749) liability liability (94.099) reserve ------payment payment (Note 24) reserve based based Share Share 9.528 9.528 9.528 9.528 9.528 ------Other Reserves of subsidiary arising from arising from acquisition acquisition Difference Difference (308.634) (308.634) (294.065) (294.065) (308.634) (14.569) ------Hedging Hedging (169.957) (169.957) (86.441) (37.711) reserve (86.441) 48.730 48.730 83.516 83.516 ------employee employee Actuarial Actuarial (128.826) (201.884) (100.808) (100.808) (128.826) benefits (73.058) (73.058) (28.018) (28.018) arising arising from from loss loss ------Currency Currency reserve 10.073 10.073 lation lation trans- 9.885 (188) (131) (131) (188) (57) (57) ------(accumulated (accumulated (288.991) (160.891) earnings/ earnings/ Retained Retained 101.088 129.106 128.100 288.991 101.088 (27.012) 28.018 deficit) ------(1.589.712) (1.490.157) 1.859.748 2.450.857 2.450.857 2.450.857 1.752.212 1.724.920 1.859.748 1.859.748 1.859.748 (270.036) (234.763) income income (27.292) for the for the year Net Net ------(1.589.712) (1.490.157) 5.421.966 2.450.857 2.436.602 6.174.757 5.113.607 5.113.607 1.859.748 1.915.115 5.421.966 (102.030) (14.255) (94.099) (14.569) 55.367 Total ------Minority Minority (122.434) (111.308) (179.473) (159.935) interest 199.720 (54.354) 11.126 54.354 56.954 19.538 14.569 ------(1.589.712) (1.490.157) 5.421.966 2.328.423 2.325.294 6.174.757 5.113.607 5.113.607 1.680.275 1.755.180 5.421.966 (156.384) (37.145) 199.720 (3.129) 54.354 74.905 equity Total Total ------(Convenience translation ofareportoriginallyissuedin Turkish -Seeadditionalparagraph belowforconveniencetranslation andNote2.1) Cash andcashequivalentsattheend oftheyear Cash andcashequivalentsatthebeginning oftheyear Foreign exchangedifferencesoncash andcashequivalentsatthebeginningofyear Net increase/(decrease)incashand equivalents Foreign exchangedifferencesfrombalancesheet Net cashusedinfinancingactivities Derivative instrumentpayments Dividends paid Interest paid Repayment ofobligationsunderfinancialleases Repayment ofbankborrowings Proceeds frombankborrowings Cash flowfromfinancingactivities Net cashusedininvestingactivities Purchase ofproperty,plantandequipment,investmentpropertyintangibleassets Proceeds fromsaleofproperty,plant,equipmentandintangibleassets Acquisition ofsubsidiary,netcashacquired Interest received Investing activities Net cashprovidedbyoperatingactivities Taxes paid Provisions paid Payments madeforlong-termemployeebenefits Other non-currentliabilitiesandprovisions Provisions, otherliabilitiesandnon-current Other non-currentassets Trade payables Other currentassetsandinventories Restricted cash Trade receivables Net workingcapitalchangesin: Operating profitbeforeworkingcapitalchanges Other provisions Obselete inventoryprovision Loss onderivativefinancialinstruments Unused vacationprovision,net Litigation provision Curtailment andsettlementgain Provision foremployeeterminationbenefits Allowance fordoubtfulreceivables Reversal ofdoubtfulreceivables Interest expenseandincome,net Foreign currencyexchangeincome/(expense),net Gain onsaleofproperty,plantandequipment IFRIC 12revenue Depreciation andamortisationimpairmentexpense cashprovidedbyoperatingactivities: Adjustments toreconcileprofitbeforetax Profit fortheperiodbeforeincometax The accompanying policiesandexplanatorynotesonpages 112through177form an integralpartoftheseconsolidated financialstatements. Consolidated statementofcashflowsfortheyearended31December2010(Currency-inThousandsTurkishLira(“TL”)) 19, 20,21 Notes 22, 30 8, 12 8, 30 29 23 16 22 22 22 22 22 6 31 December2010 1 January2010- Current period (15.283.572) (1.794.320) (1.589.712) (1.760.826) (1.804.974) 15.354.674 15.354.674 1.523.538 1.523.538 3.127.006 3.844.226 3.844.226 4.895.524 (185.691) (191.511) (237.871) (772.721) (138.821) (163.232) (185.738) (348.416) Audited (26.340) (16.193) (88.657) (11.140) (79.192) (25.885) (46.756) 108.187 108.187 277.349 102.285 102.285 389.627 110.600 277.940 199.933 497.829 (1.546) (7.816) (5.007) 64.360 64.360 16.080 16.080 82.086 82.086 88.257 44.185 1.071 1.071 1.087 1.087 1.891 Restated (Note2.2) 31 December2009 1 January2009- Prior period (20.659.828) (2.079.200) (2.320.927) (1.490.157) (1.471.646) 21.205.005 21.205.005 3.234.671 3.234.671 4.544.080 1.557.418 2.359.967 (674.935) (127.785) (307.169) (248.863) (179.862) (214.298) (316.175) Audited (84.628) (38.441) (20.975) (76.354) (27.886) (52.140) (14.186) 215.874 215.874 201.879 201.879 111.945 362.547 110.600 426.775 (3.073) (6.469) (6.008) (4.657) (5.199) 40.179 40.179 92.534 90.022 2.012 2.012 8.614 (331) - - -

Türk Telekom CONSOLIDATED FINANCIAL STATEMENTS AND 2010 Annual Report 111 INDEPENDENT AUDIT REPORT Türk Telekom CONSOLIDATED FINANCIAL STATEMENTS AND 2010 Annual Report 112 INDEPENDENT AUDIT REPORT (Convenience translationof a reportoriginallyissued inTurkish-See additionalparagraph below forconvenience translationand Note2.1) liable toTTGlobalattheamountofEuro71.834.Duringconsolidationcorrespondingreceivableandpayablebalancesareeliminated. amount Euro 71.834. At the date of the acquisition, TT Global has repaid the borrowing in the name of Pantel Group so Pantel Group became has paid Euro 135.591 for the acquisition. At the date of the acquisition, Pantel Group had a borrowing from its former shareholders at the agreement signedon18May2010withInvitelInternationalandfollowinggrantofthelegalapprovals.TürkTelekomthroughitssubsidiaries Romania S.A(collectively“PantelGroup”),followingthefulfilmentofconditionsthatwereincludedinpreliminarysharepurchase named Invitel International AG), Pantel International Hungary Kft (formerly named Invitel International Hungary Kft), and S.C. Euroweb On 7October2010,TTInternationalhascompletedthe100%sharepurchaseofPantelAG(includingitssubsidiaries)(formerly is incorporatedinHolland. interest. On3October2010,TTInternationalacquiredGlobalServicesB.V.(“TTGlobal”)(formerlynamedasMaturusHoldingB.V.),which On 30 July 2010, the Company incorporated TT International Holding B.V. (“TT International”) in the Netherlands, with 100% ownership is 25yearsstartingfrom28February2001. facilities byotherlicensedoperatorsandthemarketingsupplyoftelecommunicationservices.ThetermConcessionAgreement covers theprovisionofallkindstelecommunicationservices,establishmentnecessarytelecommunicationsfacilitiesandusesuch Authority (“ICTA”)(formerlynamedTurkishTelecommunication-“TA”)asat14November2005(Note25).TheConcessionAgreement A concessionagreement(“theConcessionAgreement”)wassignedbytheCompanyandInformationCommunicationTechnologies because ofitscontrollingownershipinOgerTelecom. As at31December2010and2009,theultimateparentcontrollingpartyofCompanyisSaudiOgerLtd(“SaudiOger”), entity an is Telecom Oger Company. the incorporated inAugust2005asalimitedliabilitycompanyunderthelawsofDubaiInternationalFinancialCentre. of 55% owns turn in which OTAŞ, of shares the of 99% owns Telecom) (Oger Limited Telecom Oger public offeringwiththepermissionofDirectorateIstanbulStockExchangeon15May2008. Company’s sharesownedbytheTreasurycorrespondingtoanominalamountofTL525.000hasbeenissuedpublicthroughaninitial According to thepermissionofCapitalMarketBoard(“CMB”) numbered 22/256,outofTL 3.500.000nominalamountofcapital,15%the signed on14November2005andthenafter,OTAŞbecametheparentcompanyofCompany. purchase ofa55%stakeintheCompany.AShareholdersAgreementandSharePledgeforblocksaleCompanywere the for Authority Privatization Turkey’s with Agreement Sale Share a into entered (“OTAŞ”), A.Ş. Telekomünikasyon Ojer 2005, August 24 On Under secretariatofTreasury(“theTreasury”). PTT pertainingtotelecommunicationservicesweretransferredtheCompany,sharesofwhichfullyownedbyPrimeMinistry of thesplittelecommunicationandpostalservicesformerlycarriedoutbyPTT.Allpersonnel,assetsobligations Turkey was given to the General Directorate of Post, Telegraph and Telephone (“PTT”). The Company was founded on 24 April 1995 as a result 4 February1924,under the TelephoneandTelegraphLawNo. 406, theauthorizationtoinstall and operatetelephonenetworks throughout Company The has itshistoryinthePostahane-iAmirane(DepartmentofPostOffice)whichwasoriginallyestablishedasaMinistryon23October1840.On Turkey. in incorporated company stock joint a is Company”) “the or Telekom” (“Türk Şirketi Anonim Telekomünikasyon Türk 1. Corporateorganizationandactivities (Currency -inThousandsofTurkishLira(“TL”)unlessotherwiseindicated.Allothercurrenciesarealsoexpressedthousands) Notes totheconsolidatedfinancialstatementsforyearended31December2010 The generalassembly andcertainregulatorybodies have thepowertoamendstatutory financialstatementsafterissue. Consolidated financial statementswereapprovedby theBoardofDirectorsCompany andauthorizedforissueon8 February 2011. The numbersofpersonneltheGroup asat31December2010,2009and2008aredisclosedinNote22. The Company’sregisteredofficeaddress isTurgutÖzalBulvarı,06103Aydınlıkevler,Ankara. services, aswellcallcentreandcustomer relationshipmanagement,technologyandinformationmanagement. The Group’sprincipalactivitiesinclude theprovisionoflocal,national,internationalandmobiletelecommunication services,internetproductsand Hereinafter, TürkTelekomanditssubsidiaries togetherwillbereferredtoas“theGroup”. Name ofSubsidiary The detailsoftheCompany’ssubsidiariesasat31December2010and2009arefollows: 1. Corporateorganizationandactivities(continued) (Convenience translationof a reportoriginallyissued inTurkish-See additionalparagraph below forconvenience translationand Note2.1) Sanayi veTicaretAnonimŞirketi(“Argela”) Argela YazılımveBilişimTeknolojileri Avea İletişimHizmetleriA.Ş.(“Avea”) TTNET AnonimŞirketi(“TTNET”) Anonim Şirketi(“Innova”) Innova BilişimÇözümleri Anonim Şirketi(“AssisTT”) Assistt RehberlikveMüşteriHizmetleri Argela -USA.Inc. A.Ş. (“Sebit”) Sebit EğitimveBilgiTeknolojileri

Sebit LLC IVEA SoftwareSolutionsFZ-LLC(“IVEA”) (“Sobee”) SOBEE YazılımTicaretLimitedŞirketi TT InternationalHoldingB.V. TT GlobalServicesB.V.(“TTGlobal”) (“TT International”) Pantel InternationalAG (“Pantel Avusturya”)

Pantel InternationalHungaryKft (“Pantel Macaristan”)

Euroweb RomaniaS.A. (“Pantel Romanya”)

Pantel InternationalBulgariaEODD (“Pantel Bulgaristan”)

Pantel InternationalCZs.r.o (“Pantel ÇekCumhuriyeti”)

Pantel Telcomd.o.oBeograd (“Pantel Sırbistan”)

Pantel Telcomunikacijed.o.o (“Pantel Slovenya”)

Pantel InternationalSKs.r.o (“Pantel Slovakya”)

MTCTR MemorexTelekomunikasyonSanayi ve TicaretLimitedŞirketi(“PantelTürkiye”)

Memorex TelexCommunicationsUALtd. (“Pantel Ukrayna”)

Pantel InternationalItaliaS.R.L. (“Pantel İtalya”)

Pantel InternationalDOOELSkopje (“Pantel Makedonya”)

(Currency -inThousands of TurkishLira(“TL”)unlessotherwiseindicated.Allothercurrenciesarealsoexpressedinthousands) Place ofincorporation Czech Republic and operation Macedonia Romania Hungary Bulgaria Slovenia Slovakia Holland Holland Ukraine Austria Turkey Turkey Turkey Turkey Turkey Turkey Turkey Turkey Serbia Italy UAE USA USA

Notes totheconsolidatedfinancialstatementsforyearended31December2010 infrastructureandwholesale infrastructureandwholesale infrastructureandwholesale infrastructureandwholesale infrastructureandwholesale infrastructure andwholesale infrastructure andwholesale infrastructure andwholesale infrastructure andwholesale infrastructure andwholesale infrastructure andwholesale infrastructure andwholesale Internet ServiceProvider Internet/data services, Internet/data services, Internet/data services, voice servicesprovider Internet/data services, voice servicesprovider Internet/data services, voice servicesprovider Internet/data services, voice servicesprovider voice servicesprovider Internet/data services, voice servicesprovider voice servicesprovider Internet/data services, voice servicesprovider voice servicesprovider Internet/data services, voice servicesprovider Internet/data services, Internet/data services, voice servicesprovider Internet/data services, voice servicesprovider Telecommunications Telecommunications Web BasedLearning Web BasedLearning Telecommunication Telecommunication Customer Relations Holding company Principal activity Service company gaming services Call Centreand GSM Operator Solutions Solutions Solutions Solutions Software

Functional Currency Turkish Lira Turkish Lira Turkish Lira Turkish Lira Turkish Lira Turkish Lira Turkish Lira Turkish Lira Euro Euro Euro Euro Euro Euro Euro Euro Euro Euro Euro Euro Euro USD USD USD

31 December Effective ownershipoftheCompany(%) 99,96 99,96 81,37 99,99 99,96 99,96 99,96 99,96 99,96 99,99 2010 2009 100 100 100 100 100 100 100 100 100 100 100 100 100 100

31 December 99,96 99,96 81,37 99,96 99,96 99,96 99,96 99,96 99,96 99,99 ------

Türk Telekom CONSOLIDATED FINANCIAL STATEMENTS AND 2010 Annual Report 113 INDEPENDENT AUDIT REPORT Türk Telekom CONSOLIDATED FINANCIAL STATEMENTS AND 2010 Annual Report 114 INDEPENDENT AUDIT REPORT (Convenience translation ofareportoriginallyissuedin Turkish -Seeadditionalparagraph belowforconveniencetranslation andNote2.1) income and,however, themonetaryeffectofthis changeonfuturefinancialstatements couldnotbeestimated. 19” releasedbytheIASBinApril2010 whichproposerecognitionofactuarialgainsandlossesinconsolidated statementofcomprehensive is morereliableandaccurate takingintoconsiderationthefinalexposuredraft“DefinedBenefit Plans-ProposedamendmentstoIAS decided to account actuarial gains and losses in the consolidated statement of comprehensive income with the belief that such presentation to paragraph 93 A of IAS 19, the Group has right to account actuarial gain and in consolidated statement of comprehensive income. The Group and 2008havebeenrestated.Since theGrouphasaccountedallactuarialgainsandlossesrelated withthedefinedbenefitplansaccording presented inconsolidatedincome statement.Accordingly,duethisaccountingpolicychangefinancial statementsasof31December2009 The Group has started to account actuarial gain and loss in the consolidated statement of comprehensive income which was previously 2.2 Changesinaccountingpolicies deposits. As of 31 December 2009 and 2008, Group reclassified the free deposits amounting to TL 207,081 and TL 189,334, respectively to restricted balance sheetasof31December2009arereclassifiedtootherpayables account. security premiumspayableamountingtoTL19,306(2008–22,105) thatwereincludedinothercurrentliabilitiesaccounttheconsolidated Due topersonnelamountingTL23,624(2008–30,800),taxes and dutiespayableamountingtoTL221,436(2008–247,035)social respectively, isreclassifiedtofinancialexpense. administration expensesintheconsolidatedincomestatementas of31December2009attheamountTL47,787,4,966and18,864, Interest costrelatedwithdefinedbenefitobligationwhichwasclassified undercostofsales,marketing,salesanddistributiongeneral to thecomparativeconsolidatedbalancesheetsandincomestatement. In ordertobecomparablewiththebalancesheetandincomestatement dated31December2010,belowexplainedclassificationsaremade Classifications appliedtofinancialstatementsasof31December2009 financial statementsarenotintendedtopresentthepositionandresultsofoperationsinaccordancewithIFRS. respect to the application of inflation accounting and also for certain disclosures requirement of the CMB. Accordingly, the accompanying statements differfromInternationalFinancialReporting Standards (“IFRS”)issuedbytheInternationalAccounting Standards Boardwith As at31December2010,theaccountingprinciplesdescribedinNote2(definedasCMBAccountingStandards)toaccompanyingfinancial Additional paragraphforconveniencetranslationtoEnglish: financial statementsinaccordancewithIFRSadoptedbytheIASB. International AccountingStandardsBoard(IASB).Thus,asatandfortheyearended31December2010,Groupprepareditsconsolidated until theTurkishAccountingStandardsBoarddeclaresdifferencesbetweenIFRSasadoptedbyEUand However, againinaccordancewiththeprovisionalclause2ofsamestandardsadoptionIFRSasadoptedbyEUispostponed In accordancewitharticle5oftheCMBAccountingStandards,companiesshouldapplyIFRSasadoptedbyEuropeanUnion (EU). disclosed inNote4. from theforecasts.Issuesthatarecomplexandneedsfurtherinterpretation,whichmighthaveacriticalimpactonfinancialstatements, these estimations are made upon the best afford of the Management by interpreting the cyclical circumstances, actual results may differ critical accountingestimationsrelatedtoassets,liabilities,contingentassetsandliabilitiesarerequiredbeused.Although In ordertopreparefinancialstatementsinaccordancewithIFRSs,certainassumptionsaffectingnotestheand which havebeenreflectedattheirfairvalues. “Property, PlantandEquipment”foracquisitionspriorto1January2000,derivativefinancialinstrumentsminorityputoptionliability for the property, plant and equipment and investment property for which the deemed cost method was applied in accordance with IAS 16 As at31December2010,2009and2008,theconsolidatedfinancialstatementshavebeenpreparedonhistoricalcostbasisexceptwith and theeffectsofapplicationInternationalFinancialReportingStandards(“IFRS”)3“BusinessCombinations”. application for long-term employee benefits according to International Accounting Standards (“IAS”) 19“Benefits Provided to Employees”, equipment and intangible assets in accordance with International Financial Reporting Interpretations Committee (“IFRIC”) 12, effects of equipment accordingtolowerofusefullifeandconcessionperiods,accountingforexpenseaccruals,property,plant effect ofaccountingfordeferredtaxation,provisiondoubtfulreceivables,thedepreciationchargeproperty,plantand presentation inaccordancewiththeAccountingStandardsofCMBandarepresentedTL.Suchadjustmentsmainlycomprise The consolidated financial statements are based on the statutory records, with adjustments and reclassifications for the purpose of fair those financialstatements. subsidiaries operate,andtorepresentinaccordancewithCMBAccountingStanda Profit fortheyearattributabletominorityinterest equityholdersoftheparent Profit fortheyearattributableto Deferred taxexpense Other operatingexpense(-) Other operatingincome Net income Retained earnings retirementplan Actuarial gain/lossreservedueto accordance withrevisedIAS27. are accountedinaccordancewith revisedIFRS3.Also,theconsolidatedfinancialstatementsasof 31December2010havebeenpreparedin the accountingforlossesincurred bythesubsidiaryaswelllossofcontrolasubsidiary.Group’s acquisitionsoccurredduring2010 Therefore suchachangewillhavenoimpactongoodwill,nor itgiveraisetoagainorloss.Furthermoretheamendedstandardchanges adjusting goodwill).TheamendedIAS27requiresthatachangeinownership interestofasubsidiaryisaccountedforasanequitytransaction. acquisition-related costsandrecognisingsubsequentchangesin fair valueofcontingentconsiderationintheprofitorloss(ratherthanby recognised, thereportedresults in theperiodthatanacquisitionoccurs, and future reported results.Suchchangesincludetheexpensingof The revisedIFRS3introducesanumberofchangesintheaccounting forbusinesscombinationswhichwillimpacttheamountofgoodwill IFRS 3BusinessCombinations(Revised)andIAS27Consolidated andSeparateFinancialStatements(Amended) or financialperformance. arranged in the individual financial statements of the subsidiary. The interpretation does not have any effect on Group’s financial position This amendmentclarifiestheaccountingforgroupcash-settled share-based paymenttransactionsandhowsuchshouldbe IFRS 2GroupCash-settledShare-basedPaymentTransactions(Amended) does nothaveanyeffectontheGroup’sfinancialpositionorperformance. instrument ashedgeditem.Thisalsocoversthedesignationofinflationariskorportioninparticularsituations.Theinterpretation The amendmentclarifiesthatanentityispermittedtodesignateaportionofthefairvaluechangesorcashflowvariabilityfinancial Amendments toIAS39“FinancialInstruments:RecognitionandMeasurement”–“EligibleHedgedItems” effect onGroup’sfinancialpositionorperformance. a liability,howtomeasureitandtheassociatedassets,whenderecognizeassetliability.Theinterpretationdoesnothaveany The interpretationprovidesguidanceonhowtoaccountfornon-cashdistributionsowners.clarifieswhenrecognize IFRIC 17“DistributionsofNon-cashAssetstoOwners” Improvements toIFRSs,April2009 Improvements toIFRSs,May2008 IFRS 3BusinessCombinations(Revised)andIAS27ConsolidatedSeparateFinancialStatements(Amended) IFRS 2GroupCash-settledShare-basedPaymentTransactions(Amended) Amendments toIAS39“FinancialInstruments:RecognitionandMeasurement”–“EligibleHedgedItems”, IFRIC 17“DistributionsofNon-cashAssetstoOwners”, The newstandards,amendmentsandinterpretationswhichareeffectiveasat1January2010follows performance havebeendisclosedintherelatedparagraphs. and IFRICinterpretationssummarizedbelow.TheeffectsofthesestandardsontheGroup’sfinancialposition those followedinthepreparationofconsolidatedfinancialstatementsprioryear,exceptforadoptionnewstandards The accountingpoliciesadoptedinthepreparationofconsolidatedfinancialstatementsasat31December2010areconsistentwith New standardsandinterpretations financial statementsasof31December2009and2008aresummarizedbelow. Due tochangeinaccountingofactuarialgainstheconsolidatedstatementcomprehensiveincome,restatementeffects 2.2 Changesinaccountingpolicies(continued) 2. Basisofpreparationfinancialstatements(continued) (Convenience translation ofareportoriginallyissuedin Turkish -Seeadditionalparagraph belowforconveniencetranslation andNote2.1) (Currency -inThousands of TurkishLira(“TL”)unlessotherwiseindicated.Allothercurrenciesarealsoexpressedinthousands) Before Accounting Before Accounting December 31,2009 Policy Change

(179.703) 1.831.730

(190.034)

1.831.730

493.581 58.097 280 Notes totheconsolidatedfinancialstatementsforyearended31December2010 - December 31,2009 After Accounting After Accounting Policy Change 1.859.748 1.859.748 (179.473) (155.032) (128.826) 493.581 101.088 51.343 Difference (128.826) 100.808 (6.754) 28.018 35.002 28.018 230 -

Before Accounting Before Accounting December 31,2008 Policy Change 1.752.212 1.752.212 (124.842) (288.991) (54.291) 134.954 310.726 - December 31,2008 After Accounting After Accounting Policy Change 1.724.919 1.724.919 (124.534) (160.891) (100.808) (52.659) 142.108 274.955 Difference (100.808) (27.293) (35.771) (27.293) 128.100 128.100 7.154 7.154 1.632 1.632 308 308

Türk Telekom CONSOLIDATED FINANCIAL STATEMENTS AND 2010 Annual Report 115 INDEPENDENT AUDIT REPORT Türk Telekom CONSOLIDATED FINANCIAL STATEMENTS AND 2010 Annual Report 116 INDEPENDENT AUDIT REPORT (Convenience translationof a reportoriginallyissued inTurkish-See additionalparagraph below forconvenience translationand Note2.1) retrospectively. The Groupdoesnotexpectthatthis amendmentwillhaveanimpacton thefinancialpositionorperformance oftheGroup. met, theseshould beclassifiedasequityregardless ofthecurrencyinwhichexercise priceisdenominated.Theamendment istobeapplied amount offoreigncurrencywhich weretreatedasderivativeliabilitiesbytheexistingstandard.Theamendment statesthatifcertaincriteriaare The amendmentiseffectiveforannual periodsbeginningonorafter1February2010.Thisamendmentrelates totherightsissuesofferedforafixed IAS32ClassificationonRightsIssues (Amended) in theprocessofassessingimpact ofthenewstandardonfinancialpositionorperformance oftheGroup. for classifying and measuringfinancialassets.Earlyadoptionispermitted.This standardhasnotyetbeenendorsedbytheEU.TheGroupis The newstandardiseffectivefor annualperiodsbeginningonorafter1January2013.Phaseofthis newIFRSintroducesrequirements IFRS 9FinancialInstruments–Phase1financialassets,classification andmeasurement the Group. applied retrospectively.TheGroupisintheprocessofassessing impactofthenewstandardonfinancialpositionorperformance to recognise as an asset some voluntary prepayments for minimum funding contributions. This Earlier application permitted and must be The amendmentiseffectiveforannualperiodsbeginningonorafter 1January2011.Thepurposeofthisamendmentwastopermitentities IFRIC 14PrepaymentsofaMinimumFundingRequirement(Amended) or performance. treated asconsiderationpaidtoextinguishthatfinancialliability. TheinterpretationdoesnothaveanyeffectonGroup’sfinancialposition paid” inaccordancewithparagraph41ofIAS39.Asaresult,the financialliabilityisderecognisedandtheequityinstrumentsissuedare the entity’sequityinstrumentstosettlefinancialliabilityfully orpartially.IFRIC19clarifiessuchequityinstrumentsare“consideration when thereisarenegotiationbetweentheentityandcreditorregardingtermsoffinancialliabilityagreestoaccept The interpretationiseffective for annualperiods beginning on orafter1July2010.Thisinterpretation addresses the accounting treatment IFRIC 19ExtinguishingFinancialLiabilitieswithEquityInstruments Standards issuedbutnotyeteffectiveandearlyadopted position orperformance. of IAS39thatrelatetoanetinvestmenthedgearesatisfied.TheinterpretationdoesnothaveanyeffectonGroup’sconsolidatedfinancial or entitieswithinthegroup,includingforeignoperationitself,aslongdesignation,documentationandeffectivenessrequirements The amendmentstatesthat,inahedgeofnetinvestmentforeignoperation,qualifyinghedginginstrumentsmaybeheldbyanyentity IFRIC 16HedgesofaNetInvestmentinForeignOperation IAS 39FinancialInstruments:RecognitionandMeasurement–ItemsAcceptedasProtectedFromRisk IFRIC 9ReassessmentofEmbeddedDerivatives in applianceguide. Group decideswhetheritactedasagentorprinciplewhenrecognizingrevenuesrelatedtoequipmentssalesconsideringtheimprovements • Bearsthecreditrisk • Hasdiscretioninestablishingprices • Hasinventoryrisk • Hasprimaryresponsibilityforprovidingthegoodsorservice features toconsiderarewhethertheentity: The Boardhasaddedguidance(whichaccompaniesthestandard)todeterminewhetheranentityisactingasaprincipaloragent. IAS 18Revenue purchase ofPantelGroup. period, theamendmentshallalsobeappliedforthatearlier period. Grouphasconsidered effects ofimprovements on standards during active marketsareonlyexamplesandnotrestrictiveonthemethodsthatcanbeused.IfanentityappliesIFRS3(revised)forearlier valuation techniquespresentedfordeterminingthefairvalueofintangibleassetsacquiredinabusinesscombinationthatarenottraded recognise thegroupofintangibleassetsasasingleassetprovidedindividualhavesimilarusefullives.Also,clarifiesthat Clarifies thatifanintangibleassetacquiredinbusinesscombinationisidentifiableonlywithanotherasset,theacquirermay IAS 38IntangibleAssets IAS 36ImpairmentofAssets IAS 17Leases IAS 7StatementofCashFlows IAS 1PresentationofFinancialStatements IFRS 8OperatingSegmentInformation IFRS 5Non-currentAssetsHeldforSaleandDiscontinuedOperations IFRS 2Share-basedPayment the on effect an have not did or had accounting policies,financialpositionorperformanceoftheGroup: which standards following the to 2009) (April IFRSs to improvements from resulting Amendments 2.2 Changesinaccountingpolicies(continued) 2. Basisofpreparationfinancialstatements(continued) (Currency -inThousandsofTurkishLira(“TL”)unlessotherwiseindicated.Allothercurrenciesarealsoexpressedthousands) Notes totheconsolidatedfinancialstatementsforyearended31December2010

into account.TheGroupdoesnot expectthatthisamendmentwillhaveanimpactonthefinancial positionorperformanceoftheGroup. redeemed, the amountof discounts or incentives otherwise granted to customers not participating in the award credit scheme, is to be taken This improvementclarifiesthatwhen thefairvalueofawardcreditsismeasuredbasedon oftheawardsforwhichtheycouldbe IFRIC 13CustomerLoyaltyProgrammes, effectiveforannualperiodsbeginningonorafter1January 2011 does notexpectthatthisamendmentwillhaveanimpactonthefinancial positionorperformanceoftheGroup. This improvementprovidesguidancetoillustratehowapplydisclosure principlesinIAS34andadddisclosurerequirements.TheGroup IAS 34InterimFinancialReporting,effectiveforannualperiodsbeginning onorafter1January2011 position orperformanceoftheGroup. after 1July2009orearlierwhenIAS27isappliedearlier.TheGroup doesnotexpectthatthisamendmentwillhaveanimpactonthefinancial Rates”, IAS“28Investments in Associates” and IAS 31“Interests in JointVentures” apply prospectively for annualperiods beginning on or This improvementclarifiesthattheconsequentialamendments fromIAS27madeto21“TheEffectofChangesinForeignExchange IAS 27ConsolidatedandSeparateFinancialStatements,effective forannualperiodsbeginningonorafter1July2010 impact onthefinancialpositionorperformanceofGroup. statement ofchangesinequityorthenotestofinancialstatements. TheGroupdoesnotexpectthatthisamendmentwillhavean This amendmentclarifiesthatanentitywillpresentanalysisofothercomprehensiveincomeforeachcomponentequity,eitherinthe IAS 1PresentationofFinancialStatements,effectiveforannualperiodsbeginningonorafterJanuary2011 have animpactonthefinancialpositionorperformanceofGroup. disclosures andthenatureextentofrisksassociatedwithfinancialinstruments.TheGroupdoesnotexpectthatthisamendmentwill This improvementgivesclarificationsofdisclosuresrequiredbyIFRS7andemphasisestheinteractionbetweenquantitativequalitative IFRS 7FinancialInstruments:Disclosures,effectiveforannualperiodsbeginningonorafter1January2011 amendment willhaveanimpactonthefinancialpositionorperformanceofGroup. (whether obligedorvoluntarily),i.e.,splitbetweenconsiderationandpostcombinationexpenses.TheGroupdoesnotexpect that this Finally, itrequiresanentity(inabusinesscombination)toaccountforthereplacementofacquiree’sshare-basedpaymenttransactions entitle theirholderstoaproportionateshareoftheentity’snetassets. share oftheacquiree’sidentifiablenetassets)onlytocomponentsnon-controllinginterestthatarepresentownershipinterests Moreover, thisimprovementlimitsthescopeofmeasurementchoices(fairvalueoratpresentownershipinstruments’proportionate 2008). to contingentconsiderationthatarosefrombusinesscombinationswhoseacquisitiondatesprecedetheapplicationofIFRS3(asrevisedin and IAS 39 Financial Instruments: Recognition and Measurement, that eliminate the exemption for contingent consideration, do not apply This improvement clarifies that the amendments to IFRS 7 Financial Instruments: Disclosures, IAS 32 Financial Instruments: Presentation IFRS 3BusinessCombinations,effectiveforannualperiodsbeginningonorafter1July2010 2010. July 1 beginning year financial Early applicationispermittedinallcasesandthisannualimprovementsprojecthasnotyetbeenendorsedbytheEU. the for is earliest the and and inconsistencies various are removing improvements to the view of a dates with effective The primarily wording. standards, clarifying its to amendments of omnibus third its issued IASB the 2010 May In the Group. been endorsedbytheEU.TheGroupdoesnotexpectthatthisamendmentwillhaveanimpactonfinancialpositionorperformanceof depreciable assets,measuredusingtherevaluationmodelinIAS16,shouldalwaysbeonasalebasis.Thisstandardhasnotyet should bedeterminedonthebasisthatitscarryingamountwillrecoveredthroughsaleandii)arequirementdeferredtaxnon- been updatedtoincludei)arebuttablepresumptionthatdeferredtaxoninvestmentpropertymeasuredusingthefairvaluemodelinIAS40 The amendmentsaremandatoryforannualperiodsbeginningonorafter1January2012,butearlierapplicationispermitted.IAS12has IAS 12DeferredTax:RecoveryofUnderlyingAssets(Amendment) on thefinancialpositionorperformanceofGroup. application ispermittedandadoptionshallbeappliedretrospectively.TheGroupdoesnotexpectthatthisamendmentwillhaveanimpact a singlecustomer.Inassessingthis,thereportingentityshallconsiderextentofeconomicintegrationbetweenthoseentities.Early as toassesswhetheragovernmentandentitiesknownthereportingentitybeundercontrolofthatareconsidered The revisioniseffectiveforannualperiodsbeginningonorafter1January2011.Thisrelatestothejudgmentwhichrequiredso IAS 24RelatedPartyDisclosures(Revised) 2.2 Changesinaccountingpolicies(continued) 2. Basisofpreparationfinancialstatements(continued) (Convenience translationof a reportoriginallyissued inTurkish-See additionalparagraph below forconvenience translationand Note2.1) (Currency -inThousands of TurkishLira(“TL”)unlessotherwiseindicated.Allothercurrenciesarealsoexpressedinthousands) Notes totheconsolidatedfinancialstatementsforyearended31December2010

Türk Telekom CONSOLIDATED FINANCIAL STATEMENTS AND 2010 Annual Report 117 INDEPENDENT AUDIT REPORT Türk Telekom CONSOLIDATED FINANCIAL STATEMENTS AND 2010 Annual Report 118 INDEPENDENT AUDIT REPORT (Convenience translation ofareportoriginallyissuedin Turkish -Seeadditionalparagraph belowforconveniencetranslation andNote2.1) not beenincludedpurchaseprice sinceitwillbecollectedfromPantelGroup. 71.834 waspaidtoformershareholders forthetransferofshareholderloantoGroup.Thepaid amounttotheformershareholdershas liabilities arerecognisedinconsolidated financialstatementsbasedonfairvalues.Asdisclosed in Note26,ontheacquisitiondate,Euro Acquisition of Pantel Group on 7 October 2010 has been accounted in accordance with revised IFRS 3 and acquired assets and assumed All transactioncostsincurredbytheGrouphavebeenrecognized in generaladministrativeexpenses. January 2010.Incomparisontotheabovementionedrequirements, thefollowingdifferencesapplied: For acquisitionsoccurredafter1January2010,theGroupimplemented revisedIFRS3“BusinessCombination”whichiseffectiveasof1 accounting. If thefairvaluesofassetsandliabilitiesarebasedonprovisional assessmentasatthebalancesheetdate,Groupmadeprovisional former shareholdersoftheacquiredcompanyasdate acquisition. the date of acquisition. Purchase consideration is the sum of fair values of assets transferred by Group and liabilities assumed against the assets and liabilities assumed are recognised at IFRS 3 fair values on the date of acquisition. Acquired company is consolidated starting from of theacquisitioncosttoassetsacquiredandliabilitiesassumed attheirfairvaluesonthedateofacquisition.Accordingly,acquired Transaction coststhataredirectlyattributabletotheacquisitionformed partoftheacquisitioncost.Acquisitionmethodrequiresallocation Before 1January2010,businesscombinationsareaccountedusing theacquisitionmethod.Accordingly,acquisitionsarerecognisedatcost. Business combinations 3. ValuationbasisandSignificantaccountingpoliciesapplied acquisition oftheminorityshares(Notes11and23). and thefairvalueamountisclassifiedas‘minorityputoptionliabilityreserve’basedonGroupaccountingprinciplesappliedfor interest of its share of recognized income and expense for the year. The value of the minority interest before the fair value calculation statements, theminorityinterestisreclassifiedasputoptionliability‘’longtermliabilities’afterappropriationto financial consolidated the in liability option put minority the reflect to order In Group. Bank İş by owned shares the on Avea, in shareholder dated 15 originally February Agreement” 2004. In Option accordance with Put the and Amendment Agreement, “IPO the the Company has and granted a Agreement” put “Shareholder option to the İş Bank to Group, Agreement” the minority “Amendment an referred signed be Group) will Bank İş (altogether as Bank İş by controlled companies the and Bank) (İş A.Ş. Bankası İş Türkiye Company, the 2006, September 15 On financial statementsduetotheirimmateriality. minority interestinInnova,Argela,AssisTT,Sebit,Sobee,Argela-USA,Inc,IVEAandSebitLLChavenotbeenrecognisedtheconsolidated of the acquisition. Loses within a subsidiary are attributed to minority interest even if that result in deficit balance. As at 31 December 2010, consists oftheamountthoseinterestsatdateoriginalacquisitionandminority’ssharechangesinequitysince Minority interestinthenetassetsofconsolidatedsubsidiariesisidentifiedseparatelyfromGroup’sequitytherein. All intra-grouptransactionsandbalancesincludingunrealizedprofitslossesareeliminated. and eventsarepreparedforthesamechartofaccountsCompany. by otherGroupCompanies.Theconsolidatedfinancialstatementsarepreparedusinguniformaccountingpoliciesforsimilartransactions Where necessary,adjustmentsaremadetothefinancialstatementsofsubsidiariesbringtheiraccountingpoliciesinlinewiththoseused as appropriate. results ofsubsidiariesacquiredduringtheyearareincludedinconsolidatedstatementsincomefromeffectivedateacquisition subsidiary’s sharecapitalandisabletogovernthefinancialoperatingpoliciesofanenterprisesoasbenefitfromitsactivities.The Macedonia. Control is normally evidenced when the Company owns, either directly or indirectly, more than 50% of the voting rights of a Bulgaria, Pantel Czech Republic, Pantel Serbia, Pantel Slovenia, Pantel Slovakia, Pantel Turkey, Pantel Ukraine, Pantel Italy and Pantel AssisTT, Sebit,Sobee,Argela-USA,Inc,IVEA,SebitLLC,TTInternational,Global,PantelAustria,Hungary,Romania, As at31December2010,theconsolidatedfinancialstatements include thefinancial results ofTürkTelekom, TTNet, Avea,Innova, Argela, 2.3 Basisofconsolidation performance oftheGroup. has notyetbeenendorsedbytheEU.TheGroupdoesexpectthatthisamendmentwillhaveanimpactonfinancialpositionor the endofareportingperiod.TheamendmentsbroadlyalignrelevantdisclosurerequirementsIFRSsandUSGAAP.Thisamendment assets. Theamendmentalsorequiresadditionaldisclosuresifadisproportionateamountoftransfertransactionsareundertakenaround assets (e.g.securitisations),includingunderstandingthepossibleeffectsofanyrisksthatmayremainwithentitywhichtransferred The purposeofthisamendmentistoallowusersfinancialstatementsimp limited to16years. Considering the Concession Agreement useful lives of purchases made in 2010 are (*) TheremainingusefullivesofthePPEarelimitedtoconcessionperiods. Other property,plantandequipment Furniture andfixtures Vehicles Data networks Switching equipment Transmission equipment Outside plant Buildings The usefullivesforPPEareasfollows: estimated usefuleconomiclivesusingthestraight-linemethod. Depreciation ischargedsoastowriteoffthecostlessresidualvalue(ifany)ofPPE,otherthanlandandconstructioninprogress,overtheir of replacingpartsuchanitemwhenthatcostisincurrediftherecognitioncriteriaaremet income in the year the costs are incurred. The Group recognizes in the carrying amount of an item of property, plant and equipment the cost Expenditures incurred after the PPE has been put into operation, such as repairs and maintenance, are normally charged to the statement of attributable costsofbringingtheassettoitsworkingconditionandlocationforintendeduse. basis, thecostofPPEgenerallycomprisesitspurchaseprice,includingimportdutiesandnon-refundabletaxesanydirectly by DeteconInternationalGmbH(asubsidiary of DeutscheTelecomAG). Other than thePPEforwhichcostwasdetermined on adeemedcost valuation companiesin2006onaretrospectivebasis.Thenetworkequipmentandvehiclesvaluesasat31December1999wereappraised basis fortheirrestatement.Thedeemedcostvaluesasat1January2000landandbuildingswereappraisedbyCMBlicensedreal-estate not availablefortheCompanypriorto1January2000.TheGroupusedindependentprofessionalassessmentsoffairvaluePPEas of IAS 29 “Financial Reporting in Hyper Inflationary Economy” since detailed records of the acquisition date and costs of items of PPE were losses. TheGroupelectedtomeasureproperty,plantandequipmentoftheCompanyonadeemedcostbasisinfirstperiodapplication Property, plantandequipment(“PPE”)oftheGroupiscarriedatcostlessaccumulateddepreciationanyimpairment Property, plantandequipment information forequityaccountingisnotachievedonatimelybasis. financial statements.Asof31December2010,2009and2008,Ceteliscarriedatcostafterdiscountingimpairment,ifany,since As of31December2010,2009and2008,theGroupaccountedits20%shareholdinginCetelasfinancialinvestmentsconsolidated Investment inanassociate cannot bereversedinfutureperiods. amounts ofthenetassetsassignedtocash-generatingunit,animpairmentlossisrecognized.Impairmentlossesrelatinggoodwill the goodwillrelates.Whererecoverableamountofcash-generatingunit(groupunits)islessthancarrying Impairment isdeterminedbyassessingtherecoverableamountofcash-generatingunit(groupcashgeneratingunits),towhich allocated representsthelowestlevelwithinGroupatwhichgoodwillismonitoredforinternalmanagementpurposes. of whetherotherassetsorliabilitiesareassignedtotheseunitsgroupsunits.Eachunitgroupwhichthegoodwillisso cash-generating unitsorgroupsofthatareexpectedtobenefitfromthesynergiesacquisition,irrespective For thepurposeofimpairmenttesting,goodwillacquiredinabusinesscombinationis,fromacquisitiondate,allocatedtoeach amount, animpairmentlossisrecognizedintheconsolidatedstatementofincome. events orchangesincircumstancesindicatethatthecarryingvaluemaybeimpaired.Wheneveramountexceedsrecoverable goodwill ismeasuredatcostlessanyaccumulatedimpairmentlosses.Goodwillreviewedforimpairment,annuallyormorefrequentlyif interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of the acquiree. Following initial recognition, Goodwill acquiredinabusinesscombinationisinitiallymeasuredatcostbeingtheexcessofacquisitionoverGroup’s Goodwill 3. ValuationbasisandSignificantaccountingpoliciesapplied(continued) (Convenience translation ofareportoriginallyissuedin Turkish -Seeadditionalparagraph belowforconveniencetranslation andNote2.1) (Currency -inThousands of TurkishLira(“TL”)unlessotherwiseindicated.Allothercurrenciesarealsoexpressedinthousands) Notes totheconsolidatedfinancialstatementsforyearended31December2010 21-25 years 3-10 years 5-21 years 5-21 years 2-8 years 3-5 years 5-8 years Years (*) 5 years

Türk Telekom CONSOLIDATED FINANCIAL STATEMENTS AND 2010 Annual Report 119 INDEPENDENT AUDIT REPORT Türk Telekom CONSOLIDATED FINANCIAL STATEMENTS AND 2010 Annual Report 120 INDEPENDENT AUDIT REPORT (Convenience translation ofareportoriginallyissuedin Turkish -Seeadditionalparagraph belowforconveniencetranslation andNote2.1) acquisitions’ usefullivesarelimited to16years. years. Theremainingusefullives oftheintangibleitemsarelimitedtoconcessionperiods.Considering theConcessionAgreement,2010 finite livesisrecognizedintheconsolidated statementofincome.Theamortizationperiodsfor intangibleassetsarebetween3and20 amortization periodormethod, as appropriate,andtreatedchangesinestimates.Theamortization expenseonintangibleassetswith useful lifeortheexpectedpattern ofconsumptionfutureeconomicbenefitsembodiedinthe asset areaccountedforbychangingthe amortization methodforanintangibleassetwithafiniteusefullife arereviewedatleasteachfinancialyearend.Changesintheexpected and assessedforimpairmentwheneverthereisanindicationthat theintangibleassetmaybeimpaired.Theamortizationperiodand intangibles withinfiniteusefullives.Intangibleassetsfinitelives areamortizedonastraightlinebasisovertheirusefuleconomiclives the expenditure is incurred. The useful lives of intangible assets are assessed to be either finite or infinite. The Group does not have any capitalized developmentcosts,arenotandexpenditure ischargedtotheconsolidatedstatementofincomeinyearwhich at costlessanyaccumulatedamortizationand impairmentlosses.Internallygeneratedintangibleassets,excluding Intangible assetsacquiredseparatelyaremeasuredoninitialrecognition atcost.Followinginitialrecognition,intangibleassetsarecarried Intangible assets continue tobeclassifiedasassetsheldforsaleprovidedthatthe Group hasstillanactivesalesprogram. In casetheperiodtocompletesaleofassetsisextendedduecircumstances which arenotunderthecontrol oftheGroup,assetswill that itisunlikelysignificantchangestotheplanwillbemade orthattheplanwillbewithdrawn. recognition asacompletedsalewithinoneyearfromthedateofclassificationandactionsrequiredtocompleteplanshouldindicate be activelymarketedforsaleatapricethatisreasonableinrelationtoitsfairvalue.Inaddition,theshouldexpectedqualify program tolocateabuyerandcompletetheplanmusthavebeeninitiated.Furthermore,asset(orgroupofassetsheldforsale) the saletobehighlyprobablemanagementmustcommittedaplansellasset(orgroupofassetsheldforsale)andanactive its presentconditionsubjectonlytotermsthatareusualandcustomaryforsalesofsuchassetssalemustbehighlyprobable.For than throughcontinuinguse.Forthistobethecase,asset(orgroupofassetsheldforsale)mustavailableimmediatesalein The Groupclassifiesanon-current asset asheld forsaleifitscarrying amount willberecovered principally throughasaletransaction rather classified asheldforsale. of timeispresentedintheconsolidatedstatementincomeasafinancecost.TheGroupdoesnotdepreciatenon-currentassetwhileit beyond oneyear,theGroupdeterminesnetpresentvalueofsellingprice.Anyincreaseinarisesfrompassage The Groupmeasuresassetsheldforsaleatthelowerofitscarryingamountandfairvaluelesscoststosell.Whenisexpectedoccur Assets heldforsale Concession Agreement,2010acquisitions’usefullivesarelimitedto16years). the straight-linemethod.ThelowerofconcessionperiodandusefullifeforbuildingsbelongingtoGroupis21years(considering Depreciation ischargedsoastowriteoffthecostofinvestmentpropertiesotherthanland,overtheirestimatedusefuleconomiclives,using initial recognition,investmentpropertiesarecarriedatcostlessanyaccumulatedamortizationandimpairment losses. January 2000marketvalueswereconductedbyCMBlicensedindependentreal-estateappraisersin2006onaretrospectivebasis.Following the acquisitiondateandcostsofitemsinvestmentpropertywerenotavailablepriorto1January2000.Professionalassessments Group decidedtomeasureinvestmentpropertyonadeemedcostbasisinthefirstperiodofapplicationIAS16,sincedetailedrecords time thatcostisincurrediftherecognitioncriteriaaremet;andexcludescostsofday-to-dayservicinganinvestmentproperty.The any accumulatedimpairmentlosses.Thecarryingamountincludesthecostofreplacingpartanexistinginvestmentproperty atthe transaction costsandsubsequenttoinitialrecognition,investmentproperties,arestatedattheircostlessaccumulateddepreciation Investment properties,whicharepropertiesheldtoearnrentand/orforcapitalappreciationmeasuredinitiallyatcost,including Investment property charges arechargedtotheconsolidatedstatementofincome. material, and reduction of the obligation so as to achieve a constant rate of interest on the remaining balances of the liability. Finance liability isincludedinthebalancesheetasanobligation.Paymentsareapportionedbetweenfinancecharges,maintenanceexpensewhere value atthetimeprojectiscompletedandputinoperationor,iflower,presentofminimumpayments.Thecorresponding sharing projects are accounted for using a method similar to a finance lease, where assets are recognized as assets of the Group at their fair percentage ofrevenuesgeneratedoncetheprojecthasbeencompletedandtakenintooperationsuptoanagreeduponlevel.Revenue Payments aremadetocontractors,asconsiderationfortheconstructionoftelephoneexchang in value. maturities arethreemonthsorless, thatarereadilyconvertibletoaknownamountofcashand subjecttoaninsignificantriskofchanges Cash andcashequivalentscomprise cashonhand,demanddepositsandothershort-termhighly liquidinvestmentswheretheiroriginal Cash andcashequivalents fixed amountofcashoranotherfinancialassetforanumber ofitsownequityinstruments. for theGrouptodeliveravariablenumberofitsownequityinstruments; oraderivativethatwillbesettledonlybytheGroupexchanging b) assets orfinancialliabilitieswithanotherentityunderconditions thatarepotentiallyunfavourabletotheissuer. a) Theinstrumentincludesnocontractualobligationtodelivercash oranotherfinancialassettoentity;exchange instrument isanequityif,aremet: to exchangeanotherfinancialinstrumentunderconditionsthat arepotentiallyunfavourable,itisclassifiedasafinancialliability.The When afinancialinstrument gives risetoacontractualobligationonthepartofGroup to deliver cash oranotherfinancialasset provisions oftheinstrument. Financial assetsandfinancialliabilitiesarerecognizedontheGroup balancesheetwhentheGroupbecomesapartytocontractual payables. and receivablefromrelated parties. Financial liabilitiesconsistoftradepayables,payabletorelatedparties,financialdebtandother Financial assetsconsistofcashandequivalents,tradereceivables,financialassets,otherderivativeinstruments Financial instruments incurred inordertorealizesale. Net realizable value is the estimated selling price in the ordinary course of business, less marketing, selling and other various expenses to be method. Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs necessary to make the sale. that have been incurred in bringing the inventories to their present location and condition. Cost is calculated using the weighted average Inventories arestatedatthelowerofcostandnetrealizablevalue.Costscomprisepurchaseand,whereapplicablethoseoverheads Inventories immediately intheconsolidatedstatementofincome. had no impairment loss been recognized for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognized of itsrecoverableamount,butsothattheincreasedcarryingamountdoesnotexceedwouldhavebeendetermined Where animpairmentlosssubsequentlyreverses,thecarryingamountofasset(cash-generatingunit)isincreasedtorevisedestimate statement ofincome. the asset(cash-generatingunit)isreducedtoitsrecoverableamount.Animpairmentlossrecognizedimmediatelyinconsolidated If therecoverableamountofanasset(orcash-generatingunit)isestimatedtobelessthanitscarryingamount, the risksspecifictoassetforwhichestimatesoffuturecashflowshavenotbeenadjusted. are discountedtotheirpresentvalueusingapre-taxdiscountratethatreflectscurrentmarketassessmentsofthetimemoneyand The recoverableamountisthehigheroffairvaluelesscoststosellandinuse.Inassessinguse,estimatedfuturecashflows generating unittowhichtheassetbelongs. Where itisnotpossibletoestimatetherecoverableamountofanindividualasset,Groupestimatescash- any suchindicationexists,therecoverableamountofassetisestimatedinordertodetermineextentimpairmentloss(ifany). At eachbalancesheetdate,theGroupassesseswhetherthereisanindicationthatanyofitsPPEandintangibleassetsmaybeimpaired.If Impairment ofproperty,plantandequipmentintangibleassetsexcludinggoodwill assets inordertoforeseeanyprobableimpairmentontheperiodthattheyarenotreadyforutilizationyet. and theassetisavailableforuse.Itamortizedoverperiodofexpectedfuturebenefit.Periodicimpairmenttestsareappliedto development costsarerecognizedatcostlessamortizationandimpairment.Amortizationoftheassetbeginswheniscomplete Impairment testisperformedannuallyinordertoidentifywhetherthereanyimpairmentthedevelopmentstage.Afterinitialrecognition, complete theassetandabilitytomeasurereliablyexpenditureduringdevelopment. to completeanditsabilityuseorselltheasset,howassetwillgeneratefutureeconomicbenefits,availabilityofresources Group candemonstratethetechnicalfeasibilityofcompletingintangibleassetsothatitwillbeavailableforuseorsale,itsintention Research costsareexpensedasincurred.Developmentexpenditureonanindividualprojectisrecognized as anintangibleassetwhenthe Research anddevelopmentcosts 3. ValuationbasisandSignificantaccountingpoliciesapplied(continued) (Convenience translation ofareportoriginallyissuedin Turkish -Seeadditionalparagraph belowforconveniencetranslation andNote2.1) If the instrument will or may be settled in the Group’s own equity instruments, it is a non-derivative that includes no contractual obligation (Currency -inThousands of TurkishLira(“TL”)unlessotherwiseindicated.Allothercurrenciesarealsoexpressedinthousands) Notes totheconsolidatedfinancialstatementsforyearended31December2010

Türk Telekom CONSOLIDATED FINANCIAL STATEMENTS AND 2010 Annual Report 121 INDEPENDENT AUDIT REPORT Türk Telekom CONSOLIDATED FINANCIAL STATEMENTS AND 2010 Annual Report 122 INDEPENDENT AUDIT REPORT (Convenience translation ofareportoriginallyissuedin Turkish -Seeadditionalparagraph belowforconveniencetranslation andNote2.1) Equity instrumentsissuedbythe Grouparerecordedattheproceedsreceived,netofdirectissuance costs. Equity instruments loss. other comprehensive income remainsin other comprehensive income until the forecast transaction or firm commitment affects profit or exercised withoutreplacementorrollover,ifitsdesignationas ahedgeisrevoked,anycumulativegainorlosspreviouslyrecognizedin of comprehensiveincomearetransferredtoconsolidated statement.Ifthehedginginstrumentexpiresorissold,terminated If theforecast transaction or commitment is nolongerexpected to occur, amounts previously recognized in theconsolidated statement statement ofcomprehensiveincomearetransferredtotheinitial carrying amountofthenon-financialassetorliability. sale occurs.Wherethehedgeditemiscostofanon-financial assetornon-financialliability,theamountstakentoconsolidated hedged transactionaffectsprofitorloss,suchaswhenthe financialincomeorexpenseisrecognizedwhenaforecast Amounts takentotheconsolidatedstatementofcomprehensiveincome aretransferredtotheconsolidatedstatementofincomewhen while anyineffectiveportionisrecognizedimmediatelyintheconsolidated statementofincome. The effectiveportionofthegainorlossonhedginginstrument is recognizeddirectlyinconsolidatedstatementofcomprehensiveincome, Hedges whichmeetthestrictcriteriaforhedgeaccountingareaccounted forasfollows: Cash flowhedges expected tobeconsistentwithdocumentedriskmanagementstrategy. all financialreportingperiodsinwhichitisdefined,hedgetransactionevaluatedcontinuouslyforidentificationofeffectivenessand hedged risk.Itisexpectedthathedgetransactiontobeeffectiveinstabilizechangesbetweenfairvalueorcashflow.During the hedginginstrument’seffectivenessinoffsettingexposuretochangeshedgeditem’sfairvalueorcashflowsattributable identification ofthehedginginstrument,hedgeditemortransaction,natureriskbeingandhowCompanyassesses wishes toapplyhedgeaccountingandtheriskmanagementobjectivestrategyforundertakinghedge.Thedocumentation includes At theinceptionofahedgerelationship,Companyformallydesignatesanddocumentsrelationshiptowhich currency riskinanunrecognisedfirmcommitment. either attributabletoaparticularriskassociatedwithrecognisedassetorliabilityhighlyprobableforecasttransactiontheforeign For thepurposeofhedgeaccounting,hedgesareclassifiedas;cashflowwhenhedgingexposuretovariabilityinflowsthatis of interestrateswapcontractsisdeterminedbyreferencetomarketvalueforsimilarinstruments. The fairvalueofoptioncontractsiscalculatedbyreferencetocurrentratesforwithsimilarmaturityprofiles. accounting aretakendirectlytoprofitorloss. the fairvalueisnegative.Anygainsorlossesarisingfromchangesinonderivativesduringyearthatdonotqualifyforhedge into andaresubsequentlyre-measuredatfairvalue.Derivativescarriedasassetswhenthevalueispositiveliabilities borrowings. Suchderivativefinancialinstrumentsareinitiallyrecognizedatfairvalueonthedatewhichacontractisentered The Groupusesderivativefinancialinstrumentstohedgeitsinterestrateandforeigncurrencyriskexposuresarisingfromlongterm Derivative financialinstruments Gains andlossesarerecognizedinprofitorlosswhentheliabilitiesderecognizedaswellthroughamortizationprocess. process, usingtheeffectiveinterestratemethodasexplainedabove. transaction costs)andthesettlementorredemptionofborrowingsisrecognizedovertermthroughamortization and are subsequently measured at amortized cost, using the effective interest rate method. Any difference between the proceeds (net of Interest-bearing financialborrowingsareinitiallymeasuredatthefairvalueofconsiderationreceived,lessdirectlyattributablecosts Financial borrowings invoice amountunlesstheeffectofimputinginterestissignificant. Trade andotherpayablesareinitiallymeasuredatfairvalue.Noneinterestratebearingshorttermoriginal Trade andotherpayables rate bearingshorttermreceivablesaremeasuredatoriginalinvoiceamountunlesstheeffectofimputinginterestissignificant. allowance foranyuncollectibleamounts.Subsequenttoinitialrecognition,tradereceivablesaremeasuredatamortizedcost.Noneinterest Trade receivablesarerecognizedatoriginalinvoiceamounthoweversubsequentlytheycarriedless Trade andotherreceivablesallowancesfordoubtful Financial instruments(continued) 3. ValuationbasisandSignificantaccountingpoliciesapplied(continued) (Currency -inThousandsofTurkishLira(“TL”)unlessotherwiseindicated.Allothercurrenciesarealsoexpressedthousands) Notes totheconsolidatedfinancialstatementsforyearended31December2010 the employees’service relates. obligations once the contributions have been paid. Thecontributions are recognized as anemployee benefit expense inthe period to which plan. TheGrouppayscontributions totheSocialSecurityInstitutionofTurkeyonamandatorybasis. TheGrouphasnofurtherpayment contribution plans where the Group’s obligations under the plans are equivalent to those arising in a defined contribution retirement benefit Payments madetotheSocialSecurity InstitutionofTurkeyandTurkishRepublicRetirementFund aredealtwithaspaymentstodefined Payments todefinedcontribution retirementbenefitplansarechargedasanexpenseintheyear inwhichthecontributions relate to. Long-term employeebenefits A related party transaction is a transfer of resources, services or obligations between related parties, regardless of whether a price is charged. Group. (g) (f) (e) (d) (c) (b) (a) Parties areconsideredrelatedtotheGroupif; Related parties reduced throughuseofanallowanceaccount.Impaireddebtsarederecognizedwhentheyassessedasuncollectible. receivables. Alsoportfolioreserveisprovidedforthenotduereceivablesbasedoncertaincriteria.Thecarryingamountofreceivable Provision forimpairmentisprovidedwhenthereanobjectiveevidenceofuncollectibility.Reservetheoverdueuncollectible statement ofincome. does notexceeditsamortizedcostatthereversaldate.Anysubsequentofanimpairmentlossisrecognizedinconsolidated after theimpairmentwasrecognized,previouslyrecognizedlossisreversed,toextentthatcarryingvalueofasset If, inasubsequentperiod,theamountofimpairmentlossdecreasesanddecreasecanberelatedobjectivelytoaneventoccurring statement ofincome. The carryingamountoftheassetisreducedthroughuseanallowanceaccount.lossrecognizedinconsolidated incurred) discountedatthefinancialasset’soriginaleffectiveinterestrate(i.e.computedinitialrecognition). the asset’scarryingamountandpresentvalueofestimatedfuturecashflows(excludingexpectedcreditlossesthathavenotbeen that animpairmentlossonassetscarriedatamortizedcosthasbeenincurred,theamountofismeasuredasdifferencebetween The Groupassessesateachbalancesheetdatewhetherafinancialassetorgroupofassetsisimpaired.Ifthereobjectiveevidence Impairment offinancialassets the differenceinrespectivecarryingamountsisrecognizedconsolidatedstatementofincome. modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and liability isreplacedbyanotherfromthesamelenderonsubstantiallydifferentterms,ortermsofanexistingare A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. Where an existing financial Financial liabilities amount oftheassetandmaximumconsiderationthatGroupcouldberequiredtorepay. Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying in theasset. risks andrewardsoftheassetnortransferredcontrolasset,isrecognizedtoextentGroup’scontinuinginvolvement Where theGrouphastransferreditsrightstoreceivecashflowsfromanassetandneithernorretainedsubstantiallyall transferred norretainedsubstantiallyalltherisksandrewardsofassetbuthascontrolasset. its rightstoreceivecashflowsfromtheassetandeitherhastransferredsubstantiallyallrisksrewardsoforneither an obligationtopaytheminfullwithoutmaterialdelayathirdpartyunder‘pass-through’arrangementortheGrouphastransferred rights toreceivecashflowsfromtheassethaveexpired,Groupretainsrightbuthasassumed A financialasset(or,whereapplicableapartoforcompanysimilarassets)isderecognizedthe Financial assets Derecognition offinancialassetsandliabilities 3. ValuationbasisandSignificantaccountingpoliciesapplied(continued) (Convenience translation ofareportoriginallyissuedin Turkish -Seeadditionalparagraph belowforconveniencetranslation andNote2.1) the partyisapost-employmentbenefitplanforofemployees oftheGroup,oranyentitythatisarelatedparty entity resideswith,directlyorindirectly,anyindividualreferredto in(d)or(e); the partyisanentitythatcontrolled,jointlycontrolledorsignificantly influencedby,orforwhichsignificantvotingpowerinsuch the partyisaclosememberoffamilyanyindividualreferred toin(a)or(d); the partyismemberofkeymanagementpersonnelGroup oritsparent; the partyisajointventureinwhichGroupventurer; the partyisanassociateofGroup; (iii) hasjointcontrolovertheGroup; (ii) hasaninterestintheGroupthatgivesitsignificantinfluenceover theGroup;or (i) controls,iscontrolledby,orundercommoncontrolwith,theGroup (thisincludesparents,subsidiariesandfellowsubsidiaries); directly, orindirectlythroughonemoreintermediaries,theparty: (Currency -inThousands of TurkishLira(“TL”)unlessotherwiseindicated.Allothercurrenciesarealsoexpressedinthousands) Notes totheconsolidatedfinancialstatementsforyearended31December2010

Türk Telekom CONSOLIDATED FINANCIAL STATEMENTS AND 2010 Annual Report 123 INDEPENDENT AUDIT REPORT Türk Telekom CONSOLIDATED FINANCIAL STATEMENTS AND 2010 Annual Report 124 INDEPENDENT AUDIT REPORT (Convenience translation ofareportoriginallyissuedin Turkish -Seeadditionalparagraph belowforconveniencetranslation andNote2.1) a constantrateof interestontheremainingbalance oftheliability.Financecharges arechargedtotheconsolidated statementofincome. finance leaseobligation.Leasepayments areapportionedbetweenfinancechargesandreduction oftheleaseobligationsoastoachieve present valueoftheminimumlease payments.Thecorrespondingliabilitytothelessorisincluded intheconsolidatedbalancesheetasa Assets heldunderfinanceleases arerecognizedasassetsoftheGroupattheirfairvalue inception oftheleaseor,iflower,at lessee. Allotherleasesareclassified asoperatingleases. Leases areclassifiedasfinanceleases wheneverthetermsofleasetransfersubstantiallyall risksandrewardsofownershiptothe Leasing -theGroupaslessee over theleaseterm. negotiating andarranginganoperatingleaseareaddedtothecarrying amountoftheleasedassetandrecognizedonastraight-linebasis Rental incomefromoperatingleasesisrecognizedonastraight-line basisoverthetermofrelevantlease.Initialdirectcostsincurredin Leasing -theGroupaslessor Prepaid corporationtaxesandcorporatetaxliabilitiesareoffset when theyrelatetoincometaxesleviedbythesametaxationauthority. or crediteddirectlytotheequityinwhichcasedeferredtaxis also dealtwithintheequity. by thebalancesheetdate.Deferredtaxischargedorcreditedtoconsolidated statementofincome,exceptwhenitrelatestoitemscharged period whentheliabilityissettledorassetrealized,basedon taxrates(andlaws)thathavebeenenactedorsubstantively balances; however,thereisnonettingonaconsolidationbasis.Deferred taxiscalculatedattheratesthatareexpectedtoapplyin The Companyandtheotherconsolidatedsubsidiarieshavereflectedtheirdeferredtaxassetliabilitiesbynettingindividual that sufficienttaxableprofitswillbeavailabletoallowallorpartoftheassetrecovered. The carryingamountofdeferredtaxassetsisreviewedateachbalancesheetdateandreducedtotheextentthatitnolongerprobable assets andliabilitiesinatransactionthataffectsneitherthetaxableprofitnoraccountingprofit. not recognizedifthetemporarydifferencearisesfromgoodwillorinitialrecognition(otherthaninabusinesscombination)ofother probable thattaxableprofitswillbeavailableagainstwhichdeductibletemporarydifferencescanutilized.Suchassetsandliabilitiesare tax liabilitiesaregenerallyrecognizedforalltaxabletemporarydifferencesanddeferredassetstotheextentthatitis and thecorrespondingtaxbasesusedincomputationoftaxableprofit,areaccountedforusingliabilitymethod. Deferred Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the financial statements enacted bythebalancesheetdate. are nevertaxableordeductible.TheGroup’sliabilityforcurrenttaxiscalculatedusingratesthathavebeenenactedsubstantively of incomebecauseitexcludesitemsorexpensethataretaxabledeductibleinotheryearsandfurther The taxcurrentlypayableisbasedontaxableprofitfortheyear.Taxablediffersfromasreportedinconsolidatedstatement Income taxexpenserepresentsthesumofcurrentlypayableanddeferredtax. as reflectedintheconsolidatedfinancialstatements,havebeencalculatedonaseparate-entitybasis. Turkish tax legislation does not permit a parent company and its subsidiary to file a consolidated tax return. Therefore, provisions for taxes, Taxation anddeferredincometaxes asset isdisclosed,whereaninflowofeconomicbenefitsprobable. A contingentliabilityisdisclosed,unlessthepossibilityofanoutflowresourcesembodyingeconomicbenefitsremote. one ormoreuncertainfutureeventsnotwhollywithinthecontrolofGrouparetreatedascontingentassetsliabilities. Possible assets or obligations that arise from past events and which existence will be confirmed only by the occurrence or non-occurrence of Contingent assetsandliabilities and arediscountedtopresentvaluewheretheeffectismaterial. Provisions aremeasuredatthemanagement’sbestestimateofexpenditurerequiredtosettleobligationbalancesheetdate, embodying economic benefits will be required to settle that obligation, and a reliable estimate can be made of the amount of the obligation. Provisions arerecognizedwhentheGrouphasapresentobligationasresultofpastevent,anditisprobablethatanoutflowresources Provisions gains andlossesintheconsolidatedstatementofcomprehensiveincome. adjusted foranyunrecognizedpastservicecost.Thereisnofundingrequirementdefinedbenefitplans.TheGrouprecognizesactuarial vested. Theretirementbenefitobligationrecognizedinthebalancesheetrepresentspresentvalueofdefinedas that thebenefitsarealreadyvested,andotherwiseisamortizedonastraight-linebasisoveraverageperioduntilbecome method, withactuarialvaluationsbeingcarriedoutateachbalancesheetdate.Pastservicecostisrecognizedimmediatelytotheextent For definedbenefitplansandotherlong-termemploymentbenefits,thecostofprovidingbenefitsisdeterminedusingprojectedunitcredit Long-term employeebenefits(continued) 3. ValuationbasisandSignificantaccountingpoliciesapplied(continued) (Currency -inThousandsofTurkishLira(“TL”)unlesso acquisition costsincludesubsidization ofthehandset,taxesonsubscriptionanddealercommissions incurredforacquisitions. The Grouprecognizessubscriber acquisitioncostsintheconsolidatedstatementofincome yearwhichtheyareincurred.Subscriber Subscriber acquisitioncosts cash receiptsthroughtheexpected lifeofthefinancialinstrumenttonetcarryingamount financialasset). Interest incomeisrecognizedasinterestaccrues(usingtheeffective interestratethatistheexactlydiscountsestimatedfuture Other income are incurred. cost oftherelatedasset,whereasotherborrowingcostsarerecognized asexpenseintheconsolidatedincomestatementperiodthey Borrowing coststhatdirectlyattributabletotheacquisition,building ormanufacturingofaspecificassetarerecognizedaspartthe Borrowing costs as expensewhenrelatedrevenuerecorded. contingent totheundeliveredcomponent.Equipmentrevenuesare presentedinotherrevenues.Costofproductsandservicesarerecorded in proportiontothefairvalueofindividualdeliverables.Revenue attributedtodeliveredcomponentislimitedwiththeamountnot customer andthefairvalueofcomponentcanbemeasured reliably.Thearrangementconsiderationisallocatedtoeachdeliverable consideration relatingtothebundledcontractareallocatedamongdifferentunitsifcomponenthasstandalonevalue tothe In connectionwithcampaigns,othertelecommunicationservicesmaybebundledphonedevicesandmodems.Totalarrangement to customers. Revenues fromsalesofphonedevice,modemandothernetworkequipmentsarerecordedasrevenueatthetimedelivery Equipment salesrevenues recognized asoperatingexpense. obligor oftheservice,revenuereceivedfromsubscribersispresentedongrossbasisandportionpaidtocontentproviders The Grouprecognizes content revenue basedonthe agreement betweenthe Group andthecontent providers. As theGroupis the primary revenues untilthesubscribersuseserviceandpresentsuchamountsunderdeferredinconsolidatedfinancialstatements. Group generallycollectscashinadvancebysellingscratchcardstodealersanddistributors.Insuchcases,thedoesnotrecognize added servicesandmonthlyfeeswhicharerecognisedatthetimerendered.Withrespecttoprepaidoutgoingrevenues, Revenues generatedfrommobiletelecommunicationservicessuchasoutgoingandincomingtraffic,roamingrevenues,revenuesvalue GSM revenues Revenues fromsaleofIndefeasibleRightUseareaccountedoverthetermcontract. since thefeesarebelowcostofconnectionwhichisalsorecognizedimmediatelyasanexpense. infrastructure leasesarerecognizedonanaccrualbasisasservicesprovided.Connectionfeesimmediatelyrevenue Revenues from fixed-line telecommunication services like network access, local usage, domestic and international long distance and Fixed-line revenues rendered. provided in the normal course of business, net of discounts and sales related taxes. Service revenues are recorded at the time services are Revenue ismeasuredatthefairvalueofconsiderationreceivedorreceivableandrepresentsamountsforgoodsservices measured. Revenue isrecognizedtotheextentthatitprobableeconomicbenefitswillflowGroupandrevenuecanbereliably Revenue recognition simultaneously. right tosetofftherecognizedamountsandthereisanintentionsettleonanetbasis,orrealizeassetliability Financial assetsandliabilitiesareoffsetthenetamountreportedinconsolidatedbalancesheetwhenthereisalegallyenforceable Offsetting the leaseterm. relevant lease.Benefitsreceivedandreceivableasanincentivetoenterintooperatingleasearealsospreadonastraight-linebasisover Rentals payableunderoperatingleasesarechargedtotheconsolidatedstatementofincomeonastraight-linebasisoverterm Leasing -theGroupaslessee(continued) 3. ValuationbasisandSignificantaccountingpoliciesapplied(continued) (Convenience translation ofareportoriginallyissuedin Turkish -Seeadditionalparagraph belowforconveniencetranslation andNote2.1) (Currency -inThousands of TurkishLira(“TL”)unlessotherwiseindicated.Allothercurrenciesarealsoexpressedinthousands) Notes totheconsolidatedfinancialstatementsforyearended31December2010

Türk Telekom CONSOLIDATED FINANCIAL STATEMENTS AND 2010 Annual Report 125 INDEPENDENT AUDIT REPORT Türk Telekom CONSOLIDATED FINANCIAL STATEMENTS AND 2010 Annual Report 126 INDEPENDENT AUDIT REPORT (Convenience translation ofareportoriginallyissuedin Turkish -Seeadditionalparagraph belowforconveniencetranslation andNote2.1) 140.755 (2009–TL 123.305)(Note21)isTL16.193for theyearendedasof31December 2010(2009–TL14.186). ended asof31December2010.The profitmarginofproperty,plantandequipmentaccountedwithin thescopeofIFRIC12amountingtoTL network equipment.Theestimated profitmarginusedinconstructionservicesprovidedexchange forconcessionrightis13%theyear of IFRIC12byaddingtheprofitmargin, whichisappliedinthemarketforsimilarconstructionservices, tothecostofacquiringrelated ii) In accordance with IFRIC 12, the Company has determined the cost of the investments in intangible assets recognized under the scope rate usedinprovisioncalculation isdeterminedas16%. provision isthepresentvalueas at 31December2010ofthecontractualreplacementexpensesthat willberealizedinthefuture.Discount to TL9.328(Note22)intheconsolidatedfinancialstatementsfor theforeseencontractualreplacementsinfuture.Aforementioned intangible assets,arethecontractualreplacementsasrequiredby theconcessionagreement.TheGrouphasprovidedprovisionamounting of thenetworkequipmentsthatarereclassifiedtointangibleassets at1January2007andthenarerecordedtofinancialstatementsas i) As of 31 December 2010, the Company considers that approximately 30% of the foreseen network investments related with the replacement b) TheestimatesusedbytheCompanyinapplicationofIFRIC12 areasfollows: discount rateinordertocalculatethepresentvalueofthosecash flows. use requirestheGrouptomakeanestimateofexpectedfuture cashflowsfromthecash-generatingunitandalsotochooseasuitable there isanindicationofimpairment.Thisrequiresestimation ofthevalueinusecash-generating units. Estimating the valuein a) The Group determines whether property, plant and equipment is impaired by estimating the recoverable amount of the assets whenever risk ofcausingamaterialadjustmenttothecarryingamountsassets andliabilitieswithinthenextfinancialyear,arediscussedbelow. The keyassumptionsconcerningthefuture,andothersources of estimationuncertaintyatthebalancesheetdate,thathaveasignificant Key sourcesofestimationuncertainty Critical judgmentsoftheGroupinrelationwithIFRIC12areexplained“keysourcesestimationuncertainty”section. content revenuesongrossbasis. Sales- SinceAveaisprimarilyresponsibleforprovidingtheservice,hascreditanddeterminantinsettingprices;recognizes Content determinant insettingprices;startingfromApril2010,Avearecognizesprepaidcardincomesongrossbasis. Agent Sales Card Prepaid Group earnseitherafixedrateofcommissionorzeroprofitonthetransaction. Group sharescreditriskwiththesupplier. Group doesnotmakeanymodificationontheequipments. Group hasnoresponsibilityontechnicalqualificationsofequipmentsdeliveredtocustomers.Responsibilityaftersalebelongssupplier. Group hasnoinventoryrisk. Accordingly, Groupmanagementaccountsbundledoffersasanagentifthesaletransactionsatisfiesbelowconditions: supplied bythesuppliers.ThereisnodefiniteguidancetodeterminewhetherGroupactingasanagentorprincipleunderIFRS. Income: Groupmakescampaignswithsuppliers under whichtheybundletelecommunication services withequipments Campaign Sales (“IPO”) forAveabefore1January2015and,therefore,expectsthattheputoptionwillbeexercisableatearliestas2015. Liability –Onvaluingtheminorityputoptionliability;GroupconsideredthattherewillbenoInitialPublicOffering Option Put Minority on operatingleases. determined thatitretainsallthesignificantrisksandrewardsofownershipitspropertiessubjecttoagreementwhichareleasedout Commitments –GroupasLessor:Thehasenteredintoacross-occupationagreementwiththePTT. Lease Operating effect ontheamountsrecognizedinconsolidatedfinancialstatements(apartfromthoseinvolvingestimations). In theprocessofapplyingGroup’saccountingpolicies,Managementhasmadefollowingjudgmentsthathavemostsignificant 4. Criticalaccountingjudgmentsandkeysourcesofestimationuncertainty operation andtranslatedtoTLusingtheexchangerateatreportingdate. Goodwill andfairvaluedifferencesthataroseasaresultofacquisitionforeignoperationisdeterminedassetliabilitythe transactions. Foreigncurrencydifferencesarisingonretranslationarerecogniseddirectlyinequityundertranslationreserve. reporting date. The incomeandexpensesaretranslated to TLatexchangeratesapproximating to theexchangeratesatdatesof For thesubsidiarieswhosefunctionalcurrencyisnotTLassetsandliabilitiesareretranslatedtoatexchangerateruling when fairvalueisdetermined. the incomestatement.Non-monetaryitemsmeasuredatfairvalueinaforeigncurrencyaretranslatedusingexchangeratesdate exchange rateatthereportingdate.Foreigncurrencydifferencesarisingontranslationofforeigntransactionsarerecognisedin of thetransactions.Monetaryassetsandliabilitiesdenominatedinforeigncurrenciesareretranslatedtofunctionalcurrencyat Transactions inforeigncurrenciesaretranslatedtotherespectivefunctionalofGroupentitiesatexchangeratesdates Effects ofchangesinexchangerates 3. ValuationbasisandSign - Principal Analysis: SinceAveaisprimarilyresponsibleforprovidingtheservice,hascreditandinventoryrisk Principal - segment results,balancesheetitemsandthecashflowsarepresentedbelow: management does not monitor Group’s performance over geographical segments, geographical segment reporting is not presented. The and impairmentoveroperatingincome.GroupmanagementusesEBITDAasitiscomparablewithothercompaniesinthesector.As Group before interest,tax,depreciationandamortization(“EBITDA”).EBITDAiscalculatedbyaddingdepreciation,amortization, AssisTT and Pantel Group whereas GSM service is provided by Avea. Groupmanagement assesses segment performance over earnings The Grouphastwomainsegments:FixedlineandGSM.servicesareprovidedbyTürkTelekom,TTNet,Argela,Innova,Sebit,Sobee, 5. Segmentreporting of theliabilityisdeterminedas1January2015anddiscountedto31December2010(ThedetailshavebeenexplainedinNote11). The Groupcalculatesmarketvalueofminorityshareputopinionliability,basedondiscountedcashflowmethodafter1January2015.Value Significant accountingjudgmentsandchangesinuseofestimates h) Thereareotherestimationsmadebythemanagementduringdeterminationofusefullivesandprovisionsforlitigations(Note 22). whether additionalimpairmentisrequiredornot. considers usefullifeoftheassetfromtechnicalandcommercialperspectivesduetochangesdevelopmentsinmarketorderassess considering itsfutureeconomicbenefit.ThisevaluationisdrivenbytheGroup’spreviousexperienceonsimilarexperiences.TheGroupalso g) Assumptions used by Company in goodwill impairment test are explained in Note 18. The Group determines the useful life of an asset by agreements areexplainedinNote26. f) AssumptionsusedbyCompanyduringPantelvaluationoftangibleandintangibleassets,financialliabilitiesindefeasibleusagerights financial statementsmaynotbesufficienttocoverbaddebts. or anyspecificindustrytrendworsencomparedtomanagementestimates,allowancefordoubtfulreceivablesrecognisedinconsolidated of previousyearscollectionratios,recordsprovisionsincaselossesduetotradereceivablesShouldeconomicconditions,trends historical collectiontrendsandgeneraleconomicconditions.TheGroupfollowsoftradereceivablesperiodicallyonthebasis e) d) Assumptionsusedintheimpairmenttestofproperty,plantandequipmentintangibleassetshavebeenexplainedNotes1820. statements, thedeferredtaxassetsarealsochanged. re-assesses itstaxlosscarryforwardsandifthereisamaterialchangeinthedeferredassetrecognizedconsolidatedfinancial assets onstatutorytaxlossesavailableforoffsettingwithfuturetaxableprofitsamountingtoTL245.000.Everyyear,theGroup differences. With the expectation to recover certain part of its tax losses carried forward in Avea, the Group has recognized deferred tax a taxbenefitwillberealized,deferredassetisrecognizedonunusedlosses,creditsandotherdeductibletemporary c) Key sourcesofestimationuncertainty(continued) 4. Criticalaccountingjudgmentsandkeysourcesofestimationuncertainty(continued) Capital expenditure Doubtful receivableprovisionexpense (“EBITDA”) depreciationandamortization Earnings beforeinterest,tax, andimpairment Depreciation andamortization Other operatingincome/(expense) amortization) (excludingdepreciationand Cost ofsalesandoperatingexpenses Total revenue Eliminations Other GSMoperators Rent incomefrom Leased lines Interconnection revenue International sales Data servicerevenue IFRIC 12revenue GSM ADSL Domestic PSTN Revenue (Convenience translation ofareportoriginallyissuedin Turkish -Seeadditionalparagraph belowforconveniencetranslation andNote2.1) A deferredtaxassetisrecognizedonlytotheextent that itisprobableataxbenefitwillberealizedinthefuture. If itisprobablethat The impairmentlossesintradeandotherreceivablesarebasedonmanagement’sevaluationofthevolumeoutstanding, (Currency -inThousands of TurkishLira(“TL”)unlessotherwiseindicated.Allothercurrenciesarealsoexpressedinthousands) 31 December (4.439.190) 1 January- 8.511.114 2.473.009 4.254.609 1.263.118 4.506.676 (891.956) 180.186 100.535 485.602 283.401 228.566 364.451 140.755 200.394 434.752 2010 Fixed line - - 31 December (4.436.075) 1 January- 1.326.614 4.301.862 8.386.451 2.140.167 4.580.892 (980.018) 268.254 351.486 107.796 115.429 578.567 244.210 193.951 302.134 123.305 Notes totheconsolidatedfinancialstatementsforyearended31December2010 2009 - - 31 December 1 January- (2.349.982) 2.646.343 2.646.343 (633.230) 470.225 331.940 76.955 35.579 2010 Mobile ------31 December 1 January- (2.437.247) 1.154.503 2.504.083 2.504.083 (577.400) (11.519) 94.293 55.317 2009 ------31 December 1 January- (304.987) (304.987) 306.843 (3.912) (5.768) 1.648 Eliminations 2010 (68) ------31 December 1 January- (322.073) (322.073) (10.925) 322.073 (1.418) (1.418) 2009 ------31 December (1.523.538) (6.482.329) 1 January- 10.852.470 1.733.275 4.834.704 2.646.343 2.473.009 4.254.609 (304.987) 464.563 277.349 180.186 100.535 485.602 283.401 228.566 364.451 140.755 Consolidated 2010 31 December 1 January- (1.557.418) (6.551.249) 10.568.461 2.504.083 2.140.167 4.580.892 2.470.192 4.355.761 (322.073) 107.796 115.429 578.567 244.210 193.951 302.134 123.305 362.547 338.549 2009

Türk Telekom CONSOLIDATED FINANCIAL STATEMENTS AND 2010 Annual Report 127 INDEPENDENT AUDIT REPORT Türk Telekom CONSOLIDATED FINANCIAL STATEMENTS AND 2010 Annual Report 128 INDEPENDENT AUDIT REPORT (**) (*) (Convenience translation ofareportoriginallyissuedin Turkish -Seeadditionalparagraph belowforconveniencetranslation andNote2.1) Consolidated profitbeforetax Depreciation andamortisation Financial expenses(-) Financial income Consolidated EBITDA Inter-segment eliminations Mobile segmentEBITDA Fixed linesegmentEBITDA 5. Segmentreporting(continued) (Currency -inThousandsofTurkishLira(“TL”)unlessotherwiseindicated.Allothercurrenciesarealsoexpressedthousands) Notes totheconsolidatedfinancialstatementsforyearended31December2010 Total segmentliabilities Total segmentassets Total segmentliabilities Total segmentassets Total segmentliabilities Total segmentassets 31 December2008 31 December2009 31 December2010 Includes minorityputoptionliabilityamountingtoTL525.894(2009-543.103, 2008 –TL586.439). Includes goodwillamountingtoTL52.873(2009–49.172,200848.735). (7.200.372) 13.624.941 (3.748.375) (5.405.444) 11.042.021 Fixed line Fixed line Fixed line 8.343.568

(4.736.921) (2.759.373) (4.044.274) 4.926.645 4.403.650 4.878.136 Mobile Mobile Mobile

Eliminations Eliminations Eliminations (3.504.438) (2.567.967) 3.537.924 2.013.425 (136.507) (451.653) 31 December2010

(1.523.538) 1 January- 3.127.006 4.834.704 4.506.676 (608.565) 424.405 331.940 (3.912) unallocated (525.894) (**) unallocated unallocated (543.103) (**) (586.439 )(**) amounts amounts amounts 52.873 (*) 48.735 (*) 49.172 (*) Other Other Other 31 December2009 1 January- (1.557.418) (8.925.263) 15.100.021 15.100.021 (7.979.396) (7.545.840) 12.659.446 13.401.362 4.355.761 4.301.862 2.359.967 (733.814) 295.438 (1.418) 55.317 Total Total Total Out ofTL1.219.007,cashandequivalentsamountingto609.271(2009–338.053;2008550.576)belongsAvea. as theclosedaccounts. pledge anynewbankaccountastheyareopenedandalsotoinformtheSecurityTrusteeonamonthlybasisaboutsuchaccountswell accounts (amountingto609.236TLat31December2010;2009-337.947;2008–550.480)infavourofSecurityTrustee.Aveaisrequired Within thecontextofBankAccountPledgeAgreementsignedbyAveaanditslenders,providedanaccountpledgeoverallbank collections throughautomatedtellermachine(“ATM”)isnotavailableforuseat31December2010(2009-TL3.469;20083.722). the Company’sdepositsthatarerestrictedasaguaranteeofTTGlobal’sbankborrowing.AnadditionalamountTL5.227arisi ng from consist ofblockedtimedepositsrelatedtoAvea’sbankborrowingagreementsandremainingEuro55.104(equivalentTL112.914)represent cash is collected.Asof 31December 2010, TL 219.938 (2009 - TL188.508; 2008 -TL189.334) of restricted deposits inrelationtobank borrowings signed withbanksforreceiptsfromthesubscribers,underwhichproceedsaremadeavailabletoGroupacertainnumberofdaysafter As of31December2010,demanddepositsamountingtoTL308.128(2009-254.807;2008155.794)isrestrictedduecollectionprotocols Cash andcashequivalentsincludedinthestatementofflowsareasfollows: These timedepositsarerestrictedandcanonlybeusedforpaymentsrelatedtoTAFICSprojects. added totheadvancesreceivedandnotreflectedinconsolidatedstatementofincomeasperagreementbetweenparties(Note15). Forces forTurkishArmedIntegratedCommunicationSystems(“TAFICS”)projects.Theinterestincomefromthesetimedepositsare As of31December2010,TL169.821(2009-189.404;2008258.092)timedepositsrepresentsadvancesreceivedfromtheTurkishArmed Euro depositsbetween0,29%and0,29%). deposits. (31December2009–forTLdepositsbetween4,00%and10,80%deposits,USD0,17%1,50% The interestratesarebetween4,00%-9,50%forTLdeposits,0,25%2,90%USDdepositsand0,50%3,60%Euro As of31December2010,timedepositsareallshort-term,maturingwithinonemonthanddenominatedinbothforeigncurrenciesTL. 6. Cashandcashequivalents (Convenience translation ofareportoriginallyissuedin Turkish -Seeadditionalparagraph belowforconveniencetranslation andNote2.1) - Other - ATMcollection - Restricteddepositsinrelationtobankborrowings - Collectionprotocols - TAFICSprojects Cash andcashequivalents Other Cash atbanks–Timedeposits Cash atbanks–Demanddeposits Cash onhand (Currency -inThousands of TurkishLira(“TL”)unlessotherwiseindicated.Allothercurrenciesarealsoexpressedinthousands) Notes totheconsolidatedfinancialstatementsforyearended31December2010 31 December2010 31 December2010 1.219.007 820.483 397.065 1.094 1.219.007 (332.851) (308.128) (169.821) 365 (13.353) 389.627 (5.227) 31 December2009 31 December2009 753.693 1.041.982 476.168 793.776 276.441 246.452 (188.508) (189.334) (254.807) (155.794) (189.404) (258.092) 110.600 426.775 753.693 1.041.982 (6.894) (8.265) (3.480) (3.722) 120 449 964 1.305 31 December2008 31 December2008

Türk Telekom CONSOLIDATED FINANCIAL STATEMENTS AND 2010 Annual Report 129 INDEPENDENT AUDIT REPORT Türk Telekom CONSOLIDATED FINANCIAL STATEMENTS AND 2010 Annual Report 130 INDEPENDENT AUDIT REPORT included intheconsolidatedfinancialstatementsamounttoTL923.825(2009-1.141.454;20082.369.672). As of31December2010thefairvaluebankborrowingsisTL4.149.376(2009-3.953.298;20083.403.356).Avea’stotal (**) (*) Total long-termborrowings Euro bankborrowingswithvariableinterestrates(**) Euro bankborrowingswithfixedinterestrates USD bankborrowingswithvariableinterestrates(*) USD bankborrowingswithfixedinterestrates Long-term borrowings: Total short-termborrowings Euro bankborrowingswithvariableinterestrates(**) USD bankborrowingswithvariableinterestrates(*) USD bankborrowingswithfixedinterestrates Short-term portionoflong-termbankborrowings: Euro bankborrowingswithvariableinterestrates Euro bankborrowingswithfixedinterestrates USD bankborrowingswithvariableinterestrates USD bankborrowingswithfixedinterestrates TL bankborrowingswithfixedinterestrates Interest accruals: Euro bankborrowingswithfixedinterestrates USD bankborrowingswithvariableinterestrates TL bankborrowingswithfixedinterestrates Short-term borrowings: 7. Financialliabilities-Net (Currency -inThousandsofTurkishLira(“TL”)unlessotherwiseindicated.Allothercurrenciesarealsoexpressedthousands) Notes totheconsolidatedfinancialstatementsforyearended31December2010 (Convenience translation ofareportoriginallyissuedin Turkish -Seeadditionalparagraph belowforconveniencetranslation andNote2.1) Euribor +(variesbetween0,93–3,75)spread Libor +(variesbetween1,70–3,75)spread average nominal average nominal interest rate eighted Weighted 6,39% 4,07% 6,83% 3,15% 1.863.186 2,94% 4,07% 3,15% 2,94% 4,00% Original amount 669.284 511.786 669.271 125.576 188.212 301.683 132.936 11.378 55.104 4.432 7.686 1.098 31 December2010 248 231 - equivalent 1.048.701 1.034.693 2.300.849 669.284 194.140 385.665 466.402 205.519 112.914 23.315 11.883 9.082 1.698 508 231 TL -

Weighted Weighted

nominal nominal average interest 4,44% 3,14% 2,90% 4,44% 3,14% 2,90% 3,23% 7,54% rate - 1.571.182 Original amount 326.430 632.005 168.523 80.183 70.000 80.038 12.994 22.087 5.705 31 December2009 389 140 - - -

equivalent 1.777.309 2.154.838 1.571.182 120.513 253.745 705.186 951.610 173.219 105.399 19.565 22.087 8.590 840 211 TL - - - Weighted Weighted nominal nominal average interest 22,80% 4,52 % 7,84% 6,23% 7,84% 6,23% rate - - -

1.304.882 Original amount 129.069 185.000 738.281 31 December2008 69.848 25.563 17.034 6.240 1.532 3.279 ------equivalent 2.122.904 1.973.373 1.285.578 149.531 195.190 279.776 738.281 13.359 38.659 17.034 TL ------securitypackage Borrowings securedby shareholder loan obtainedfromtheCompany. as of30June2009.Instead,these financialcovenantsareagreedtobetestedatGrouplevel.Avea’s earlypaymenthasbeenfinancedby (ratios) mentioned below was abolished as effective from June 30, 2009 upon Avea has paid USD 621.297 and Euro 32.972 as early payment In accordance with Amendment Agreement signed between Avea and the lenders on June 25, 2009, undertaking and the financial covenants • DebtServiceReserveFund:Restricted accountsusedtoensurethatinordermeetdebtservice after sixmonths(Note6). of business. contracts will perform any of their obligations towards Lenders in the same conditions as they were valid to Avea during the normal course are assignedassecurityinfavoroftheLenderspartSecurityPackage. Incaseofaneventdefault,Aveacounterpartiesundermaterial • Assignment of Receivables: The material contracts entered into by Avea that results in a revenue or cost to Avea over USD 20.000 per annum • MortgageonthebuildingofAVEAinÜmraniyeamountingupto USD40.600infavoroftheSecurityAgent. (31 December2010-TL609.236;2009337.947;2008550.480)(Note 6). • Account pledges on all the bank accounts of Avea, which do not restrict operational usage of the accounts in the normal course of business total SeniorSecuredFinancialIndebtednessofAveaamountstoapproximately TL920.420(2009-1.136.658;20082.359.285). (excluding Avea, of name trade Indebtedness ofAveauptoamaximumamountTL1.000.000(equivalent toUSD646.831asat31December2010).At2010,the the and İş-TIM of enterprise commercial of assets the movablefixedassetsofcommercialenterpriseAycell).The CommercialEnterprisePledgesecurestheSeniorSecuredFinancial fixed movable all on Pledge Enterprise Commercial • security packageconsistsof: Senior SecuredCreditorsofAvea.In2004,subsequenttomerger AriaandAycell,thesecuritypackagewasrevised.Accordingly,revised the acquisitionofitspropertyandequipmentsecuredwithasecuritypackagecreatedinfavorSecurityAgentactingonbehalf for 2001 in suppliers network its from financing granted was Aria A.Ş.), Hizmetleri Telekomünikasyon İş-TIM of subsidiary former (“Aria”, A.Ş. Before the merge of the Company’s former subsidiary of Aycell Haberleşme ve Pazarlama Hizmetleri A.Ş. (“Aycell”) with Aria İletişim Hizmetleri The followingborrowingsofAveaas31December2010,2009and2008aresecuredbyasecuritypackage: interestrates Euro bankborrowingswithvariable interestrates Euro bankborrowingswithfixed interestrate USD bankborrowingswithvariable interestrates USD bankborrowingswithfixed interestrates TL bankborrowingswithfixed The re-pricingortheearliercontractualmaturitiesofbankborrowingsinequivalentTLareasfollows: interestrates Euro bankborrowingswithvariable interestrates Euro bankborrowingswithfixed interestrate USD bankborrowingswithvariable interestrates USD bankborrowingswithfixed interestrates TL bankborrowingswithfixed The contractualmaturitiesoffinancialliabilitiesinequivalentTLareasfollows: 7. Financialliabilities-Net(continued) (Convenience translation ofareportoriginallyissuedin Turkish -Seeadditionalparagraph belowforconveniencetranslation andNote2.1) (Currency -inThousands of TurkishLira(“TL”)unlessotherwiseindicated.Allothercurrenciesarealsoexpressedinthousands)

3 months 3 months 1.325.946 2.679.009 1.267.571 666.708 181.015 297.270 113.422 985.024 878.162 666.708 113.422 569.950 20.896 373.851 Up to Up to 2.983 2.983 3 months 3 months to 1 year to1year to 1 year to1year 554.284 30.988 204.234 204.234 187.032 873.498 2.807 2.807 31 December2010 31 December2010 USD - - 1.023.959 2.120.537 1 yearto 1 yearto 120.690 73.450 952.573 120.690 73.450 144.005 5 years 5 years 23.315 23.315 Euro - - - - More than More than More than More than 180.312 4.164.035 10.734 1.512.978 96.128 1.443.448 73.450 5 year 5 year 31 December2010 Notes totheconsolidatedfinancialstatementsforyearended31December2010 TL Equivalent - 669.515 - 136.737 - 669.515 - 1.512.978 - 136.737 - 1.443.448 4.164.035 920.420 401.357 401.357 Total Total 1.593.269 - 1.720.729 1.593.269 - 1.053.464 2.727.752 1.083.882 3 months 3 months 119.414 248.320951.610 80.553 798.692 701.490 7.580 166.479705.186 Up to Up to 466 466 19.31067.754 USD - - 3 months 3 months to 1 year to1year to1year 434.109 1.777.309 265.880 - 19.310 31 December2009 31 December2009 37.228 1 yearto 1 yearto 120.513 5 years 5 years Euro 67.754 - 31 December2009 More than More than More than 52.759 52.759 5 year 5 year TLEquivalent ------1.136.658 1.451.856 1.593.269 1.319.344 133.498 3.932.147 1.593.269 1.319.344 3.932.147 3.125.950 140.289 - 879.245 140.289 879.245 166.169 Total Total - -

3 months 3 months 2.204.466 755.315 898.771 755.315 Up to Up to 9.958 - USD 3 months 3 months to 1 year to1year to1year 380.128 386.807 2.122.904 282.532 - 282.532 31 December2008 31 December2008 6.679 149.532 ------1.973.372 76.440 1 yearto 1 yearto Euro 5 years 5 years 31 December2008 - - - More than More than More than More than 5 year TL Equivalent 5 year ------2.359.285 2.486.998 3.408.482 2.486.998 3.408.482 755.315 166.169 755.315 166.169 Total Total - - - -

Türk Telekom CONSOLIDATED FINANCIAL STATEMENTS AND 2010 Annual Report 131 INDEPENDENT AUDIT REPORT Türk Telekom CONSOLIDATED FINANCIAL STATEMENTS AND 2010 Annual Report 132 INDEPENDENT AUDIT REPORT (Convenience translation ofareportoriginallyissuedin Turkish -Seeadditionalparagraph belowforconveniencetranslation andNote2.1) December 2010loanpayableamountstoEuro5.775. Pantel Turkey,inreturnforthisloan,assigneditsreceivablesamountingtooutstandingloanbalancethecorrespondingbank.Asof31 Pantel TurkeyborrowedEuro10.000loanintotalfromaTurkishbank’sBahrainBranchfortheinvestmentofconstructionfiberopticlines. (the supporthasbeenwhollyusedasof31December2010). g) TürkTelekomprovidessupportamountingtoUSD250.000forfinancingacquisitionofassetsunderEricsson2Gand3Gcontract 31 December2010). f) TürkTelekomprovidessupportamountingtoEuro214.000forfinancingof3Glicencefee(thehasbeenwhollyusedas The supporthasbeenwhollyusedasof31December2010. support). e) Company also provides extra support on demand of Avea due tooperationalorfinancial shortage amounting to USD 450.000 (additional respect ofeachcondemnationevent,infavourtheSecurityTrusteeasacontinuingsecurityforfulfilmentsecuredobligations. interests andbenefitsin,tounderitsreceivablestheclaimsarisingfromSubordinatedLoanAgreementsmadetowardsAveain d) AssignmentofReceivables:AsaconditiontothefacilitiesbeingmadeavailableAvea,Companyisobligedassignitsrights,titles, c) PledgingsharesitownsinAvea, b) USD500.000“CorporateGuarantee”tobecalledinaneventofdefault, a) USD300.000“ContingentEquitySupport”tobedrawnwhencashgeneratedbyAveaisinsufficientpayitsdebtservice, The Companyalsosupportsthelong-termfinancingofAveainformof: same assets. c) Avea created security over its assets in favour of the lenders as collateral that should not be diluted with new securities created over the or disposingofitsassets,withsomeexceptionsdeterminedintheFinanceDocuments. b) a) Licenseagreement(Avea’sConcessionAgreement)mustbemaintainedinfullforceandeffect. 2. Generalundertakings,amongothers,are: b) TürkTelekomconsolidatednetdebttoEBITDARatioshouldbe2atmaximum. period excludingtheprincipalrepayments. income beforeinterest,tax,depreciation,andamortization,(‘’TürkTelekomconsolidatedEBITDA)tothepaymentobligationsinrelated a) Basedonthe consolidated financialstatements,Debt Service Coverage Ratio shouldbe 5 at minimum. (Theratio is calculatedby dividing 1. Financialcovenants(ratios): 7. Financialliabilities-Net(continued) (Currency -inThousandsofTurkishLira(“TL”)unlessotherwiseindicated.Allothercurrenciesarealsoexpressedthousands) Notes totheconsolidatedfinancialstatementsforyearended31December2010 To keepAvea’sbusinessunaffectedfromanysaleordisposalofassets,thereisanannuallimitationUSD10.000forselling,leasing 31 December2008 31 December2009 31 December2010

At 31December Write offdoubtfulreceivables Reversal ofprovision-collections(Note30) Provision fortheyear At January1 Total long-termtradereceivables Trade receivables Long-term Total short-termtradereceivables Allowance fordoubtfulreceivables(-) Other tradereceivables Trade receivables Short-term Receivables guaranteedfromdealersofAveaareamountingtoTL22.541(2009–28.446). As of31December2010,2009and2008,theanalysistradereceivablesthatwerepastduebutnotimpairedisasfollows: The movementoftheallowancefordoubtfulreceivablesisasfollows: collection termoveroneyear.ShortreceivablesfromequipmentsalesamountstoTL118.112(2009–46.181). As of31December2010,long-termtradereceivablesarecomprisedfromequipmentsalesinconnectionwithcampaigns with Trade receivablesgenerallyhave30dayterms(2009–days,2008days). a) Tradereceivables 8. Tradereceivablesandpayables (Convenience translation ofareportoriginallyissuedin Turkish -Seeadditionalparagraph belowforconveniencetranslation andNote2.1) (Currency -inThousands of TurkishLira(“TL”)unlessotherwiseindicated.Allothercurrenciesarealsoexpressedinthousands) Notes totheconsolidatedfinancialstatementsforyearended31December2010 1.635.811 1.324.986 1.396.175 Total Neither

nor impaired days past due 998.387 871.988 880.925 31 December2010 31 December2010 362.359 257.321 254.961 (1.317.070) 1.586.921 2.879.916 (1.228.656) (1.317.070) >30 (277.349) 24.075 48.890 48.890 185.691 3.244 105.129 113.149 95.274 30-60

(1.228.656) 9.889 179.862 (359.489) (1.058.918) - -

31 December2009 31 December2009 (1.228.656) 2.594.579 1.396.175 34.733 52.375 68.291 60-90 days 30.252 Past duebutnotimpaired 25.062 90-120 30.856 8.060 days 31 December2008 31 December2008 (1.058.918) (1.058.918) 2.341.608 1.324.986 (252.452) (890.069) 119.996 30.113 47.993 42.296 80.513 days >120 3.090 - -

Türk Telekom CONSOLIDATED FINANCIAL STATEMENTS AND 2010 Annual Report 133 INDEPENDENT AUDIT REPORT Türk Telekom CONSOLIDATED FINANCIAL STATEMENTS AND 2010 Annual Report 134 INDEPENDENT AUDIT REPORT (Convenience translation ofareportoriginallyissuedin Turkish -Seeadditionalparagraph belowforconveniencetranslation andNote2.1) reflected onanetcashbasisinthe consolidatedfinancialstatements,insteadofgrossedupfairvalue (Note10). agreement attheendoftenyears. SincethetransactionbetweenPTTandCompanyisnot anarms-lengthtransaction,ithasbeen use ofnetm2buildingspaceowned bythePTTbutoccupiedCompanyorviceversa.The partieswillrenegotiatethetermof per year for ten years (which will be escalated based on rent increase rate determined by Ministry of Finance) to PTT in exchange for the buildings occupied by both parties for 49 years. In 2005, an amendment was made to the agreement requiring the Company to pay TL 35.000 After thefoundationofCompany,anagreementwassigned betweenPTTandtheCompanyin1997tograntrightoffreeuse Operating leases Present valueoffinanceleaseliabilities Less: Futurefinancecharges Later thanfiveyears Between twotofiveyears Between onetotwoyears Within oneyear A summaryofminimumpaymentsforcommitmentsinrelationtofinanceleasesisasfollows: Later thanfiveyears Between twotofiveyears Between onetotwoyears Within oneyear Finance leaseobligations,Grouphasenteredintoforacquisitionofnetworkequipmentandabuildingareasfollows: The Grouphasnofinancialleasereceivablesasof31December2010,2009and2008. Financial leases: 9. Obligationsunderfinanceandoperationalleasesleasereceivables campaigns andwillbepaidwhencollectedfromthesubscribers. As of31December2010,long-termtradepayablesrepresenttosuppliersequipmentsthatarepurchasedinconnectionwithsale The averagetermoftradepayablesisbetween30and90days(2009–days,2008days). projects (Notes6). Trade payables amounting to TL 11.914 as at 31 December 2010 (2009 - TL 2.773; 2008 – TL 1.244) represent payable to suppliers due to TAFICS Total longtermtradepayables Trade payables Long- term Total shorttermtradepayables Other tradepayables Notes payable Trade payables Short- term b) Tradepayables 8. Tradereceivablesandpayables(continued) (Currency -inThousandsofTurkishLira(“TL”)unlessotherwiseindicated.Allothercurrenciesarealsoexpressedthousands) Notes totheconsolidatedfinancialstatementsforyearended31December2010 31 December2010 31 December2010 31 December2010 1.267.044 1.266.886 (5.768) 35.354 21.699 35.354 19.223 4.922 6.975 7.526 4.790 5.615 5.726 80.561 80.561 158 - - - 858.058 - 3.011 855.047 41.929 (7.994) 12.926 22.116 7.372 7.509 31 December2009 41.929 12.284 18.607 5.592 5.446 31 December2009 31 December2009 31 December2008 31 December2008 31 December2008 (13.023) 881.319 881.130 46.760 20.895 22.854 46.760 19.129 17.330 7.618 8.416 5.068 5.233 128 61 - - Later thanfiveyears Between twotofiveyears Between onetotwoyears Within oneyear A summaryofcommitmentsinrelationtobasestationleasesandleasedlinesareasfollows: ended 31December2010amountstoTL187.059(2009–160.767). Group enteredintooperatingleaseagreementswithrespecttobasestationsandleasedlines.Totalexpensefortheyear 2010 isTL369.993(2009–436.759). b) TheCompanyhasoperatingleaseagreementswithrespecttoleasedlines.revenuefromlinesfortheyearended31December (*) Futureescalationshavenotbeenconsideredandfuturepaymentscalculatedbased oncurrentyearsrentamount. After fifthyear In thesecondtofifthyears(inclusive) Within oneyear a) At thebalancesheetdate,Grouphasoutstandingcommitmentsundernon-cancellableoperatingleases,whichfalldueasfollows: Operating leases(continued) 9. Obligationsunderfinanceandoperationalleasesleasereceivables(continued) (Convenience translation ofareportoriginallyissuedin Turkish -Seeadditionalparagraph belowforconveniencetranslation andNote2.1) (Currency -inThousands of TurkishLira(“TL”)unlessotherwiseindicated.Allothercurrenciesarealsoexpressedinthousands) Notes totheconsolidatedfinancialstatementsforyearended31December2010 31 December2010 31 December2010 1.719.235 1.473.630 196.484 221.234 49.121 21.136 61.118 50.897 88.083 (*) 225.326 25.607 69.970 47.772 81.977 31 December2009 1.663.560 1.432.510 184.840 46.210 (*) 31 December2009 31 December2008 31 December2008 1.584.599 1.370.464 178.411 171.308 21.048 60.486 40.299 56.578 42.827 (*)

Türk Telekom CONSOLIDATED FINANCIAL STATEMENTS AND 2010 Annual Report 135 INDEPENDENT AUDIT REPORT Türk Telekom CONSOLIDATED FINANCIAL STATEMENTS AND 2010 Annual Report 136 INDEPENDENT AUDIT REPORT (Convenience translation ofareportoriginallyissuedin Turkish -Seeadditionalparagraph belowforconveniencetranslation andNote2.1) (3) (2) (1) State controlledentities Amounts owedtorelatedparties(non-currentliabilities) Other PTT OTYH (2) State controlledentities Due torelatedparties Other Saudi TelecomCompany(“STC”)(3) Oger TelecomYönetimHizmetleriLimitedCompany(“OTYH”)(2) Oger Telecom PTT Cell-C Ltd.(1) State controlledentities Due fromrelatedparties Details ofbalances and transactionsbetweentheGroup and otherrelatedpartiesasat31December 2010, 2009and2008aredisclosed below: usual listprices.Institutionsunderstatecontrolaredefinedasrelatedpartiesdueto30%ownershipandthegoldenshareofTreasury. of incomeforconsolidationpurposesandarenotdisclosedinthisnote.SalesgoodsorservicestorelatedpartiesweremadeattheGroup’s All intra-grouptransactionsandbalancesincludingunrealizedprofitslossesareeliminatedintheconsolidatedstatement 10. Duefrom/Duetorelatedparties (Currency -inThousandsofTurkishLira(“TL”)unlessotherwiseindicated.Allothercurrenciesarealsoexpressedthousands) Notes totheconsolidatedfinancialstatementsforyearended31December2010 shareholder ofOgerTelecom an affiliateofOgerTelecom a subsidiaryofOgerTelecom 31 December2010 31 December2010

134.513 110.216 44.061 20.466 19.356 12.675 3.904 8.640 2.890 335 84 6 2 - -

23.820 388 1.063 3.558 18.811 90.992 767 7.050 - - 3.051 2 80.122 31 December2009 31 December2009 - 336 - 336 31 December2008 31 December2008 21.517 14.288 92.944 84.747 1.973 4.457 3.702 4.303 799 96 96 - - The CompanyhasgivenguaranteestoCetelattheamountofEuro8.000asafinancialsupport. The guaranteesgivenbytheCompanytosupportlongtermfinancingofAveaisexplainedinNote7. Guarantees providedtorelatedparties shareholder isSaudiOger.Thecontracthasbeenrenewedon20October2009foranannualchargeofUSD8.500thethreeyears. the yearended31December2010(2009–TL18.103and1.763),basedoncontractbetweenOTMSCCompany.OTMSC’s ultimate Furthermore, OTMSC charged to the Company a management fee amounting to TL 12.948 and an expense fee for an amount of TL 328 for Long-term definedbenefitplans Short-term benefits The remunerationofdirectorsandothermemberskeymanagementwereasfollows: Compensation ofkeymanagementpersonnel Operational lease payment madetoPTT by theCompanyin2010aspartof lease agreement(Note9)amountstoTL49.121(2009–46.210). and otherservicesin2010amountedtoTL27.552(2009-30.015). Postage servicesrenderedin2010byPTTtotheGroupamountedTL102.600(2009-110.869)whilecommissionforcollectionofinvoices Transactions withotherrelatedparties share paymentisTL376.867in2010(2009–361.530). (the Treasury Share). As of31 December 2010 unpaid but accrued treasuryshare is TL35.236 (2009–TL 35.444) andthe amount of treasury Furthermore, Avea is required under theterms of the Avea Concession Agreement, to pay 15% ofits monthly gross revenue to the Treasury amounted toTL874.342(2009-819.586). The Company paid dividends to the Treasury at the amount of TL 476.914 (2009 - TL 447.047) during 2010. During 20010, dividends paid to OTAŞ Transactions withshareholders 10. Duefrom/Duetorelatedparties(continued) (Convenience translation ofareportoriginallyissuedin Turkish -Seeadditionalparagraph belowforconveniencetranslation andNote2.1) (Currency -inThousands of TurkishLira(“TL”)unlessotherwiseindicated.Allothercurrenciesarealsoexpressedinthousands) Notes totheconsolidatedfinancialstatementsforyearended31December2010 31 December2010 44.498 43.674 824 31 December2009 29.930 29.278 652

Türk Telekom CONSOLIDATED FINANCIAL STATEMENTS AND 2010 Annual Report 137 INDEPENDENT AUDIT REPORT Türk Telekom CONSOLIDATED FINANCIAL STATEMENTS AND 2010 Annual Report 138 INDEPENDENT AUDIT REPORT (Convenience translation ofareportoriginallyissuedin Turkish -Seeadditionalparagraph belowforconveniencetranslation andNote2.1) of minorityinterest(Note23). 2008 –TL586.439)isreflectedinequityas“minorityputoptionliabilityreserve”,basedontheGroup’saccountingpolicyforacquisition value ofminorityputoptionliability,hasbeendeterminedasTL525.894(2009-543.103),andthedifference582.848488.749, “minority putoptionliability”underlong-termliabilitiesafterappropriationofprofit/losstotheminorityinterestforyear.Thefair of loss) as at 31 December 2010, amounting to negative TL 56.954 (2009 – TL 54.354; 2008 - TL 199.720), has been reclassified from equity to In ordertoreflecttheminorityputoptionliabilityinconsolidatedfinancialstatements,interest(aftergivingeffect 2010 and2009hasbeenaccountedinotherreservesunderequity. 586.439). InaccordancewithGroupaccountingpolicies,thechangebetweenfairvaluesofminorityputoptionliabilitiesas31December back to31December2010.Thefairvalueoftheputoptionliabilityasat2010amountsTL525.894(2009–543.103,2008 has estimated a value based discounted cash flows after 31 December 2010. The value determined as at 1 January 2015 is then discounted Company The 2015. January 1 on option its exercise will Group Bank İş that assumption the on based option the of value fair the determined its optionon1January2011,whichistheearliestexercisabledate.Asof31December2010Companyhaschangedthisassumptionand While determining fair value of minority put option liability as of 31 December 2009, it had been assumed that İş Bankası Group would exercise percent discount. İş IPO, the of Bank GroupshallhavetherighttosellCompanyalloftheiroutstandingsharesinAveaatapriceequalIPOlessfive timing the of regardless and above described methods the of any via IPO, an of execution the following month one Within c) have therighttodemandthatCompanyinitiateandexecuteanIPO. b) If an IPO does not take place by the end of the “First Period” then starting from 1 January 2015 until 31 December 2015, İş Bank Group shall demand forIPO,topostponetheIPOuntilendofFirstPeriod. within ninemonthsstartingfromthedateofdemand.However,Companymaydecide,thirtydaysfollowing İş Period”) (“First Bank GroupatanytimeduringtheFirstPeriodshallhaverighttodemandthatCompanyinitiateandexecuteanIPObeconcluded 2014 December 31 until 2011 January 1 from starting then 2011, January 1 before place take not does Avea for IPO an If a) Bank Group.Theputoptionisexercisableunderthefollowingconditions: parties. In accordance with the Amendment Agreement, the Company grants a put option to İş Bank Group on the shares of Avea owned by İş “Shareholder the to Agreement” andthe“IPOPutoriginallydated2004.The“Amendmentoutlinesrightsobligationsof Agreement” “Amendment an signed shareholders Avea other and Group Bank İş Company, the 2006, September 15 On 11. Minorityputoptionliability (Currency -inThousandsofTurkishLira(“TL”)unlessotherwiseindicated.Allothercurrenciesarealsoexpressedthousands) Notes totheconsolidatedfinancialstatementsforyearended31December2010 2015 2014 2013 2012 2011 Expiration years As of31December2010,Avea’sdeductabletaxlossesthatwillbeutilized upontheexistenceofataxbaseandexpirationdatesareasfollows: are amountingtoTL84.573andtheydonotexpire. As of 31 December 2010, deferred tax asset arising from tax losses of Pantel Group is amounting to TL 19.419. Taxable losses of Pantel Group December 2010and2009,thedeferredtaxassetrecognizedforAvea’s carriedforwardtaxlossesamountedtoTL245.000. and Pantel) arising from the tax losses carried forward based on the estimated taxable profits according to Avea’s business plan. As of 31 The Groupperpetuallyreassessesunrecognizeddeferredtaxassets anddecidedtoaccountfordeferredtaxassets(resultingfromAvea differences ofcertainincomeandexpenseitemsinstatutory CMB financialstatementasdisclosedbelow. liabilities asreportedforCMBpurposesandtheirtaxbasestatutorypurposes.Thesetemporarydifferencesaremainlyduetothetiming The Groupcalculatesdeferredtaxassetsandliabilitiesbasedontemporarydifferencesarisingbetweenthecarryingamountof Deferred tax 14. Deferredtaxassetsandliabilities composed ofmodems,dectphones,cableboxandconsumablessuchaslinkageblockSIMcards. The GrouphasaninventorybalanceofTL81.444asat31December2010(2009-62.920,2008–49.080).Majorpartthisis 13. Inventories Other payables Deposits andguaranteestaken Other non-currentliabilities Other payables Deposits andguaranteestaken Social securitypremiumspayable Taxes anddutiespayable Due topersonnel Other currentliabilities As at31December2010Group’sotherlongtermreceivablesamountofTL2.148(2009–676,2008669). Other longtermassets Allowance forotherdoubtfulreceivables Other doubtfulreceivables Deposits andguaranteesgiven Other currentassets Other currentassets 12. Otherreceivablesandpayables (Convenience translation ofareportoriginallyissuedin Turkish -Seeadditionalparagraph belowforconveniencetranslation andNote2.1) (Currency -inThousands of TurkishLira(“TL”)unlessotherwiseindicated.Allothercurrenciesarealsoexpressedinthousands) Notes totheconsolidatedfinancialstatementsforyearended31December2010 31 December2010 3.701.290 1.081.953 213.196 781.115 757.127 867.899 31 December2010 31 December2010 31 December2010 (24.532) 291.518 226.546 13.761 13.761 28.796 30.623 34.417 24.532 33.117 5.392 1.300 161 - 8.942 - 8.942 31 December2009 304.269 39.862 41 19.306 221.436 23.624 31 December2009 33.309 (24.891) 24.891 647 32.662 31 December2009 31 December2008 31 December2008 31 December2008 329.234 247.035 (21.833) 16.094 15.143 29.294 22.105 30.800 67.188 21.833 14.730 52.458 951 -

Türk Telekom CONSOLIDATED FINANCIAL STATEMENTS AND 2010 Annual Report 139 INDEPENDENT AUDIT REPORT Türk Telekom CONSOLIDATED FINANCIAL STATEMENTS AND 2010 Annual Report 140 INDEPENDENT AUDIT REPORT (Convenience translation ofareportoriginallyissuedin Turkish -Seeadditionalparagraph belowforconveniencetranslation andNote2.1) Deferred taxliability,net Deferred taxasset,net Deferred taxliability,net Other Universal servicefundandothercontributions Provision fordoubtfulreceivables Expense accruals Provision forunusedvacation Provision forlong-termemployeebenefits Deferred taxassetrecognizedfromlossescarriedforward Other Income accruals Temporary differencesonproperty,plantandequipment Deferred taxasset/liability For thecalculationofdeferredtaxassetandliability,arate20%forcompanies establishedinTurkeywasusedasat31December2010,2009and2008. Deferred tax(continued) 14. Deferredtaxassetsandliabilities(continued) (Currency -inThousandsofTurkishLira(“TL”)unlessotherwiseindicated.Allothercurrenciesarealsoexpressedthousands) Notes totheconsolidatedfinancialstatementsforyearended31December2010 Base for deferred Base fordeferred tax calculation 31 December 31 December (2.579.803)

(2.228.748) (452.287) 1.316.117 2.398.395 (152.270) (30.455)(525)(105) (198.785) (39.757)(71.505)(14.301) 599.571 201.090 125.790 63.240 58.930 24.657 2010 31 December2010 tax assets/ (liabilities) (liabilities) (552.499) (338.504) (252.638) (301.551) Deferred Deferred (42.901) 264.027 119.918 479.598 258.650 12.650 11.786 40.208 25.158 5.851 Base for deferred Base fordeferred tax calculation 31 December 31 December (2.449.055) (489.811) (2.377.025) (475.405) 1.225.000 2.411.490 629.270 117.125 160.655 128.465 93.080 57.895 2009

31 December2009 tax assets / tax assets/ (liabilities) (liabilities) Deferred Deferred 245.000 125.854 482.298 245.125 (65.610) (7.513) 18.616 23.425 32.131 25.693 11.579 Base for deferred Base fordeferred tax calculation 31 December 31 December (2.882.385) (576.477) (2.802.105) (560.421) 1.352.035 2.554.340 (80.050) (16.010) 664.170 269.960 121.205 85.945 21.460 39.565 (230) 2008

31 December2008 tax assets / tax assets/ (liabilities) (liabilities) Deferred Deferred 270.407 132.834 510.867 272.894 17.189 53.992 24.241 4.292 7.912 (46) Deferred taxincome(Note32) -Deferredtaxassetincome/(expense) -Deferredtaxliability(expense)/income Reflected toperiodprofitorloss Closing balance Reflected toperiodprofitorloss Business combinationeffect Opening balance,1January Movement ofdeferredtaxasset Closing balance Reflected toperiodprofitorloss Actuarial gain Currency translationdifferences Business combinationeffect Opening balance,1January Movement ofdeferredtaxliability Deferred tax(expense)/income Other Currency translationdifferences Universal servicefundandothercontributions Provision fordoubtfulreceivables Expense accruals Income accruals Provision forunusedvacation Provision forlong-termemployeebenefits Tax lossescarriedforward Temporary differencesofproperty,plantandequipment Deferred tax(expenses)/income 14. Deferredtaxassetsandliabilities(continued) (Convenience translation ofareportoriginallyissuedin Turkish -Seeadditionalparagraph belowforconveniencetranslation andNote2.1) (Currency -inThousands of TurkishLira(“TL”)unlessotherwiseindicated.Allothercurrenciesarealsoexpressedinthousands) Notes totheconsolidatedfinancialstatementsforyearended31December2010 31 December 2010 31 December 2010 31 December 2010 31 December 2010 1 January- 1 January- (301.551) (252.638) (33.240) (46.765) (11.639) (25.456) (24.027) (33.797) (32.971) (33.240) (38.505) 245.125 258.650 (5.991) 13.525 12.968 65.031 18.065 7.908 (535) (959) (210) 557 933

31 December2009 31 December2009 31 December2009 31 December2009 1 January- 1 January- (252.638) (338.504) (27.769) (27.769) (21.861) (13.734) (25.407) 245.125 272.894 51.343 79.112 79.112 51.343 19.133 85.016 6.754 3.608 1.452 1.709 1.427

- - - -

Türk Telekom CONSOLIDATED FINANCIAL STATEMENTS AND 2010 Annual Report 141 INDEPENDENT AUDIT REPORT Türk Telekom CONSOLIDATED FINANCIAL STATEMENTS AND 2010 Annual Report 142 INDEPENDENT AUDIT REPORT (Convenience translation ofareportoriginallyissuedin Turkish -Seeadditionalparagraph belowforconveniencetranslation andNote2.1) have notbeeninvoicedyetandwillbecollectedlaterthan1year. As of31December2010non-currentincomeaccrualsincludeamountsrelatedwithequipmentsalestosubscribersundercampaigns,which Other Income accruals Prepaid rentexpense Prepaid loanupfrontfees Other non-currentassets Advances givenconsistofadvancesforinventory,tangibleandintangibleassetspurchasestopersonnel. consists ofGSMandADSLpost-paidsubscriptionincomeaccrualsunbilledequipmentsaleswithinthecontextcampaigns. Prepaid rentexpensesconsistmainlyoftheprepaidrentspaidforAvea’sbasestations.As31December2010incomeaccrual Other currentassets VAT andSCTreceivable Advances given Income accrual Other prepaidexpenses Prepaid rentexpense Other currentassets 15. Othercurrent/non-currentassets (Currency -inThousandsofTurkishLira(“TL”)unlessotherwiseindicated.Allothercurrenciesarealsoexpressedthousands) Notes totheconsolidatedfinancialstatementsforyearended31December2010 31 December2010 31 December2010 655.963 347.996 133.158 57.681 21.832 31.672 30.992 65.526 68.830 4.177 9.461

- 10.326 - 6.023 26.832 31 December2009 507.510 7.054 91.127 36.053 151.351 162.164 59.761 31 December2009 43.181 31 December2008 31 December2008 414.147 137.300 18.057 97.254 15.800 96.663 49.073 4.675 4.157 518 - - (Convenience translation ofareportoriginallyissuedin Turkish -Seeadditionalparagraph belowforconveniencetranslation andNote2.1) (**) (*) Other Advances taken(**) Deferred income(*) Other non-currentliabilities 5) Incomeaccrualsmainlyresultfromprovisionfordealercommissionsandinterconnectionprovisions. 4) Capitalexpenditureaccrualsrepresenttheunreceivedinvoicesforfixedassetpurchasesthathavebeenreceivedwithinagreement. to theadvancesreceivedinaccordancewithagreementbetweenparties(Note6). from the advances received at the date of the expenditure. Advances not used are held as time deposits and the interest earned is credited advances receivedtothecontractorsandsupportsmanagementofprojects.Expendituresarisingfromprojectsarededucted 3) The Company acts as an intermediary of Ministry of Defence and North Atlantic Treaty Organization (NATO) projects by transferring 2) Deferredrevenueiscomposedoftheinvoicedbutunconsumedminutessalesvalue. year totheMinistryofTransportationasUniversalServiceFund.ThecontributionispayablebyendAprilfollowingyear. 1) Accordingtothelawnumbered5369publishedon16June2005,TürkTelekomandTTNetwillcontribute1%oftheirnetrevenueseach Other payables Accrual fortheTreasuryShare Accrual forcontributiontotheICTA Accrual forcapitalexpenditures(4) Accrual forUniversalServiceFund(1) Deferred revenue(2) Expense accruals(5) Advances received(3) Other currentliabilities 15. Othercurrent/non-currentassets(continued) Advances takenmainlyresultfromtheadvancesbyPantelaccordingto indefeasiblerightofusecontracts. Deferred revenuesmainlyresultfromPantel’sindefeasiblerightofusecontracts. (Currency -inThousands of TurkishLira(“TL”)unlessotherwiseindicated.Allothercurrenciesarealsoexpressedinthousands) Notes totheconsolidatedfinancialstatementsforyearended31December2010 31 December2010 31 December2010 208.777 137.499 878.182 109.070 296.352 214.901 69.278 35.236 43.105 72.180 99.615 2.000 7.723

6.485 - - 6.485 31 December2009 6.373 35.444 49.348 162.072 97.364 102.752 202.690 205.061 31 December2009 861.104 31 December2008 31 December2008 699.850 103.571 121.602 273.853 29.238 45.564 26.993 94.133 9.559 9.559 4.896 - -

Türk Telekom CONSOLIDATED FINANCIAL STATEMENTS AND 2010 Annual Report 143 INDEPENDENT AUDIT REPORT Türk Telekom CONSOLIDATED FINANCIAL STATEMENTS AND 2010 Annual Report 144 INDEPENDENT AUDIT REPORT (Convenience translation ofareportoriginallyissuedin Turkish -Seeadditionalparagraph belowforconveniencetranslation andNote2.1) included intheconsolidatedincome statement. Avea doesnotdesignateoptioncontracts forhedgeaccounting.Accordingly,at31March2010acumulative netrealizedprofitofTL660is the exercisedatesare26–30March 2010. In 2009,Aveaenteredintoforeign currencyoptiontransactionsforwhichthetotalcurrentoutstanding nominalamountisUSD110.000and Option contracts a foreignoperationisrecognizedunderequityinotherreserves. of TL2.894fairvalueincomehasbeenclassifiedconsolidated statementand925TLthatisrelatedwithhedgeofanetinvestmentin of theforwardcontractwithnominalvalueEuro200.000isused tohedgetheGroup’snetinvestmentinaforeignoperation.Theamount The Companyhasenteredforwardcontractswithnominalvalues of USD176.000andEuro200.000withmaturity24January2011.Aportion Forward contracts statement. to theresultsofeffectivenesstest,unrealizedinterestrateswap gainamountingtoTL185hasbeenclassifiedconsolidatedincome 4 March2015andatotalnotionalamountofUSD255.000,inorder tohedgeaportionofitsvariableratelongtermbankborrowings.Due The Companyhasenteredintoafive-partinterestrateswaptransaction between28July2010and3Augustwithamaturitydateon to TL45.209. comprehensive incomeamountstoTL35.178.Accordinglythetotalunrealizedlossrecognizedunderother 2015 whichistheresidualmaturityoforiginalhedgerelationship.Theunamortizedportionoldrecognizedunderother old hedgeasofSeptember28,2009,whichbeingrecognizedunderothercomprehensiveincome,(USD31.8million)willbeamortizeduntil fair valueofthenewhedgewithanamountTL10.031iscontinuedtoberecognizedunderothercomprehensiveincome.The outstanding borrowingafterprepaymentisfollowedupseparately.Thenewhedgefoundaseffectiveresultofeffectivenesstestand negative fairvalueofthehedgeasinceptiondate-30September2009)andnewisseparatedeffectoldrelatingto As the Amended and Restated Transaction resulted in a change in the hedge structure the effect of the old hedge (which leads to significant swap lossamountingtoTL27.149hasbeenclassifiedconsolidatedincomestatements. 31 December 2010, realized interest rate swap loss amounting to TL 58.326 (2009 – TL 105.263; 2008 – TL 15.370) and unrealized interest rate December 2010, the amountof TL 45.609unrealized interest rate swap losshasbeenrecognized under equity reserves. For theperiod ended As of31December2010,fairvaluerealizedinterestrateswaptransactionsamounttoTL72.358(2009–106.233;2008209.515). periods between31March2009and30September2013. Amendment andrestructuringhasbeendesignatedascashflowhedgetransaction.Aveawillpayfixedreceivefloatinginterestforthe As of31December2010,notionalamountthatwillbeduetill30September2013amountstoUSD554.284andEuro34.108. MTPF havebeenwhollycoveredbythisnewinterestratehedgingtransaction. early paymentmadeasof30September2009amountingtoUSD621.297veEuro32.973.anddenominatedprincipalbalances Nominal amountshavebeendecreasedandinterestratesrestructuredinordertomatchthenominalasaresultof of 30September2009whichhasreplacedthecurrentinteresthedgingtransaction. As of28September2009,Aveahasenteredintorestructuringinteresthedgingtransactionforthecriticaltermmatchearlypaymentas interest rateriskofexpectedfuturecashoutflowsinrelationtoitsfloatingdebt2007and2008. Avea hasenteredintothreeseparateinterestratehedgingtransactionsastheFirstHedge,Overlay1and2tocontrolitsexposure Interest rateswaps Cash flowhedges 17. Otherfinancialinvestmentsandotherliabilities timely andasaresultCeteliscarriedatcost. As of31December2010,2009and2008duetothelacksignificantinfluence,financialinformationforequityaccountingcannotbeachieved Balance at31December Contribution tosharecapitalincrease Balance at1January Cetel 16. Financialinvestments (Currency -inThousandsofTurkishLira(“TL”)unlessotherwiseindicated.Allothercurrenciesarealsoexpressedthousands) Notes totheconsolidatedfinancialstatementsforyearended31December2010 31 December2010 11.840 11.840 - 11.840 - 11.840 31 December2009 31 December2008 11.840 11.200 640 of thebetacoefficient.Asaresultoimpairmenttest,noimpairment, isnotedforthegoodwillarisingfromacquisitionofSobee. respectively with sensitivity of -/+2%. For the WACC calculation, technology companies have been taken as a benchmark for thecalculation flows consistsofthediscountedcashdenominatedinUSDollars until2015.ThevaluationhasbeentestedwithaWACCrateof19,2%, capital expendituresandincome and expensesinthebusinessplanareUSDollarsdenominated,estimated value oftheprojected cash The goodwillimpairmenttestsofSobeeas31December2010 havebeenperformedbasedontheenterprisevalueofSobee.Since Sobee acquisition goodwill arisingfromtheacquisitionofArgelaandInnova. have beentakenasabenchmarkforthecalculationofbetacoefficient. Asaresultotheimpairmenttest,noimpairment,isnotedfor a WACCrateof18,4%and18,5%InnovaArgela,respectivelywithsensitivity-/+2%.Forthecalculation,technologycompanies of theprojectedcashflowsconsistsdiscounteddenominatedinUSDollarsuntil2015.Thevaluationhasbeentestedwith and Argela.SincethecapitalexpendituresincomeexpensesinbusinessplanareUSDollarsdenominated,estimatedvalue The goodwillimpairmenttestsofInnovaandArgelaas31December2010havebeenperformedbasedontheenterprisevalues Innova andArgelaacquisition Avea acquisition.Thevalueinuseprojectionsarebasedonadiscountedcashflow(DCF)studyimplementeduntil2029. capital cost(WACC)by-/+2%.Asaresultoftheimpairmenttesting,ithasbeennotedthatthereisnoongoodwillarising inflation inthebusinessplanandestimatedpopulationgrowthofcountry.Thevaluationistestedwithasensitivityweightedaverage the tenyearsareextrapolatedusinga3,4%growthrateforTLandUSDdenominatedcashflowprojectionsthatisdrivenbyestimated used forthediscountofcashflowsperiodthatAveawillpayincometaxis14,5%and15.4%non-taxableperiod.Cashflowbeyond cash flow projections from the business plan ofAvea approved by theBoard of Directors in December 2010 covering a five-year plan. WACC goodwill arisingfromtheacquisitionofAveashares.Theenterprisevalueusedasabaseforimpairmenttesthasbeencalculatedusing has been accepted as one cash generating unit for the purposes of determining the value in use for the impairment testing of the TL 29.695 The goodwillimpairmenttesthasbeenperformedasof31December2010,basedonthevalueinusestudy.Avea,atcorporatelevel, arising fromacquisitionofsubsidiary”inequity. of thepurchasepriceallocation.Theresultre-measurementamountingtoTL294.065hasbeenreflectedas“Fairvaluedifference been re-measuredtotheirfairvaluesbasedonthevaluefinancialstatementsofAveapreparedas15September2006forpurpose shareholding of40,56%,whichhavebeenaccountedforusingtheequitymethodinfinancialstatementspriorto15September2006 Therefore, duringtheaccountingoflatestacquisition40,56%shareson15September2006,firsttwoacquisitionscomprisingatotal with Aria,0,56%throughanequityincreaseinMay2005andfinally40,56%theacquisitionofTIMshareson15September2006. The acquisitionofAveashareshasbeeneffectedthroughthreestepsindifferentyears(40%February2004themergerAycell Avea acquisitionandgoodwillrelatedto (*) Asof31December2008negativegoodwillamountingtoTL3.967fromSebitacquisition hasbeenrecognizedintheconsolidatedincomestatement. Carrying amountat31December2010 Acquisition ofPantel(Note26) Opening balance,1January2010 Acquisition ofSobee Opening balance,1January2009 Acquisition ofSebit(*) Acquisition ofInnova Acquisition ofArgela Opening balance,1January2008(relatedtoAvea) The movementofgoodwillisasfollows: 18. Goodwill (Convenience translation ofareportoriginallyissuedin Turkish -Seeadditionalparagraph belowforconveniencetranslation andNote2.1) (Currency -inThousands of TurkishLira(“TL”)unlessotherwiseindicated.Allothercurrenciesarealsoexpressedinthousands) Notes totheconsolidatedfinancialstatementsforyearended31December2010 52.873 49.172 48.735 11.097 29.695 3.701 7.943 437 -

Türk Telekom CONSOLIDATED FINANCIAL STATEMENTS AND 2010 Annual Report 145 INDEPENDENT AUDIT REPORT Türk Telekom CONSOLIDATED FINANCIAL STATEMENTS AND 2010 Annual Report 146 INDEPENDENT AUDIT REPORT (Convenience translation ofareportoriginallyissuedin Turkish -Seeadditionalparagraph belowforconveniencetranslation andNote2.1) determined. Inthiscontext,fairvalueoftheinvestmentpropertiesasconsolidatedbalancesheetdatearenotavailable. the fair values of all investment properties are not determined in each year, instead selected investment properties’ fair values have been The Group’s investment properties consist of number of buildings and lands. In accordance with balance between cost and benefit principle indicator thatthereisimpairmentoninvestmentpropertyandfollowingthetestperformedithasconcludednoimpairment. 3.021 impairmentincludedinconsolidatedincomestatement2009.Asof31December2010,theGrouphasassessedwhetherther e isany properties. In2009,themanagementhasanalyzedwhetherthereisanycircumstanceforimpairmentoftheseassetsandaddit ional TL values andcarryingoftheinvestmentpropertiesonanindividualassetbasisrecordsidentifiedimpairmentinvestment The Groupassesseswhetherthereisanyimpairmentindicatorininvestmentproperties.Ifsuchexiststhecompa res fair the parties(Notes10). Investment propertyrepresentsbuildingspaceownedbytheGroupbutoccupiedPTTunderacross-occupationagreementbet ween Carrying amount Closing balance Impairment Disposal Depreciation chargefortheyear Opening Accumulated depreciationandimpairment Closing balance Disposals Additions Opening balance Cost given below: The movementofinvestmentpropertyandtherelatedaccumulateddepreciationforyearsended31December2010,20092008is 19. Investmentproperty (Currency -inThousandsofTurkishLira(“TL”)unlessotherwiseindicated.Allothercurrenciesarealsoexpressedthousands) Notes totheconsolidatedfinancialstatementsforyearended31December2010 31 December2010 1 January- 384.481 274.237 110.244 384.981 16.636 93.980 (372) (500) - - 291.001 93.980 3.021 - 16.632 74.327 384.981 - - 384.981 31 December2009

1 January- 31 December2008 1 January- 310.654 384.981 384.981 74.327 16.637 57.690 - - - - maximum amountofTL1.000.000. for themovablesofAycell).ThecommercialenterprisepledgesecuresSeniorSecuredFinancialIndebtnessAveaupto for theyearended31December2010.AsdisclosedinNote7,thereisacommercialenterprisepledgeonallmoveableassetsofAria(except As of31December2010,netbookvalueleasedassetsGroupisamountingtoTL42.307(2009–42.353).Therearenonew valuation workhasbeenperformedbytheprofessionalindependentfirm;KPMGAkisBağımsızDenetimveSMMMA.Ş. on carrying amounts of tangible and intangible assets. Additionally, there is no impairment on the tangible and intangible assets of Avea. The plan andestimatedpopulationgrowthofthecountry.Basedonimpairmenttest,Companyhasconcludedthatthereisnoimpairment rate used is 12,6%. For the periods beyond ten years, 1% growth rate has been projected, considering the estimated inflation in the business intangible assets.Forthevalueinusetest,cashflowprojectionsaredenominatedTLand“WeightedAverageCapitalCost”(WACC) At 31December2010,theGrouphasperformedavalueinusestudyordertotestwhetherthereisanyimpairmentontangi ble and Carrying amountat31December2010 Closing balance,31December2010 Currency translationdifferences Transfers Depreciation chargefortheyear Disposals Opening balance,1January2010 Closing balance,31December2010 Currency translationdifferences Disposals Addition duetoacquisitionofasubsidiary Additions Transfers Opening balance,1January2010 Cost The movementofPPEandtherelatedaccumulateddepreciationforyearsended31December2010,20092008isgivenbelow: 20. Property,plantandequipment(PPE) (Convenience translation ofareportoriginallyissuedin Turkish -Seeadditionalparagraph belowforconveniencetranslation andNote2.1) (Currency -inThousands of TurkishLira(“TL”)unlessotherwiseindicated.Allothercurrenciesarealsoexpressedinthousands) 1.150.314 573.825 5.753 3 (1) (3.760) 508.075 1.724.139 203 (20.575) 68.691 10.682 69.508 1.659.385 buildings Land and Notes totheconsolidatedfinancialstatementsforyearended31December2010 equipment 30.548.718 29.673.685 35.939.393 34.561.813 and other 5.390.675 1.029.691 Network (108.393) (120.560) 334.315 124.707 979.935 3.127 9.427 364 Vehicles 135.079 133.826 156.694 151.757 (3.926) (3.996) 21.615 1.795 7.095 5.171 43 8 - -

and fixtures Furniture 127.899 180.825 142.112 308.724 236.491 (3.285) 73.545 38.883 1.024 (424) 251 929 20 3 fixed assets (17.299) 202.922 188.773 234.902 233.273 (1.094) (6.140) (4.203) 31.980 25.050 19.446 Other 11 7 - Construction in progress (121.373) (15.591) 438.580 438.580 131.516 433.080 (1.237) 12.185 ------31.641.369 38.802.432 30.646.471 37.275.799 7.161.063 1.335.588 1.112.943 (170.147) (120.706) 354.988 (2.259) Total 2.283 8.463 378

Türk Telekom CONSOLIDATED FINANCIAL STATEMENTS AND 2010 Annual Report 147 INDEPENDENT AUDIT REPORT Türk Telekom CONSOLIDATED FINANCIAL STATEMENTS AND 2010 Annual Report 148 INDEPENDENT AUDIT REPORT (Convenience translation ofareportoriginallyissuedin Turkish -Seeadditionalparagraph belowforconveniencetranslation andNote2.1) Carrying amountat31December2008 Closing balance,31December2008 Transfers Depreciation chargefortheyear Disposals Opening balance,1January2008 Closing balance,31December2008 Disposals Additions Transfers Opening balance,1January2008 Cost Carrying amountat31December2009 Closing balance,31December2009 Transfers Depreciation chargefortheyear Disposals Opening balance,1January2009 Closing balance,31December2009 Disposals Additions Transfers Opening balance,1January2009 Cost 20. Property,plantandequipment(PPE)(continued) (Currency -inThousandsofTurkishLira(“TL”)unlessotherwiseindicated.Allothercurrenciesarealsoexpressedthousands) Notes totheconsolidatedfinancialstatementsforyearended31December2010 Land and 1.076.030 - 58.078 (18) 386.273 1.520.363 (81) 4.071 85.600 1.430.773 buildings Land and 1.151.310 508.075 - 63.788 (46) 444.333 1.659.385 (1.381) 87.871 52.532 1.520.363 buildings 444.333

equipment equipment 27.649.222 33.629.202 32.605.199 29.673.685 28.747.330 34.561.813 33.629.202 28.747.330 and other and other 4.881.872 1.267.221 4.888.128 1.115.265 1.180.641 Network Network (169.113) (204.082) (182.353) (213.494) (34.536) 308.280 919.805 (6.557) - Vehicles Vehicles 130.539 148.225 143.034 133.826 130.849 151.757 148.225 130.849 (2.271) (2.284) (2.003) (2.164) 17.376 17.931 2.581 7.446 4.459 4.720 521 976 29 -

and fixtures and fixtures Furniture Furniture 112.673 180.510 139.864 142.112 120.397 236.491 180.510 120.397 (2.294) (2.448) (5.941) (8.414) 60.113 10.018 39.134 94.379 23.145 60.461 3.960 4.511 3.934 - fixed assets fixed assets 167.129 105.056 167.129 153.862 188.773 122.936 233.273 122.936 (4.288) (4.496) 44.193 22.409 44.500 44.277 21.997 17.475 49.491 Other Other 8.774 8.989 (437) (822) (241) Construction Construction in progress in progress (1.092.452) 1.160.322 (37.060) 197.541 197.541 129.671 433.080 433.080 272.599 197.541 ------28.383.763 35.842.970 34.602.403 30.646.471 29.565.845 37.275.799 35.842.970 29.565.845 6.277.125 1.360.307 1.485.436 6.629.328 1.228.654 1.623.767 (177.984) (213.391) (190.780) (226.275) (31.478) 42.752 35.337 Total Total (241) (Convenience translation ofareportoriginallyissuedin Turkish -Seeadditionalparagraph belowforconveniencetranslation andNote2.1) (*) AdditionsamountingtoTL140.755(2009–123.305,2008-100.383)comprise intangibleassetsunderscopeofIFRIC12. Carrying amountat31December2009 Closing balance,31December2009 Amortization chargefortheyear Transfers Disposals Opening balance,1January2009 Accumulated amortization Closing balance,31December2009 Additions (*) Disposals Transfers (Note20) Opening balance,1January2009 Cost Carrying amountat31December2010 Closing balance,31December2010 Currency translationdifference Amortization chargefortheyear Transfers Disposals Opening balance,1January2010 Accumulated amortization Closing balance,31December2010 Currency translationdifference Additions duetoacquisitionofsubsidiary Additions (*) Disposals Transfers (Note20) Opening balance,1January2010 Cost 21. Intangibleassets (Currency -inThousands of TurkishLira(“TL”)unlessotherwiseindicated.Allothercurrenciesarealsoexpressedinthousands) License License

1.477.929 978

1.477.929

1.477.929 879.377 1.219.547 609.786 1.000.945 879.377 1.295.639 592.069 Notes totheconsolidatedfinancialstatementsforyearended31December2010 182.290 287.308 258.382 378.106 476.984 118.389 200.264 182.290 287.308 76.092 63.901 - 3.504 - 101.228 - - - 3.783 - - 60 - - - - 879.377 relationships relationships Customer Customer 987.892 89.760 87.044 ------

302.379 908.381 302.540 235.561 621.914 302.379 648.326 302.379 908.381 251.006 412.743 Brand 51.373 495.638 15.606 66.979 662.761 Brand 35.766 393.124 51.373 495.638 15.607 161 2.373 - 117.713 - - - 5.647 - 518 - - 56 - - - - -

Other intangible Other intangible 1.284.675 256.932 166.743 246.136 103.347 assets (6.371) assets 13.946 (194) (829) (27) (4)

Concession Concession 840.239 140.755 980.994 105.256 151.014 829.980 123.305 716.934 840.239 105.256 734.983 45.758 39.212 66.044 right right ------4.408.305 5.034.030 1.121.865 1.517.242 3.516.788 3.547.961 4.408.305 1.121.865 3.286.440 397.687 218.941 218.941 393.959 846.425 309.111 813.587 (6.371) 13.946 Total Total 6.038 9.430 1.496 (194) (829) (27) 116 (4)

Türk Telekom CONSOLIDATED FINANCIAL STATEMENTS AND 2010 Annual Report 149 INDEPENDENT AUDIT REPORT Türk Telekom CONSOLIDATED FINANCIAL STATEMENTS AND 2010 Annual Report 150 INDEPENDENT AUDIT REPORT (Convenience translation ofareportoriginallyissuedin Turkish -Seeadditionalparagraph belowforconveniencetranslation andNote2.1) The netbookvalueoftheGSM900bandlicenceasat31December 2010isTL10.671(2009–11.378). the remainingGSMlicensedurationandamendedagreement hasbeensignedbetweenAveaandICTAon25February2009. After receivingStateCouncil’sopinionsandapprovaloftheboard ofICTA,AveamadeTL14.122(includingVAT)paymentasthetenderfeefor frequency channelshasreachedto12togetherwithpreviously-held 6,5channels. Avea hadbeengranted5,5additionalGSM900MHzfrequencychannels asaresultofthetenderandultimatelytotalnumberGSM900MHz minimum feeofTL128/year/channel(excludingVAT). The tenderforthereallocationofunused900MHzFrequencyBands hadbeenheldon20June2008andAveaobtainedCbandwiththe GSM 900AdditionalFrequencyBandTender The netbookvalueofthe3Glicenceasat31December2010isTL438.854 (2009–TL462.578). ultimately theConcessionAgreementhasbeensignedon30April2009. accordingly andapprovedbyICTA.Thelicensefee(including18%VAT)amountingtoTL539.332hasbeenpaidAveainApril20 09 and the CouncilofStatetoreceiveits opinions. Subsequent toreceivingtheopinionofCouncil State, the Concession Agreementisamended On 3December2008,followingtheapprovalofICTA,adraftConcessionAgreementhasbeeninitiatedbyAveaandICTAdeliveredto operating inTurkey. The tender for authorization of IMT-2000 / UMTS services has been held on 28 November 2008 with the participation of all three GSM operators 3G LicenceTender There isnorestrictionorpledgeontheintangibleassetsexceptforAveabrandasat31December2010. Pantel other Pantel customerrelationships Avea brandname Avea customerrelationships Avea License Remaining amortizationperiodsofsignificantintangibleassetsareasfollows: impairment. As of31December2010,2009and2008,theGroupperformedimpairmenttestonintangibleassetsithasbeenconcludedthatthereisno Carrying amountat31December2008 Closing balance,31December2008 Amortization chargefortheyear Transfers Disposals Opening balance,1January2008 Accumulated amortization Closing balance,31December2008 Additions Disposals Transfers (Note21) Opening balance,1January2008 Cost 21. Intangibleassets(continued) (Currency -inThousandsofTurkishLira(“TL”)unlessotherwiseindicated.Allothercurrenciesarealsoexpressedthousands) Notes totheconsolidatedfinancialstatementsforyearended31December2010

19,8 years 14,8 years 15,1 years 5,8 years 15,1 years License

1.000.945 879.377 1.000.945 879.377 118.389 200.264 882.556 679.113 66.729 112.281 51.660 87.983 - - - - - relationships Customer - - - - -

302.379 450.649 302.379 648.326 266.613 255.202 Brand 20.160 327.345 15.606 65.979 35.766 393.124 - - - - -

Other intangible 170.357 assets (4.158) 31.478 (441) 241

Concession 100.383 616.551 716.934 650.890 32.450 33.594 66.044 right - - - - 3.249.901 3.547.961 2.734.374 270.740 558.965 254.822 813.587 (4.158) 31.478 Total (441) 241 Provisions at31December2009 Reversals Provisions fortheperiod(Note30) Settled provisions Provisions at1January2009 Provisions at31December2010 Foreign currencytranslationdifference Effect ofbusinesscombinations Reversals (Note30) Provisions fortheperiod Settled provisions Provisions at1January2010 The movementofprovisionsisasfollows: Others Unused vacation Litigation provision The breakdownofprovisionsasat31December2010,2009and2008isfollows: a) Shorttermprovisions 22. Provisions (Convenience translation ofareportoriginallyissuedin Turkish -Seeadditionalparagraph belowforconveniencetranslation andNote2.1) (Currency -inThousands of TurkishLira(“TL”)unlessotherwiseindicated.Allothercurrenciesarealsoexpressedinthousands) Notes totheconsolidatedfinancialstatementsforyearended31December2010 31 December2010 2.337 (26.125) 90.485 (4.333) 147.609 147.609 (19.254) 127.190 (84.628) 124.301 provision 210.065 92 Litigation Litigation provision 282.396 210.065 72.271 60 248.595 338 100.648 147.609 31 December2009 Unused vacation Unused vacation provision provision (24.878) (21.214) 100.648 100.648 17.062 72.271 92.034 8.614 615 38 - - 31 December2008 (15.402) 232.075 124.301 15.740 Other Other 15.740 92.034 (338) 338 338 60 60 - -

Türk Telekom CONSOLIDATED FINANCIAL STATEMENTS AND 2010 Annual Report 151 INDEPENDENT AUDIT REPORT Türk Telekom CONSOLIDATED FINANCIAL STATEMENTS AND 2010 Annual Report 152 INDEPENDENT AUDIT REPORT (Convenience translation ofareportoriginallyissuedin Turkish -Seeadditionalparagraph belowforconveniencetranslation andNote2.1) separately asasettlementgain. obligation asat31December2010and2009.Thedecreaseinliability hasbeenpresentedinthereconciliationofdefinedbenefitobligations to theGroup.Therefore,long-termemployeebenefitsforthese employeeswerenottakenintoaccountindeterminationoftheGroup’s Upon thesetransfers,thelong-termemployeebenefitliabilitiesof theemployeesarealsotransferredtootherstateenterpriseswithnocost workers thatweregrantedtherighttoaskforatransferotherstate companies. law wasenactedwhichextendedthisdurationfrom180daystofive years.Asof31December2010.TheCompanyhasnothecivilservantsand state enterprisesorgovernmentalorganizationswithin180daysstartingfromtheprivatizationdate.Additionally,in9February2006,another a resultoftheCompany’sprivatizationon14November2005,someemployeeshaveusedthisrighttoaskforemploymentfromother In accordancewiththerelatedlaws,civilservantsandworkersweregrantedrighttoaskforatransferotherstatecompanies.As i) TransferofEmployeestoOtherStateEnterprisesafterPrivatization amortized over seven years, the period over which benefits become vested, which is the expected average future service life of the employees. been reflectedfullyintheconsolidatedstatementofincome2005,yearprivatization.PastservicecostamountingtoTL58.737isbeing while the ceasing of certain otherlong-term employment benefits has resulted in plan curtailments. The effect of theplancurtailments has The abovedescribedamendmenttothebenefitsofcivilservantswithrespectdefinedbenefitplanresultedinpastservicecost, have beenceased. representation indemnity, social aid increase and jubilee awards. Upon privatization, the death payment and social aid increase benefits In additiontoretirementbenefits,theCompanywasliableforcertainotherlong-termemploymentbenefits:deathpaymentposition,joband The numberofpersonnelasat31December2010,2009and2008were34.138,34.08634.025,respectively. year. retirement payliabilityasat31December2010issubjecttoaceilingoffullTL2.517(2009–2.365)permonthlysalaryforeach service obligations ofthewhiteandbluecollarpersonnelseparately,Companycalculatedtotalretirementobligationforallpersonnel.The their serviceperiods.Hence,sincetheprivatizationprocesshasbeencompletedasat31December2005,insteadofreflectingretirement servants whowerepreviously(before2004)eligibleforretirementpremiumswillbecalculatedinaccordancewithlaborlawconsideringallof to privatization,LaborLawbecameeffectiveforallemployeesoftheCompany.Accordingthislaw,retirementbenefitsofcivil In 2004,alawwasenactedregulatingthestatusofCompany’semployeesafterpossibleprivatization.Thisstatedthatsubsequent the calculationofretirementpremiumandbenefitweredifferentregulatedbyrelatedlaws. and retirement benefit to workers uponmeeting the conditions mentioned in the first paragraph above. The parameters and scales used for and workerswerewithinthescopeofSocialSecurityInstitution(“SSI”).TheGroupwasliabletopayretirementpremiumsthecivilservants the scopeoftwodifferentsocialsecuritysystems.ThecivilservantswerewithinTurkishRepublicRetirementFund(“TRRF”) employees outofscopecollectivelaborunioncontract,contractedandpermanentemployees).Thesewerewithin Before privatization,theCompanyhadfourdifferenttypesofemploymentstatus(employeesinscopecollectivelaborunioncontract, assets forthedefinedbenefitsasthereisnofundingrequirement. is ended due to retirement or for reasons other than resignation or misconduct. The liability is not funded and accordingly there are no plan In accordancewithexistingsociallegislationinTurkey,companiesarerequiredtomakelump-sumpaymentsemployeeswhoseemployment c) Long-termemployeebenefits Provision fortheinvestmentsunderscopeofIFRIC12 b) Longtermprovisions 22. Provisions(continued) (Currency -inThousandsofTurkishLira(“TL”)unlessotherwiseindicated.Allothercurrenciesarealsoexpressedthousands) Notes totheconsolidatedfinancialstatementsforyearended31December2010

31 December2010 9.329 9.329 7.139 7.139 31 December2009 31 December2008 5.126 5.126 The averagevoluntarywithdrawalrateforthenextyearremaining employeesisestimatedtobe3%(2009-3%). Expected rateofceilingincreases Discount rate v) Principalactuarialassumptionsuse: Total netincomerecognizedintheconsolidatedstatementof Settlement gainrecognized(Note30) Total netcostrecognizedintheconsolidatedstatementofincome Past servicecost Interest cost Current servicecost iv) Totalexpenserecognizedintheconsolidatedstatementofincome: Net liabilityrecognizedinthebalancesheet Unrecognized pastservicecost Present valueofdefinedbenefitobligations iii) Analysisofthepresentvaluedefinedbenefitobligationtoliabilitiesrecognizedinbalancesheet: (*) Asat31December2010,actuarialgainamountingtoTL91.336(2009-35.002)havebeenreflectedothercomprehensiveincome. Provisions Foreign currencytranslationdifference Effect ofbusinesscombinations stateenterprises)(Note30) Transfers -net(employeestransferredto Benefits paidbytheGroup Actuarial (loss)/gain(*) Interest cost Current servicecost Defined benefitobligationatJanuary1 ii) Reconciliationofopeningandclosingbalancesdefinedbenefitobligation c) Long-termemployeebenefits(continued) 22. Provisions(continued) (Convenience translation ofareportoriginallyissuedin Turkish -Seeadditionalparagraph belowforconveniencetranslation andNote2.1) (Currency -inThousands of TurkishLira(“TL”)unlessotherwiseindicated.Allothercurrenciesarealsoexpressedinthousands) Notes totheconsolidatedfinancialstatementsforyearended31December2010 31 December2010 31 December2010 31 December2010 31 December2010 1 January- 1 January- (137.672) (88.657) (88.657) (88.657) (16.253) 622.859 658.755 108.187 606.606 622.859 91.336 62.639 36.067 62.639 36.067 9.481 5.1% 10% 376 15 658.755 - - (52.140) (127.784) 35.002 71.907 31.294 700.476 31 December2009

(52.140) (52.140) 111.945 8.744 71.907 31.294 31 December2009 4.,8% 31 December2009 634.171 (24.584) 658.755 31 December2009 1 January- 1 January- 11% 31 December2008 31 December2008 31 December2008 31 December2008 1 January- 1 January- 1.007.149 (360.715) (47.255) (34.139) (47.255) (47.255) (33.328) 700.476 143.769 667.148 700.476 99.457 35.979 99.457 35.979 5,40% 8.333 12% - -

Türk Telekom CONSOLIDATED FINANCIAL STATEMENTS AND 2010 Annual Report 153 INDEPENDENT AUDIT REPORT Türk Telekom CONSOLIDATED FINANCIAL STATEMENTS AND 2010 Annual Report 154 INDEPENDENT AUDIT REPORT (Convenience translation ofareportoriginallyissuedin Turkish -Seeadditionalparagraph belowforconveniencetranslation andNote2.1) higher majorityvote. Board resolutionsshallbepassedbyasimplemajorityofthevotes ofthedirectorspresentatsuchmeetingunlessresolutionrequiresa elected andremovedbythesimplemajorityvotesofthosepresent atthemeetingofboarddirectors. The chairmanoftheboarddirectorsshallbenominatedby nominatedbythegroupAsharesfromamongdirectorsandbe for theCgroupGoldenShare. (d) while the Treasury holds the C group Golden Share, the Treasury shall be entitled tonominate a further one person for election as director entitled tonominateapersonwhoisunanimouslyagreedfortheelectionasanindependentdirector; (c) as long as the Treasury holds 15% or more of the shares (but less than 30% of the shares), the group A shareholder and the Treasury shall be • 15%ormoreoftheshares(butlessthan30%Shares)theTreasuryshallbeentitledtonominate2personsforelectionasdirectors; • 30%ormoreoftheshares,Treasuryshallbeentitledtonominate3personsforelectionasdirectors; (b) providedthattheTreasuryshallhold: (a) thegroupAshareholdershallbeentitledtonominate6personsforelectionasdirectors; The boardofdirectorsiscomposedtennominatedbytheshareholdersasfollows: of thedirectorsCompanyshallconsisttendirectors. Based on the Shareholders Agreement signed between OTAŞ and the Treasury on 14 November 2005 and the articles of association, the board agreement Loan Term OTAŞ The Trustee. Citicorp provides certainlimitationswithrespecttodilution,saleandtransferofsharesinOTAŞ,theCompanyAvea. and OTAŞ between agreement loan term the for Trustee Citicorp to pledged were Shares 55% ofthetotalcompanyshares. As of 31 December 2010, Citicorp Trustee Company Limited has a pledge over 192.500.000.000 group A shares belonging to OTAŞ which represent ledger. TheholderoftheGoldenShare,Treasury,hasonemember,representingamongBoardDirectors. change inthemanagementcontrolofCompanyandregistrationanytransferregisteredsharesCompany’sshareholders’ proposed amendmentstotheCompanyarticlesofassociation,transferanyregisteredsharesinwhichwouldre sult ina Treasury inordertoprotectnationalinterestsregardingeconomyandsecurity.TheholderoftheGoldenSharehasrightapproveany The Treasuryistheholderofpreferredstock(GoldenShare)asperlaw.Thissharenon-transferable.Itprovidescertainrightsto and theTreasuryisholderofgroupBCshares.Groupshareconsistsonlyasinglepreferredstock. The Company’s share capital is fully paid and consists of 350.000.000.000 shares of 1 kuruş nominal value . OTAS is the holder of Group A shares Inflation adjustmenttosharecapital Public share OTAŞ The Treasury As of31December2010,2009and2008,theshareholdersCompanywiththeirshareholdingpercentageareasfollows: 23. Paidincapital,reservesandretainedearnings/(accumulateddeficit) (Currency -inThousandsofTurkishLira(“TL”)unlessotherwiseindicated.Allothercurrenciesarealsoexpressedthousands) Notes totheconsolidatedfinancialstatementsforyearended31December2010 15 55 30 % 31 December2010 3.260.248 3.260.248 3.500.000 3.500.000 1.925.000 1.050.000 (239.752) (239.752) 525.000 TL 15 525.000 55 1.925.000 30 1.050.000 % TL

31 December2009 15 55 30 %

31 December2008 1.925.000 1.050.000 3.260.248 3.500.000 (239.752) 525.000 TL amounting toTL288.991hasbeenoffsetfromrestrictedreservesallocatedprofits. the financialstatementspreparedinaccordancewithTTCandTCCCMBStandardsAccounting.Asof31December2009,accumula ted loss distribution basedonCMBfinancials.Inotherwords,accumulatedlossamountingtoTL288.991resultedfromtheaccountingdifferencesof and TurkishTaxCode(TTC)fortheprofitdistributionpriortofinancialyearof2008,whenCompanyfirst-timeadopted fact andformerobligationthattheCompanyusedfinancialstatementspreparedinaccordancewithTurkishCommercialCode (TCC) Accounting Standards. ThisamountdoesnotrepresentanactuallossoftheCompanyinpreviousyears;butitisconsequence Prior period losses amount to TL 288.991 in the previously issued 31 December 2008 financial statements prepared in accordance with CMB shareholders. which amounted to TL 1.490.157 (a dividend of full kuruş 0,4258 per share) has been committed to be distributed and distributed in cash to the During theyearended31December2009,remainingbalanceof2008distributableprofitafterassigningfirstandsecondlegal reserves, shareholders. which amounted to TL 1.589.712 (a dividend of full kuruş 0,4542 per share) has been committed to be distributed and distributed in cash to the During theyearended31December2010,remainingbalanceof2009distributableprofitafterassigningfirstandsecondlegal reserves, Dividends appropriation offirstlegalreserve,TL2.450.857wasdeterminedasanamountavailablefordividenddistribution. cash dividenddistributions.TheCompany’s2010consolidatednetincomehasbeencomparedwithitsstatutoryandafter indexed totheinflation).Thesecondlegalreserveisallocatedafterfirstanddividends,atrateof10%perannumall allocated out of lastperiod’sstatutory profits at therate of 5% per annumuntil the totalreservereaches1/5 of thepaid-insharecapital (not reserve consistsoffirstandsecondlegalreserves,allocatedinaccordancewiththeTurkishCommercialCode.Theis In accordance withtheTurkish Commercial Code,companies are required to assign legal reserves before profit appropriations. The legal companies definedinthearticlesofassociationandneedtomaintainsoundfinancialstandinggroupcompanies. the investmentprogrammeapprovedbyboardofdirectorsinbusinessplanorbudget;(ii)tradingprospectsofgroup materially prejudicialtotheinterestsofanygroupcompanydefinedinarticlesassociationhavingregardto:(i)implementation b) theboardofdirectorsresolvesbywayasimplemajoritythosepresentatrelevantmeetingthatdistributionis directors ,belikelytocausesuchbreachwithinthefollowing12months;or articles ofassociation)toanylenderorwould,intheopinionsimplemajoritythosepresentatrelevantmeetingboard a) thedistributionwouldresultinabreachofanycovenantorundertakinggivenbygroupcompany(groupcompaniesaredefined legislation regardingcapitalmarkets,thenetprofitmaynotbedistributed,if: financial yearsubjecttotheboardofdirectorsmakingreasonableprovisionsandtransfersreserves.Providedthatitisnotagainst The boardofdirectorsshallproposethedistributionmaximumCompany’sprofitslawfullyavailablefordistributionineach 23. Paidincapital,reservesandretainedearnings/(accumulateddeficit)(continued) (Convenience translation ofareportoriginallyissuedin Turkish -Seeadditionalparagraph belowforconveniencetranslation andNote2.1) (Currency -inThousands of TurkishLira(“TL”)unlessotherwiseindicated.Allothercurrenciesarealsoexpressedinthousands) Notes totheconsolidatedfinancialstatementsforyearended31December2010

Türk Telekom CONSOLIDATED FINANCIAL STATEMENTS AND 2010 Annual Report 155 INDEPENDENT AUDIT REPORT Türk Telekom CONSOLIDATED FINANCIAL STATEMENTS AND 2010 Annual Report 156 INDEPENDENT AUDIT REPORT (Convenience translation ofareportoriginallyissuedin Turkish -Seeadditionalparagraph belowforconveniencetranslation andNote2.1) Basic andearningspershare(infullkuruş) Net profitfortheyearattributabletoequityholdersofCompany Weighted averagenumberofordinarysharesoutstandingduringtheyear The calculationofthebasicearningspershareattributabletoordinaryequityholdersCompanyisasfollows: As of31December2010 Reclassification toothernon-currentliabilities(Note11) Minority interestshareinactuarialgain/(loss)recognizedunderequity Minority interestshareinunrealizedlossonderivativefinancialinstrumentsrecognized underequity Share ofprofitgeneratedbetween1January2009–31December Reclassification tominorityinterest As of31December2009 Reclassification toothernon-currentliabilities(Note11) Adjustment differenceofshareholdingratechange Minority interestshareinactuarialgain/(loss)recognizedunderequity Minority interestshareinunrealizedlossonderivativefinancialinstrumentsrecognized underequity Share ofprofitgeneratedbetween1January2008–31December Reclassification tominorityinterest As of31December2008 minority during theacquisitionofminorityshares.Themovementinterestisasfollows: 2010, December 31 of As 2010. December 31 at as Avea interests arereflectedwiththeirfairvaluesandclassifiedasothernon-currentliabilitiesbasedontheGroup’saccountingpolicyapplied in Group Bank İş of shareholding 18,63% represents interest minority The Minority interest 23. Paidincapital,reservesandretainedearnings/(accumulateddeficit)(continued) (Currency -inThousandsofTurkishLira(“TL”)unlessotherwiseindicated.Allothercurrenciesarealsoexpressedthousands) Notes totheconsolidatedfinancialstatementsforyearended31December2010 31 December2010 350.000.000.000 1 January– 2.450.857 0,7002 31 December2009 350.000.000.000 1 January– (122.434) (179.473) 1.859.748 (54.354) 199.720 56.954 11.339 54.354 14.569 19.846 0,5314 (213) (308) - - - tion. The fairvalueofthediscountsprovidedtothesegroupsamountsapproximatelyTL34.000in2008,atyeartransaction. increase thenumberofsmallinvestorsasithasbeendoneinallotherprivatizationenhancedthroughanIPO. b) theTreasuryprovidedthesediscountsnotasapartyactingshareholderofTürkTelekombutratherStateAuthorityinorderto a) TürkTelekomhasnotreceivedanybenefits(goodsandservices)inexchangeforthediscountsprovidedthesegroupsto purchasing powerarenotwithinthescopeofIFRS2byconsideringfactthat The managementofTürkTelekomdecidedthatthediscountsprovidedtoPTT’semployees,smallinvestorsanddomesticwithhigh Total benefitsprovidedtotheemployees The numberofsharessoldtoTürkTelekom’semployees(lot) The averagepriceappliedtotheemployeesofTürkTelekom The marketpriceduringtheIPO 2008 andcreditedthesameamountintoequityasasharebasedpaymentreserve. provided toTürkTelekomemployees,amountingTL9.528,asanexpenseintheconsolidatedincomestatementforyearended31December Telekom consideringthefactthatTürkreceivesservicesfromitsemployees.TheGrouphasreflectedfairvalueofdiscounts provided toTürkTelekomemployeeshavebeenconsideredaswithinthescopeofIFRS2(“ShareBasedPayment”)bymanagement application date(comparedtothepriceappliedothercorporateinvestorsforremainingsharesof34.980.335.900.Thediscounts shares allocatedtodomesticinvestorswithhighpurchasingpowerdiscountedpricevaryingaccordingthepaymenttermsand IPO, 12.299.160.300ofsuchshareshavebeenallocatedtotheemployeesTürkTelekom,PTTandsmallinvestorstogetherwith5.220.503.000 May 2008, through an initial public offering (“IPO”) (such shares correspondence to corresponding to 15% Türk Telekom’s shares ). During the December 2007,52.500.000.000sharesofTurkTelekomownedbytheTreasury,minorityshareholderTürkTelekom,hasbeensoldasat15 According totheTurkishCouncilofMinistersdecisiondated12December2007,whichwaspublishedinOfficialGazetteon26 24. Sharebasedpayment (Convenience translation ofareportoriginallyissuedin Turkish -Seeadditionalparagraph belowforconveniencetranslation andNote2.1) (Currency -inThousands of TurkishLira(“TL”)unlessotherwiseindicated.Allothercurrenciesarealsoexpressedinthousands) Notes totheconsolidatedfinancialstatementsforyearended31December2010

: TL9.528 : 31.104.948 : TL4,2937 : TL4,60

Türk Telekom CONSOLIDATED FINANCIAL STATEMENTS AND 2010 Annual Report 157 INDEPENDENT AUDIT REPORT Türk Telekom CONSOLIDATED FINANCIAL STATEMENTS AND 2010 Annual Report 158 INDEPENDENT AUDIT REPORT 2008 -0,33%). GPMs givenbytheGroupasat31December2010areequivalentto 0,27%oftheCompany’sequity(31December2009–0,32%,31December Total thescopeofCabove iii. GPMsgiveninfavorofthirdpartycompaniesnot thescopeofBandCabove ii. GPMsgiveninfavorofCompanycompaniesnot i. GPMsgiveninfavorofparentcompany D. OtherGPMs runordinarycourseofbusiness C. GPMsgivenbytheCompanyforliabilitiesof3rdpartiesinorderto fullconsolidation B. GPMsgiveninfavorofsubsidiariesincluded legalpersonality A. GPMsgivenonbehalfoftheCompany’s GPMs givenbytheCompany The Company’sguarantee,pledgeandmortgage(GPM)positionasat31December20102009,2008isfollows: Euro 12.840isrelatedwiththeguaranteeprovidedfor3G(2009–12.840)license. (*) USD151.500oftheamount(2009-151.500)isrelatedwithguaranteeprovidedtoICTAbyAvearespecttheConcessionAgreementand Guarantees given(*) Guarantees received Guarantees receivedandgivenbytheGrouparesummarizedbelow: 25. Commitmentsandcontingencies (Currency -inThousandsofTurkishLira(“TL”)unlessotherwiseindicated.Allothercurrenciesarealsoexpressedthousands) Notes totheconsolidatedfinancialstatementsforyearended31December2010 (Convenience translation ofareportoriginallyissuedin Turkish -Seeadditionalparagraph belowforconveniencetranslation andNote2.1) Sterlin Euro Euro USD USD TL TL 427.437 17.359 156.465 152.265 1.130.369 64 86.618 582.650 239.378 currency Original 31 December2010 156.465 235.402 177.489 582.650 370.078 35.570 152 TL 13.300 116.151 151.987 64.008 490.591 186.841 currency 31 December2010 Original 1.243.293 2.081.215 3.359.527 31 December2009 16.644 18.375 16.393 251 - 373.730 116.151 228.847 910.193 138.276 490.591 281.326 28.732 3.207.716 - 17.282 - 17.282 15 1.417.766 1.772.653 31 December2009 TL

currency Original 153.919 484.991 149.479 58.809 94.073 6.589 31 December2008 - 31 December2008 2.824.665 1.211.882 1.595.657 305.688 232.772 912.440 201.392 484.991 226.057 14.107 58.809 17.126 17.126 TL - - - - licence ofAveaby evaluatingtherenewalrequest accordingtolegislationonthatdate. Avea mayapply to theICTAforrenewalbetween dates 24and6monthsbeforethe endofAveaConcessionAgreement. ICTAmayrenewthe The termoftheAveaConcessionAgreement is25yearsfrom11January2001. Pursuant totheAveaConcession Agreement, Aveawasgrantedtouse75channelsinthe1800MHzband and12channelsinthe900MHzband. Turkey, buttheappendixtoAvea ConcessionAgreementalsograntsAveasixchannelsinthe900 MHzband. The AveaConcessionAgreement covers theestablishment,developmentandoperationofaGSM 1800networkbyAveaintheRepublicof by ICTAonJune20,2008,agreementwasrearranged. and superseded the previous GSM 1800 license agreements in place in relation to Aycell and Aria. After GSM 900 Frequency Band bidding done A concessionagreementwasenteredintobetweenAveaandtheICTA (“theAveaConcessionAgreement”)on12January2005whichreplaced Avea ConcessionAgreement to answercustomercomplaints. Other provisions of the Concession Agreement provide for theconfidentiality of communications and theestablishment of effectivemethods customer onrequest,totheextenttechnicallypossibleandsubject tothepaymentofafee. governed byregulation.However,thecostofeachserviceprovided toacustomermustbeidentifiedanddetailedbillsentthe approval of the ICTA unless expressly provided to the contrary in any regulation issued by the ICTA. The specific content of customer bills is The tariffstobechargedbytheCompanymustcalculatedon acost-orientatedbasis,withoutdiscrimination,andaresubjecttothe 1% ofrevenuesfortheUniversalServiceFund. any regulationsmadebytheICTAinaccordancewithlawonProvisionofUniversalServices.TheCompanymustpayanannualfee approved bytheICTA.TheConcessionAgreementalsocontainsanobligationonCompanytoprovideuniversalservicesincompliancewith discrimination andtotheextenttechnicallypossible.TheCompanyisfurtherrequiredpublishareferenceaccessinterconnectionoffer Under theConcessionAgreement,Companymustcomplywithrequestsfromotheroperatorsforaccessand/orinterconnection without frequencies. Inaddition,theCompanyisrequiredtopayICTA0,35%ofitsannualrevenue,asacontributiontowardsICTA’sexpenses. agreements withtheGovernmentofRepublicTurkey.Thisspecificallyincludeslicenseandutilizationfeesforuse of radio In relationtofees,theConcessionAgreementrequiresCompanymeetallpaymentsaccruedasaresultofapplicablelegis lation or services. The ConcessionAgreementplacesalsoanumberofgeneralobligationsontheCompanyinrelationtoprovisiontelecommuni cations Concession Agreement. respect toitscontractualobligations.ItisonlyifthisprogramnotacceptedbytheICTAthatthenhasrightterminate order toremedyanybreach.WithinsuchgraceperiodgrantedbytheICTA,CompanymustsubmitICTAarecoveryprogramwith concordat bytheGroup)oranunremediedbreachofobligations.However,Companymustbegivenagraceperiodatleast9 0 daysin The ICTAmayterminatetheConcessionAgreementfollowingacourtdecisiononbankruptcyagainstCompany(ordeclaration of installed, totheICTA,atnocost,andingoodcondition. all equipmentaffectingtheoperationoftelecommunicationsnetwork,togetherwithimmovablepropertieswheresuchequi pment is Agreement placesanobligationontheCompany,ineventofexpiry,non-renewalorterminationConcessionAgreement,totransfer to theICTAforrenewalofConcessionAgreement,withanysuchbegrantedatdiscretionICTA.TheCon cession authorization agreementwasenteredintobetweentheCompanyandMinistryofTransportation.However,may apply The termoftheConcessionAgreementis25yearsfrom28February2001(i.e.,until272026),beingdateuponwhichoriginal safety communicationservices,orserviceswhichinvolvetheallocationofscarceresources. of anentirelynewnetwork.TheConcessionAgreementalsodoesnotcovercabletelevision,satelliteservices,maritimecommunicationsand The ConcessionAgreementdoesnotcoverGSM1800networksornextgenerationtelecommunicationsserviceswhichrequiretheestablishment - - - and theresultantreductioninpublicshareholdingtolessthan50%.TheConcessionAgreementcovers: The ConcessionAgreementwasenteredintobetweentheCompanyandICTAon14November2005followingprivatizationofCompany Türk Telekomconcessionagreement in casetheTurkishNationalFootballTeamqualifiesforFIFA2012EuropeanCup. Federation total net ofUSD300+VATin two equalinstalmentsdated 16 January 2012 and12 March 2012 (each paymentofnetUSD150 + VAT) In accordancewiththesponsorshipagreementbetweenTTNetandTurkishFootballFederation,hascommittedtopaythe as at31December2010.Paymentsforthesecommitmentsaregoingtobemadeinan11-yearperiod. The GrouphasthecommitmentforsponsorshipsandadvertisingservicestopurchaseamountingTL273.443(31December2009–250.616) Other commitments 25. (Convenience translation ofareportoriginallyissuedin Turkish -Seeadditionalparagraph belowforconveniencetranslation andNote2.1) the marketingandsupplyoftelecommunicationsservices. the establishmentofnecessarytelecommunicationsfacilitiesandusesuchbyotherlicensedoperators; the provisionofallkindstelecommunicationsservices; Commitments andcontingencies(continued) (Currency -inThousands of TurkishLira(“TL”)unlessotherwiseindicated.Allothercurrenciesarealsoexpressedinthousands) Notes totheconsolidatedfinancialstatementsforyearended31December2010

Türk Telekom CONSOLIDATED FINANCIAL STATEMENTS AND 2010 Annual Report 159 INDEPENDENT AUDIT REPORT Türk Telekom CONSOLIDATED FINANCIAL STATEMENTS AND 2010 Annual Report 160 INDEPENDENT AUDIT REPORT (Convenience translation ofareportoriginallyissuedin Turkish -Seeadditionalparagraph belowforconveniencetranslation andNote2.1) Avea hastoprovideatleasttwobase stationsfortheuseofministryinemergency. provided thatthepublicauthoritiesandenterpriseswillhavepriority inthecaseofhealthandsecurityemergenciesorfireotherdisasters. Avea willtakethenecessarymeasureswithpriorityinordertosatisfy therequirementsandneedsofsubscribersusersinemergencies, Emergencies Avea mayfreelydetermineitstariffsprovidedthattheseare notcontrarytotheregulationsofICTA. Tariffs call failureratenottobemorethan2%. recommendations intheGSM1800internationalstandards.These standardsrequireblockingrateofthelicensednetworktobe5%and Avea will comply with the telephoneservicequalitystandards set downintheInternationalTelecommunicationUnion(“ITU-T”) Service quality forwarding topoliceandotherpublicemergencyservices. but notlimitedtoemergencycalls,callforwarding,barringofoutgoingandincomingtechnicalassistanceforsubscribersfree Avea agreesandundertakestoprovidetheservicesspecifiedwithinframeofGSMlicensememorandumunderstandinginclud ing, Service offerings Avea hascompleteditsrelatedliabilitieswithrespecttocoverageat31December2004. be contributedbynationalroaming. than 10.000inhabitantsshallnotbetakenintoconsideration.ThiscoverageareareferstothecoveredbyAveaalone,andwill January 2001andatleast90%ofthepopulationTurkeywithinfiveyearsafter112001.However,localitieswherethereareless Avea has guaranteedandundertookto cover (upto2Wattoutdoors)atleast50%of the populationofTurkeywithinthreeyearsafter 11 Coverage area following year. Avea shallpay0,35%ofthegrosssalestoICTAascontributionshareICTA’sexpenses,latestonlastbusinessdayApril Contribution sharetotheICTA reporting purposes. subscribers fortheirlatepayments,indirecttaxes,financialobligationssuch as chargesandfees,theaccrualamountsaccountedfor Avea willpayanamountequalto15%ofthegrosssalesonamonthlybasisTreasury,exceptfordefaultinterestimposedtheir Fund payabletotheTreasury also requiredforanychangeofcontrol,beingatransfertheshares. Regarding transferofsharesregulationclausesatthedatetransactionwillbeapplied.TheapprovalCompetitionAuthorityis such issuesaredeterminate,GSM1800licensegiventothembyICTAiscancelled. related partiesofsuchanentity,tothecompaniesorsubsidiarieswhichisownedmanagedsomehowbyshareholdersentity.Incases Authorization Ordinance.However,notransfermaybemadetoanentitywhichalreadyhasaGSM900or1800licenseinTurkey, The AveaConcessionAgreementprovidesthatthelicensemaybetransferredwithapprovalofICTAandwithintermsof 760.320 correspondingto6%ofbiddingamountafterGSM900AdditionalFrequencyBandbyICTAonJune20,2008. Avea providedaperformancebondintheamountofUSD151.500.Avea,additionaltothatbond,amountingTRY The AveaConcessionAgreementprovidesthatthelicensefeeswerepaidattimeofissuanceoriginalagreement. Avea isalsocommittedtorenewthenetworkinlinewithtechnologicalimprovementsandinternationalagreements. together withallequipmentaffectingtheoperationofsystemandimmovablepropertiesusedbyAveatoICTAatnocost. units oftheGSM1800system,gatewayswitchboardsandcentralsubscriptionworkssystems(includingallkindstechnicalhardware), In the event of expiry or non-renewal, Avea is under an obligation to transfer the network management centre, being the central operation Avea concessionagreement(continued) 25. (Currency -inThousandsofTurkishLira(“TL”)unlessotherwiseindicated.Allothercurrenciesarealsoexpressedthousands) Notes totheconsolidatedfinancialstatementsforyearended31December2010 Commitments andcontingencies(continued) • Avea pays every month as the Treasury share, 15% of its monthly gross sales except the default interest imposed to its subscribers for for subscribers its to accounted forreporting purposes. imposed interest default the except sales gross monthly its of the amounts not paid within the specified term as well as the financial liabilities like 15% excises, duties and charges and the accrual amounts share, Treasury the as month every pays Avea • year’s investmentplanandreasons ofdeviation,ifany. costs withrespecttoexchangecenters, basestationsandcontroltobeestablished,aswell astherealizationratioofprevious to theICTA.Thisplanshallbeprepared forthreeyearsandshallincludesuchinformationasthenumber, location,coverageareas,investment • During the term of the Agreement, Avea shall each year submit its investment plan related to the subsequent calendar year, till 1 November granted withinthesaidperiod,Agreementmightbeterminated. confiscation offinalguaranteeasincomeisrealised,Aveashallgrant newfinalguaranteewithin30days.Shouldthefinalnot Should guarantee. the Aveaisunderstoodtonotperformitscontractualobligations, ICTAshallrecordandconfiscatethefinalguaranteeasincome.Insuch final as act to for fee, license the of 6% is which 12.840 Euro to amounting guarantee of letter bank a granted has Avea • share assignmentleadingachangeinthecontrolofAveashallbe subject totheapprovalofICTA. shares Avea of assignment each in ratio exceeding 10% to persons and entities other than the current shareholders and subsidiaries of the current shareholders. Any type of for ICTA the of approval the obtain shall Avea Agreement, the of signature the by years 5 first the Within • of TransportandCommunication. Ministry the of request the under situations emergency in used be to stations base mobile IMT-2000/UMTS of units 2 least at keep shall Avea • According tothisAgreement; on 30July2009. 214.000 excluding VAT. The term of the license is 20 years effective from the signature date of the Agreement. 3G services have been launched The ConcessionAgreementwithICTAhasbeensignedon30April2009andAveagranted3Glicenseforanamount ofEuro 3G Licenseauthorization license term. Avea willmaintainadequateallriskinsuranceforthetelecommunicationfacilitiesandservicesestablishedoperateduntilendof Insurance Upon terminationoftheAgreement,AveashalltransferallGSM1800systemequipmenttoICTAwithoutanyremuneration. iv) the MinistrytoAveaforuseinGSM1800System,andfailureofceasesuchactivitiesareasonableperiodtimegranted, ii) ii) i) Agreement attheendof90daysperiodgrantedtoAvea. the pointsofdisagreementwillberevisedatendprogramme.Ifthisprogrammeisnotacceptable,ICTAmaytermi nate the time, AveawillfurnishtotheICTAacorrectiveactionprogrammeforfulfilmentofitsobligations.IfthisisacceptedbyICTA, will be giventheopportunitytofulfilits obligations withina period not lessthan90daysof written noticeby the ICTA.Duringthisperiodof The ICTAmaycancelthelicenseorterminateAgreementforfollowingreasons,provided,however,thatexceptpoint(iv)below,Avea Termination oftheagreementbyICTA above willbeaddedtothetermoflicenseandincomesuchaperiod,ifany,belongAvea. permanently suspendallorapartoftheoperationalactivitiesAveaandmaydirectlyoperatenetwork.Theperiodsuspensionas If deemednecessaryforpublicsecurityandnationaldefenceincaseofwar,generalmobilization,etc.theAuthoritymaytemporarilyor Suspension ofoperations clause ofthecontractshastobepresentedICTAbeforesignatureprocedurescompleted. Avea mayenterintocontractswithotherlicensedGSMnetworksinTurkeyfornationalroamingpurposes.Roamingandthefinancial National roaming Agreement. costs. Within120daysofreceipttheinvestmentplan,ICTAwillapprovecomplianceplanswithcommitmentsgivenin locations oftheexchangestations,basestationsandcontroltobeestablished,periodoperation,investment years to the ICTA. These plans will be valid for 3 yearsand will contain information about the dynamic demand forecasts, and number and Pursuant totherelevantregulation,byfirstdayofSeptembereveryyear,Aveawillpresentitsinvestmentplanforfollowingcalendar Investment plans Avea concessionagreement(continued) 25. (Convenience translation ofareportoriginallyissuedin Turkish -Seeadditionalparagraph belowforconveniencetranslation andNote2.1) Determination that Avea extends its activities beyond the frequencies allocated hereunder or other frequencies that may be allocated by Determination thatAvea extends itsactivities beyondthefrequenciesallocatedhereunderor other frequenciesthatmaybe allocated by Failure ofAveatoperformitscontractualobligationshereunderandremedydefaultinareasonableperiodtimegranted, A finaljudgmentofthecompetentcourtsforinsolvencyAveaoritscompositionwithcreditors, Failure ofAveatopaythelicensefeeshereunder. Commitments andcontingencies(continued) (Currency -inThousands of TurkishLira(“TL”)unlessotherwiseindicated.Allothercurrenciesarealsoexpressedinthousands)

Notes totheconsolidatedfinancialstatementsforyearended31December2010

Türk Telekom CONSOLIDATED FINANCIAL STATEMENTS AND 2010 Annual Report 161 INDEPENDENT AUDIT REPORT Türk Telekom CONSOLIDATED FINANCIAL STATEMENTS AND 2010 Annual Report 162 INDEPENDENT AUDIT REPORT (Convenience translation ofareportoriginallyissuedin Turkish -Seeadditionalparagraph belowforconveniencetranslation andNote2.1) shall beappliedseparatelytoAveaforeachyear.Thisclauseisvalid forthefirstthreeyearsfollowingsignaturedateofAgreement. except fortheinvestmentsleaseofplace,towers,piles,pipes,containers, channels,energytransferlinesandsimilarinfrastructureplants, Should Aveanotperformthesaidobligations,apenaltyas40%of totalamountofitsinvestmentsinthenetwork(hardware,softwareetc.), monetary penaltyshallbeappliedtoAveaup1%ofitsturnover ofthepreviouscalendaryear. Should Aveaisunderstoodtoprocuregoodsandservicesthrough methodsagainsttheforegoingtermsandconditions,anadministrative auditing whendeemsnecessary.Thecoststoarisefromsuchaudits shallbebornebyAvea. ICTA mayperformauditsregardingtheexecutionofthisobligation ormaycommissionanotherorganizationinstitutiontoperformsuch All theindependentsoftwareandhardwareunitstobeusedin networkofAveashallhaveopeninterfaceconnectionswitheachother. system development. b) Toprocureatleast10%ofsuchinvestmentsfromthevendorsin quality ofSMEandestablishedinTurkeyforthepurposeproduct companies complywiththeforegoingtermsandconditions. Avea isobligedtoperformitsinvestmentsregardingtheelectroniccommunicationsnetworkbyauditinganddeterminingwhether vendor associates maynotexceed5%ofthetotalnumberengineersstatedabove. The universityassociatesmayalsobeemployedparttime,asengineerstobythevendorcompany.numberof established togetherwithothervendorcompaniesfunctioningininformationandcommunicationtechnologiesarea. Said organizationorinstitutionresidentinTurkeyshallnotemployotherR& establish withacompany,organizationorinstitutionresidentinTurkey.Thevendorcompanyshallhaveatleast50%shareofsuchcenters. A vendorcompanymaynotestablishtheR& the secondyearandatleast150engineersinthirdsubsequentyears. however suchcompanytoemployalsoaTechnicalAssistanceCentrewithatleast50engineersinthesaidfirstyear,100 after thesignatureofAgreement,atleast250engineersinsecondyearand350forthirdsubsequentyears the thirdandsubsequentyearsorfromvendorcompaniesemployingaR& such companyinthefirstyearaftersignatureofAgreement,atleast300engineerssecondand500for developing R& a) Toprocureatleast40%ofsuchinvestmentsfromvendorcompaniesemployingaR& software etc.); plants; eachyearAveashallfulfilthefollowingrequirementsforitsinvestmentsrelatedtoelectroniccommunicationsnetwork(hardware, Except fortheinvestmentsmadeinleaseofplace,towers,piles,pipes,containers,channels,energytransferlinesandsimilarinfrastructure The Investmentsforhardwareandsoftwarebeingusedintheelectroniccommunicationsnetwork years, thentheAgreementmightbeterminatedbyICTA. within theframeofRelevantLegislation.Ifthereisanydelayinfulfilmentcoverageareaobligationsforaperiodmorethantwo If thereisanydelayinfulfilmentofthe coverage areaobligations, except theforce major conditions, an administrative fine shall be applied Upon requestoftheICTA,yearlyutmosttwosettlingareasshallbecoveredwithprioritybyAvea. and standards,decisionsrecommendationsgivenbyITU. Avea shouldmaintainservicequalityinaccordancewithICTAregulations,ETSI(EuropeanTelecommunicationsStandardsInstitute)standards These aretheareaswhichtobecoveredbyAveaaloneandthisobligationshallnotfulfilledthroughroaming. - - - - Following thesignatureofAgreement,Aveashallhaveundercoveragepopulationwithinbordersof; Coverage AreaObligations: 3G Licenseauthorization(continued) 25. (Currency -inThousandsofTurkishLira(“TL”)unlessotherwiseindicated.Allothercurrenciesarealsoexpressedthousands) Notes totheconsolidatedfinancialstatementsforyearended31December2010 residential locationshavingapopulationofmorethan1.000within10years. all theresidentiallocationshavingapopulationofmorethan5,000within8years, all themunicipalitiesofprovincesanddistrictswithin6years, metropolitan municipalitieswithin3years, Commitments andcontingencies(continued) D projects in relation with the information and communication technologies provided at least 200 engineers functioning in D centre and Technical Assistance Centre together with another vendor company; but may D centreandTechnicalAssistanceCentretogetherwithanothervendorcompany;butmay D centre with at least 150 engineers functioning in the first year D centrewithatleast150engineersfunctioninginthefirstyear D centres and Technical Assistance Centres that have been D centresandTechnicalAssistanceCentresthathavebeen D centre established in Turkey and engaged in D centreestablishedinTurkeyandengaged tax audit report has been notified to Türk Telekom by 13 September 2010. tax auditreporthas beennotifiedtoTürkTelekom by13September2010. The Company’s2005,2006,2007and 2008financialperiodshavebeentaxauditedbyMinistryofFinance GeneralDirectorateofRevenueand Monetary penaltiesofMinistry Finance and investment infrastructure the to contribution as interest chargeshasbeenreflected toconsolidatedfinancialstatementsasat31December2010. Municipality Metropolitan İstanbul by Company municipality share is TL 23.091. A cumulative provision amounting to TL 58.696 (2009 – TL 66.050) including the nominal amount and legal the against filed amount Total Disputes betweentheCompanyandIstanbulMetropolitanMunicipa lity been providedintheconsolidatedfinancialstatementsforongoing cases. of thecourtsdecidedagainstCompanywhileremainingcases arestillongoing.ProvisionamountingtoTL13.908(2009-15.350)has on theBoardofDirectorsDecision.Accordingly,certainpartthose employeeshasfiledre-employmentlawsuitsagainsttheCompany.Most the contractsofemployeeswhoareentitledforpensionand areregardedasasurplustotheCompanyhavebeenterminatedbased In thescopeofongoingrestructuringpersonnelorganization oftheCompanyinordertoachievenumberpersonnelidentified, Disputes betweentheCompanyanditsformerpersonnel of interconnectionlegislation,legislationwithrespecttotelecommunication servicesandinfrastructure. with respecttotheotheroperatorsinmarket.Thesector-specific disputesgenerallystemfromtheobjectionswithrespecttoprovisions The CompanyhasfiledvariouslawsuitsagainstICTA.Theselawsuits arerelatedwiththesector-specificandtarifflegislationslegislations Disputes betweentheCompanyandICTA 2010. not accruedincomeaccrualforthiscasetobeprudent,sincetheissubjectappeal.Turkcellhasappealeddecisionon28January Protocol dated20September2003,adefaultpenaltyof10%shallalsobeapplied.Intheconsolidatedfinancialstatements,Companyhas the NetworkInterconnectionandCooperationAgreementsignedbetweenTurkcellCompanyamendedbyclauseIXof Annex the basis of Turkish Central Bank commercial advance interest rate as from the filing date namely 5 August 2005, according to clause 12.3 of default interest) to the Company. Furthermore, beside the default interest to be added to the principal amount which shall be calculated on Consequently, Turkcellwas condemned to paya total ofTL279.227,(TL137.733which is the principal amountand TL 141.494ofwhichisthe Ankara decidedunanimouslyinfavoroftheCompanyandpartiallyacceptedCompany’sclaims. amounting toTL450.931theCompany.Inhearingoflawsuitdated5November2009,7thCommercialCourtFirstInstance Germany by breaching the Network Interconnection and Cooperation Agreement between Turkcell and the Company and that caused damage The lawsuitwasfiledagainstTurkcellforthereasonthatcarriedvoicetrafficthroughMilleni.comGmbH,acompany based in The DisputearisingoutofTurkcell’sillegalvoicetrafficthroughMillenicom provided aprovisionforthisdisputeamountingtoTL28.844asat31December2010(2009-27.826)intheconsolidatedfinancialstatements. The CompanyandTurkcellhavedisputesoverinternationalinterconnectionleasedlinerateschargedbytheCompany.Co mpany Interconnection tariffandleasedlinedisputes Disputes betweenTürkTelekomandTurkcellİletişimHizmetleriA.Ş(“Turkcell”) of itsbusiness. From timetotheGrouphasbeen,andexpectscontinuebe,subjectlegalproceedingsclaimsarisinginordinarycourse Legal proceedingsofTürkTelekom blockages onthemandtheyarefreeofcostworksproblems. stated andintheusageofAveatoICTAorentityenouncesbymakingsurethatthereisnopledge,mortgage,levyandrelatedlegal system, softwaresaffectingtherunningofsystem(including(tower,beam,blare,container,channel,energytransmissionlines,antennaetc), of aterminationagreement.InthecasecancellationagreementbyICTA,Aveawillalienatealldataanddocumentswhichconstitute all the obligations within this period, the Agreement will be terminated by ICTA. The licence fee or any other fee is not reimbursable in case In suchcircumstances,ICTAgivesAveatheopportunitytofulfilitsobligationswithin90daysafterwrittennotice.casecannot - - - - - The AuthoritymightterminatetheAgreementforfollowingreasons; Termination oftheAgreementbyICTA: 3G Licenseauthorization(continued) 25. (Convenience translation ofareportoriginallyissuedin Turkish -Seeadditionalparagraph belowforconveniencetranslation andNote2.1) Avea not performing national roaming obligation stated in the contract. Avea notperformingnationalroamingobligationstatedinthecontract. Termination ofAveaConcessionAgreement, Avea operatingunderthefrequenciesotherthanonesallocatedtoitselfbyICTA, Avea notperformingsomeofitscontractualobligationsandcorrectingsuchbreachinthegivenperiod, A bankruptcyorbankrupt’scertificatedecisiononAveagivenbythejudicialauthorities, Commitments andcontingencies(continued) (Currency -inThousands of TurkishLira(“TL”)unlessotherwiseindicated.Allothercurrenciesarealsoexpressedinthousands) Notes totheconsolidatedfinancialstatementsforyearended31December2010

Türk Telekom CONSOLIDATED FINANCIAL STATEMENTS AND 2010 Annual Report 163 INDEPENDENT AUDIT REPORT Türk Telekom CONSOLIDATED FINANCIAL STATEMENTS AND 2010 Annual Report 164 INDEPENDENT AUDIT REPORT (Convenience translationof a reportoriginallyissued inTurkish-See additionalparagraph below forconvenience translationand Note2.1) compromise, TL 570 was paid to VD Directorate and TL 154 was paid to Istanbul Tax Administration Directorate at the date 20 September 2010. Concerning thesame issue, the law suits opened in the termswhich arenotincludedinthecompromisedtermwill continue. As aresult of the Avea has been compromised with the directorate of VD (Tax Administration Office) in the issue of VAT payments with the title of “responsible”. tax auditfortheperiodFebruary 2004 -July2009andsenttaxnotificationsamountingtoTL18.696 Aveaon21and22October2009. date ofthesefinancialstatements. CouncilofStatedecidedinfavorAveafor17courtcases.Furthermore, theMinistryofFinancemadea and inJune2007fullTL722.Avea filedcourtcasesagainsttheMinistryofFinance.Thehavenot beenconcludedasatthepreparation not did İş-Tim and in theirreportandissuedtaxnotifications. Thetotalamountoftaxnotifications,whichweresent toAvea,wereinDecember2006fullTL46 Aycell Since İş-Tim. and Aycell to issued invoices roaming on calculate 18%reversechargedVATovertheroaminginvoicesissued bytheforeignroamingoperators,MinistryofFinancecriticizedAvea audits tax made Finance of Ministry the 2007 and 2006 In • VAT,SCTandreversedchargedVAToninternationalroamingservices Monetary penaltiesofMinistryFinance 31.12.2010, themanagementofAveadecidedtonotrecordallowance forthepunishmentrelatedtolawsuit. was made.Thelawsuitacceptedandthetransactioncancelled basedonthedecisiondeclaredatOctober6th2010.Therefore,asof Regional AdministrativeCourtrejectedtheapplicationandCompany receivedtheofficialnoticeon30June2010.AtJuly15th2010,trial Avea lodgedalawsuiton9October2009forstayofexecutionand annulment oftheadministrativetransactionforatotalfineTL51.335. the of annulment that notified was It findings oftheMinistryrelevantissuewouldbecommunicated toICTAevaluatetheissue. 2009. October 6 on Governorship İstanbul by Avea administrative transactionforafineofTL3.216,whichwasissued duetotheLawNo.5809,wouldberepelledandthatitwasdecided upon served were which fines the to According and TL3.216relatedwiththeArticle9/A11/A,respectively,ofLawonProtectionConsumerRights. documents wererequired.Theauditwasconcludedin2009andAveapenalizedwithtwoseparateadministrativemonetaryfinesof TL 51.335 (Protection oftheConsumerRights)andrelevantregulations.TheinvestigationAvealasteduntilmid2009asadditionaldata The GeneralDirectorateforProtectionofConsumersandCompetitionrananauditattheend2008dependingonLaw No. 4077 Fines IssuedAgainstAveabytheMinistryofIndustryandTrade Legal proceedingsofAvea For the above-mentioned cases, provision amounting to TL 62.435 has been booked in the consolidated financial statements as at 31 December 2010. prepared in13September2010withintheframeworkoftaxauditsandaboutfinereleasesonsubjectshavebeenpointedoutabove. There hasbeenaninquiryforagreementafterconciliationbeforeassessmentin22September2010regardingdeclaredtaxthath as been be expenseorcostinincomeandcorporatetaxapplications. foresighted tobeimposed.Ontheotherhand,taxamountsinreportsthatarenon-deductiblepointedoutthey can beconsideredto 2007 and2008,willnotbeconsideredastaxdiscountsTL24.393ValueAddedTaxconciliationbeforeassessment36.601fineis rights ofusetoMinistryNationalEducationfreecharge.Valueaddedtaxesfortheconstructedschoolsthathavebeendonatedin2006, construction ofschools,sportandconferencehalls,dormitoriesattachmentstothesewhichtheirpassionbegiventheTreasury Based ontheprotocolsthataremadebetweenTürkTelekomandMinistryofNationalEducation,Companyhasundertaken the Donations madetotheMinistryofNationalEducation tax amounttoberefundedisTL10.902morethanimposedtherebythisshouldpaidbacktheCompan y. in 2006areforesightedtobewritten-off..Whentaxamountrefundedandimposediscompared,itunderstoodthat to berefundedtheCompany.Withinthisframe,extrataxamountofTL36.302thathasbeenpaidin2005and131.611 the Companyhasretrospectivelydeclaredabovementionedtaxesinfollowingyearsandtheseextrataxpaymentshavebeen decided 90.344 tax to be imposed with TL 135.516 tax fine and for the year 2006 TL 66.667 tax to be imposed with TL 100.000 tax fine. On the other hand, as abasefortaxcalculationinsteadofthegrosspaymenttoTreasury.Withinthisframeithasbeenforesightedthatyear2005TL dividend paymentstotheTreasury,whichwerenotdeclaredormadesubjectwithholdingtaxandalsonetpaymenthasbeenused Withholding incometaxestobeimposedtheCompanyhasbeenforesightedasaresultoffactsthatThemadeadvance • WithholdingIncomeTaxnotdeductedfromDividendPayments period, discountwillbetakenintoconsiderationasValueAddedTaxdeductible. apply ataxfineofTL71.331aboutthesereconciliationsbeforeassessment.Oncetheimposedisfinalizedtobepaidduringtaxation Total reconciliationbeforeassessmentvalueofValueAddedTaxfor2005,2006,2007and2008isassumedtobeTL47.554itdecided emerged consequenttothesetransactions,usingoffsettingme Commitments andcontingencies(continued) their fairvaluesat thedateofacquisition. finalized asof31 December2010andtheassets,liabilities andcontingentliabilities determinedbasedonIFRS3,have beenrecordedbasedon the for Şirketi Limited Hizmetleri Danışmanlık Pricewaterhousecoopers valuation ofpropertyplantequipment andintangibleassets,financialliabilitiesIRU’s& company assessment professional independent used Group The Cash andcashequivalentsacquired Cash considerationpaid Net cashoutflowarisingonacquisition Total consideration Goodwill Acquired netassets(100,00%) Other non-currentliabilities Deferred taxliability Due torelatedparties Other payables,provisionsandaccruedexpenses Trade andotherpayables Financial liabilities Deferred taxasset Intangible assets Property, plantequipment Other currentandnon-currentassets Inventories Trade andotherreceivables Cash andcashequivalents Net assetsacquired regional connectioncenterpositionoftheacquiredcompany.Thenetassetsintransactionandgoodwillarising,areasfollows: Euro 71.834isalsopaidincashtotheformershareholderstakeoverPantelGroup’sdebt.TTInternationalmadethisacquisitiondue Group (formerlynamed“InvitelGroup”)foraconsiderationofEuro135.591,allpaidincash.Atthedateacquisition,anadditionalamount On 7October2010,TTInternationalHoldingBV(“TTInternational”)whichisasubsidiaryoftheCompanyacquired100%sharesPantel Pantel Groupacquisition 26. for thesecases. cases, Grouplawyerscommentedthatbasisofthosecasesarenotrealisticandshouldbeappealed.Therefore,noprovisionhasbeenprovided assessments. The provision for such court cases is amounting to TL 41.326 as at 31 December 2010 (2009 – TL 13.281) (Note22).Fortherest of the Provision hasbeenprovidedintheconsolidatedfinancialstatementsforprobablecourtcasesagainstGroupbasedonthelawyers’ Other issues Avea hasaccountedforaprovisionJanuary2005–December2010periodinitsbooksamountingtoTL4.200asof312010. Avea respectively.willapplyforsettlementregardingthisdisputein1monthfromthereportdates. to Office Taxpayers Large and Office Tax İstanbul from 2010 November 12 and 2010 November 04 on officially announced were reports tax and amounts afterthediscount.On28September2010,AvearepresentativeshavesignedstatementspreparedbyController.Thetaxnotifications distributors bythecompanyinsaleofprepaidcardsandthatSpecialCommunicationTax(SCT)hasbeencalculatedover Revenue ControllersbeganauditingAveainOctober2009fortheyearof2005-ongroundsthatdiscounthasbeenapplied • SCTassessmentoverDiscounts Avea hasaccountedforaprovisionJuly2009–September2010periodinitsbooksamountingtoTL656asof31December2010. Directorate atthedate20September2010. has beenestablished.Asaresultofthecompromise,TL819waspaidtoVDDirectorateand41IstanbulTaxAdministration Directorate andIstanbulTaxAdministrationinthedatesof20August201030Septemberrespectively,andcompromise Avea madeasettlementrequestatNovember19th2009relatedtoSCT(communicationtax).CompromisemeetingswerewithBMVD Additionally, fortheperiodofSeptember2006–July2009itisrequiredtobepaidoriginalamountSCT(TL6.872). cases court 4 and Office Tax Corporate Boğaziçi against case against PresidencyofLargeTaxpayersOffice).Thecaseshavenotbeenconcludedasatthepreparationdatethesefinancialstatements. court (1 2009 November 19 on VAT for cases court 5 opened Avea send. not was 4.948 fortheperiodfromSeptember2006toJuly2009.ThisamountisnotdeductedAvea’saccumulatedVATreceivables,anddeclaration subscribers andcollectthemfromsubscribers.Basedonthisnotification,AveahasbeenaskedtopayfortheprincipalofVATamountingTL Value AddedTax(“VAT”)onchargespaidtointernationalGSMoperatorsforthecallsinitiatedbysubscribersabroad(roaming),chargeVAT Based ontheTaxInvestigationReportsfromPresidencyofLargeTaxpayersOffice21and22October2009.Aveashouldcalculate Legal proceedingsofAvea(continued) 25. (Convenience translationof a reportoriginallyissued inTurkish-See additionalparagraph below forconvenience translationand Note2.1) Business combinations Commitments andcontingencies(continued) (Currency -inThousands of TurkishLira(“TL”)unlessotherwiseindicated.Allothercurrenciesarealsoexpressedinthousands) Notes totheconsolidatedfinancialstatementsforyearended31December2010

3.701 the acquisitiondate Carrying amountat (118.002) (141.901) (19.784) (51.400) (13.484) (34.856) 166.181 135.903 298.083 30.107 31.942 21.197 27.845 531 RoW’s. The acquisition accounting has been RoW’s.Theacquisitionaccounting hasbeen adjustment Fair value (13.187) (32.971) (18.974) 12.968 (9.137) (127.139) 98.096 264.277 83.038 218.941 56.905 354.988 (547) (35.403) (2) (141.903) - 30.107 - (51.400) - (13.484) - 531 - 21.197 - 27.845 (237.871) 30.107 (267.978) 267.978 264.277 Fair value

Türk Telekom CONSOLIDATED FINANCIAL STATEMENTS AND 2010 Annual Report 165 INDEPENDENT AUDIT REPORT Türk Telekom CONSOLIDATED FINANCIAL STATEMENTS AND 2010 Annual Report 166 INDEPENDENT AUDIT REPORT (Convenience translation ofareportoriginallyissuedin Turkish -Seeadditionalparagraph belowforconveniencetranslation andNote2.1) Research anddevelopmentexpenses(-) General administrativeexpenses(-) Marketing, salesanddistributionexpenses(-) Cost ofsales(-) 28. None. 27. income statement. Total costofthePantelGroupacquisitionamountingtoTL5.407isrecordedundergeneraladministrationexpensesinconsolidated 187.959 andconsolidatedprofitfortheyearwouldhavebeenTL32.044more. income statement.IfTTInternationalhadmadetheacquisitionatbeginningofyear;consolidatedsalesrevenuewouldhavebeenTL From thedateofacquisition,PantelGrouphascontributedTL57.707consolidatedsalesrevenueand9.748lossesto Goodwill (excludingassembledworkforce) Assembled workforce Other intangibleassets Indefeasible rightofuses Customer relationships Customer contract Other longtermassets/(liabilities) Tangible assets Net workingcapital Asset andliabilityclass factor oftheassessedassetsandliabilitiesareadded/(deducted)to/fromthisrate,discountratesasfollows: values utilizingfinancialmarketdataandusedfordiscountingthisaftertaxeffectWACCdeterminedas11,2%.Whentherelativerisk During the acquisitionperiod about the assessed assets and liabilities cash flows income and expenses in thebusiness plan with predicted Pantel Groupacquisition(continued) 26. (Currency -inThousandsofTurkishLira(“TL”)unlessotherwiseindicated.Allothercurrenciesarealsoexpressedthousands) Notes totheconsolidatedfinancialstatementsforyearended31December2010 Operating expenses(includingcostofsales) Events afterthebalancesheetdate Business combinations(continued)

factor adjustment Relative risk (2,3)% (2,3)% (7,0)% 10,0% 21,2% 0,0% 11,2% 0,0% 11,2% 0,0% 11,2% 1,0% 12,2% 0,7% 11,9%

31 December2010 Post –taxrate 1 January– (8.005.867) (8.108.667) (1.493.116) (1.695.001) (1.571.606) (1.302.532) (4.917.512) (5.081.802) of return (23.633) (29.332) 8,8% 8,8% 4,2% 31 December2009 Cost ofdebt Cost ofdebt Cost ofdebt 1 January– Base rate WACC WACC WACC WACC WACC WACC Other operatingexpense(-) Other Special ConsumptionTaxandotherexpenses Litigation provisionexpense Other operatingincome Other Gain onscrapsales Indemnity income Income onreleaseofbaddebtprovision(Note8) Income fromlitigation Curtailment andsettlementgain 30. Total operatingexpenses Depreciation, amortizationandimpairment Total operatingexpenses(excludingdepreciationandamortizationexpense) Other expenses Doubtful receivableexpenses Satellite expenses Insurance expenses Stationary expenses Court expertexpenses Consulting expenses IFRIC 12expenses International interconnection Bill distributionexpenses Rent expenses Utilities Promotion expenses Advertisement expenses Commission expenses Taxes Domestic interconnection Repair andmaintenanceexpenses Personnel expenses 29. (Convenience translation ofareportoriginallyissuedin Turkish -Seeadditionalparagraph belowforconveniencetranslation andNote2.1) Other operatingincome/(expense) Operating expenses(basedontheirnature) (Currency -inThousands of TurkishLira(“TL”)unlessotherwiseindicated.Allothercurrenciesarealsoexpressedinthousands) Notes totheconsolidatedfinancialstatementsforyearended31December2010 31 December2010 31 December2010 1 January– 1 January– (1.872.633) (8.005.867) (1.523.538) (6.482.329) (604.148) (277.349) (126.752) (158.185) (108.613) (311.014) (287.287) (156.830) (392.799) (436.972) (720.792) (523.728) (335.512) (98.704) (32.681) (57.652) (13.001) (19.334) (50.419) (79.354) 563.267 176.049 185.691 (8.371) (7.607) 22.647 64.098 26.125 88.657 31 December2009 31 December2009 1 January– 1 January– (8.108.667) (1.557.418) (6.551.249) (1.889.121) (155.032) (127.190) (501.520) (362.547) (111.132) (149.425) (126.734) (277.584) (259.914) (131.936) (249.235) (391.675) (705.486) (800.282) (383.910) (20.575) (13.493) (25.090) (14.447) (63.277) (94.441) 493.581 132.608 179.862 (7.267) 21.295 73.020 34.656 52.140

Türk Telekom CONSOLIDATED FINANCIAL STATEMENTS AND 2010 Annual Report 167 INDEPENDENT AUDIT REPORT Türk Telekom CONSOLIDATED FINANCIAL STATEMENTS AND 2010 Annual Report 168 INDEPENDENT AUDIT REPORT (Convenience translation ofareportoriginallyissuedin Turkish -Seeadditionalparagraph belowforconveniencetranslation andNote2.1) comprehensive income. As of31December2010,deferredtaxamountingtoTL18.065(2009–6.754)wererecognizedintheconsolidatedstatement Deferred incometaxcredit(Note14) Current incometaxexpense Tax expense: Tax payable Prepaid taxesandfunds(-) Current corporatetaxprovision Corporate taxpayable: 32. Financial (expense)net Financial income Other Gain onderivativeinstruments Foreign exchangegains Interest incomeonbankdepositsanddelaycharges Financial expense Other Loss onderivativeinstruments Foreign exchangelosses Interest expense 31. (Currency -inThousandsofTurkishLira(“TL”)unlessotherwiseindicated.Allothercurrenciesarealsoexpressedthousands) Notes totheconsolidatedfinancialstatementsforyearended31December2010 Taxation onincome Financial income/(expense) 31 December2010 (624.867) 142.405 767.272 31 December2010 31 December2010 31 December2009 1 January– 1 January– (798.582) (765.343) (184.160) (608.565) (112.697) (168.839) (229.230) (581.053) (33.239) (97.799) 424.405 183.466 199.933 149.982 731.035 30.594 10.412 31 December2008 31 December2009 31 December2009 1 January– 1 January– (679.692) (731.035) (549.760) (438.376) (733.814) (161.195) (225.358) (265.604) (81.657) 643.642 295.438 201.860 51.343 93.882 23.519 60.515 9.544 Tax expensefortheyear - adjustmentsandtaxlossesofsubsidiariesnotsubjecttodeferred - deferredtaxassetrecognizedfromlossescarriedforwardbysubsidiaries - taxratedifferenceofsubsidiaries - expensesthatarenotdeductibleindeterminingtaxableprofit Tax effectsof: Tax atthecorporatetaxrateof20% Profit beforetax The reconciliationbetweentaxexpenseandtheproductofaccountingprofitmultipliedbyapplicableisasfollows: collected bytheendofsecondcalendaryearfollowingsale. be keptunderafundaccountintheliabilitiesandshouldnotwithdrawnfromenterprisefor5years.Thesalesamount shares andredeemedisexemptfromcorporatetax.Inordertobeablebenefittheexemption,relevantincomeshould Furthermore, 75%oftheincomederivedbyentitiesfromsaleparticipationshares,immovableproperty,preferentialrights,founders’ of investmenttrusts)derivedbyentitiesfromtheparticipationincapitalanotherresidententityisexemptcorporatetax. The dividendincome(excludingtheparticipationcertificatesofinvestmentfundsandprofitsharesderivedfromshare is notdistributedortransferredtoequity. in Turkeytoacorporationalsoresidentarenotsubjectincometax.Furthermore,taxiscalculatedcasetheprofit the onesexemptfromcorporateandincometax),aresubjecttoantaxof15%.Dividendpaymentsmadeacorporationresident Dividend paymentsmadetoresidentandnon-residentindividuals,legalentitiescorporationsinTurkey(exceptfor authorities caninspecttaxreturnsandtherelatedaccountingrecordsforaretrospectivemaximumperiodoffiveyears. Corporate taxlossescanbecarriedforwardforamaximumperiodoffiveyearsfollowingtheyearinwhichwereincurred.The taxes, asreflectedintheconsolidatedfinancialstatements,hasbeencalculatedonaseparate-entitybasis. In Turkey,thetaxlegislationdoesnotpermitaparentcompanyanditssubsidiariestofileconsolidatedreturn.Therefore,provisionfor and paidareoffsetagainstthefinalcorporatetaxliabilityforyear. for atemporarytaxof20%(2009–20%)tobecalculatedandpaidbasedonearningsgeneratedeachquarter.Theamountsthus month following the balance sheet date and taxes must be paid in one instalment by the end of the fourth month. The tax legislation provides In Turkey,thecorporationtaxrateis20%(2009–20%).Corporatereturnsarerequiredtobefiledbytwenty-fifthdayoffourth operate. The Group is subject to taxation in accordance with the tax regulations and the legislation effective in Turkey where the Group companies 32. (Convenience translation ofareportoriginallyissuedin Turkish -Seeadditionalparagraph belowforconveniencetranslation andNote2.1) Taxation onincome(continued) (Currency -inThousands of TurkishLira(“TL”)unlessotherwiseindicated.Allothercurrenciesarealsoexpressedinthousands) Notes totheconsolidatedfinancialstatementsforyearended31December2010 31 December2010 1 January– 3.127.006 798.583 144.788 625.401 29.547 (959) (194) 31 December2009 1 January– 2.359.967 679.691 174.188 471.992 33.511 - -

Türk Telekom CONSOLIDATED FINANCIAL STATEMENTS AND 2010 Annual Report 169 INDEPENDENT AUDIT REPORT Türk Telekom CONSOLIDATED FINANCIAL STATEMENTS AND 2010 Annual Report 170 INDEPENDENT AUDIT REPORT (Convenience translation ofareportoriginallyissuedin Turkish -Seeadditionalparagraph belowforconveniencetranslation andNote2.1) E. Offbalancesheetitemswithcreditrisk D. Carryingamountofassetsimpaired C. Carryingamountoffinancialassetsoverduebutnotimpaired B. Carryingamountoffinancialassetswithrediscussedconditions, A. Carryingamountoffinancialassetsnotoverdueorimpaired - Guaranteedportionofthemaximumrisk Maximum creditriskexposedtoasat31December2010(A+B+C+D+E) As of31December2010 Credit risk 33. Financialriskmanagementobjectivesandpolicies published intheOfficialGazetteno27456dated8January2010.Accordingly,Aveamayutilizethoseunusedincentivefuture. limit theuseofinvestmentallowanceincentive allowance withtheyears2006,2007and2008.Theannulmentdecisioniseffectiveafterbeing However on15October2009,theConstitutionalCourtdecidedtocancelphraseswhichabolishinvestmentallowancesafter2008and December 2005wouldbeabletoutilizetheirinvestmentallowancerightsonlyforincomegeneratedintheyears2006,2007,and2008. 24 April2003andtheprovisionsofamendedarticle19IncomeTaxLaw(amendedwithNo4842)thatwereeffectiveuntil31 The Lawforesawthatthetaxpayershaveinvestmentallowancerightsobtainedunderscopeofpreviousprovisionsvalidbefore December 2009-TL4.127)(Note25). however, suchinvestmentallowancesaresubjecttoawithholdingtax.At31December2010amountTL4.451(31 The investmentallowanceindicatedin(b)aboveisdeductiblefromcurrentorfuturetaxableprofitsforthepurposesofcorporationtax; b) Aninvestmentallowanceof100%onapprovedcapitalexpenditures. a) A100%exemptionfromcustomsdutyonmachineryandequipmenttobeimported, expenditures, whichentitleAvea,amongotherthings,to: Avea has obtained investment incentive certificates from the Turkish government authorities in connection with certain major capital Investment Incentives 32. (Currency -inThousandsofTurkishLira(“TL”)unlessotherwiseindicated.Allothercurrenciesarealsoexpressedthousands) Notes totheconsolidatedfinancialstatementsforyearended31December2010 - Impairment(-) - Overdue(grossbookvalue) - Amountsecuredviaguarantees that areconsideredoverdueorimpairedifnotrediscussed Taxation onincome(continued) - - - - 134.513 134.513 parties Related Trade receivables - (1.315.040) - 1.315.040 - 572.873 - 22.541 1.062.938 1.635.811 parties Third Receivables - - - - Related parties Other receivables ------(24.532) parties 34.417 34.417 24.532 Third ------1.217.548 1.217.548 Deposits at banks ------380.630 380.630 Other ------all financialassetsfromcarryingamountonconsolidatedbalance sheet. As of31December2010,thereisnosignificantcreditriskCompany. ThemaximumcreditriskCompanyexposure,isreflectedbypresenting have notbeenconsidered.Theagingforassetsoverduebutimpaired forhasbeenprovidedinNote8. When determiningthecreditriskexposureasatbalancesheet date,itemslikeguaranteesreceived,whichincreasethecreditworthiness assets byacustomerorotherpartyconstitutescreditrisk. Financial lossesduetoGroup’sreceivablesandfinancialassetswhich resultfromnotimplementingagreementclausesrelatedtofinancial E. Offbalancesheetitemswithcreditrisk D. Carryingamountofassetsimpaired C. Carryingamountoffinancialassetsoverduebutnotimpaired B. Carryingamountoffinancialassetswithrediscussedconditions,thatare A. Carryingamountoffinancialassetsnotoverdueorimpaired - Guaranteedportionofthemaximumrisk Maximum creditriskexposedtoasatthereportingdate(A+B+C+D+E) As of31December2008 E. Offbalancesheetitemswithcreditrisk D. Carryingamountofassetsimpaired C. Carryingamountoffinancialassetsoverduebutnotimpaired B. Carryingamountoffinancialassetswithrediscussedconditions, A. Carryingamountoffinancialassetsnotoverdueorimpaired - Guaranteedportionofthemaximumrisk Maximum creditriskexposedtoasat31December2010(A+B+C+D+E) As of31December2010 As of31December2009 Credit risk(continued) 33. Financialriskmanagementobjectivesandpolicies(continued) (Convenience translation ofareportoriginallyissuedin Turkish -Seeadditionalparagraph belowforconveniencetranslation andNote2.1) - Impairment(-) - Overdue(grossbookvalue) - Amountsecuredviaguarantees considered overdueorimpairedifnotrediscussed - Impairment(-) - Overdue(grossbookvalue) - Amountsecuredviaguarantees that areconsideredoverdueorimpairedifnotrediscussed (Currency -inThousands of TurkishLira(“TL”)unlessotherwiseindicated.Allothercurrenciesarealsoexpressedinthousands) Notes totheconsolidatedfinancialstatementsforyearended31December2010 90.992 - 90.992 92.944 - - - - 92.944 - - - Related parties Related parties Trade receivables Trade receivables - 28.446 - 515.250 - 49.227 - (1.228.656) - 1.228.656 - 452.998 - (1.058.918) - 1.058.918 1.396.175 1.325.873 880.925 871.988 parties parties Third Third 887 Receivables Receivables ------Related Related parties parties Other receivables Other receivables ------(24.891) (21.833) parties parties 33.309 33.309 67.188 24.891 67.188 21.833 Third Third ------Deposits Deposits 1.040.228 1.040.228 at banks at banks 752.609 752.609 ------151.726 151.726 109.342 109.342 Other Other ------

Türk Telekom CONSOLIDATED FINANCIAL STATEMENTS AND 2010 Annual Report 171 INDEPENDENT AUDIT REPORT Türk Telekom CONSOLIDATED FINANCIAL STATEMENTS AND 2010 Annual Report 172 INDEPENDENT AUDIT REPORT (Convenience translation ofareportoriginallyissuedin Turkish -Seeadditionalparagraph belowforconveniencetranslation andNote2.1) Derivative financialliabilities(net) Related parties Other payables Trade payables Obligations underfinanceleases Financial liabilities Non-derivative financialliabilities 31 December2008 Contract basedmaturitiesasat Financial guarantees Derivative financialliabilities(net) Related parties Other payables Trade payables Obligations underfinanceleases Financial liabilities Non-derivative financialliabilities 31 December2009 Contract basedmaturitiesasat Financial guarantees Derivative financialliabilities(net) Related parties Other payables Trade payables Obligations underfinanceleases Financial liabilities Non-derivative financialliabilities 31 December2010 Contract basedmaturitiesasat undiscounted payments(includinginterestnotdueyet). The tablebelowsummarizesthematurityprofileofGroup’sfinancialliabilitiesat31December2010and2009basedoncontractual financial assetsandliabilities. facilities andreserveborrowingbycontinuouslymonitoringforecastactualcashflowsmatchingthematurityprofileof The Groupmanagescurrentandlong-termfundingliquiditymanagementrequirementsbymaintainingadequatereserves,banking projections. The Group’sobjectiveistomaintainabalancebetweencurrentassetsandliabilitiesthroughclosemonitoringofpaymentplanscash Liquidity riskisuncertaintytocoverfuturefinancialobligations. Liquidity risk 33. Financialriskmanagementobjectivesandpolicies(continued) (Currency -inThousandsofTurkishLira(“TL”)unlessotherwiseindicated.Allothercurrenciesarealsoexpressedthousands) Notes totheconsolidatedfinancialstatementsforyearended31December2010 Book value Book value Book value 1.686.625 1.360.757 4.164.037 3.408.482 1.808.318 3.932.147 208.722 881.319 107.014 858.058 73.790 44.064 29.114 35.354 21.517 29.294 46.760 23.820 39.903 41.929 Total contract Total contract (=I+II+III+IV) (=I+II+III+IV) based cash based cash Total contract 1.686.625 1.360.757 4.203.676 1.808.318 4.009.136 outflow outflow (=I+II+III+IV) based cash 107.745 858.053 74.340 44.064 29.114 41.047 23.820 39.903 49.923 3.998.963 outflow 207.361 881.319 21.517 29.294 59.782 3 months(I) Less than3 months (I) 3 months(I) Less than 1.358.505 1.729.150 Less than 992.005 854.637 19.700 25.549 44.064 29.114 23.820 39.903 880.524 935.057 1.263 4.449 1.577 21.517 29.294 5.775 2.064 - months (II) months (II) months (II) 888.209 214.028 449.557 458.293 3 to12 3 to12 3 to12 21.876 58.054 29.625 4.438 1.305 6.250 3.416 5.932 6.352 795 ------years (III) 1.279.466 2.143.150 years (III) years (III) 1.777.671 1.851.921 1.224.614 161.888 26.915 28.613 49.691 29.488 30.472 1 to5 1 to5 1 to5 947 ------years (IV) years (IV) years (IV) 383.021 180.312 365.227 753.692 than 5 than 5 than 5 12.926 52.758 10.073 20.894 More More More 4.921 ------Minority putoptionliability(Note11) Options Swap transactions Financial liabilitiesatfairvaluethroughprofitorloss: Fair valuehierarchytableasat31December2009isfollows: Minority putoptionliability(Note11) Forward transactions Swap transactions Financial liabilitiesatfairvaluethroughprofitorloss Forward transactions Swap transactions Financial assetsatfairvaluethroughprofitorloss Fair valuehierarchytableasat31December2010isfollows: Level 3:Valuationtechniquesdoesnotcontainsobservablemarketinputs Level 2:Othervaluationtechniquesincludesdirectorindirectobservableinputs Level 1:Marketpricevaluationtechniquesforthedeterminedfinancialinstrumentstradedinmarkets(unadjusted) as follows: The groupclassifiesthefairvaluemeasurementofeachclassfinancialinstrumentsaccordingtosource,usingthree-levelhierarchy, Fair valuehierarchytable 33. Financialriskmanagementobjectivesandpolicies(continued) (Convenience translation ofareportoriginallyissuedin Turkish -Seeadditionalparagraph belowforconveniencetranslation andNote2.1) (Currency -inThousands of TurkishLira(“TL”)unlessotherwiseindicated.Allothercurrenciesarealsoexpressedinthousands) Notes totheconsolidatedfinancialstatementsforyearended31December2010

Level 1 Level 1 - - 1.414 - 72.376 - 3.383 - 202 - - 781 - 106.233 Level 2 Level 2 - 525.894 - 543.103 Level 3 Level 3 ------

Türk Telekom CONSOLIDATED FINANCIAL STATEMENTS AND 2010 Annual Report 173 INDEPENDENT AUDIT REPORT Türk Telekom CONSOLIDATED FINANCIAL STATEMENTS AND 2010 Annual Report 174 INDEPENDENT AUDIT REPORT Total (3+6+9) 9- Otherforeigncurrencyneteffect(7+8) 8- Portionprotectedfromotherforeigncurrency(-) 7- Otherforeigncurrencynetasset/liability Appreciation ofotherforeigncurrenciesagainstTLat1%: 6- Euroneteffect(4+5) 5- PortionprotectedfromEurorisk(-) 4- Euronetasset/liability Appreciation ofEuroagainstTLat1%: 3- USDneteffect(1+2) 2- PortionprotectedfromUSDrisk(-) 1- USDnetasset/liability Appreciation ofUSDagainstTLat1%: As of31December2009 Total (3+6+9) 9- Otherforeigncurrencyneteffect(7+8) 8- Portionprotectedfromotherforeigncurrency(-) 7- Otherforeigncurrencynetasset/liability Appreciation ofotherforeigncurrenciesagainstTLat1%: 6- Euroneteffect(4+5) 5- PortionprotectedfromEurorisk(-) 4- Euronetasset/liability Appreciation ofEuroagainstTLat1%: 3- USDneteffect(1+2) 2- PortionprotectedfromUSDrisk(-) 1- USDnetasset/liability Appreciation ofUSDagainstTLat1%: As of31December2010 held constant,oftheGroup’snetprofitforyear(duetochangesinfairvaluemonetaryassetsandliabilities): The following table demonstrates the sensitivity to a reasonably possible change in the USD and Euro exchange rate, with all other variables denominated borrowingsarestatedinNote7. The Grouphastransactionalcurrencyexposuresmainlywithrespecttothefinancialliabilitiesandtradepayables.Foreign Foreign currencyrisk 33. Financialriskmanagementobjectivesandpolicies(continued) (Currency -inThousandsofTurkishLira(“TL”)unlessotherwiseindicated.Allothercurrenciesarealsoexpressedthousands) Notes totheconsolidatedfinancialstatementsforyearended31December2010 (Convenience translation ofareportoriginallyissuedin Turkish -Seeadditionalparagraph belowforconveniencetranslation andNote2.1) (13) - (13) (10.687) - (10.687) (12.709) 1.656 (14.365) currency - (2) - (16.857) (18.904) currency Appreciation offoreign Appreciation offoreign (35.763) 35.763 (16.857) 16.857 (18.904) 18.904 (23.409) (2) 2 Profit/Loss Profit/Loss Depreciation offoreign Depreciation offoreign currency currency (1.656) 10.687 10.687 12.709 14.365 16.857 18.904 23.409 13 13 2 - - - - 22. FairvalueofFXswapfinancialinstruments (=1+2a+5+6a-10-11-12a-14-15-16a)* currency monetaryitems(IFRS7.B23) 21. Netasset/(liability)positionofforeign (9-18+19) 20. Netforeigncurrencyasset/(liability)position 19b. Totalliabilityamounthedged*** 19a. Totalassetamounthedged** sheet derivativeinstruments(19a-19b) 19. Netasset/(liability)positionofoffbalance 18. Totalliabilities(13+17) 17. Long-termliabilities(14+15+16) 16b. Non-monetaryotherliabilities 16a. Monetaryotherliabilities 15. Financialliabilities 14. Tradepayables 13. Short-termliabilities(10+11+12) 12b. Non-monetaryotherliabilities 12a. Monetaryotherliabilities 11. Financialliabilities 10. Tradepayables 9. Totalassets(4+8) 8. Non-currentassets(5+6+7) 7. Other 6b. Non-monetaryfinancialassets 6a. Monetaryfinancialassets 5. Tradereceivables 4. Currentassets(1+2+3) 3. Other 2b. Non-monetaryfinancialassets (Cashandbanksaccountsincluded) 2a. Monetaryfinancialassets 1. Tradereceivables Foreign currencyrisk(continued) 33. Financialriskmanagementobjectivesandpolicies(continued) (Convenience translation ofareportoriginallyissuedin Turkish -Seeadditionalparagraph belowforconveniencetranslation andNote2.1) (Currency -inThousands of TurkishLira(“TL”)unlessotherwiseindicated.Allothercurrenciesarealsoexpressedinthousands)

(3.576.385)(1.222.791) (3.526.925)(1.195.544)

TL equivalent 4.532.592 2.746.487 2.668.028 1.786.105 1.131.475 1.005.667 1.005.659 591.135 440.450 515.749 78.459 63.495 49.420 40 8 8 ------Notes totheconsolidatedfinancialstatementsforyearended31December2010 1.700.392 928.952 1.033.883 560.297 1.027.942 526.490 666.509 368.655 471.709 196.287 179.230 153.129 504.848 109.707 504.844 109.702 178.209 80.462 299.388 25.814 15.570 19.239 27.247 3.426 31 December2010 5.941 33.807 USD 4 4 ------(822.675) (819.245) Euro 5 4 1 ------GBP (78) 105 105 105 126 126 21 99 27 ------27 - Other (12) 12 42 12 12 54 54 27 ------TL equivalent (2.578.861) (1.002.627) (2.506.465) (954.069)(494.678) 2.899.848 1.161.334 1.813.808 713.255342.480 1.813.792 713.244342.480 1.086.040 448.079189.829 (107.014) (65.972) 107.014 65.972 159.082 77.39219.698 567.015 257.703 359.943 112.984 428.001 224.679 425.523 223.232 228.426 136.987 164.782 70.27827.294 32.315 15.967 2.478 2.303 175 16 ------31 December2009 1.447 1.447 USD 11 - (494.423) 532.309 (3.555) 82.855 87.276 41.441 41.339 10.256 3.555 3.789 Euro 102 21 81 - (486) (520) GBP 524 524 524 38 38 34 4 ------179 - 179 - - - - - Other (12) 171 183 12 12 12 4 4 ------

Türk Telekom CONSOLIDATED FINANCIAL STATEMENTS AND 2010 Annual Report 175 INDEPENDENT AUDIT REPORT Türk Telekom CONSOLIDATED FINANCIAL STATEMENTS AND 2010 Annual Report 176 INDEPENDENT AUDIT REPORT (Convenience translation ofareportoriginallyissuedin Turkish -Seeadditionalparagraph belowforconveniencetranslation andNote2.1) entered intointerestrateswaps.Thecarryingamountandthematuritiesofthesefinancialinstrumentshavebeenpresentedabove. The Groupissubjecttointerestriskduefinancialliabilitiesandfinanceleaseobligations.Inordercoverfortheserisks,thehas effected byTL193andadirecteffectonequitywouldbehigher/lower2.259(31December2009–4.876). On theothersidebecauseofhedging,ifbasepointinterestratehigher/lower0.25%,incomebeforetaxandminoritywillbe (31 December2009–TL5.863). variables heldconstant,theGroup’sincomebeforetaxandminorityinterestwouldbelower/higherTL7.391asof31December2010 If thebasepointofTLdenominatedinterestratesforfinancialinstrumentswithvariableratewashigher/lower0,25%,allother Financial liabilities Financial instrumentswithvariableinterestrate Financial liabilities Financial instrumentswithfixedinterestrate The interestraterisktableispresentedbelow: risk. Theseexposuresarepartiallymanagedbyinterestrateswaps. and futurecashflowsassociatedwiththesefinancialinstrumentswillnotfluctuateinamount.Therefore,theGroupisexposedtofairvalue The interest-bearingfinancialliabilitieshavevariableinterestrates,whereasthebearingassetsafixedrate attributable toitsborrowings. specific totheindividualsecurityoritsissuerfactorsaffectingallsecuritiestradedinmarket.TheGroup’s interest rateriskisprimarily The valueofafinancialinstrumentwillfluctuateasresultchangesinmarketpriceswhetherthosearecausedbyfactors Interest raterisk summarised below. liquidity risk,foreigncurrencyriskandcreditrisk.Theboardreviewsagreestopoliciesformanagingeachoftheseriskstheyare financial instruments shall be undertaken. The main risks arising from the Group’s financial instruments are cash flow interest rate risk, liabilities suchastradereceivablesandpayables,whicharisedirectlyfromitsoperations.ItistheGroup’spolicythatnotradingin main purposeofthesefinancialinstrumentsistoraisefundsfortheGroup’soperations.TheGrouphasvariousotherassetsand The Group’s principal financial instruments comprise forward market transactions, bank loans and cash and short-term deposits. The Financial riskfactors 33. Financialriskmanagementobjectivesandpolicies(continued) (Currency -inThousandsofTurkishLira(“TL”)unlessotherwiseindicated.Allothercurrenciesarealsoexpressedthousands) Notes totheconsolidatedfinancialstatementsforyearended31December2010 31 December2010 2.956.426 1.207.608

31 December2009 2.198.589 1.733.558

changes weremadeintheobjectives,policiesorprocessesduringyears2010and2009. To maintainoradjustthecapitalstructure,Groupmaydividendpaymenttoshareholdersreturnshareholders.No the remainingofshort-termloansduringyear2009. restructured its debt obligations through replacing the majority of the short-term loans with long-term ones and further to this rolled over The Group manages its capital structure and makes adjustments to it in light of changes in economic conditions. In this respect the Group order tosupportitsbusinessandmaximizeshareholdervalue. The primaryobjectiveoftheGroup’scapitalmanagementistoensurethatitmaintainsastrongcreditratingandhealthyratiosin Capital managementpolicies (*) Group’sshareinCeteliscarriedatcost.Informationonfairvalueof isnotavailable. Other currentandnon-currentliabilities Trade andotherpayables Financial liabilities Financial liabilities Other financialinvestments Other currentandnon-currentassets related parties) Trade andotherreceivables(including Cash andcashequivalents Financial assets estimated marketinterestrates. fair valueofforeigncurrency denominated borrowingswithvariableinterestsisobtainedbydiscountingtheprojectedcashflowsusing fixed interests is obtained by calculating their discounted cash flows using the market interest rate effective at the reporting date. The Due totheirshort-termnature,thefairvalueoftradeandotherreceivablesrepresents their bookvalue. The fairvalue of borrowings with consolidated financialstatements. The below table summarizes the carrying and fair values of financial asset and liabilities not presented at fair value in the Group’s Explanation onthepresentationoffinancialassetsandliabilitiesattheirfairvalues 33. Financialriskmanagementobjectivesandpolicies(continued) (Convenience translation ofareportoriginallyissuedin Turkish -Seeadditionalparagraph belowforconveniencetranslation andNote2.1) (Currency -inThousands of TurkishLira(“TL”)unlessotherwiseindicated.Allothercurrenciesarealsoexpressedinthousands) Notes totheconsolidatedfinancialstatementsforyearended31December2010 Current period 1.082.105 1.696.947 4.164.034 1.806.889 1.219.007 421.831 11.840 Book value Prior period 1.096.404 1.195.089 3.932.147 1.521.152 249.298 753.693 11.840 Current period 1.082.105 1.696.947 4.170.459 1.806.889 1.219.007 421.831 Book value (*) Prior period 1.096.404 1.195.089 3.953.298 1.521.152 249.298 753.693 (*)

Türk Telekom CONSOLIDATED FINANCIAL STATEMENTS AND 2010 Annual Report 177 INDEPENDENT AUDIT REPORT