Turkcell the Digital Operator

Turkcell Annual Report 2018 About Turkcell

Turkcell is a digital operator headquartered in Turkey, serving its customers with its unique portfolio of digital services along with voice, messaging, data and IPTV services on its mobile and fixed networks.

Turkcell Group companies operate in 5 countries – Turkey, Ukraine, Belarus, Northern Cyprus, Germany.

Turkcell launched LTE services in its home country on April 1st, 2016, employing LTE-Advanced and 3 carrier aggregation technologies in 81 cities. Turkcell offers up to 10 Gbps fiber internet speed with its FTTH services. Turkcell Group reported TRY 21.3 billion revenue in FY18 with total assets of TRY 42.8 billion as of December 31, 2018.

It has been listed on the NYSE and the BIST since July 2000, and is the only NYSE-listed company in Turkey. Read more at www.turkcell.com.tr/english-support

All financial results in this annual report are prepared in accordance with International Financial Reporting Standards (IFRS) and expressed in Turkish Lira (TRY or TL) unless otherwise stated. TABLE OF CONTENTS

TRY Turkcell Group 16 Chairman’s Message 21.3 20 Board of Directors 22 Message from the CEO billion 26 Executive Officers 28 Top Management of Subsidiaries REVENUES 30 Turkcell Group 31 Our Vision, Target, Strategy and Approach 32 2018 at a Glance 34 2018 Highlights 36 The World’s 1st Digital Operator Brand: Lifecell 37 Turkcell’s Digital Services

2018 Operations 38 Exemplary Digital Operator 40 Our Superior Technology 41.3% 46 Our Consumer Business EBITDA 52 Our Corporate Business MARGIN 56 Turkcell on Communication 60 Our Digital Services 76 Turkcell Sales Channels 78 Carrier Relations and Wholesale 79 Customer Experience Focus 83 Successful Finance Management 84 Social Responsibility 94 Sponsorships 98 Human Resources 106 Turkcell Academy 112 Our Subsidiaries 49 118 Awards

million Corporate Governance 123 Investor Relations GROUP 126 Credit Ratings SUBSCRIBERS 127 Important Developments after the Reporting Period 130 2018 Financial Year Corporate Governance Principles Compliance Report 142 Other Issues Regarding Corporate Governance 143 Conclusion of the Subsidiary Report

Sectoral and Financial Information 144 Telecommunications Sector in Turkey 145 Developments in Our Companies 150 Turkcell Group: 2018 Financial & Operational Review 154 Forward Looking Statements 86 155 Review of Risk Assessment million 157 Independent Auditor’s Report and Consolidated Financial Statements 278 Our Offices DIGITAL 279 Glossary SUBSCRIBERS

You can have access to the Digital Annual Report with the QR Code. This is what drives the technology we have developed over the last 25 years: #senyapdiye The world’s (for you to DO it) first digital operator The world’s first digital operator

We have concluded a quarter century on our journey we embarked on by introducing Turkey to first mobile phone call. Through our investments and digital transformation strategy, we have transformed ourselves from a traditional telecom operator into the first Digital Operator in the world. Working passionately for 25 years and achieving many industry firsts, we offer globally innovative products and services that enable our customers to make the most of the communication and digital solutions of the modern era.

TRY Record revenue with 49% two-year billion21.3 cumulative growth

Strong mobile ARPU* growth 15% *Excluding M2M

TRY Record EBITDA with 90% two-year billion8.8 cumulative growth Strong growth through digital transformation

We became the world’s first digital operator thanks to our digital transformation strategy. We continued our strong growth and achieved record results, despite significant macroeconomic volatility. We inspired our global competitors with our digital services, which enrich the lives of our customers, and with our innovative approach. 6 TURKCELL ANNUAL REPORT 2018 TURKCELL ANNUAL REPORT 2018 7 The relationship of a telecom operator with its customers is limited to 31 minutes of inbound/outbound calls in a day… We, on the other hand, take important steps to be relevant to our customers at every one of 1440 minutes each day with our products and services. For example, currently, in addition to an average 31 minutes of inbound/outbound calls, we touch our customers’ lives each day for 81 minutes with TV+, 48 minutes with fizy, and 18 minutes with Dergilik.

Adding value to every minute of life

Average data consumption per 8 GB 4.5G user

Digital million86 subscribers Digital exports to the entire world

Number of countries where our digital 192 services are downloaded

Downloads of our digital services 169million As a company innovation underscores what we are. We have begun to export our digital services and knowledge in this key area to the entire world with our lifecell Ventures subsidiary. Thus, we contribute to our country’s goal of ranking among the world’s 10 largest economies working towards the vision of developing Turkey into a globally respected technology producer. 10 TURKCELL ANNUAL REPORT 2018 Our new generation payment platform, Paycell, has brought a breath of fresh air to payment systems. We deliver fast and easy payment services to over 3 thousand member-merchants and more than 5 million users. Facilitating the lives of our customers with innovative solutions such as Paycell card, mobile wallet and direct billing, Paycell continues to enjoy steady growth. Meanwhile, Financell, our other brand in techfin solutions, makes our customers’ lives easier enabling them to access all kinds of technology products by supporting them with the loans it provides.

Paycell users +5million

Financell loan TRY 4.2 billion portfolio Techfin solutions that make a difference TURKCELL ANNUAL REPORT 2018 11

Techfin solutions that make a difference 12 TURKCELL ANNUAL REPORT 2018 A major step in social responsibility with Turkcell Foundation TURKCELL ANNUAL REPORT 2018 13 Each year, we allocate 1% of our revenues to corporate social responsibility activities that invest in society. We established Turkcell Foundation to focus our efforts in this area under a single roof and enable our social responsibility projects to create stronger, more effective, efficient, transparent and higher social benefit. 14 TURKCELL ANNUAL REPORT 2018 We maintained our leadership of the Net Promoter Score thanks to our efforts focused on customer satisfaction. The quality of our 4.5G network played an important role in our high Net Promoter Score. In the report published by the Global Mobile Suppliers Association, we ranked among the best in the world with our 4.5G network.

Leadership continues in Net Promoter Score

Turkcell score points25

Over the next points13 best competitor

Over the third points23 best competitor TURKCELL ANNUAL REPORT 2018 15 16 TURKCELL ANNUAL REPORT 2018

CHAIRMAN’S MESSAGE

We continued to enrich our customers’ lives through our telecommunications and digital services, and to create value for them, through our investments during the year.

Dear Shareholders, FOR TURKEY’S DATA TO REMAIN IN TURKEY…

We concluded a year shaped by challenging As Turkcell, we have always embraced the macroeconomic developments on both global and responsibility of being Turkey’s first mobile operator, local fronts. In 2018, we witnessed conflicts between and a group that introduces customers living in our Atlantic and Pacific regions, acceleration in trade countries of operation to the advantages of the wars to an extent that raised concerns over the communication world. And so, over the past 24 years, future of global trade and capital outflows from the we have continued to introduce our customers to The high-quality emerging markets. While Turkey, as one of the world’s innovative products and services by deepening and standards we have 20 largest economies, had its share of this economic diversifying our expertise based upon the latest achieved and the firm and political volatility, which impacted global trade technologies. The high-quality standards we have steps we have taken in general, it also continued its struggle to eliminate achieved and the firm steps we have taken in line in line with our targets the regional terrorism threat triggered by external with our targets confirm that we have successfully confirm that we have interventions. These developments led to significant met the responsibility of “being the first” and “being a successfully met the economic fragility in the second half of 2018. With brand born of this country.” responsibility of “being sound and timely steps taken by the government, a the first” and “being new economic route has been established focused Today, we are entering a new era, named Industry a brand born of this on increasing savings and exports, and the fight 4.0, through digital transformation taking place on country.” against inflation. Thus, began the stabilization period a global scale. As Turkcell, we continuously work in the economy, with critical and positive results being to position ourselves in the best possible manner achieved towards the end of the year. during this transformation process, and to offer our customers a rich customer experience. In addition As Turkcell, we continued to work passionately to to traditional telecommunication services, today, serve our country and our shareholders to the best we offer digital services meeting customer needs in extent possible, leveraging our group synergy and almost all fields, from messaging to entertainment, investing great effort, without succumbing to difficult from music to publishing, from payment systems to conditions. We are proud to sustain our commitment search engine, and from e-commerce solutions to to creating value for our shareholders, a result of our online storage solutions, leveraging our strength in R&D successful operations in 2018. and our innovative vision. Most importantly, we keep the data of all these services in Turkey in line with Through our investments in 2018, we supported the our goal of ensuring that “Turkey’s data remains in journey of Turkey and the countries in which we operate Turkey.” As may be recalled, we previously established towards embracing the future with technology. We our world-class data center in Gebze equipped with continued to enrich our customers’ lives through our the latest technology and security facilities in 2016. telecommunications and digital services, and to create Meanwhile, the data center we opened in İzmir last value for them, through our investments during the year gave us the ability to provide resilient services year. As Turkcell Group, we took firm steps towards addressing needs for geographical redundancy and strengthening corporate credibility further, based on trust capacity. and financial success. In the upcoming period, we will continue to develop innovative products and services We started to achieve the position that we deserve in that will fully reflect the message and responsibilities the digital world with services that run on this robust of the Turkcell brand from the perspective of our infrastructure. We now export this model, which has customers, and will continue our investments to make our recently made a strong contribution to our growth, to competitive advantage sustainable on a global scale. the world with our lifecell Ventures subsidiary. Over the coming period, we will expand our digital export efforts, which we started in early 2018, and continue to contribute to growth of our country through our digital services. TURKCELL GROUP 17 ANNUAL REPORT 2018 REPORT ANNUAL TURKCELL IN ACCORDANCE WITH SOCIAL RESPONSIBILITY RESPONSIBILITY SOCIAL WITH ACCORDANCE IN TURKCELL… BEFITS THAT In 2018, as Turkcell Group, we took pride in pride in took we Group, as Turkcell In 2018, social results-oriented many implementing of in the light activities, and sponsorship responsibility society. Turkish to widely contributing to approach our important the most one of In this context, of the establishment was 2018 of developments responsibility social bring our to Foundation Turkcell more stronger, create they where a point to projects social and higher transparent efficient, effective, donations, other as our as well forward, Going benefit. the Turkcell donation to an annual will also make we by determined within the framework Foundation our both serve to will continue We shareholders. our Foundation, and the humanity with Turkcell country the of and credibility the strength by supported ensure to will work we roof, its Under brand. Turkcell scientists support for and cultural social economic, in that will a crucial role play force and a skilled labor rather producer, a technology into Turkey developing it. of solely a consumer technologies infrastructure of which was provided by by provided which was of infrastructure technologies 7 Fully and only “Level as the first registered was Turkcell, in 2018. in Europe Hospital” Digital consumer our introduce to will continue we As Turkcell, geographies diverse across customers and corporate and services products new to and the world, in Turkey in accordance value at bringing added aimed sustainable supporting Turkey’s of target with our the out carrying In addition to journey. development will we determination, 5G with great to transition a diversity to contributions valuable offer to continue in the light automotive, to healthcare from sectors, of Turkey make solutions to communication integrated of worldwide. prominent more people and the Turkish WE INTRODUCE VALUE-ADD FOCUSED FOCUSED VALUE-ADD INTRODUCE WE PEOPLE. THE TO TECHNOLOGIES Our 4.5G network, one of the key components of of components the key one of 4.5G network, Our to continued process, transformation digital our and internationally. locally quality both its demonstrate for in the world the best one of named was Turkcell Report Status Global in May 2018 4.5G network, its Mobile Suppliers (Global the GSA by published where report, the May 2018 to According Association). point as a reference taken were networks Gigabit LTE announced, were networks download and the fastest was operator, digital first the world’s Turkcell, operators, fastest two the world’s as one of presented 1.2 Gbps. of speed with a connection 4.5G on our achieved the success replicate to In order throughout activities our continued we in 5G, network In alliances. and international launching local the year achieved we this year, conducted that we the tests to which is difficult Gbps, 70 of speed a download will 5G technologies technologies. today’s given reach smart from sectors in various services numerous allow health to transportation and from agriculture, to cities will maintain we that as Turkcell and I believe services, with our services these of in the provision leadership our capabilities. digital our solutions to end-to-end offer to continued We technological all their meeting customers, corporate and IT solutions Integration Digital through needs While vision. operator digital our of within the scope year, last in this area 200 projects implemented we We 550. exceeded in 2018 projects of the number with project the City Hospitals support for our maintained the same roof. under dedication of the same degree started City Hospitals that Elazığ and Eskişehir note We were we In this respect, in 2018. patients accept to the information City Hospital, that Yozgat also proud One of the most the most One of developments important the was 2018 of Turkcell of establishment bring to Foundation responsibility social our where a point to projects stronger, create they efficient, effective, more and higher transparent benefit. social 18 TURKCELL ANNUAL REPORT 2018

CHAIRMAN’S MESSAGE

We will continue to offer solutions for all aspects of life in accordance with our long-term goals, leveraging the strength of our solid technological infrastructure and qualified human capital.

Within the scope of the Whiz Kids Project that we Following the Hello Hope Mobile Application, which initiated in the education field, which is among the key we developed to meet our Syrian guests’ social needs, focus areas of our social investments, the number of particularly language learning, and to support their We set out to explore laboratories that we established in 27 provinces has adaptation to social life, we launched the Hello Hope the sporting talents and reached 33, and the total number of students reached Technology Center at the Kahramanmaraş Temporary potential of 2 million 500 during the three-year period exceeded 30 thousand. Housing Center. Thanks to the free of charge fiber thousand children through The project is conducted under the auspices of internet connection service at the center, our Syrian the Turkey Athletic Talent the Ministry of National Education with the aim guests have the opportunity to access various Turkcell Screening and Orientation of introducing students with special talent to new services, in addition to learning Turkish. to Sports Project, which generation technology and training. we supported under the WE WILL CONTINUE TO WORK WITH THE SAME auspices of the Ministry Through the Education without Boundaries Program DETERMINATION FOR OUR PEOPLE AND OUR of Youth and Sports and that we have been conducting since 2015, we have COUNTRY. the Ministry of National reached out to over 10 thousand disabled students Education. in need of special education at 84 schools in 45 As the Board of Directors and Management Team, provinces. We encouraged the development of we are aware of the significance of Turkcell’s our disabled citizens’ social skills, and their greater innovative products and services for the sustainable participation in social life through our “Academy development of our country, and for our customers’ without Boundaries” and “Turkcell Dialog Museum” access to communication and the digital solutions projects. We enabled our disabled citizens to establish of the modern era. In this respect, we will continue a stronger bond through the excitement and joy of to offer solutions for all aspects of life in accordance sports, providing sponsorships again in 2018 to the with our long-term goals, leveraging the strength of Blind Sports Federation, the Hearing-Impaired Sports our solid technological infrastructure and qualified Federation, the Physically Disabled Sports Federation human capital. and the Special Athletes Federation, both at national team and league level. I would like to thank all our business partners and employees, and particularly our shareholders, who We set out to explore the sporting talents and became part of the achievements registered by potential of 2 million 500 thousand children through Turkey’s pride, Turkcell, in 2018 with their effort the Turkey Athletic Talent Screening and Orientation and support. We will continue to work with full to Sports Project, which we supported under the determination in the upcoming periods to make our auspices of the Ministry of Youth and Sports and shareholders’ savings more valuable, and to support the Ministry of National Education. We offered our the sustainable development of our country, and the technological strength to serve Turkey, in the area of welfare of our people. sports with the aim of investing in the future of Turkish sports, strengthening its infrastructure, and ensuring Respectfully yours... that youth grow up in touch with sporting activity.

Through the “Women Developers of the Future” project, which we initiated together with the TOBB Women Entrepreneurs Council, seeking to contribute to Turkey’s digital transformation through women’s AHMET AKÇA employment in line with our 2023 targets, we Chairman of the Board of Directors provided mobile application development training to approximately 1,400 women across 18 provinces in Turkey. I can proudly state that, as the first tangible output of the project, we employed 100 women, who attended these trainings, as remote testing experts. TURKCELL GROUP 20 TURKCELL ANNUAL REPORT 2018

BOARD OF DIRECTORS

4 3 1 2 6 5

AHMET AKÇA (1), ATİLLA KOÇ (2), MEHMET HİLMİ GÜLER (3) MUSTAFA KIRAL (4), HASAN TUVAN YALIM (5) , INGRID MARIA STENMARK (6) TURKCELL GROUP 21 ANNUAL REPORT 2018 REPORT ANNUAL TURKCELL ** ** ** Hasan Tuvan Yalım was appointed to the Turkcell Board of Directors Directors of Board the Turkcell to appointed was Yalım Hasan Tuvan Mr. 2009, 2004 to From in 2018. Assembly decision the General by Swaine law firm Cravath, at the U.S. as an attorney served Yalım & acquisition and merger finance various led he where & Moore as international He worked Asia and the U.S. in Europe, transactions and led 2014 to 2010 from Group the Çukurova of counsel general arbitration multinational complex in many team legal Çukurova’s in several in landmark decisions which resulted and litigation cases of As the partner and Switzerland. U.S. including U.K., the jurisdictions, at as an attorney serve to continues Yalım Mr. Office, Law the Kabine finance arbitration, in international specializing counsel law and legal and corporates numerous represents currently He law. and corporate arbitration and investment commercial individuals in international High Galatasaray from graduated Yalım Hasan Tuvan proceedings. (LL.B.) degree Laws of a Bachelor obtained and subsequently School (LL.M.) degree Laws of and a Master University Galatasaray from School. Law Harvard from Ingrid Maria Stenmark Member Board of Board the Turkcell to appointed was Ingrid Maria Stenmark is Stenmark Ms. in 2018. Assembly decision the General by Directors Ethics Risk Management, Enterprise Strategy, Group for responsible In Company. at Telia Audit Internal and overseeing and Compliance in operations the associate for she has the responsibility addition, Stenmark Ms. in 1994, Company joining Telia Since and Latvia. Turkcell including Head in the Group, positions senior of has held a number and responsible Counsel, General acting affairs, Regulatory Group of as a served Stenmark Ms. and MegaFon. Turkcell the associates for holds a Master Stenmark Ms. and MegaFon. Kcell of member board Stockholm. of the University law from of Mustafa Kıral Mustafa Member Board by Directors of Board the Turkcell to appointed was Kıral Mustafa in he served During his career, in 2018. Assembly decision the General has He and acquisitions. mergers overseeing for responsible Altimo, He also years. in recent deals key the company’s some of on advised McKinsey, to Prior & Company. McKinsey of offices in various served in San Exchange Stock in the Pacific maker market a was Kıral Mr. Partner a Senior He is currently options. technology trading Francisco, a BS in received Kıral Mustafa UK. in London, Technology at LetterOne and an Austin at Texas of the University from Engineering Mechanical at Berkeley. California of University from Engineering MS in Biomedical Yalım Tuvan Hasan Member Board of March 2018, they were appointed as Board Members to serve for 3 years. for serve to Members as Board appointed were they 2018, March of th * period of the Grand National National the Grand of period rd * * and 23 nd Governments. Mehmet Hilmi Güler graduated graduated Hilmi Güler Mehmet Governments. th and 60 th , 59 Government. Atilla Koç graduated from Ankara University’s University’s Ankara from graduated Koç Atilla Government. th th from Middle East Technical University’s Department of Metallurgical Metallurgical of Department University’s Technical Middle East from and his Master’s he obtained where Engineering and Materials degrees. Doctorate * The Board Members who were appointed by the Capital Markets Board as “Independent Board Members” pursuant to Article 17, second paragraph, of the Capital Markets Law Markets the Capital of paragraph, Article second to 17, pursuant Members” Board as “Independent Board Markets the Capital by appointed who were Members Board * The 11, 2013. March dated was CMB decision The No.6362. 29 dated Assembly Meeting General at Ordinary taken the decision of the scope ** With Mehmet Hilmi Güler was appointed as an independent member member as an independent appointed was Hilmi Güler Mehmet Board Markets Capital by Directors of Board the Turkcell to and Engineer as a Project worked He formerly 2013. in March also Güler Mr. Industries. Aerospace Chairman at TUSAŞ Group and the Scientific of Member and Board President as Vice served as Chairman (TUBİTAK), Turkey of Council Research Technological Industries and Chemical the Machines of Manager and General Etibank, and Chairman of Manager as the General (MKEK), Board and as Board the Prime Minister, to Undersecretary as the Chief Güler Mr. at ERDEMİR and İGDAŞ. Director and Executive Member in the Resources and Natural Energy of as Minister also served 58 Atilla Koç was appointed as an independent member to the the to member as an independent appointed was Koç Atilla 2013. in March Board Markets Capital by Directors of Board Turkcell and Interior, of at the Ministry as an Undersecretary Having worked of Governor as the District he served in Konya, Police of as Chief of and as the Governor districts, Nusaybin and Bayındır the Ulubey, the Prime Minister’s He has also been provinces. Siirt and Giresun Metropolitan Ankara of Secretary the General Undersecretary, as served Koç Mr. Then, Governor. and the Central Municipality, in the 22 Deputy AKP Aydın Atilla Koç Atilla Member Board Independent Ahmet Akça was appointed as an independent member to the the to member as an independent appointed was Akça Ahmet in March Board Markets Capital by Directors of Board Turkcell Chairman of serving as the been he has 2013, August Since 2013. served Akça Mr. 1988, to 1981 From Directors. of Board the Turkcell in glass companies reputable in two Manager Trade as a Foreign an international of the CEO he became In 1988, industry. and food his started He later 1992. he held until position a company, trade Lojistik A.Ş and Tedarik Tic. ve Hizmetleri Lojistik Akça business, own also Akça Mr. runs as the Chairman. which he still A.Ş. Hizmetleri at Directors of Board at the member as an independent serves Mathematics at Middle studied Akça Mr. May 2018. since BİM A.Ş. a for University Istanbul at and Sociology University Technical East Economics of the Department from and graduated period, certain Academy. Sciences and Commercial at Bursa Economics Ahmet Akça Akça Ahmet Member Board and Independent Chairman the Board of Assembly of Turkey and as Minister of Culture and Tourism in the in the and Tourism Culture of and as Minister Turkey Assembly of 59 Mehmet HilmiMehmet Güler Member Board Independent Faculty of Political Science. Political of Faculty 22 TURKCELL ANNUAL REPORT 2018

MESSAGE FROM THE CEO

While our digital transformation has reached its 4th year, our 1440 strategy focused on creating value for every minute of our customers’ lives, has led to superior performance, both in operational and financial terms.

Dear Shareholders, Our digital communication and experience platform BiP has been equipped with two important capabilities this year. BiP As Turkcell Group, we have concluded another successful now allows the use of two numbers on a single handset In 2018, we continued to year of operations, having taken firm steps in accordance and money transfer in addition to its enriched messaging expand and enrich our with our digital business model. While our digital experience, multiuser video and voice call capability and digital services portfolio transformation has reached its 4th year, our 1440 strategy subscription to service provider channels. We reached 34.6 with new features, a focused on creating value for every minute of our customers’ million downloads and 11.5 million active users of BiP on the key pillar of our digital lives, has led to superior performance, both in operational and back of rising customer appreciation in 2018. operator transition. We financial terms. I am delighted that we have accomplished saw 169 million downloads the vision that we set as the “Digital Operator”, having fulfilled fizy, over which 7 million songs were streamed daily as of our digital services, the very definition of being a “Digital Operator”, creating new of the year end, reached 3.2 million customers, while TV+ receiving a higher share business areas in a challenging environment, and reaching a became one of Turkey’s largest digital TV platforms with from our customers’ point where this model is now extended to the wider world. its users reaching 3.4 million. Dergilik, now with international 1440 minutes and creating magazines in its portfolio, led evening editions of newspapers greater value for them 2018 was a year where challenging macroeconomic to be published once again in Turkey. Reaching 12.5 million within those minutes. conditions shaped global and local markets, where global active users, Dergilik continued to transform the publishing trade decelerated, the emerging markets saw capital sector. outflows, and the Turkish Lira depreciated against foreign currencies. And yet, we delivered a strong performance, Turkey’s search engine, Yaani, which we launched by the actually exceeding our initial targets. Turkcell Group’s total end of 2017, has been downloaded 7.6 million times to date, revenues grew 20.8% to TRY 21.3 billion, while EBITDA rose while its active users reached 3 million. Over Yaani, the web 41.1% to TRY 8.8 billion leading to an EBITDA margin of version of which we now also offer to our customers, 2.7 TRY 8.8 billion 41.3%. 2-year cumulative growth in revenues reached 49% million searches were performed on average every day. We Turkcell Group’s total while EBITDA grew 90.2%. Despite the challenging macro launched Copilot, our service offering safe driving experience revenues grew 20.8% environment, we reported a net income above that of 2017 and vehicle security, and Supercam, through which we took to TRY21.3 billion, while at TRY 2 billion. Our capital expenditures were in line with our an important step in the field of smart home technologies. EBITDA rose 41.1% to plans, at 18.5% of revenues. TRY8.8 billion leading to an In the attractive gaming market, we are committed to EBITDA margin of 41.3%. As reflected by this solid set of results, our digital operator growth on multiple platforms including Playcell, BiP Gaming model and strong balance sheet and business model hedging and TavlaGo. Playcell, a safe-zone for kids offering a variety strategies have successfully passed a significant stress test. of educational and entertaining games, had 18.7 million total I would like to share with you the main components of our visitors in 2018, while BiP Gaming users have reached 4.8 strategy that have made this performance possible, and the million as at the end of 2018. progress we have achieved throughout the year. We improved our applications and digital capabilities to WE INCREASED OUR SHARE OF 1440 MINUTES WITH serve corporate customers in private sector as well as public OUR DIGITAL SERVICES. institutions and municipalities; we embedded our offerings on this front into attractive business models. Along with business In 2018, we continued to expand and enrich our digital efficiency applications, we facilitated institutions’ access to services portfolio with new features, a key pillar of our digital the end users through the “Discover in BiP” feature of BiP. operator transition. We saw 169 million downloads of our digital services, receiving a higher share from our customers’ WE TOOK EFFECTIVE STEPS TO GROW THE DIGITAL 1440 minutes and creating greater value for them within those ECONOMY. minutes. Our Fast Login application, which enables secure and fast login experience to mobile applications, and mobile and online websites, has been used 232 million times to date by TURKCELL GROUP 23 ANNUAL REPORT 2018 REPORT ANNUAL TURKCELL OUR CUSTOMERS INCREASINGLY BENEFITED FROM FROM BENEFITED INCREASINGLY CUSTOMERS OUR THE RAISED WE SERVICES. AND PRODUCTS OUR INBAR 4.5G. The average data consumption of 4.5G users reached 8 GB 8 GB 4.5G users reached of consumption data average The mobile services. innovative our of on the back in December on the mobile front ratio multiplay customers Turkey’s Turkcell while increase, point percentage 66.7% with a 10.9 reached 48.6% in the reached multiplay with TV+ users of the ratio promoter in net leadership our continued We segment. fixed our to thanks customers of appreciation with increasing score and infrastructure strong portfolio, services digital attractive campaigns. successful take to customers enable our investments infrastructure Our a new reached we In April, world. the digital of advantage full on our 1 Gbps of in excess at speeds serving by milestone named were we this development, Following 4.5G network. the Global by leading 4.5G operators among the world’s In an announcement Mobile (GSA). Suppliers Association Mobile Suppliers the Global Association made in May by operators fastest the two as one of cited was Turkcell (GSA), in the world. on products our deploying services, NB-IoT our initiated We with customers our serve to started We infrastructure. our application with its together Filiz, device, featured NB-IoT our remote through productivity agricultural at increasing aimed monitoring. and high-speed seamless ensure to taken steps As part of (Fixed FWA our Superbox, launched we communication, our from appreciation great to product, Access) Wireless which will Dronecell, developed we Moreover, customers. intensive where in areas 4.5G services provide enable us to first Turkey’s Dronecell, experienced. be to is likely traffic data role in ensuring will play an important station, base flying particularly in lives save to communication uninterrupted and disasters. emergencies its 15.3 million registered users. Thanks to Fast Login, Turkey Turkey Login, Fast to Thanks users. 15.3 millionits registered sustainability the commercial meet to market the first became Mobile Operators (Global the GSMA by set criteria the consider we an area authentication, in digital Association) economy. the digital of cornerstone our of the foundations strengthened we solutions, In techfin our and increased competencies, our deepened business, firm its continues Paycell, focus, One key interaction. customer in players the strongest one of becoming towards progress has been application Paycell The world. the mobile payment than 1 million Paycell 2.6 million and more times downloaded finance consumer our Financell, issued. been have Cards to access customers’ our facilitate to continued company, This supporting it provided. with the loans them smart devices in financial services competencies our expanded we year, in insurance Sigorta that engages Güvencell establishing our to offered product insurance the first activities; agency at women. aimed package insurance a health was customers and mobile authentication digital management, traffic Our online and mobile content for solutions introduced payment a offered e-commerce, grow to providers and service entrepreneurs numerous to experience digital seamless support through that we the start-ups One of this year. in the a revolution to led Quiz, “Hadi” Live services, our 1.2 million people Hadi attracted in Turkey. sector entertainment on December broadcast during the live phone screens their to the year. day of the last 31, sectors of transformation the digital supported have We smart cities and from health, to agriculture from ranging to projects of the number increased We transportation. to feel We 550. to services integration digital provided which we technology the information City Hospital, that Yozgat proud by and operated established which was of infrastructure received have to in Europe and only hospital is the first Turkcell, the peak considered certification, Hospital” Digital 7 Fully “Level Systems and Management Information HIMSS (Healthcare of health for society respected most the world’s Society), technologies.

In an announcement In an announcement the made in May by MobileGlobal Suppliers Turkcell (GSA), Association the as one of cited was in operators fastest two the world. We continued our our continued We promoter in net leadership with increasing score customers of appreciation attractive our to thanks portfolio, services digital and infrastructure strong campaigns. successful 24 TURKCELL ANNUAL REPORT 2018

MESSAGE FROM THE CEO

In accordance with our vision of globalization, we aim to expand our digital footprint not only in the countries where we have operations, but throughout the wider world, by cooperating with other operators.

markets to become digitized by lifecell over the coming WE ACCELERATED THE DIGITAL TRANSFORMATION OF years. While we provide consultancy services to operators OUR COMPANY AND OUR SALES CHANNEL. from all over the world with respect to digitalization via these Strong operational meetings, we also offer our products and services, such as performance combined We accelerated the digital transformation also within our BiP, fizy, TV+, lifebox, RTM, My Account to global users. with our Business Model Company which enabled us to achieve all these. Today, we Hedging strategy, monitor more than 4 thousand metrics, from the utilization Another important development of 2018 was the sale of Fintur enabled us to achieve rate of our products, to the competitive analysis, from subsidiaries, and ultimately the agreement to sell our stake in strong profitability and network data, to the sales performance in our stores, in real Fintur to Telia, signed in December. This transaction enhances create shareholder value, time through RTM and Digital Cockpit platforms developed our efficient balance sheet management and focus on despite macroeconomic in-house. We completed the digital and visual transformation growth through digital services, and will result in a cash inflow headwinds. of our stores; we introduce our rich portfolio of application, of EUR 350 million upon completion. tariff and handset offerings to our customers with most up- to-date information and environment-friendly methods via WE CREATED VALUE FOR OUR INVESTORS WITH OUR digital tools we provided to our sales staff. We transformed DIGITAL MODEL AND BUSINESS MODEL HEDGING customer satisfaction management via our My Account STRATEGY. application, which is one of the most crucial interfaces for our interactions with our customers. Strong operational performance combined with our Business Model Hedging strategy, enabled us to achieve WE OPENED UP OUR DIGITAL MODEL TO THE WORLD, strong profitability and create shareholder value, despite LAUNCHING THE DIGITAL EXPORT ERA. macroeconomic headwinds.

In 2018, we also transferred our digital competencies to the In a landmark development, with our 10-year, USD 500 countries where Turkcell Group operates. lifecell, the first million Eurobond issuance in April, we became the first operator to implement 4.5G in Ukraine, is taking firm steps Turkish company to issue a 10-year bond since 2015. This has towards becoming the national digital operator. Following the strengthened our balance sheet under favorable financing launch on 2600 MHz on March 30, lifecell also started 4.5G conditions, while confirming market confidence in Turkcell. services on 1800 MHz, on July 1. This development, which is an Going forward, we plan to keep the average tenure of our important milestone in our journey to offer digital experience debt portfolio at 4-5 years. In addition to the bond issuance, in Ukraine with all means, allowed us to take a further we continued to strengthen our liquidity and diversify step and enable widespread use of our digital products financing sources, while registering firsts for the market with and services with all their features. As one of the most vendor financing, lease certificates, asset-backed securities important foreign investors in the country, we joined National and other debt instruments. Investment Council of Ukraine, which has a critical role in the development of Ukraine’s economy. On the back of hedging instruments, we maintained FX risk at a minimum level, generating solid profits, despite In accordance with our vision of globalization, we aim to TL depreciation. Moreover, hedge accounting principles expand our digital footprint not only in the countries where minimized volatility, allowing for predictable quarterly net we operate, but throughout the wider world, by cooperating profits throughout the year. with other operators. Established for this purpose, our subsidiary lifecell Ventures was introduced to the international Including the TRY 1.9 billion dividend paid out in 2018 with a audience at the GSMA Mobile World Congress, the most yield of 7.2%, we have distributed nearly 60% of net profit prestigious event of our industry, in Barcelona in February 2018. recorded since 2010 to our shareholders.

lifecell Ventures conducted its first service export to Moldcell with BiP and lifebox. Negotiations that are carried out with numerous operators from the Caribbean to South Asia, encourage us for the rapid rise potential in the number of TURKCELL GROUP 25 ANNUAL REPORT 2018 REPORT ANNUAL TURKCELL THE FUTURE IS ALREADY HERE AND WE ARE READY FOR IT. FOR READY ARE WE AND HERE ALREADY IS FUTURE THE UP KEEP WILL PROCESS TRANSFORMATION DIGITAL OUR PACE. THE roof and work to increase the employment opportunities by by opportunities the employment increase to and work roof required force and the qualified labor supporting scientists endeavor. all fields of across such as 5G, technologies by will shaped be future near The and virtual and augmented blockchain, artificial intelligence, strategic launched have we As Turkcell, the world. all over reality and universities companies with leading technology alliances with respect years two the past for and abroad domestically By in 2018. continued activities Related 5G. into studies our to test source in the open infrastructure bringing the necessary the ICTA of with the leadership established 5G Valley of area at the in September the initial tests completed we in Ankara, Campus. University Hacettepe 70 of a speed achieved which we through 5G technology, With it will suppliers, with our conducted that we in the tests Gbps sectors. in vertical models business new develop to critical be few the past over covered have we that the distance I believe a catalytic will have sectors of the digitization towards years efficient and on their use cases, of on the emergence effect implementation. 5G by generated the data processing for primary tool The As technologies. learning will artificial be intelligence/machine enrich to utilizing technologies these currently are we Turkcell, contact and efficient effective more make to applications, our image through fraud identity prevent and to customers, with our human capital, and creative R&D Center our Through processing. the to internally artificial intelligence employ to will continue we services. our in deploying standards ethical highest which is field, in blockchain studies our also continue We the Carrier joined we In 2018, technology. emerging another the leading which brings together Group, Study Blockchain platform a blockchain develop to markets various of players know- The network. on a global that will work and ecosystem in Turkcell’s role will gain will play an important that we how future. primarily our stakeholders, all thank our to like I would we where support during 2018, unyielding their for shareholders, with operator a digital into process transformation our crowned story success that our believe I sincerely achievements. notable in stakeholders all our and support of with the trust will continue period. the upcoming Sincerely, Yours TERZİOĞLU KAAN Officer Executive Chief WE HAVE INVESTED IN TURKEY’S FUTURE WITH OUR OUR WITH FUTURE TURKEY’S IN INVESTED HAVE WE AWARENESS RESPONSIBILITY SOCIAL TECHNOLOGY, FOUNDATION. OUR NOW, AND We utilized our technology and strength to contribute to the the to contribute to and strength technology our utilized We primarily of operate, in which we the countries of growth “Turkey’s motto our with In accordance also in 2018. Turkey the increase to steps took we in Turkey”, remain should data and data, and process store to country our of competence which will insight meaningful into data processed transform data largest Turkey’s became We growth. enable economic data new our of June with the opening in operator center in Izmir. center among which ranks Airport, Istanbul new equipped have We latest with the economy, support Turkish to projects the major station base local first putting of proud feel We technology. in various service into contribution, with our developed ULAK, Universal the of within the scope country our of regions Project. every to access internet that enabling fiber believe We in the growth economic Turkey’s to will key household be all means by work to continue and we period, upcoming the infrastructure consider We infrastructure. joint towards the with the support of this year signed sharing protocol all and which united and the ICTA, Transportation of Ministry in this direction. step a positive players, sector in human investing means in future that investing believe We friends 232 young welcomed we Accordingly, capital. GNCYTNK our of within the scope family the Turkcell to support we Kids project, with the Whiz Moreover, Project. while also supporting children, gifted our of the education the through obstacles overcoming children of education with cooperate We Project. Boundaries without Education and Intelligence, DQ - Digital of area in the DQ Institute to in order awareness digital develop to help children we citizens. digital confident become and projects various through support entrepreneurship We platform. funding crowd our primarily Beehive, applications, female our for program a separate launched we year, This the Future” of “Developers our as part of entrepreneurs development mobile application and provided platform of a number While Turkey. across 1,400 women to training 100 entrepreneurship, towards progressed the participants testers experience as user workforce, our joined participants applications. popular 10 most Turkcell’s of Syrian serving our to dedicated application our “Hello Hope”, We 1 million nearly downloads. has reached in Turkey, guests of the benefit for technology our leverage to will continue it. need who most those establishing by step important another took we In this respect, into Turkey developing a vision of With Foundation. Turkcell gather aims to Foundation Turkcell producer, a technology one under activities responsibility social corporate Turkcell’s We will continue to to will continue We technology our leverage those of the benefit for it. need who most In accordance with with In accordance “Turkey’s motto our in remain should data to steps took we Turkey,” the competence increase store to country our of and data, and process processed transform meaningful into data will which insight enable growth. economic 26 TURKCELL ANNUAL REPORT 2018

EXECUTIVE OFFICERS

Kaan Terzioğlu (1) Chief Executive Officer Kaan Terzioğlu was appointed as Turkcell Group’s Chief Executive Officer as of April, 2015. Kaan Terzioğlu leads the digital transformation of Turkcell Group companies. Mr. Terzioğlu serves as board member of several international institutions and organizations. He is at the board of GSMA, the leading international mobile communication organization, and advisory board of World Economic Forum Center for Fourth Industrial Revolution. Mr. Terzioğlu also serves as a board member for “Turkey’s Car” Initiative and he assumes the presidency of Mobile Telecommunications Operators Association (m-TOD). Terzioğlu is 7 11 also at the board of Turkcell Foundation and as well as at GSMA Foundation 3 5 9 10 focusing on “Mobile Communications for Development”. Kaan Terzioğlu began his professional life in 1990 at Arthur Andersen Turkey. From 1990 to 1998, he 2 4 undertook several roles on information technologies at Arthur Andersen in the USA, Belgium and Turkey. From 1999 to 2012, he held global managerial 8 roles at the Cisco Systems Brussels office. From 2012 to 2015, Kaan Terzioğlu 6 1 served as member of board of directors at Akbank, Aksigorta A.Ş., Teknosa İç ve Dış Ticaret A.Ş. and Carrefoursa A.Ş. Kaan Terzioğlu graduated from the Department of Business Administration at Boğaziçi University.

Osman Yılmaz (2) Executive Vice President - Finance (CFO) Osman Yılmaz was appointed as the Chief Financial Officer on August 1, 2018. Mr. Yılmaz started his professional career at Türkiye İş Bankası Treasury Department in 2006. In 2007, he worked at BNP/TEB Treasury Department. From 2008 to 2016, he served as Senior Fund Manager in Structured Products and Group Head of Fixed Income and Multi Asset Funds at HSBC Global Asset Management. In August 2016, he joined Turkcell family as Director of Treasury, Risk and Collection Management. Mr. Yılmaz holds a dual BSc degree in Economics and Management from London School of Economics and Istanbul Bilgi University, MSc in Financial Engineering from Boğaziçi University and a PhD in Finance from Ozyegin University. TURKCELL GROUP 27 ANNUAL REPORT 2018 REPORT ANNUAL TURKCELL Ayşem Ertopuz (8) Ertopuz Ayşem and Solutions Services - Digital President Vice Executive In Planning Director. as Strategic 2016 in January Turkcell joined Ertopuz Ayşem Digital of President Vice as the Executive appointed she was 2016, November as Quality A.Ş. in 1993 at Arçelik career her started She and Solutions. Services at Manager Services Consultancy as Strategic She served Engineer. System in in 2001 Organization Region EMEA Joining Cisco’s in 1997. Andersen Arthur including functions in several managerial roles took Ertopuz Ayşem Belgium, Customer and Global Operations Intelligence, Business Planning, Strategic Group Intelligence Business of as the manager She served Management. organization and Planning Strategy Sales Global based York New within Cisco’s sector, providers service on the fields of focusing 2006 and 2015, between and performance, strategy business dynamics, and competition market graduated Ertopuz Ayşem models. business in new services digital of utilization and Department Engineering Industrial University Technical Middle East from Business. of School Stern University, York New from degree MBA her received Öztürk (9) Serkan and Information Experience - Customer President Vice Executive Technologies 2017, In August Supervisor. in 2000 as a Project Turkcell Öztürk joined Serkan Experience Customer of President Vice as the Executive appointed he was and supervisor as project he worked Previously, Technologies. and Information and 2009. 2000 between office Management Project at Turkcell manager between life-Ukraine in Officer Technologies Information as Chief He served 2011 From and 2011. 2010 between Superonline and in Turkcell 2009 and 2010 and Business Management Relations Customer as Turkcell he served 2015 to he appointment, last his his to Prior & BIS) Director. Solutions (CRM Intelligence Technologies. and Communication Information of President Vice Executive was and Electrical University Technical Middle East from Öztürk graduated Serkan Istanbul from degree his MBA He received department. Engineering Electronics University. (10) Sezgin Gediz Technologies - Network President Vice Executive In October in 1995. Engineer as Network Turkcell joined Sezgin Gediz Network of President Vice as the Executive appointed he was 2015, Information of President Vice as Senior he served Previously, Technologies. and Communication Information Chief Technologies, and Communication Service of Director Operations, Application of Director Officer, Technologies in the positions executive and held various Function the ICT under Network He in 1991. Teletaş at Alcatel his career started Sezgin Mr. Function. Technology and Communication Electronics University Technical İstanbul from graduated the same from degree his Master’s and received Department Engineering university. (11) Ali Türk Chain - Supply Management President Vice Executive Chain Supply of President Vice as the Senior Turkcell joined Ali Türk of President Vice as the Executive appointed He was in May 2016. Management at Başak his career started Türk Mr. 2017. in March Chain Management Supply managerial positions he held various 2007, 2002 to From Sigorta in 1999. Hayat and supply chain management warehouse planning, logistics for responsible as Lojistik at Ceva he worked 2011, to 2007 From Group. at Ülker processes joined Turk Mr. Manager. Group Operations Added and Value Warehouse appointed He was President. Vice Operations in 2011 Airlines as Cargo Turkish from graduated Ali Türk 2012. in President Operations Cargo Airlines as Turkish completed and Department Engineering Industrial University Technical Istanbul University. Technical Istanbul of program MBA Executive Murat Erkan (5) Erkan Murat - Sales President Vice Executive Manager in June 2008 as the General Group Turkcell joined Erkan Murat as the appointed he was 2015 in December and Superonline Turkcell of life his professional who started Erkan, Mr. Sales. of President Vice Executive Mühendislik at Biltam and then Engineer as an Application worked at Toshiba, He served Turkey. at Cisco Turkey of Engineer” “System as the first served Business Sales, Technology, of in charge Systems at Cisco Officer as Chief served Erkan Mr. 2006, As from and Channel Management. Development solutions related for responsible at Aneltech Unit Manager as the Business products and industrial industry defense ICT, mobile, telecommunications, to Electronics University Technical the Yıldız from graduated Erkan Murat sectors. the Strategic He completed Department. Engineering and Telecommunication in 2010. School Business at Harvard Program Marketing Sağlam (6) Seyfettin - Human Resources President Vice Executive Officer the Chief and undertook in July 2014 Turkcell Sağlam joined Seyfettin and Human and Construction Estate Real Procurement, of in charge roles President Vice as the Executive serves Sağlam currently Mr. Resources. of He is also a member Human Resources. Group Turkcell for responsible at MSC career his professional He started PERYÖN. of Directors of the Board Human of in charge levels at various He held managerial roles Consulting. & Hotels Rixos Bankası, Ziraat T.C. Holding, Yıldız at Tekstilbank, Resources the from Sağlam graduated Seyfettin and Borsa İstanbul. İnşaat A.Ş. Sembol and he received University Technical at Middle East Sociology of Department Quality in International University the Marmara from degree his master’s at Program & Leadership the HR Management He completed Management. School. Business at Harvard Program Education and Executive INSEAD (7) Terzioğlu İlter - Strategy President Vice Executive and Regulation Strategies, as Business in 2003 Turkcell joined Terzioğlu İlter as the appointed he was 2015, In October Division Head. Risk Consolidation as he served this appointment, to Prior Strategy. of President Vice Executive Function. the Strategy under Business International of President Vice Senior International of Chief acting of the roles he undertook at Turkcell, Previously Operations Network and Chief Officer Projects Strategic Chief Business, Group at Turkcell Manager General as Assistant He also had worked Officer. Ericsson for He had worked TV and Superonline. including Show companies, 1994 between Turkcell for responsible Manager General as the Assistant Turkey Econometrics. of Department University Istanbul from He graduated and 2002. Serhat Demir joined Turkcell as the Executive Vice President of Legal and and Legal of President Vice as the Executive Turkcell joined Serhat Demir in 1997 career his professional started Demir Mr. in May 2015. Function Regulation Holding at Yıldız he worked 2007 to 2003 From office. Turkey at Dun&Bradstreet Holding A.Ş. at Çalık Counsel as the Legal he served and in 2007 Department Legal Director Affairs Holding Legal Çalık undertook Demir Mr. 2009 and 2015, Between at Directors of Board of as member he also served and in the meantime role fields. and finance in telecom that operated companies and at group holding level University. at Istanbul Law of the Faculty from graduated Serhat Demir Ömer Barbaros Yiş (3) Yiş Barbaros Ömer - Marketing President Vice Executive Acting as serve to continues Yiş Mr. in 2017. Turkcell joined Yiş Barbaros Ömer Marketing and Focused holding Strategic after Director Marketing Consumer Vice Executive as acting appointed was Yiş Barbaros Ömer role. Director role his existing in addition to 2018, 18, on December Marketing of President and Consumer in 2006 as Corporate his career Having started in Turkcell. in roles Manager Product Senior he held various in Turkcell, Pricing Specialist as the his career he continued 2013, to 2010 From department. the marketing he served In 2013, Group. & Rogers in Peppers Director Industry Telecom Global Customer Segment Premium Director, Management Customer as Existing at Director Management Revenue Products and Fixed Director Management with a double University Koç from graduated Yiş Barbaros Ömer Telekom. Turk his master’s and received and Economics Administration in Business major De Barcelona. Autonoma Universitat from in Economics degree (4) Serhat Demir and Regulation - Legal President Vice Executive 28 TURKCELL ANNUAL REPORT 2018

TOP MANAGEMENT OF SUBSIDIARIES

3 2 4 5 1

Kaan Terzioğlu (1) Barbaros Özdemir (4) Chief Executive Officer General Manager of lifecell Ventures & Turkcell Europe Please see page 26 for detailed CV. Barbaros Özdemir serves as General Manager of lifecell Ventures and Turkcell Europe. Mr. Özdemir joined Superonline in 2008 as Deputy General Manager İsmet Yazıcı (2) of Sales, Marketing and Wholesale and then held Fixed Solutions Sales General Manager of lifecell Ukraine Director role. Prior to his current role, he undertook Medium Business Sales İsmet Yazıcı joined Turkcell in 2009. Mr. Yazıcı has been serving as the General Director position between 2015 and 2016. Mr. Özdemir began his career as Manager of lifecell, Turkcell’s subsidiary in Ukraine since May 2017. Prior to a System Analyst at an IBM SoftwareHouse Step Reseller. Barbaros worked this position, Yazıcı worked as the Deputy General Manager of Sales and as a Sales Director at Borusan Telecom and BMC Software, Corporate Business Development at Global Tower between 2009 and 2010 and as the Solutions Sales Manager at HP Turkey. Barbaros has 26 years of experience in General Manager between 2010 and 2011 at Global Tower. From 2011 to 2015, digital transformation, marketing and sales. He is a member of IMD Business he served as the General Manager at BeST, Turkcell’s subsidiary in Belarus and School International Leaders Program. He is also a senior trainer for Digital as General Manager at Kuzey Kıbrıs Turkcell between 2015 and 2017. Beginning Transformation Leadership Program at Turkcell Academy. Barbaros graduated his professional career in 1993, Yazıcı served as the Research & Development from Bilkent University Computer Technology and Programming Department in Engineer, International Sales Engineer, Romania Country Manager, Product 1990. Marketing Manager, EMEA Region CDMA Business Development Director, and Enterprise Leader, respectively, at the Turkey and USA offices of Nortel Nihat Narin (5) until 2009. İsmet Yazıcı received his bachelor’s degree in Electric-Electronic General Manager of Global Tower Engineering at Hacettepe University in 1992, and postgraduate degrees in Nihat Narin was appointed as General Manager of Global Tower in June 2016. Political Science at Marmara University in 1998 and in International Marketing He also serves as Board Member at Inteltek Technology and Investments Co. and Management at the University of Texas in 2001. In 2011, he had obtained his and UkrTower LLC. Mr. Narin began his career in investment banking in 1996 and second undergraduate degree from Istanbul University, Faculty of Law. worked in various roles including corporate finance and research analyst. During his position at Ata Invest as Telecom Analyst, he worked in various IPO projects, Erdal Yayla (3) including IPO of Turkcell. He joined Turkcell in 2000 and worked as senior BeST, CFO (Acting General Manager) specialist at Investor Relations Department until 2004. Subsequently, he served Erdal Yayla joined Turkcell İletişim Hizmetleri A.Ş. as a financial controller & as Director of Internal Audit, Director of Investor Relations & International Media reporting specialist in 2003. He served as the manager of financial accounting, and Group M&A Director at Turkcell. Mr. Narin received his BA degree from control and reporting department (2004-2010), deputy general manager of the Faculty of Economics and Administrative Sciences at Marmara University finance (2010-2016) and acting general manager (2014-2015), respectively and MBA degree from Middlesex University while completing his graduation at lifecell in Ukraine. He has been serving as the deputy general manager project on Capital Markets of UK. Mr. Narin also holds Turkish Capital Markets of finance at BeST, our subsidiary in Belarus since March 2016, and he has Advanced Degree License and Corporate Governance Licenses. been assuming the acting general manager since November 2018. Mr. Yayla started his career as a senior auditor at PricewaterhouseCoopers in 1999, and then worked as a financial controller at LafargeHolcim in 2002. Erdal Yayla graduated from Marmara University Faculty of Economics and Administrative Sciences in 1999 and completed the Executive Development Program at Wharton School in 2016. TURKCELL GROUP 29 11 ANNUAL REPORT 2018 REPORT ANNUAL 10 TURKCELL 9 Ahmet Sezer (9) Sezer Ahmet İnteltek of Manager General began Sezer in 2004. Manager as the General İnteltek joined Sezer Ahmet Senior Engineer, as the System he served Subsequently, at Aselsan. his career at Manager and General Manager General Deputy Manager, General Deputy and respectively Consulting, and Vestel Group and Vestel Intertech IBM Turk, Technical Istanbul from graduated Sezer Ahmet at Probil. Manager as General in 1982. Department Engineering and Communication Electronics University Harun Maden (10) Kıbrıs Turkcell Kuzey of Manager General Kıbrıs Kuzey of Manager as the General appointed Harun Maden was as an working he started and 1989, 1986 Between April 2017. as of Turkcell Makinacılık ve at Kerimoğlu Engineer and Automation Control Industrial as a Technical and 2002, 1989 between Datateknik for He worked Ticaret. and Sales (1991-1993), Director Development Product (1989-1991), Manager (1996- Manager General and Deputy (1993-1996) Coordinator Marketing of as a Member he served 2002 and 2006, Between respectively. 2002), Bilişim at Hızlı Sistem Manager and as the General Directors of the Board Mağazacılık. at Hızlı Sistem Directors of the Board of and also as a Member at Türk Consultant as a Management Maden served Mr. In addition, Manager as the General He worked and 2004. 2003 between Telekom and 2009. 2007 between İletişim and Global Telekomünikasyon Teletek of at affiliated roles executive he held several and 2015, 2010 Between Manager General as the acting Maden also worked Mr. IBB. of companies IBB İstelkom of the Board and Chairman of Founder in 2011, IBB Kültür of and Directors of the Board of and as a Member and 2015 2012 between Maden Mr. and 2015. 2010 İBB Belbim between of Manager General and as an the Board as the Chairman of Manager, as the General worked the Board of He is also a Member and 2017. 2015 between at PTT Advisor 2012. since Turkey of Association and Automobile Turing of Directors of Technical at Istanbul study his undergraduate Harun Maden completed in Communication Electronic of Department Electrics, of Faculty University 1982. Erkin Kılınç(11) Solutions Energy Turkcell of Manager General in Manager Solutions as the General Energy Erkin Kılınç Turkcell joined in 1998. Specialist Insulation as Sales at Ode Kılınç his career began 2017. Trade&Agency Foreign at Doğan Specialist as Sales he served Subsequently, (2003- at Akenerji Manager Group Trade as Energy (2001-2003), Operations Turkey as (2009-2011), Group at Akfel Coordinator Projects as Energy 2009), at Limak Manager General and as Assistant (2011-2015) at RWE Director Sales in Mechanical degree his bachelor’s Erkin Kılınç received (2015-2017). Energy degree MBA and Executive in 1998, University Technical at Istanbul Engineering in 2003. at Işık University 7 8 6 Çağatay Aynur (6) Aynur Çağatay Global Bilgi Turkcell of Manager General In July Manager. in 2000 as an Account Group Turkcell joined Aynur Çağatay Prior Bilgi. Global Turkcell of Manager as the General appointed he was 2015, in Manager as the Regional he had served position, this to his appointment to in Charge Manager Sales and Public Affairs, Customers Strategic of Charge Scale Large of in Charge Director Sales Corporate Businesses, Scale Large of Businesses. Mid-Scale of in Charge Director Sales and Corporate Businesses Aynur Çağatay Döküm Sanayi, at Erkunt career his professional Beginning from graduated Aynur Çağatay at Martı Ltd. Manager as the Sales served in University Technical at Middle East Engineering Metallurgical of Department 1993. Duman (7) Adem Finansman Turkcell of Manager General Finansman Turkcell of Manager as the General appointed Duman was Adem of the Association of He is also the chairman 2018. September, as of A.Ş. Finance European of the Federation of member and board Financial Institutions as a career his banking Duman started (Eurofinance). Association Corporation as he worked 2005, 2000 to From in 1996. at Interbank trainee management 2014, 2005 to From Bank. Banking at BNP AK Dresdner Corporate of the Head Firms Desk, Capital the Foreign of and Director as the Manager Duman served and then as the Large Director Synergy Paribas and BNP Finance Structured Vakıf he joined In 2015, Bank. Economy at Turkish Director Customers Corporate Finance, of in charge Manager General as Deputy Emeklilik and served A.Ş. and in addition to Project Transformation and Human Resources Marketing and Law Management, Risk the Actuarial, for also responsible he was his role, from Duman graduated Adem period. one year for functions Control Internal and department Relations and International Science Political University Boğaziçi the same university. from degree MBA his Executive received (8) Kara Melike Services Money and Electronic Payment Turkcell of Manager General Mobile Financial Services in Turkcell as a manager worked Kara, Melike as appointed was Kara Ms. 2015, In February 2015. 2011 to from Department Kara Manager. General A.Ş. Hizmetleri Para Elektronik ve Ödeme Turkcell Business of Department University Technical the Middle East from graduated Istanbul at PricewaterhouseCoopers working in 2004 and began Administration she held various PwC experience, of 2 years After the same year. Office within Garanti development and business marketing in the field of positions line. business Services Bank Payment 30 TURKCELL ANNUAL REPORT 2018

TURKCELL GROUP

Turkcell Group companies operate in 5 countries including Turkey, Ukraine, Belarus, TRNC and Germany.

BELARUS - BeST TURKEY - TURKCELL

Mobile Customers 1.6 million Mobile Customers 33.8 million Revenues TRY 293 million Fixed Customers 2.3 million IPTV Customers 613 thousand Revenues TRY 18.3 billion

TRNC - KUZEY KIBRIS TURKCELL

GERMANY - TURKCELL EUROPE Mobile Customers 0.5 million Revenues TRY 180 million Mobile Customers 0.2 million UKRAINE - lifecell

Mobile Customers 9.9 million Revenues TRY 924 million

Note: On March 5, 2018, Fintur transferred its 51.3% total shareholding in Azertel Telekomunikasyon Yatirim Diş Ticaret A.Ş to Azerbaijan International Telecom LLC, a fully state-owned company of the Republic of Azerbaijan. On March 20, 2018, Fintur completed the transfer of its 99.99% total shareholding in Geocell LLC to Silknet JSC, a joint stock company organized under the laws of Georgia. On December 12, 2018, Fintur signed a binding agreement and on December 21, 2018 completed the transfer of its 51% total shareholding in Kcell JSC to Kazakhtelecom JSC, a fixed line operator controlled by the government of the Republic of Kazakhstan through the sovereign wealth fund Samruk-Kazyna. On December 12, 2018, Turkcell signed a binding agreement with respect to the transfer of its shares in Fintur to Sonera Holding B.V., the majority shareholder of Fintur. TURKCELL GROUP 31 ANNUAL REPORT 2018 REPORT ANNUAL TURKCELL Our Approach Our technological, in delivering Turkcell brand Leading stakeholders. its all of to benefits and social economic Global leadership in digital services by by services in digital leadership Global in 3 years 1 billion downloads reaching Our Target Our

Our Strategy: 1440’ Strategy: Our and customers with our relationship our strengthen To that and services products providing by loyalty increase 1440 minutes of each for proposition include value Digital Operator Turkcell Operator Digital Our Vision Our OUR VISION, TARGET, STRATEGY AND APPROACH AND STRATEGY TARGET, VISION, OUR 32 TURKCELL ANNUAL REPORT 2018

2018 AT A GLANCE Remarkable results with digital transformation…

RECORD REVENUE 41.3% 66.7% MOBILE MULTIPLAY AND EBITDA SUBSCRIBER EBITDA MARGIN RATIO

Group revenues increased by 90.2% two-year cumulative The mobile multiplay subscriber 20.8% to TRY 21.3 billion, while EBITDA growth, led to an ratio reached 66.7%, up 10.9 pp EBITDA rose by 41.1% to EBITDA margin of 41.3%. year-on-year; and multiplay with TV TRY 8.8 billion. subscribers reached 48.6%, up 4.2 pp year-on-year.

15% 91% MOBILE ARPU* 4.5G SUBSCRIBER NPS PENETRATION GROWTH

Mobile ARPU rose 15%. According to Net Promoter Score, 74% smartphone penetration, *Excluding M2M which reflects customer satisfaction, 80% are 4.5G compatible Turkcell has the highest level of smartphones. customer satisfaction in the industry in 2018.

1.2 8 GB STRONG Gpbs DATA SHAREHOLDER THE FASTEST USAGE RETURN 4.5G Turkcell was cited as one The average monthly data usage We have distributed nearly of the world’s two fastest of 4.5G users rose to 60% of our net income operators. 8 GB as of December 2018. registered since 2010. TURKCELL GROUP competitor. Following its launch launch its Following country of its closest closest its of country in Turkey, BiP accelerated BiP accelerated in Turkey, of global media was US, the the US, global was of media its communications activities activities communications its in the most important medium medium important in the most abroad. The first address of the the of address first The abroad. application preparing to appear appear to preparing application 34 TURKCELL ANNUAL REPORT 2018

2018 HIGHLIGHTS

Turkcell Group continued its strong financial performance in 2018 by reaching TRY 21.3 billion revenue on 20.8% growth and 8.8 billion EBITDA on 41.1% rise.

FINANCIAL HIGHLIGHTS

Turkcell Group Revenues (TRY million) Turkcell Group EBITDA(1) (TRY million) Turkcell Group Net Income (TRY million) 2,021 1,979 8,788 21,292 17,632 6,228 20.8% 41.1% 2.1% GROWTH GROWTH GROWTH 2017 2017 2017 2018 2018 2018

Turkcell Group Financial Indicators 2017 2018 Change Turkcell Turkey (TRY million) Revenues 15,450 18,266 18.2% EBITDA 5,594 7,534 34.7% EBITDA Margin 36.2% 41.2% 5.0 pp

Turkcell International (TRY million) Revenues 1,067 1,457 36.5% EBITDA 264 613 132.1% EBITDA Margin 24.7% 42.1% 17.4 pp

Turkcell Other Subsidiaries(2) (TRY million) Revenues 1,115 1,570 40.8% EBITDA 370 641 73.0% EBITDA Marginı 33.2% 40.8% 7.6 pp

(1) EBITDA is a non-GAAP financial measure. (2) “Other subsidiaries” is mainly comprised of our information and entertainment services, call center business revenues, financial services revenues and inter-business eliminations.

In the tables totals may not foot due to rounding differences. The same applies to the percentage comparisons. TURKCELL GROUP - 35 1.6% 15.1% (1.7%) 21.2% (4.5%) Change Change

14.9 18.8 36.7 2018 613.4 905.6 1,385.6 ANNUAL REPORT 2018 REPORT ANNUAL TURKCELL 15.6 18.5 36.7 921.4 2017 505.9 1,204.3

On the mobile front, the number of our mobile mobile our of the number On the mobile front, 18.8 million to with increased customers postpaid additions subscriber postpaid net 347 thousand 1.4 reached base subscriber fiber Our annually. additions. annual net thousand million on 181 on 108 thousand 613 exceeded IPTV subscribers additions. net annual thousand

2018 36.2

2017 31.6 (TRY) *

M2M

15% 15% IPTV subscribers (thousand) IPTV subscribers ADSL (thousand) Fiber (thousand) Fiber Mobile Prepaid (million) Mobile Prepaid Mobile Postpaid (million) Mobile Postpaid GROWTH Number of Subscribers (million) Subscribers of Number Turkcell Turkey Operational Indicators Operational Turkey Turkcell excluding OPERATIONAL INDICATORS OPERATIONAL Mobile ARPU **

48.9 million, of which 36.7 million which 36.7 million, of in Turkey. 48.9 In 2018, the total number of customers was was customers of number the total In 2018, 36 TURKCELL ANNUAL REPORT 2018

THE WORLD’S 1ST DIGITAL OPERATOR BRAND: LIFECELL Lifecell, offering customized packages, facilitated the lives of our customers, who prefer to do everything online, with its new digital services and continued to meet all of their communication needs also in 2018.

8.6 GB Lifecell Has a Average Package for Data Usage Everyone! 2.5 million Lifecell Customers

~30 Digital Services TURKCELL GROUP 37

billion 41 more ARPU more Service KPIs Service person/day 5.8 27% 27% logins to date date to logins 2.7M 3.4M 7.0M 522K 148M search per day per search 232M messages per day per messages docs uploaded per per uploaded docs transactions in 2018 transactions TV sessions per day per TV sessions copies read per day per read copies songs streamed per day per songs streamed ANNUAL REPORT 2018 REPORT ANNUAL TRY TRY TURKCELL 3.1M 3.2M 2.6M 5.2M 8.2M 11.5M 3.0M 19.2M 12.5M 3 month active users active 3 month (1) Download 7.6M 2.6M 11.8M 10.1M registered users registered 15.3M 10.5M 34.6M 38.8M 20.9M (2) (4) (5) (3) TV Yaani Music Digital Digital Instant (lifebox) Payment Payment Platform Fast Login Fast Messaging Operator Publishing Personal Cloud Personal

Refers to downloads as of February 15, 2019 15, February as of downloads to Refers Transactions include subsidiary revenues. Active users include DCB, app and Paycell card customers card app and Paycell users include DCB, Active revenues. include subsidiary Transactions 3-Month active users also include IPTV users active 3-Month Includes users who utilized the zero rating benefit of Dergilik magazines and newspapers via browser and newspapers magazines Dergilik of benefit rating the zero users who utilized Includes My Account is renamed as Digital Operator as Digital is renamed My Account (3) (4) (5) (1) (2) TURKCELL’S DIGITAL SERVICES DIGITAL TURKCELL’S 38 TURKCELL ANNUAL REPORT 2018

EXEMPLARY DIGITAL OPERATOR

As Turkey’s Turkcell, we have been cited as one of the exemplary companies of the telecom and technology sector in international platforms in 2018.

As Turkey’s Turkcell, we have been cited WORLD ECONOMIC FORUM (WEF) as one of the exemplary companies of the telecom and technology sector in international As Turkcell, we made our The annual meeting of the World Economic platforms in 2018. Having actively participated mark with our Forum (WEF), which brings together leaders of on international platforms, we succeeded in 469 m2 booth at the global society, took place in Davos with the theme becoming the focus of international media with Mobile World Congress of “Creating a Shared Future in a Fractured World.” the new projects we implemented. (MWC) in Barcelona, The refugee crisis was one of the key topics of Spain in 2018. the meeting. In his speech on the “Reconnecting lifecell MARK AT MOBILE WORLD CONGRESS Refugees” panel organized within this context, our CEO Kaan Terzioğlu outlined Turkey’s efforts As Turkcell, we made our mark with our 469 m2 to enable Syrians to regain humanitarian living booth at the Mobile World Congress (MWC) standards. Having also addressed Turkcell’s Hello in 2018. MWC was organized by GSMA, which Hope application, which reached approximately 1 guides the mobile communication sector, in million users, Terzioğlu underlined that we should Barcelona, Spain between February 26-March 1. benefit from the opportunities created by digital At our booth, where digital transformation technology in order to produce effective solutions of Turkcell was showcased, visitors had the for the future. opportunity to experience the full range of Turkcell solutions. The press meeting held at UNITED NATIONS our booth, during which we launched lifecell Ventures, attracted great attention from both Our CEO Kaan Terzioğlu was one of the guests of the national and international press. As a result the CEO Roundtable organized by GSMA, during of the communication efforts within the scope the week of 73rd session of the United Nations of the Mobile World Congress, we appeared on (UN) General Assembly this year. At the event, the international mainstream media, primarily NY contribution of the telecommunications sector to Times, Financial Times and Wall Street Journal, the Global Sustainable Development Goals set by and in industry publications with various news the United Nations to achieve the 2030 targets, items. Additionally, due to exclusive interviews was discussed. and informative activities that we conducted during the event, our news and images were In addition, the interview with “Our Children featured on the CNBC, BBC, TVE and TV3 and the Digital World” theme, conducted by the television channels. social media team of the UN with our CEO Kaan Terzioğlu, was broadcast live from UN social WE INTRODUCED lifecell IN GERMANY. media accounts.

Germany was one of our first routes in exporting The Foreign Economic Relations Board of Turkey of our products and services. Right after lifecell (DEIK), held the 9th Turkey Investment Conference Ventures’ launch in Barcelona, we introduced in New York also within the scope of UN Week lifecell to our users in Germany at a press events. Our President Recep Tayyip Erdoğan, conference organized in April. The launch grabbed our ministers Berat Albayrak, Ruhsar Pekcan, interest from national media and media sources Mustafa Varank and Fahrettin Koca attended followed by Turkish people living in Germany. the meeting, where numerous foreign investors Turkcell’s digital transformation story was reflected were welcomed. CEO Kaan Terzioğlu represented at Handelsblatt, Germany’s leading daily economy Turkcell at the meeting. newspaper, with an exclusive interview with our CEO Kaan Terzioğlu. 2018 OPERATIONS 39 ANNUAL REPORT 2018 REPORT ANNUAL TURKCELL IMD BUSINESS SCHOOL EXAMINED TURKCELL. EXAMINED SCHOOL BUSINESS IMD UNICEF, USAID and the key institutions of the the of institutions and the key USAID UNICEF, such as GSMA, world mobile communication as an project “Hello Hope” Turkcell’s selected ITU, the invitation Upon among 160 projects. exemplar in the participated Turkcell the Association, of of the purpose for organized symposium closed the and shared projects articulating exemplary it provided benefit and the “Hello Hope” of story mobile technology, leveraging humanity by to and Association Mobile Education of with officials participants. transformation in the digital leadership Turkcell’s as an international published has been journey the world’s School, IMD Business by study case This and management. strategy of leading school of journey Turkcell’s in detail examined study case operator telecom a traditional from transformation the world’s and indeed, provider, an experience to strategies at its It also looked operator. digital first to adapted the Company how and practices, the expectations met the change, of the speed and management, our how customers, our of were manners and capabilities business our as Turkcell’s as well transformed, developed, with OTT markets plans in international leadership services.

outing this year, our chairman Ahmet Akça Akça chairman Ahmet our this year, outing th 8 he Mobiles for Education Alliance, formed with with formed Alliance, Education for he Mobiles ALLIANCE OF CIVILIZATIONS FORUM 2018 FORUM CIVILIZATIONS OF ALLIANCE MOBILES FOR EDUCATION ALLIANCE – – ALLIANCE EDUCATION FOR MOBILES HOPE HELLO the partnership of internationally respected respected internationally the partnership of UNESCO, Bank, such as the World organizations Turkcell participated as a private sector sector as a private participated Turkcell the under organized at the forum representative Civilizations, Nations Alliance of the United of roof then Prime of in 2005 at the initiative launched Zapatero, Rodriguez Luis Jose Spain, of Minister forum, the At Erdoğan. Tayyip Recep and President in its attended the panel with “Productive Cooperation: Cooperation: with “Productive the panel attended and Civil Society Sector Private of Using the Power theme and informed Peace” of in the Foundation on focused projects on Turkcell’s the audience and humanity. in society investments Nations Headquarters held at the United forum, The was 2018, 19-20, on November York in New Çavuşoğlu Mevlüt Minister the Foreign by attended Akça, Chairman Ahmet Our Turkey. of on behalf sector a private as the event who attended a speech gave Turkey, of on behalf representative establish to and Turkcell Turkey of on the efforts country and in our in the world peace and sustain the forum. of within the scope T Turkcell’s leadership leadership Turkcell’s in the digital journey transformation as published has been case an international IMD Business by study leading the world’s School, and strategy of school management. 40 TURKCELL ANNUAL REPORT 2018

OUR SUPERIOR TECHNOLOGY

Turkcell was named among the best in the world for its 4.5G (LTE) network, in May 2018 Global Status Report published by Global Mobile Suppliers Association (GSA).

According to the May 2018 report, where Gigabit LTE networks were taken as a reference point and the fastest download networks were announced, Turkcell, the world’s first digital operator, was presented as one of the world’s two fastest operators with a speed of 1.2 Gbps.

achieved both energy savings of up to 35% THE WORLD’S FASTEST 4.5G NETWORK IS AT and increased capacity, as well as improved TURKCELL. customer experience in these sites. During the transformation, we also increased investment We continue to offer the best services to efficiency by reutilizing existing equipment. our subscribers with our superior network technologies. As a result of our efforts in this As part of this modernization, with actions taken context, Turkcell was named among the best in to enable more efficient use of our frequency the world for its 4.5G (LTE) network, in May 2018 resources, we continued our preparations that will Global Status Report published by the Global ensure utilization of our existing frequencies in new Mobile Suppliers Association (GSA). According to generation technologies. Thus, we increased the the May 2018 report, where Gigabit LTE networks service quality provided to our subscribers, while were taken as a reference point and the fastest using our frequency resources more efficiently. download networks were announced, Turkcell, the world’s first digital operator, was presented WE INTRODUCED MOBILE BROADBAND IN as one of the world’s two fastest operators with RURAL SETTLEMENTS THROUGH LOCAL BASE a speed of 1.2 Gbps. Utilizing all three main LTE- STATIONS. Advanced features, Turkcell ranked at the very top among the fastest networks in the GSA database. Within the scope of the “Addition of Mobile Broadband Internet Services to the Existing GSM With the Technology Transformation Program, Infrastructure Under the Universal Service Law” we modernized our 2G and 3G sites to Project, carried out by the Ministry of Transport, make them ready for new technologies. As Maritime Affairs and Communications, Directorate a result, with new generation products, we General of Communications, and of which we 2018 OPERATIONS 41 ANNUAL REPORT 2018 REPORT ANNUAL TURKCELL WE ARE LEADING 5G IN TURKEY. IN 5G LEADING ARE WE We conducted the first live 5G experience in Turkey in Turkey 5G experience live the first conducted We provided We 5G equipment. real with end-to-end environment and high-quality experience a smooth applications for infrastructure, 5G network through such as Cloud and high-speed resolution requiring and streaming 4K video Reality, Virtual Gaming, image transmission. camera 360-degree institutions, with standardization cooperation Our suppliers and agencies, government universities, speed at full continue R&D activities and our SMEs, a “technology being vision of in line with our only a not company, producing/developing” user.” “technology project our 5G R&D studies, of the scope Within communication 5G vehicle regarding proposal Union research the European by approved was the will implement also We 2020. Horizon fund 5G, the use of for scenario a vital truck platooning, partners with national and international together 5G vehicle H2020-supported first in Turkey’s project. communication in 5G in our R&D activities continued we As Turkcell, Networks), such as SON (Self Organizing areas focus and security network physical Slicing, Network health. the “Digital organized we As the leading operator, at the Haliç Congress with 5G” conference Journey technological addressed during which we Center, be to opportunities business 5G, of developments and particularly the World 5G all over by created The transformation. and the digital in Turkey, leading national and by attended conference fields in their with expertise speakers international 350 listeners over While attention. great attracted by followed it was in the conference, participated online. people of thousands supported we studies, 5G Valley of the scope Within in Ankara. infrastructures test of the establishment the sector, for human resources educate to In order Bilkent, of students postgraduate incorporating by Universities, and Hacettepe Technical Middle East By universities. with our cooperation enriched we suppliers global of R&D teams with local working support we such as Ericsson and Huawei, in Turkey efficiently. in Turkey them utilizing potential their studies development software continue We to suppliers in an attempt telecom with global one of and become technologies new develop them. utilize to in the world operators the first the developing constantly are we Accordingly, the expectations that models architecture network This manner. possible in the best customers our of OUR SUPPORT FOR LOCAL AND NATIONAL NATIONAL AND LOCAL FOR SUPPORT OUR SPEED. FULL AT CONTINUES TECHNOLOGIES are the prime contractor, we completed the the completed we the prime contractor, are on time, in 2017, that had begun 4.5G installations using also ULAK local by in 2018 successfully Maritime Transport, of Minister Our stations. base Kaan CEO and our and Communications, Affairs via BiP during call video made the first Terzioğlu, launch Stations” ULAK Base of the “Commissioning the of As a result 2018. 17, on May province in Kars brought we the Project, of completion successful 1,623 4.5G to over service the mobile broadband villages. the development Turkcell, of the contribution With for 3 years over ongoing for processes and testing have ULAK, station, base 4.5G local first Turkey’s to started we As Turkcell, final stage. its reached service live with the first customers our provide of in the city center station base the local through stations base local the use of increasing While Rize. the support for our continue we network, on our the product map of road the technical of creation requirements. technical its of and the determination 4.5G antenna the local developing of process The with conducted which we tests, network and live we In 2019, completed. successfully Aselsan were network. on our antennas local use the first plan to products local support for our limited not have We having also technologies, today’s through the of the technology support for our expanded and National 5G Local End-to-End “The 5G. future, and Scientific The by supported Project” Network (TUBITAK), Turkey of Council Research Technological companies 16 local with the participation of started within the Communication and operators the of the scope Within (HTK). Cluster Technologies support 8 different to started we as Turkcell, Project, technical of the determination for groups product testing. and site as laboratory as well specifications, With the contribution of of the contribution With the development Turkcell, processes and testing 3 years over ongoing for 4.5G local first Turkey’s for have ULAK, station, base its final stage. reached started we As Turkcell, customers our provide to service live with the first base the local through in the city center station Rize. of 42 TURKCELL ANNUAL REPORT 2018

OUR SUPERIOR TECHNOLOGY

As Turkcell, we added the “Dronecell” to our innovative solutions. With “Dronecell,” Turkey’s first flying base station, 4.5G mobile network service can be provided in areas with no coverage.

In 2018, Turkcell crowned its leadership on Internet of Things (IoT) with 2 awards.

year, by adding Internet of Things (IoT) studies WE HAVE CROWNED OUR LEADERSHIP IN THE we expanded the scope of Mixed Mode Multi IOT WITH PRESTIGIOUS AWARDS. Standard software developments, enabling 4.5G, 3G and all technologies to operate together. In the In 2018, Turkcell crowned its leadership on Internet of development process of new radio technologies, we Things (IoT) with 2 awards. We have been awarded filed patent applications in 3 separate topics. at the IoT World Europe in the Best End-to-End IoT Solution category for our “Connected Parking” WE PLAY AN ACTIVE ROLE IN DETERMINING THE project, and at Telecoms World in the Innovation STANDARDS OF OUR SECTOR. Award category for our “Water Irrigation” project.

In the beginning of 2018, as Turkcell, we became a WE ARE OFFERING INNOVATIVE SOLUTIONS TO member of the ETSI (European Telecommunication OUR CUSTOMERS. Standards Institute) and 3GPP (3rd Generation Partnership Project). Within the scope of these We implemented relay technology to provide memberships, we began to participate in ongoing 4.5G network coverage in regions where network standardization studies and related meetings, access was challenging. Thanks to the practical particularly on 5G. Similarly, we take part in installation and intelligent optimization feature various working groups within the framework through the plug-and-play method, we increase of our existing membership at the NGMN (New customer satisfaction by offering a fast and high Generation Mobile Networks) alliance. Besides, quality solution. The use of this solution, one of the as Turkcell, we also lead a project in the “5G Trial We implemented relay first examples in the world, is becoming increasingly and Testing Initiative” working group. We actively technology to provide widespread. participate in the studies of the Technology 4.5G network coverage in Group and Spectrum Group at GSMA and regions where network As Turkcell, we added the “Dronecell” to our closely monitor developments in these areas. We access was challenging. innovative solutions. With “Dronecell,” Turkey’s first are part of the management of a focus group Thanks to the practical flying base station, 4.5G mobile network service called “Machine Learning for Future Networks” installation and intelligent can be provided in areas with no coverage. at ITU-T’s Working Group 13 (SG13). Thus, we optimization feature We developed a solution to support search make significant contributions to studies that also through the plug-and- and rescue activities by providing temporary include 5G. We take part in the working groups play method, we increase coverage to inaccessible areas, in particular, within the 5G-PPP (5G Infrastructure Public Private customer satisfaction by during natural disasters and emergencies. Partnership), an outstanding initiative in Europe offering a fast and high focused on 5G research and development. quality solution. 2018 OPERATIONS 43 will will ANNUAL REPORT 2018 REPORT ANNUAL TURKCELL e became a member of the Open Network Network the Open of a member e became fter offering households 1 Gbps internet speed speed internet 1 Gbps households offering fter y the end of 2018, we are capable of delivering delivering of capable are we 2018, y the end of his year, Muğla and Edirne provinces were also also were Muğla and Edirne provinces his year, Foundation, which aims to accelerate the the accelerate which aims to Foundation, in operators telecom of transformation digital business and enrich their world the developing at the use of aimed this move, With models. aim to we and hardware, code source open offer the opportunity to customers our provide cost services digital of generation the latest effectively. 6.44 million to service internet fiber our infrastructure with our in 28 cities households infrastructure fiber Our and partnership activities. the year. km at the end of 42,700 reached internet. fiber Turkcell to introduced with an innovative solution in our network in in network solution in our with an innovative customers our of segmentation provide to order infrastructure of the scope within acquired also completed we Additionally, sharing projects. this for applications patent international our solution. another also undersigned we Turkey, for in a first this of users 10 times residential serving our first, ability gained we Accordingly, at 10 Gbps. speed, generation next high quality video-based offer to services. T W A W B » » structure anIPv6-based to switching e are » » » CYBER SECURITY SUPPORT FROM TURKCELL TO TO TURKCELL FROM SUPPORT SECURITY CYBER SUBSIDIARIES AND CUSTOMERS CORPORATE OUR Having pioneered digital transformation in Turkey, in Turkey, transformation digital Having pioneered operator digital first the world’s and become Turkcell investments, and technology its through » » » » » use its technological superiority to ensure cyber cyber use ensure to superiority its technological frastructure with the leading internet with the leading internet frastructure y expanding our plug-and-play Wi-Fi service service plug-and-play Wi-Fi our y expanding B Sharing in penetrate to country our of providers service in accordance focus at our services digital aim to we vision, operator digital with our the digital through ourselves differentiate our to provide we and experience services customers. launched for large enterprises and SMEs, we we and SMEs, enterprises large for launched focus. field of within our people young included on university service new our implemented We authorization. SIM-based through campuses » » TURKCELL ESTABLISHED THE DIGITAL INDOOR INDOOR DIGITAL THE ESTABLISHED TURKCELL LARGEST WORLD’S THE OF NETWORK SYSTEM AIRPORT. EVERYWHERE. IS QUALITY SERVICE TURKCELL » » As Turkcell, we assumed the task of establishing the the establishing of the task assumed we As Turkcell, the new of infrastructure mobile communication with an area largest, the world’s Airport, Istanbul 77.5 millionof m² and an annual accommodation The 200 million up to passengers. of capacity which is equipped infrastructure, mobile network country our that befits technology with advanced airport, the density at the new for and is suitable the launch for in time out rolled successfully was In addition to 2018. 29, on October organized technology, today’s of the boundaries pushing ensures deployed have that we the infrastructure thanks with confidence, the future to look that we to proud are We with 5G. compatibility its to speed with Gbps customers our providing be a digital through quality service and the highest features. all these that possesses infrastructure After offering households households offering After in speed internet 1 Gbps also we Turkey, for a first first, another undersigned residential serving our of users with 10 times at 10 Gbps. this speed, gained we Accordingly, high ability offer to next video-based quality services. generation 44 TURKCELL ANNUAL REPORT 2018

OUR SUPERIOR TECHNOLOGY

Having pioneered digital transformation in Turkey, and become the world’s first digital operator through its technology and investments, Turkcell will use its technological superiority to ensure cyber security.

security. In this respect, Turkcell offers custom at zero investment cost. In addition to the superior solutions against threats, through the Cyber technological infrastructure of our center, we will Defense Center established three years ago, and avoid system outages by protecting companies the Cyber Security Operation Center established against cyber-attacks with our professional last year. teams working on a 24/7 basis. Therefore, we will eliminate the unnecessary losses of our companies Our Cyber Defense Center team and Cyber and prevent possible financial losses. Security Operations Center team serve with knowledge-based approach with leadership of The Turkcell Cyber Security Operation Center was Turkish cyber security experts who are equipped designed with an infrastructure that can develop with skill set that revolves around knowledge, security solutions for corporate companies, as well talent and creativity. We have completed the as public institutions. transition to the 24/7 working structure aimed at real-time detection and prevention of cyber- FIRST CERTIFICATE attacks. The provision of continuous security monitoring of critical and high-value digital The Turkcell Cyber Defense Center and Cyber Security assets has enabled cyber security incidents to be Operation Center have been awarded the right to effectively intervened, reported, while supporting participate in and receive the certificate of FIRST compatibility. (Forum of Incident Response and Security Teams) organization, which has a total of 448 members The Turkcell Cyber THE SYSTEM WILL PERFORM 24/7 ANALYSIS AND including global giants, from 90 countries. Defense Center and Cyber GENERATE ALARMS. Security Operation Center The Turkcell Cyber Defense Center team and Cyber have been awarded the The Turkcell Cyber Security Operation Center Security Operations Center achieved a first in the right to participate in, and developed with international standards to serve private sector in Turkey by having FIRST Certificate receive the certificate of, 24/7, will oversee the previously experienced attack following the Information and Communication FIRST (Forum of Incident databases, both internationally and nationally, thanks Technologies Authority. Response and Security to its superior technological infrastructure. Thus, Teams) organization, detecting variations in user behavior at institutions With this certification, granting access to the best which has a total of 448 and it will generate alarms on cyber-attacks and the practices and tools in the area of cyber security, and members including global functioning of systems. These alarms will be examined establishing reliable communications with member giants, from 90 countries. in detail by cyber security expert analysts at the teams around the world, it is possible to respond Center, ensuring the prevention of attacks in advance. to security events aimed at our Company more effectively and rapidly. TOP-LEVEL CYBER PROTECTION FOR COMPANIES AT ZERO INVESTMENT COST TI MEMBERSHIP

With the digitalization of institutions, the number Turkcell Cyber Defense Center team became a of systems and business processes connected to member of the TI (Trusted Introducer) community, the internet is also increasing rapidly. This brings established in 2000 by the CSIRT (Cyber Security a number of cyber security risks, both globally Incident Response Teams) in Europe. and locally. For various reasons, it is not always TI membership ensures that the operations of the possible for institutions to have their own cyber Turkcell Cyber Defense Center team comply with security experts within their organization, or to international standards, enables receipt of support make investments for anticipation and prevention through early warning of and urgent informing on of potential risks. For this reason, we launched global cyber threats, and provides the opportunity our new center where we will offer end-to-end to meet with other CSIRT teams around the world high-level cyber security services to companies on a common platform. 2018 OPERATIONS 45 ANNUAL REPORT 2018 REPORT ANNUAL TURKCELL LIFECELL MIX LIFECELL BLOCKING AD CHARGING BROWSER YAANİ A – PREDICTION OUTAGE SERVICE STATION BASE APPLICATION ML/AI New generation digital data services were launched launched were services data digital generation New in further a step going By Project. with the Appworld users our enabled we usage, data standard charging the applications from packages own their create to the most incorporate to managed We wish. as they the into applications and global domestic popular our that model a tariff introduced We range. selection lack. competitors that is not service an ad blocking launched We this With in Turkey. operator other any by offered quality internet users a higher our provide we service, advertisements undesired preventing by experience on the internet. to exposed are customers that our the on both activated be can Service Blocking Ad The time via My Account in real network mobile and fixed software. any installing without application we charging, browser-based innovative With of in the area the world for a first implemented pricing structure With pricing. application-based and engine Yaani search local the use of to specific by use Yaani to enabled users were browser, Yaani having without quotas, Yaani their spending from This packages. internet on their use the quota to local the use of at increasing is aimed application engine Yaani. search studies, Prediction” Outage Service “Base Station of digitalization of within the scope conducted fruitful generate to begun have operations, our managed outages, site this application, With results. the incident before predicted are today, reactively any without taken are actions and necessary occurs, impact. customer and the 200 million alarm records Approximately processed are data 200 GB of corresponding Turkcell’s by with the algorithm developed together ML (Machine Learning) local on Turkcell’s engineers for prediction An outage platform. together is calculated time frame a 24-hour basis. on a site rate with realization usability of hours thousand 33 year, on the full Based interventions. proactive due to is anticipated increase the outages, site of with the prevention In addition, customers that our problems signal loss instant in a 5% decrease Thus, will prevented. be experience is foreseen. complaints customer of number the total iP iP TELCO CLOUD TELCO TURKCELL UNIFIED COMMUNICATIONS UNIFIED TURKCELL MY SECOND NUMBER IS ON B ON IS NUMBER SECOND MY B AT HOME Turkcell became the leader of Telco Cloud Cloud Telco of the leader became Turkcell virtualization of standard the new investments, a implementing By sector. in the telecommunications 1.8 Tbps, of capacity with an overall virtual investment in this operators few the world’s one of became we on the VoLTE virtualization 70% providing By field. and advantage cost significant gained we network, central Our services. voice digital new for flexibility is services and voice data our providing network 2020. by 75% virtualized be to targeted Turkcell Unified Communications is a cloud PBX PBX is a cloud Communications Unified Turkcell fixed our to offer to started have that we service the traditional In addition to customers. corporate announcement, greeting (company PBX services forwarding, transfer, dialing, call short code the SoftClient etc.), voicemail, music, standby on PC and mobile phones downloaded application using a single-number of the experience offers calls and video voice and mobile phone, fixed for and instant teleconferencing the employees, of messaging. It is now possible to make and receive calls using using calls and receive make to possible It is now the most As one of via BiP. the home phone number and digital our that combines service important few a Home at BiP is among just services, operator in the World. such examples with the BiP IMS network fixed our integrating By in use home telephones to the need infrastructure, possible It is now will eliminated. be location a fixed while via home numbers, calls and receive make to mobile. being It is now possible to make and receive calls with with calls and receive make to possible It is now started We BiP. through mobile number a second our this to of example second the world’s offer to services important the most as one of customers services. and operator digital our combining by phones two carrying the issue of eliminate We mobile IMS (IP Multimedia Subsystem) our integrating this service With with BiP infrastructure. network via BiP number a second the use of allowing coming the calls number, on the first downloaded via BiP received be can number the second to be to while calls number, on the first downloaded initiated also be can number the second made from number. on the first via BiP, We launched an ad an ad launched We that is service blocking other any by offered not With in Turkey. operator provide we this service, quality users a higher our by experience internet undesired preventing that our advertisements to exposed are customers on the internet. 46 TURKCELL ANNUAL REPORT 2018

OUR CONSUMER BUSINESS

We increased the time during which we add value to our users’ lives over 1440 minutes of the day through the campaigns and communications that we enrich with our digital services.

freely communicate while they are holiday in Mobile AS THE WORLD’S FIRST DIGITAL OPERATOR, Turkey. Moreover, upon return to their country (Multiplay) WE LAUNCHED MANY OF OUR MASS of residence, they can register to BiP with their CAMPAIGNS IN 2018 OVER OUR DIGITAL foreign number in use in their country of domicile, 66.7% SERVICES. nd 60.5% 63.9% and through the 2 Number service on BiP, may 58.7% call their loved ones in Turkey as often as they We increased the time during which we add wish. value to our users’ lives over 1440 minutes of the day through the campaigns and communications The number of our customers who prefer that we enrich with our digital services. Lifecell continues to increase nearly doubling each quarter. In Lifecell, which provides Together with increasing service usage, we rich internet offers, subscribers consume an continue to increase the number of customers average of 8.6 GB of internet. Our customers using our multiple products. who prefer Lifecell are 50% more loyal and create 1.3 times ARPU. LIFECELL’S UNLIMITED INTERNET WORLD 1Q 2018 4Q 2018 2Q 2018 3Q 2018 CONTINUES TO GROW WITH BRAND NEW WE ALSO HAVE OUR CUSTOMERS FEATURES. EXPERIENCE HIGH SPEED SEAMLESS INTERNET IN THEIR HOMES. As of December, we reached 2.5 million subscribers in our Lifecell world, where we meet We continued to meet the fixed broadband all of our customers’ communication needs with needs of our customers with our evolving product our digital services and mobile internet service, range. In addition to our fiber and ADSL services, wholly built on mobile data and entirely realized we offered Superbox with its superior technology, Fiber Residential online. and had our customers experience 4.5G speed at (Multiplay with TV) home. With Superbox, offering high-speed home On our digital brand journey that we set out on in internet with easy installation for those households 46.8% 47.5% 48.6% the last quarter of 2017, we provide our customers 45.7% that don’t have fiber infrastructure, and a unique with a more flexible and free Lifecell world with customer experience, we exceeded 33 thousand the Lifecell Mix incentives offered as of the second customers in our first year. Superbox continues to quarter of 2018. Lifecell customers experience grow with a monthly average growth rate of 30% the freedom of creating their own packages by in the number of new customers. choosing from a pool of nearly 30 applications, which are most widely used in Turkey and in the In 2018, the number of our customers who World, in addition to the rich internet offering experienced our unique fiber speed had available for Turkcell applications BiP, fizy, lifebox, reached 1.4 million. We continued to support TV+, Dergilik and Yaani, included in their packages. our multiplay strategy, a focus area also in 2018, with our TV+ product offered with our 1Q 2018 4Q 2018 2Q 2018 3Q 2018 In 2018, within Lifecell World, we implemented fiber service. On the fixed front, the ratio of brand new solutions for Turkish citizens living customers using multiplay with TV services in other countries. We launched Lifecell One reached 48.6%. offerings tailored to the communication needs of our citizens living abroad enabling them to 2018 OPERATIONS 47 DSS 32% 29% Data ANNUAL REPORT 2018 REPORT ANNUAL TURKCELL Paycell 4% Voice 8% App Data 27% DIGITAL LOYALTY DIGITAL Gifts on Shake and Win on Shake Gifts Turkcell sets an example for the entire world with with world the entire for an example sets Turkcell operator, digital first world’s The 4.5G network. its in the world the best one of named was Turkcell Global in May 2018 network, 4.5G (LTE) its for Mobile Global the by published Report Status (GSA). Suppliers Association (Salla Win and Kazan) Shake and Win, Shake campaign, popular most Turkcell’s 21 million to Turkcell 604 million gifts has delivered on November launch its since mobile customers which grants this campaign, With 2016. 28, two Friday, every shake to right a new customers Ramadan of week on the granted were shakes Sacrifice. of and Feast million 297 GB of which awarded Win, and Shake billion and 73 BiP minutes 48 billion minutes data, them with a sense provided customers, Turkcell to customer. a Turkcell being of privilege of to granted gifts 32% of where Win, and Shake BiP, and lifebox Dergilik, fizy, TV+, were customers to subscribers Turkcell for a platform became Turkcell’s services. digital and experience access by supported was focus penetration service Campaign, Gift such as Dergilik additional features and in Shake who participated subscribers where when downloading additional gifts received Win, application. Dergilik the from magazines 4.5G Turkcell’s benefited greatly Win and Shake participation the campaign’s to thanks focus and 4.5G ownership 4.5G SIM card of prerequisite while participating taken approvals subscription the fight of the scope Within in the campaign. cards SIM whose subscribers inflation, against also allowed with 4.5G were compatible not were till November from in the campaign participate to year-end. 5.9 7.6 Total Users Total 3.4 4.3 5.9 3.0 user Lifecell 2.8 8.6 GB 8.6 GB 4.3 4Q 2016 4Q 2017 4Q 2018 Non 4.5G Users 4.5G Users 2.2 FASTEST IN 4.5G FASTEST (Average GB/User) (Average Usage Mobile Data In 2018, we continued to connect our customers customers our connect to continued we In 2018, by experience speed fiber with a seamless life to that packages unlimited literally on our focusing the same time, At Usage Quota. a Fair don’t have with or customers all our for world a created we experience freely to Usage Quota Fair a without fizy, BiP, where services, digital innovative Turkcell’s deducted usage is not and Dergilik lifebox TV+, quotas. customers’ our from up our open to the initiative of the scope Within operators national other to infrastructure fiber participate to continued we in 2014, initiated technological the to that contribute in projects in country our of and development transformation project, infrastructure supporting the joint by 2018 of with the leading companies together initiated the sector. 4.5G with Usage in Data Increase Continuous packages doubling the internet campaign The free SIM cards, who change their customers of and the 4.5G Shake and campaign SIM Card significant the most provided campaign Win during the 4.5G transformation contribution the 4.5G of on the anniversary In addition, period. Campaign, the 4.5G Ramadan launch, technology internet customers’ our doubled we where 3.4 million saw the participation of packages, against the fight of In the context customers. subscribers card 4.5G SIM our offered we inflation, package internet their double the opportunity to which was campaign, The months. three for 31, December 13 to October from available these to Thanks million 6.3 subscribers. attracted for rewarded be to begun have we campaigns, of the ratio 2018, the end of At investments. our among devices using 4.5G compatible subscribers average The 80%. to smartphone users rose rose 4.5G customers our usage of data monthly as much twice creating 8 GB in December, to users. other by as generated traffic customer. them with a sense of them with a sense of Shake and Win, which which and Win, Shake awarded 297 million GB million 297 GB awarded of data, 48 billion minutes 48 billion minutes data, of 297 million297 GB privilege of being a Turkcell a Turkcell being privilege of and 73 billion BiP minutes to to billionand 73 BiP minutes Turkcell customers, provided provided customers, Turkcell Turkcell sets an example an example sets Turkcell world the entire for 4.5G network. its with digital first world’s The was Turkcell, operator, the best of one named 4.5G its for in the world in May network, (LTE) Global Status 2018 the by published Report Global Mobile Suppliers (GSA). Association 48 TURKCELL ANNUAL REPORT 2018

OUR CONSUMER BUSINESS

Turkcell gave full support to the “All-out War Program Against Inflation” announced by the Ministry of Treasury and Finance.

Since the launch of the campaign, the number of GNÇ downloads of the My Account application, which Relaunched in May 2018 and downloaded 6 enables customers to access Shake and Win, has million times, the GNÇ application is now open We gave gifts to those risen from 10 million to 38.8 million, whereas the to the young subscribers of all operators. In the of our customers who number of 3 month active users has been 19.2 renewed GNÇ application, we started the “CRACK followed the Surprise million per month. THE EGG” era this year. This smart system, which Point Campaign in the BiP is developed and patented by Turkcell Technology discover field, and went to Shake and Win has a positive effect on and marks a first for the World, enables young the point where the gifts valuable customer retention activities, due to people to crack the surprise eggs on the GNÇ had been located. So far, the continuous benefit perception it gives to application twice a week and earn hourly 7 million subscribers customers owning a smartphone. internet opportunities according to the network have participated in the density at that time. With this newly-developed campaign through the The Fight Against Inflation smart system, we use our networks efficiently, channel, which began in Turkcell gave full support to the “All-out War reduce our costs, and bring our young customers April 2018, and won Program Against Inflation” announced by together with rich internet experience in the 50 million gifts. the Ministry of Treasury and Finance. We most efficient manner. The hourly 1 GB packages doubled the internet quotas of our customers’ that we developed for the potential needs of packages as of October 13, to enable everyone young people for hourly internet and a daily 1 GB to meet their communication needs more package for TRY 1, attracted considerable interest easily. We also doubled the GBs valid for having opened the door to the rich internet world. our digital applications BiP, TV+, Dergilik and lifebox. During the campaign, customers with In addition, young people benefit from the GNÇ a 4.5G compatible SIM card had to access application in areas such as practicing English the BiP application and follow the “All-out language for their academic and career needs, War Program Against Inflation” channel under as well as access to university lecture notes and the discover field. At the same time, our preparation for exams. With our campaign aimed customers without a 4.5G compatible SIM card at increasing youth recognition of Paycell, young participated in the campaign between 15 and people are not subject to transfer fees when 30 November and doubled the internet in their realizing money transfers from mobile to mobile packages. Thus, 6.3 million customers have on the GNÇ application. participated in the campaign through the BiP channel. With the GNÇ application, positioned as a platform that markets other applications in our Surprise Point focus, young people enjoy various opportunities in We gave gifts to those of our customers who applications such as TV+, fizy, Yaani and BiP. One followed the Surprise Point Campaign in the BiP of our most popular campaigns was the 2 GB discover field, and went to the point where the internet gift campaign implemented via TV gifts had been located. So far, 7 million subscribers communication took place in June over BiP for our have participated in the campaign through the users under the age of 26, With such campaigns, channel, which began in April 2018, and won we managed to increase the use of our digital 50 million gifts. Our customers have so far won services among the youth segment. In 2018, two a total of 50 million GB data, 9 million digital out of every three of our young customers benefit service gifts as well as a total of 8 billion minutes from our postpaid offers including all our digital including 5 billion voice minutes and 3 billion BiP services free of charge. One out of two of our minutes. young customers is using the GNÇ packages prepared specifically for young people. 2018 OPERATIONS 49 ANNUAL REPORT 2018 REPORT ANNUAL TURKCELL ROAMING Platinum Package World Platinum Package in the needs internet increasing the With the Platinum added have we world, digitalized which portfolio, offering our to 50 package such as BiP, services rich digital our features provided and Dergilik, Yaani lifebox, TV+, fizy, 50 Platinum The Platinum customers. our to use of with benefits has 50 GB package calls. international and the placing of abroad with integrated been have services digital Our and retention acquisition customer new our via gift such as movie with schemes activities, voucher. gift and Fulltrip TV+, Abroad Life to Connect Freely Users Turkcell perception brand its strengthened Turkcell In 2018, its to offered the rich incentives providing by Turkcell countries. in more abroad customers which accompanies applications offer to started in abroad lives their and facilitates customers our as well. countries more Home in 85 countries Like Roam as tariffs domestic their utilize users can Turkcell dealing without using them in Turkey, were if they an paying simply by with additional procedures, additional daily fee. its to countries 12 new added Turkcell In 2018, in making it available feature, Home” Like “Roam in total. 85 countries use this feature, to customers for In order they segment; or price, tariff their of regardless including internet, tariff, on a postpaid be to need time. and SMS at the same minute, Tariff Smart World Advantageous without abroad travel customers our When Smart our from benefit they a package, choosing being of instead purposes, safety for tariff World fees. linear at unfavorable charged Lines Prepaid for Offers Abroad Unrivalled Turkcell from package, Abroad” the “Advantageous to Thanks countries, as in 88 other as well in Turkey, valid also conveniently can customers prepaid our rich with ones loved with their communicate life to connected and remain incentives, package while abroad. with Turkcell Card Prepaid Your Home with Like Roam Uçuran who buy customers, prepaid Our 4.5G offerings, our as part of provided Packages, in wish, as they abroad tariffs use their can an additional daily fee. for exchange PLATINUM We Continue to Offer Superior Services that that Services Superior Offer to Continue We Adding by Customers Our for a Difference Make Privilege. of the Platinum World to Innovations brand the Turkcell Platinum, Turkcell Through and needs with high internet customers addressing embraced we requirements, communication heavy the customers our offering by this year, innovations reaching brand, Our before. offered not privileges lives customers’ our enriched 2.1 million customers, this offered and privileges sponsorships with our with sponsorships customers our by stood We year. Concerts, Flight Platinum Night such as the Turkcell Platinum Turkcell Park, Platinum Offroad Turkcell Cup, Platinum Bosphorus Turkcell Arena, Zorlu Fishing Alaçatı Platinum International Turkcell Challenge, Platinum Golf and Turkcell Tournament, sponsorships. venue seasonal as with as well such as free benefits current our continuing While we and D&R, with THY and Ankara in Istanbul valet as such areas in diverse innovations undersigned and Art Culture 1001 Center, Performance the Zorlu on the focused we year, This and Offroad. Concept Samsun and Kocaeli Antalya, Bursa, Mersin, Adana, provided We localization. of goal our with provinces services rental and car washing car cinema, Havaş, provinces. these to specific communication through we with Samsun Municipality, together Working Challenge Platinum Golf Turkcell the first organized 11 approximately which reached Samsun event, million people. main channel our Platinum application, Turkcell The reached customers, with our communication of thousand and 700 2.5 million downloads of quarter the fourth users as of active three-month a into application our turned We 2018. willing to brands Premium revenue-generator. pay to need part in the Platinum application take in the Turkcell included be to price the campaign high-GB who prefer customers Our application. Platinum who use fiber or Platinum packages, Platinum as privileges more receive now packages Platinum Black customers These Black customers. as new as well additional internet, 5 GB of receive month. each surprises year. the Turkcell brand brand the Turkcell 2.1 million customers 2.1 million customers, 2.1 million customers, heavy communication communication heavy offering our customers customers our offering high internet needs and and needs high internet innovations this year, by by this year, innovations enriched our customers’ customers’ our enriched the privileges not offered offered not the privileges Through Turkcell Platinum, Platinum, Turkcell Through and privileges offered this this offered and privileges lives with our sponsorships sponsorships our with lives addressing customers with with customers addressing before. Our brand, reaching reaching brand, Our before. requirements, we embraced embraced we requirements, 50 TURKCELL ANNUAL REPORT 2018

OUR CONSUMER BUSINESS

Through our customer-oriented approach, reception quality and uninterrupted connection, we continued our Net Promoter Score leadership.

WE FACILITATE LIFE.

Turkcell Store is Just One Click Away Thanks to the “Fast Login” technology that we have integrated into our website, we made it possible for our 27 million visitors each month to log into turkcell.com.tr, the nearest Turkcell Store, safely and quickly with one click.

Moreover, we offer our customers an easy and lucrative e-commerce experience with a wide range of product alternatives from smartphones to accessories, and from new generation technologies to computers with advantageous payment options. We provide special offers specific to turkcell.com.tr on special days to enrich the e-commerce experience. In addition, we are implementing multi-channel sales schemes with Professional Tour Guide on Your Mobile Phone our Yellow Days Campaign, integrated with our When Abroad stores and digital channels. Thanks to the Piri application, Turkcell customers have their own professional tour guide on their The marketing automation schemes enable mobile phones when abroad. The overseas us to know our customers better and provide tours, prepared with unique content by Saffet them customized campaign offers. Accordingly, Emre Tonguç, Turkey’s most widely travelling tour our new device and campaign offers reach our guide, tells Piri users the unknown stories of the users with the most appropriate design and city they are visiting. With audio walking feature, visuals. We also use marketing automation which is free of charge for Turkcell customers, schemes in new customer acquisition via the beauty and stories of the cities, guided by turkcell.com.tr. For example, we provide offers Piri, can be listened in Turkish and explored. With by changing our message and visual based on Piri’s overseas tours, users can explore London, the weather conditions at the user’s location. Amsterdam, Paris, Rome and Barcelona by listening to a guide in their own language. In 2018, we launched the transformation of our Turkcell brand and logo, after having reflected all Video Call with BiP Abroad arrangements on our web and mobile site, with Through BiP’s Abroad Campaign valid in our new brand communication. 88 countries that provides 1 GB free of charge 88 countries data to be used on BiP, all Turkcell customers can turkcell.com.tr visitors, the majority of whom Through BiP’s Abroad fulfil their loved ones’ longing through BiP video are mobile internet users, continue to reach all Campaign valid in calls while talking and messaging as they wish. products, services, digital services and campaigns 88 countries that provides Thanks to BiP’s new group conversation feature, Turkcell offers its subscribers, in a more 1 GB free of charge data to no matter how far they may be from their loved customized manner. be used on BiP, all Turkcell ones, they also have the opportunity to talk to customers can fulfil their them simultaneously. And if they need to call loved ones’ longing through Turkcell customer services while abroad, they can BiP video calls while talking do so free of charge via BiP. Moreover, calls from and messaging as they BiP in all directions are charged as domestic calls. wish. 2018 OPERATIONS 51 +25 +19 +24 Points over the third best competitor best the third over Points +16 +23 ANNUAL REPORT 2018 REPORT ANNUAL +19 +21 TURKCELL 1Q18 2Q18 3Q18 4Q18 of every month. We began the digitalization the digitalization began We month. every of Points over the next best competitor best the next over Points th +14 INCREASING CUSTOMER SATISFACTION CUSTOMER INCREASING Net Promoter Score (NPS) of 4.5G Users (NPS) of Score Promoter Net Competition with - Gap Fans with these digital packages, had the had the packages, digital with these Fans special many from benefit opportunity to club to such as having access surprises, Support Red the Yellow from information tickets, match gift on BiP, channel established while supporting their and balls, shirts signed the who have customers our Moreover, team. each day for 1 GB per won Champion package, and additional 200 Galatasaray by game won scored. goal each MB for MobileBursa offered we with Bursaspor, the cooperation With initial code Bursa with the “516” for specific lines the of number plate the license that includes of fans living in Bursa and who are those for city, the special In addition to and white. the green Turkcell’s of full tariffs offered we number, 3 GB earn to the chance services, rich digital with the Bring a internet additional monthly to gift and a 200 MB internet Campaign Friend scored. Bursaspor goal every for customers our the “green- one of to subscribed Bursa citizens line from a 516 obtaining by packages white” win various to the chance also have Turkcell, on the organized with campaigns surprise gifts 16 process of Bursaspor, which has undersigned which has undersigned Bursaspor, of process biggest five Turkey’s as one of firsts, several championship. experienced teams approach, customer-oriented our Through connection, quality and uninterrupted reception leadership. Score Promoter Net our continued we among the 4.5G is also the leader Turkcell of expectations higher who have customers best the next over points Our the operators. score in the promoter higher are competitor using not those to the 4.5G users compared of 4.5G. +23 +13 +24 Points over the third best competitor best the third over Points +14 +23 +12 +20 1Q18 2Q18 3Q18 4Q18 Points over the next best competitor best the next over Points +9 OUR NEW COLLABORATIONS IN SPORTS IN COLLABORATIONS NEW OUR TRULY IT BELONGS TO US, IT BELONGS TO TO BELONGS IT US, TO BELONGS IT TRULY IT. OF INCH EVERY WITH TURKEY Net Promoter Score (NPS) (NPS) Score Promoter Net Competition with - Gap Galatasaray Digital Cooperation Galatasaray the of step as the first In January 2018, we Club, Sports Galatasaray of digitalization called packages digital special three offered our of those for and Champion Red Yellow, allowing and red, the yellow who love customers In addition to team. support their further them to including packages these Turkcell, for a first being bring the Galatasaray aim to services digital our Thus, environment. in a digital together community our for value economic sustainable create we the largest one of Galatasaray, partner, business club in Turkey. sports turkiyeninuygulamalari.com goal our towards rapidly progressing are We digital Turkey’s of the growth to contributing of production and supporting domestic economy develop and create to continue We momentum. lives. customers’ that enrich our services digital website turkiyeninuygulamalari.com launched We developed the applications explain we where again and in users once to organization within our and and national concept, the local through detail download. easy enable their ensure to Turkey of Applications offered We that our in Turkey, remains data that Turkey’s and that language, our understands application Turkey’s to contributes generate that we value our engineers Turkish by entirely Developed growth. Turkey, of on Applications and programmers, to presented are applications wholly-domestic to entertainment from ranging customers our music, to television from services, information search to newspapers and magazines from content. educational to sports from and engines, We launched launched We turkiyeninuygulamalari.com explain we where website developed the applications organization our within again and once users to the local in detail through and national concept, and enable easy their download. 52 TURKCELL ANNUAL REPORT 2018

OUR CORPORATE BUSINESS

Turkcell, the world’s first digital operator, renewed its world of corporate products and services with a brand new vision, to accompany institutions through every stage of their digitalization process.

special service packages were launched to meet the entire digital communication needs of nearly 2 million artisans. Therefore, another important step was taken towards the rapid digitalization process of artisans, the lifeblood of the Turkish economy.

As the first step towards long-term digitalization process, TESK-member artisans can meet all their digital communication needs by opting for Turkcell’s artisan packages. At the same time, they also benefit from digital solutions such as Smart Fax specific to them. To qualify, it is sufficient for customers to have a TESK Card featuring the advantages aimed at artisans and craftsmen.

WE CONTINUE OUR LEADERSHIP OF THE NET PROMOTER SCORE.

TURKCELL HAS COMPLETELY RENEWED ITS With the increase in our digital product and CORPORATE WORLD: “İŞTE DESTEK İŞTE service penetration, we posted an increase in both Turkcell has strengthened TURKCELL” market share and brand image criteria. We not its leadership position as only maintained our leadership position in the Net the most recommended Turkcell, the world’s first digital operator, renewed Promoter Score (NPS) of corporate customers, operator for its internet its world of corporate products and services with a but also increased the score difference to 8 points speed and innovative brand new vision, to accompany institutions through between our nearest competitor thanks to the digital services during a every stage of their digitalization process. Taking the contribution of the products and services developed period when competitors responsibility for digitalization of companies in Turkey that are tailored to the needs of our customers. experienced losses in as a mission, Turkcell brought a new perspective to Turkcell has strengthened its leadership position as many areas, primarily product and service platform. the most recommended operator for its internet market share, NPS and speed and innovative digital services during a period image scores. Turkcell, which produces customized solutions when competitors experienced losses in many areas, for the needs of companies, did not forget those primarily market share, NPS and image scores. entrepreneurs running their own businesses, declaring “İşte Destek İşte Turkcell.” By visiting the Now, our customers are listening to music from the small companies that make up 85% of the national fizy, while following up on news and programs on economy, hearing them out on site, and determining TV+ and newspapers from Dergilik. While enabling their digital needs, Turkcell offers solutions in a single our customers to experience digital services, we package, such as e-accounting and mobile internet continue to develop those services to facilitate their support, as well as the unlimited fiber internet that daily life. companies need the most.

TURKCELL AND TESK DIGITIZE ARTISANS.

Turkcell conducts the digitalization process of the members of the Confederation of Turkish Tradesmen and Craftsmen (TESK), Turkey’s largest professional non-governmental organization. With the cooperation of TESK and Turkcell, advantageous 2018 OPERATIONS 53 sale was sale was 2 m ANNUAL REPORT 2018 REPORT ANNUAL customer area was activated. With the the With activated. was area customer 2 m urkcell, we integrated all cloud services that that services all cloud integrated we urkcell, ebze Data Center, 2,000 Center, Data ebze TURKCELL ith the opening of Izmir Data Center, the first Tier Tier the first Center, Data Izmir of ith the opening e became the Oracle Cloud best seller business business seller best Cloud the Oracle e became grade students throughout Turkey. We contributed contributed We Turkey. throughout students grade rd digitalized our cloud sales and order processes. and order sales cloud our digitalized W conducted the projects through the year of partner this year. with Oracle in cooperation As T new module, we will host the data of our new new our of the data will host we module, new customers. with a customers corporate our to offer we We on www.turkcellbulut.com. experience portal performed within two years. In November 2018, 2018, In November years. within two performed 1,000 W In G 3 certified data center in the Aegean Region, we we Region, in the Aegean center data 3 certified and cloud center data of the provision commenced Ankara, Kocaeli, (Izmir, cities different in four services Istanbul). » » » » CLOUD COMPUTING AND DATA CENTERS DATA AND COMPUTING CLOUD OUR ACHIEVEMENTS IN INFORMATION INFORMATION IN ACHIEVEMENTS OUR SERVICES TECHNOLOGY » » We provide and manage all information technology technology manage all and information provide We and wireless wired centers, including data infrastructure, in the City devices and end-user infrastructure network in health transformation digital of the pioneers Hospitals, within operation the entire manage we In addition, sector. Management Information Hospital with the this scope which is the heart of service, software application System in the hosted personnel entry and the data the hospital, with in 2017 which began transformation, This hospital. with Elazığ and continues hospitals, city Adana and Yozgat in 2019. and Bursa hospitals in 2018 Eskişehir with project Screening the Talent launched we In May, the talents explore to Sports and Youth of the Ministry of 3 » » Turkcell Expanded its Data Center and Cloud and Cloud Center Data its Expanded Turkcell Data 3 Certified Tier the First Opening by Services in Izmir. Region the Aegean of Center this year: centers, and data computing cloud of In the area As Turkcell, we are among the leading companies in terms in terms leading among the companies are we As Turkcell, revenues Services Technology Information 2017 our of the that reviews IDC, by published the report to according services Technology Information Turkey’s of status market operator digital our In addition to in September. year, each this achieve us to enabled identity integrator vision our outcome. important team Chain Management Supply our In addition, Partner Services Managed Cisco the 2018 received the partnership with to thanks Award the Year of hospital our of the purchases for this year Cisco and Integration the DIIS (Digital by managed projects which competitor, our overtaking IT Solutions) team years. five for the leading position maintained to Turkish sports by taking part in the installation and partthe installation in taking by sports Turkish to mobile infrastructure. of integration THE CHOICE OF TURKEY’S LARGEST LARGEST TURKEY’S OF CHOICE THE TURKCELL COMPANIES: OF STAR THE WERE SERVICES DIGITAL MULTIPLAY. MOBILE PRIVATE PUBLIC AND INTEGRATION SYSTEM COLLABORATIONS Turkcell, the world’s first digital operator, is preferred is preferred operator, digital first the world’s Turkcell, country. our of companies valuable the most by announced recently on the most companies Of those Turkey. for with Turkcell, 88% work 500 list, Fortune from service receive on the list 10 companies All top it also provides itself, digitizes And as Turkcell Turkcell. with on it works companies the giant support to full transformation. digital of the path the increased Turkcell segment, In the corporate a 40% in by 2P-3P-4P customers of number total the use of where multiplay, in corporate year mobile business products, core mobile/fixed services and cloud center data fixed applications, that are incentives data our Through monitored. are BiP, fizy, such as TV+, services in digital used be to customers our all of enabled we and Dergilik; lifebox having to without services these experience to accelerated We packages. in their the internet spend benefits, increasing through upsell customers’ our attached and the campaigns content differentiated packages. these to customers’ our solutions to offer to continue We needs technology information and other telecom supporting by is achieved This a single point. from in our adopted solution approach end-to-end our and Integration System with our business corporate In line organization. Services Technology Information in 200 projects over implemented we vision, with our undertaken projects of the number 2018, As of 2017. the roof under team management project our by Technology and Information Integration Digital of address we projects, In these 550. Solutions exceeded from needs analyzing customer solution by the right team management project and with our sector, each security solutions such as network, our implement we management, application management, and system digital services, center data support, end-user and mobile mobile applications IoT, transformation, customers’ with our in accordance support, user processes. business and Information Integration Digital our In addition to a be mission is to our Solutions approach, Technology processes in the restructuring partner business critical in the Accordingly, forward. country our that will carry have we solution partner, digital country’s our of role in the public sector, projects valuable undersigned do so. to will continue and we As of 2018, the number of of the number 2018, As of by undertaken projects management project our of the roof under team and Integration Digital Technology Information 550. Solutions exceeded Of those companies on the on the companies Of those announced recently most 88% work 500 list, Fortune Turkey. for with Turkcell, on All 10 companies top service receive the list Turkcell. from 54 TURKCELL ANNUAL REPORT 2018

OUR CORPORATE BUSINESS

In the Technology Summit, Turkey’s largest technology event, 127 expert speakers in 46 sessions took stage.

+10 thousand participants

30

thousand CYBER SECURITY TECHNOLOGY SUMMIT live broadcast viewers Having established a Cyber Security Operation In April, we organized the Technology Summit, Turkey’s Center, Turkcell offers companies 24/7 tailored largest technology event, with the theme of “Turkey. solutions against threats. Today. Now.” A total of 10 thousand people from our thousands of customer companies participated in the Having pioneered digital transformation in Turkey vast event, where 127 expert speakers in 46 sessions and become the world’s first digital operator with took stage to address many subjects that shape its technology and investments, Turkcell also uses its the future, such as artificial intelligence, blockchain technological superiority to ensure cyber security. For and digitalization. Our event, which brought our this purpose, Turkcell established a Cyber Security corporate business partners together with the opinion Operations Center and offers companies 24/7 leaders of the world of science and technology, also tailored solutions against threats. attracted interest at state level, with the participation of the Information and Communication Technologies Having introduced the digital technologies, developed Authority President and ministries. Access to to ensure the security of networks and systems, Turkcell launched a new Cyber Security Operation Our event, which attracted record participation, 12 million Center that will provide institutions 24/7 service. also registered a record in terms of press coverage, people on Thanks to the new center established at Turkcell appearing in 47 publications. Our news, covering a Maltepe Technology Plaza, expert teams monitor the total of 10 newspaper pages, reached approximately social media potential cyber-attacks that institutions may face. By 10 million people. taking necessary measures beforehand, institutions are protected against cyber-attacks 24/7. At the cyber security center set to serve institutions, the prevention of material and moral damages is aimed at by avoiding data and information losses. 2018 OPERATIONS 56 TURKCELL ANNUAL REPORT 2018

TURKCELL ON COMMUNICATION

We thoroughly renewed our visual world, in accordance with the changing and digitalizing world.

On the path on which we set off as the Şoray, who had not appeared on the screen world’s first digital operator, we have now for many years. During this period, we shot TV concluded another successful year where our technology programs at our stores, and through We hold a total of 15 solutions added value to life, where our projects radio broadcasts in Turkcell stores, we gave awards from Crystal demonstrated our social responsibility, and our consumers the opportunity to experience our new Apple, and were selected family expanded. We were deemed worthy of technologies. by Crystal Apple as an many awards for our communication campaigns. advertiser that had We hold a total of 15 awards from Crystal Apple, As Turkcell, with our strong presence during the encouraged creativity Turkey’s preeminent marketing and creativity special days, we once again designed very over the past 30 years. awards event. In addition, we were selected special campaigns. Our October 29 campaign in by Crystal Apple as an advertiser that had 2017, identified as the most admired commercial encouraged creativity over the past 30 years. We film of the past seven years, according to the also received the “coolest brand” award in the results of research conducted by Mediacat telecom sector from Marketing Turkey. and Ipsos, once again made us proud. In our campaign, we highlighted our integrity under We thoroughly renewed our visual world, in the Turkish flag, with the message of unity and accordance with the changing and digitalizing solidarity, and on the day of October 29, we world. In the new world, we further strengthened celebrated Republic Day with the voice of our our natural, warm and sincere communication founder Atatürk. We touched the hearts of millions with our customers on the marketing front with of people, achieving a great success. On the the phrase “connect to life right now.” The cast of feast of Ramadan, we delivered Turkish people our commercial prepared for the launch of our the message to “leave the phones aside and be major change featured the legendary Türkan with the family and loved ones” with our “Bayram Olsun” commercial film. 2018 OPERATIONS 57 ANNUAL REPORT 2018 REPORT ANNUAL TURKCELL For the successful integrated communication of our our of communication integrated the successful For received we campaign, Gelin” Mix “Yiyosa Lifecell and service in general awards and Bronze the Silver in “Media First” used We Apple. Crystal of categories mass communication TV Viewers Light with Turkey the new launch of the for Lifecell. operator, data-focused phenomenon Uncle the internet use of Our offering customer in new video Şelale and its of in terms example a good set communication time with real and remembered mentioned being frequently the most one of It was communication. five of a period films for commercial remembered has ranked Turkcell January 2017, Since months. frequently most seven top on Adwatch’s times eight competitor whereas films, commercial remembered once. ranked were commercials the adopt to the first became we As Turkcell, communication Usage Quota” is no Fair “There In competitors. our of ahead implementation use able to were customers fiber Turkcell addition, applications digital and lifebox Dergilik TV+, fizy, BiP, internet their of the quota spend to the need without used. they which tariff of regardless packages, relaunch Corporate Turkcell our conducted We asserted in which we image film, In our in April. the to out reached we Turkcell” İşte Destek “İşte that as Turkcell, and emphasized self-employed campaign, first Our them. supported always we visit” a workplace us for said “call in which we “Self Our history. Corporate made a mark in Turkcell the TESK by followed was commercial Employed” and Craftsmen) Tradesmen Turkish of (Confederation how conveyed in which we commercial, cooperation digitized operator, digital first the world’s Turkcell, artisans. “İşte of platform the main communication Under remain that we emphasize we Turkcell,” İşte Destek scale all small and large of the firm supporter in a changing them solutions offering companies, also support this We world. and transforming brochures, digital, TV, through communication advertisements dressing, solution centers corporate communications. and local and the innovations, of the world of As the pioneer continued we operator, and only digital first world’s communication. in digital a difference make to the under BiP broadcast of launch video new The attention great “Do the BiPing!” attracted of slogan mass reach BiP’s Following media. in the social that up in the video set was world a colorful out, BiP. download to people encouraged a mark this year make to activities our of Another the highlighted We engine Yaani. search Turkey’s was local and embracing using of rising trend recently in Turkey. and national products As Turkcell, since our inception, corporate social social corporate inception, our since As Turkcell, our been always have projects responsibility projects new develop to continued We priority. received we In this context, technology. using our “Hello Hope our for Apple awards Crystal three our communicated in which we - Bana” film, overcome to developed application, Hello Hope living in Turkey. Syrians of the language barrier the from awards four received we In addition, Smarties (MMA), Association Mobile Marketing Hello Hope with another competitions and Felis empathy. develop to implemented project with Project Screening Talent joint our With a initiated we and Sports, Youth of the Ministry with the film and sports towards momentum children at motivating ad aimed public service TURKSPORU launched We engage in sport. to available periodical a quarterly magazine, and that application, on the Dergilik exclusively and known of millions to the stories delivers first its With sports. Turkish of heroes unknown special Marathon Gelibolu and the Turkcell volume than more received TURKSPORU edition, reads. 40 thousand of the pioneer being stopped never We our benefit to while continuing innovation, We and tariffs. offers with our customers Point the Surprise of the awareness increased at Points Surprise placing physical by campaign, campaign the city during our of the main arteries a added we importantly, Most communications. family Emocan much loved our to member new which will be launching Armağan Emocan, by in the virtual environment. available thousand reads. thousand periodical available available periodical edition, TURKSPORU TURKSPORU edition, magazine, a quarterly a quarterly magazine, received more than 40 than 40 more received volume and the Turkcell and the Turkcell volume application. With its first first its With application. More than 40 than 40 More exclusively on the Dergilik on the Dergilik exclusively We launched TURKSPORU TURKSPORU launched We Gelibolu Marathon special special Marathon Gelibolu thousand reads thousand 58 TURKCELL ANNUAL REPORT 2018

TURKCELL ON COMMUNICATION

We continue to benefit from the creative power of digital media to draw attention to the challenges that our disabled citizens face, while supporting them in all areas.

a vacation with the “Let’s Travel!” concept. We conveyed product awareness to a large audience within a very short time frame through uninterrupted communications during the early booking period.

In our new TV+ ad, where we talked about the world of entertainment that smart devices bring to our lives, we explained that we could switch on TV+ and enjoy its fun content, rather than stare ahead in a traffic jam, a bank queue, before a meeting, or in any other spare moment. We highlighted that we can always carry our television with TV+ that we upload on our tablets or phones, by conveying our “TV+, wherever One of our projects that touched many through our you go” message to the consumers. technology was Life Repairer Hasan. Our videos, told stories of Hasan from Mardin, helping disabled Our news line project, With the aim of penetrating our applications abroad, animals on World Animal Day, and building a which we implemented we started to invest in media in many countries, and prosthetic hand for his friend using Turkcell technology. with TV channels, in particularly in Germany and the US for BiP, lifebox, These videos were shared on social media numerous order to enhance usage Dergilik and fizy. Having launched the new world of times. habit of BiP received the BiP at first in the US, we also continued to broadcast Effective Native - Special in Turkey with a wide combination of channels. During One of our key projects was our film broadcast Award and Partnerships this period, BiP appeared in main news bulletins along during Disability Week, telling how Dialog and Sponsorships - Bronze with the interviews of Kaan Terzioğlu. Museum guides and Tango Instructor Elif Ömüriş Award, from WARC. connected to life through dance, and their story We renewed nearly 4 thousand food containers left in of overcoming obstacles. Our film was extensively our warehouses. We sent them to our close to 1,500 disseminated on social media and in the press. stores throughout Turkey, announcing this with our film, Our “#PeoplewithoutBoundaries Marking a First in which we used #LoveandFoodforStreetAnimals tag. the World with Dance” video that we shared on #LoveandFoodforStreetAnimals entered the global Facebook, Twitter, Instagram, YouTube and LinkedIn agenda in third place, remaining for 2 hours on the reached 5.5 million people with 11.5 million page views. list of Twitter’s trending topics. And in Turkey, entering the agenda in second place, it rose to first place and Within the scope of the GSMA Mobile World remained for 5.5 hours on the list of Twitter’s trending Congress, we launched the www.turkcellblog.com topics. Our film was accessed 946 thousand times website, and throughout the event, we brought over 2 days. together the most important developments, news and interviews with followers, while instantly sharing WE WERE REWARDED ON MANY LOCAL AND all developments at the lifecell Ventures booth. In GLOBAL PLATFORMS THIS YEAR, FOR THE FIRSTS addition to this website, we continuously shared WE MARKED AND THE TECHNOLOGIES WE innovations with respect to products and services, DEVELOPED, IN THE MEDIA! interviews, photos and videos within the booth on the social media accounts of Turkcell. Our news line project, which we implemented with TV channels, in order to enhance usage habit of BiP Bringing all travel operations together on a single received the Effective Native - Special Award and platform with Fulltrip, we aimed to meet all the needs Partnerships and Sponsorships - Bronze Award, from of our users in the field of tourism from end to end. WARC. We launched Fulltrip through our communication campaigns where we encouraged people to take 2018 OPERATIONS 59 ANNUAL REPORT 2018 REPORT ANNUAL TURKCELL WE FURTHER DEVELOPED OUR CONTENT CONTENT OUR DEVELOPED FURTHER WE YEAR. THIS STRATEGIES We brought a breath of fresh air to TV advertorials TV advertorials to air fresh of a breath brought We turns characters that integrations content through Our spokespersons. the brand into the series from the most Kuş, during Erkenci introduction Lifecell great attracted the season, of series popular rise in the a significant leading to interest, audience of the scope Within traffic. and site search product’s campaign, now life to connect Turkcell of the relaunch advertising a fresh to the consumer introduced we the of the daily life from sections showing by model, the ad break. during the series, of actors broadcast, Referee) Aided (Video VAR deploying By as of matches in Superlig used be to which began on and Goals with TURKSPORU season, the 2018-2019 on TV. implemented media” use was “first Mobile, own in our available areas all advertising utilized We campaigns. digital media in our and articles on Dergilik, channels on BiP, use of The these With targeting. us the possibility of provided opportunities targeting Turkcell’s and all of use cases also made We send notifications. able to are we DSS our primarily for in TV series, integrations results. business highly successful achieving products, view the organic Turkey, for a first In the project, videos, Our the target. exceeded greatly ratings the exceeded responses, positive very which received level. 5.5 million viewing internet two connected we time in Turkey, the first For live them to and enabled phenomenon on the air watched broadcast, the live directed We broadcast. the phenomenon, of followers by interest with great on the YouTube main video integrated the Yaani to We features. the product and introduced channel, BiP and addressed from coming questions broadcast In addition channel. on the Onedio video celebrities to mentions our of the ratio numbers, high viewing to on social content the fun with the sharing of rose media. as as well the world across trends also followed We the for communication started we When in Turkey. page 172 thousand received we launch, web Yaani with on the internet clicks and 23 thousand views we this campaign, With video. Laurel” or the “Yanny on search in the always the traffic 43% of provided our doubled we words, In other engine campaigns. traffic. monthly WE CREATED STRONG APP INTERACTION, INTERACTION, APP STRONG CREATED WE ALL IN MODELS CONTENT AND INFORMATICS WE MEDIA. SOCIAL PRIMARILY CHANNELS, MODELS. MEDIA INNOVATIVE IMPLEMENTED We increased the return on investment with with on investment the return increased We simple in addition to approaches sophisticated and measurements. integration technical our of media definitions the social completed We with Turkcell integration its and implemented data management. relations customer of the impact measured we launch, During the Fulltrip a and implemented traffic on website TV broadcasts optimization. spot-based by planning practice new in the beta Ads” Search “Responsive used We in space more which provides model, advertising more provided we Thus, network. search the Google while increasing single ad user, a for opportunities 9%. by traffic turkcell.com.tr in cooperation models business new created We integrating by Superonline, Emlak for with Hürriyet with the B2B channels, communication alternative channel. sales investments, our of the efficiency to contributed We mobile in our spaces the advertising using actively by all Turkcell for Dergilik) Yaani, fizy, (BiP, applications strategy. a cross-marketing through campaigns of source a major Quiz into the Hadi turned Live We Yaani. BiP and primarily for users, active Point, on the BiP Surprise returns strong received We people For schemes. gamification based location the them showed we gifts, Year New seeking at the right like, would ones loved that their products time and location. Şaşkınız” the “Ailecek for TV+ sponsorship our With including by awareness product increased we movie, the purchasing By movie. office TV+ in a high box picture, the motion of rights broadcasting exclusive the application. of the activity increased we We were awarded at the Excellence in Branded in Branded at the Excellence awarded were We Awards Media in the Excellence category Experience on BiP created we which Channel, Extra the Series for series. of the followers to content special offer to of power the creative from benefit to continue We the challenges to attention draw media to digital while supporting face, disabled citizens that our mobile advertising interactive Our them in all areas. of awareness which increased Case, Aurora model, Companion and My Dream the My Sign Language the at awards with five crowned was applications, MMA Smarties. views 5.5 million million viewing level. million viewing received very positive positive very received DSS products, achieving achieving DSS products, We made integrations in in made integrations We target. Our videos, which which videos, Our target. highly successful business business highly successful TV series, primarily for our our primarily for TV series, results. In the project, a first a first In the project, results. for Turkey, the organic view view the organic Turkey, for rating greatly exceeded the the exceeded greatly rating responses, exceeded the 5.5 the 5.5 exceeded responses, 60 TURKCELL ANNUAL REPORT 2018

OUR DIGITAL SERVICES

BiP has been used in 192 countries, and downloaded by 34.6 million users as of the end of 2018.

Over BiP, which reached 11.5 million three-month active users as of the fourth quarter of 2018, approximately 4 billion messages are sent each month, while more than 20 million calls are placed and nearly 2 million hours are spent over phone calls.

category of BiP with its flexible and advanced BiP capabilities, reached more than 2 million followers. While the latest information on the contest was BiP has been used in 192 countries, and provided through the ‘Hadi Live Quiz’ channel, downloaded by 34.6 million users as of the end BiP users were given the privilege of getting the of 2018. lifeline they could use in the contest. Hadi starts digital interaction with its users by accepting them Over BiP, which reached 11.5 million three-month on the platform through Fast Login, the digital active users as of the fourth quarter of 2018, authentication management solution provided approximately 4 billion messages are sent each by Turkcell. The winners of the contest spend month, while more than 20 million calls are placed the money that they receive through Paycell. and nearly 2 million hours are spent over phone In new year’s eve, 1.2 million people competed calls. simultaneously, setting a new record. BiP and the cooperation with Turkcell digital services have a With over 200 services positioned under the significant share in the success of Hadi Live Quiz discover platform of BiP, the total number of 50 million in reaching millions in a couple of months. follows reached nearly 50 million. The paid and follows free of charge services launched in diverse With over 200 services Vipme runs on Turkcell Cloud infrastructure by categories, from sports to finance, and from positioned under the strengthening its cooperation with Turkcell for magazines to entertainment and information discover platform of BiP, users from all operators, enabling an uninterrupted services, continue to reach end users. the total number of follows experience during the contest. The Hadi Live Quiz reached nearly 50 million. example is one of the key indicators of the power Hadi Live Quiz Started the Digital Journey with BiP. that Turkcell digital platform and solutions deliver Setting off with the idea of a live broadcast to business partner applications online. In 2019, mobile quiz show with cash prizes, Vipme new players are going to continue to join the accomplished a first for Turkey with ‘Hadi Live Turkcell digital ecosystem rapidly. Quiz’ as the strategic partner of BiP. The ‘Hadi Live Quiz’ channel appearing under the Discover 2018 OPERATIONS 61 ANNUAL REPORT 2018 REPORT ANNUAL TURKCELL 81 provinces of Turkey. Millions of BiP users roamed Millions users roamed BiP of Turkey. of provinces 81 one and from another, to one province from As gifts. the surprise collect to another to district Point Surprise in 2018, service popular most BiP’s Surprise them. users and rewarded amused both as a solution to positioned be to continues Point numerous for and loyalty acquisition customer sectors. Channel. Inflation Against the Fight Loved Turkey campaign Quota” Internet “Double Turkcell’s War the All-out of in the scope launched announced Program Inflation Against Program Finance, of and the Ministry the Treasury by of 72 hours In the first interest. great attracted users than 2 million Turkcell more the campaign, on channel Inflation’ Against the ‘Fight followed of As the result quota. internet BiP doubling their downloaded the most BiP became the campaign, in stores in the application Turkey of application 3 days. of that time frame on a Single Numbers Using Two of Era The on BiP. Phone Began numbers different use two to it possible BiP makes Number My Second to thanks on a single phone, developed feature this innovative With on BiP. using two people engineers; Turkcell BiP by for using only one start can numbers different the With line via BiP. other using their by handset the second on BiP service, Number My Second and receive place on BiP to is identified number to who need those Thus, SMS. and get calls, carrying of the burden may avoid lines use two multiple devices. and Europe, Turkey in both a first feature, This this With BiP users abroad. to is also available to started living in Europe people Turkish feature, the country line of and their line in Turkey, use their the and eliminated on a single phone, in, live they lines. their one of closing hassle of Send Message Easily As If You Send Money via BiP as if send money to It is also possible transfer, BiP money With sending a message. simply by money transfer to possible it is now the requiring without the phone number knowing number. account or IBAN BiP Gaming of Joy 4.8 million unique December, the end of As of on the BiP game platform, games played visitors a unique game experience, which offers day with its with each players more accessing game portfolio. enriched Global Communications Campaigns that Make that Make Campaigns Global Communications “BiP”ing the World communication its for efforts its BiP accelerated increased Having Turkey. of in the wake abroad year, the past over 70% users by of number its campaign. communication a new BiP launched preparing the application of address first The the medium of important in the most appear to closest its of the country US, was media, global that BiP the campaigns to Thanks competitor. including countries, European in many started the number and Russia, France Germany, England, of quarter in the last momentum users gained of users are new than half of more In 2019, the year. abroad. from come to expected communication international its In addition to digital its BiP also continues activities, In with operators. partnerships transformation users in active of the number it increased 2018, the cooperation of as a result 30 times Moldova Moldcell. with initiated Including the Public Services, of Hundreds Discover. through Provided are Sphere, Service on BiP the channels/services of number The The in 2018. 200 exceeded platform Discover the channels of unique followers of number total 13 million. exceeded to sports from rich content users diverse BiP offers users derive and ensures magazine and games, contests different through and excitement joy public to access BiP also enables instantly. Agriculture of such as the Ministry institutions e-government Office, Supply State and Forestry, Municipality White Metropolitan Istanbul gateway, Municipality. and Bodrum and the Keçiören Table, BiP! with Point is at Surprise Turkey Whole Discover under service Point Surprise With distributed, were millions gifts of BiP, of platform as Paycell, TV+ to fizy and from to lifebox from in the located at the surprise points as cash well With Surprise Point Point Surprise With Discover under services millions BiP, of platform distributed, were gifts of fizy and to lifebox from Paycell, TV+ to from at the cash as as well in located surprise points Turkey. of provinces the 81 62 TURKCELL ANNUAL REPORT 2018

OUR DIGITAL SERVICES

Integration of UpCall and Turkey’s local search engine, Yaani, enabled location based searches inquired under the application to be performed over Yaani which further enriched those searches.

UpCall application also has features that enable users to identify the number of an unknown person or place via name and to conduct number The Operator Name queries, to form a group and initiate a group Setting feature provided call with a single click and speak to everyone in only by UpCall enables the group simultaneously. Allowing for a more users to personalize the dynamic usage with its renewed interface, UpCall operator name displayed enables to track all notifications and settings on the phone screen. related to a mobile call on a single screen and to manage them effectively.

The Operator Name Setting feature provided only by UpCall enables users to personalize the operator name displayed on the phone screen.

Integration of UpCall and Turkey’s local search engine, Yaani, enabled location based searches inquired under the application to be performed over Yaani which further enriched those searches.

Moreover, in order to enable users to get easier support, Live Support integration was first introduced in UpCall in addition to e-mail communication. With this feature, which is dynamically adjustable, it is possible to obtain rapid support via instant messaging with the application consultant within the specified time period.

UPCALL – THE APPLICATION THAT CHANGES With the UpCall application, which started to THE CALLING EXPERIENCE create solutions for institutions, employees in the same institution can see name and title UpCall is an application enriching and facilitating information when they call each other, even if our customers’ calling experience with the the number is not recorded in their phone book. numerous value added features it offers. When In addition, with the feature of adding topics to a call is received from a number that is not calls, call centers are now able to communicate saved in the phonebook, the caller is identified the reason for calling their customers while the on the screen, while the phone rings; the calling phone is ringing. This way, while subscribers are experience can be made customized in a fun way informed about incoming calls when their phone by adding picture and Emocan stickers, while the rings, call centers also increase their ratio of reach call is being initiated; a note stating the reason for and efficiency. the call can be delivered to the other party, while the phone is ringing. In addition, with the Do Not Having reached more than 5 million downloads, Disturb feature, when the phone is on, the caller UpCall is planned to be made available for the hears the message that the number cannot be use of other operators subscribers soon. reached, while it is possible to track when and which number called. 2018 OPERATIONS 63 ANNUAL REPORT 2018 REPORT ANNUAL TURKCELL introduced them to users on the digital platform. By By platform. digital users on the them to introduced on a single publications valuable gathering these in digital leadership our also manifested we platform, publishing in Cyprus. Offers That Add Value to Life to Value Add That Offers GB 5 offer to started Dergilik 2016, September As of in the used be to quota mobile internet monthly of the encourage to tariffs consumer for application Users enjoy magazines. of reading and downloading Turkcell in their reading for reserved 5 GB, consuming to an additional paying fee without on Dergilik, tariffs Operator the Digital part of benefit, This tariffs. their and satisfaction. loyalty user increases strategy, different of users had the advantage Dergilik In 2018, Turkcell the 5 GB incentive. in addition to benefits the in to and logged who downloaded customers gifted time were the first for application Dergilik who additionally downloaded Users, internet. 1 GB of participating in the after Dergilik from magazines (minute, a second won campaign, and Win Shake who those In addition, gift. etc.) internet, SMS, the right won Dergilik from magazines downloaded campaign. in the phone draw participate to Million Publishing! 81.7 Read Users Dergilik In 2018, read and newspapers magazines of number The reached publishing, in digital the leader on Dergilik, one year. of in a span 3.4 times million, rising by 81.7 publishing the digital expanded Dergilik Moreover, different many of the content combining by sector pioneering its demonstrating users, its publishers for small for equality in the sector creating by position within the ones large as much as for publishers, ecosystem. Dergilik Became Global. Became Dergilik from Dergilik users downloading January, As of the from will benefit stores application the global who are users, Our Dergilik. of world rich content read can Turkey, from away kilometers of thousands with and newspapers magazines local of hundreds in the world. anywhere from one click, just Dergilik Use to Easy digital popular and most richest Turkey’s Dergilik, platform, reading magazine and newspaper strong taking by position solidify its to continues powerful most the Turkey’s becoming towards steps numerous offering publishing platform digital experience. that enrich the reading features and automatically offline reading Among others, the magazine edition of current the downloading the current of informed being with one instruction, and a list, on the favorite listed magazines edition of hundreds accessing that enables offer subscription are a single magazine, of at the price magazines of Dergilik. by offered the features some of DERGİLİK – THE APPLICATION THAT CHANGES CHANGES THAT APPLICATION THE – DERGİLİK HABITS READING Northern Cyprus Reads Dergilik, too. too. Dergilik, Reads Northern Cyprus of Republic the Turkish to Dergilik brought We widely the most incorporating By Northern Cyprus. we Dergilik, into in Cyprus national newspapers read In addition to our extensive portfolio of local local of portfolio extensive our In addition to to subscribers our introduced we magazines, diverse across magazines international 1 thousand science and from business to sports from categories, with an additional premium press, the tabloid to this premium users to many attract to In order fee. a of the cost to equal the price set we subscription, the of the value a magazine boosting of single piece offering. Our Dergilik application, which offers the opportunity the opportunity which offers application, Dergilik Our magazines popular Turkey’s of hundreds read to reached on one platform, digitally and newspapers the fourth users as of active 12.5 million three-month user-friendly its also improving While 2018. of quarter for enjoyable made it more we in 2018, experience by and newspapers, magazines read users to our downloading enhancing magazine and newspaper performance. and reading and Newspaper Magazine Our Quadrupled We Archive. Dergilik magazines, local the popular In addition to international popular 1 thousand introduced to sports from categories, diverse across magazines its to science to press the tabloid and from business, in its publications of quadrupling the number users, in 2018. 1.6 thousand to 400 from portfolio widely most Turkey’s only included not Dergilik but platform, its to national newspapers read with minority and local content its also extended as the as well Newspaper Dünya newspapers, the Day’ newspaper, of ‘Headlines daily special the unique to the daily headlines which compiles application. Magazine International the Dergilik Launched We Package. 3.4 times in 2018. 3.4 times publishing 81.7 million 81.7 In addition to the popular the popular to In addition Dergilik magazines, local 1 thousand introduced international popular diverse across magazines sports from categories, the and from business, to to science to press tabloid its users. reached 81.7 million, rising by million, rising by 81.7 reached newspapers read on Dergilik, Dergilik, on read newspapers the leader in digital publishing, publishing, in digital the leader The number of magazines and and magazines of number The 64 TURKCELL ANNUAL REPORT 2018

OUR DIGITAL SERVICES

In 2018, 7 million songs were listened at average on a daily basis on fizy, which reached 21 million downloads to date.

fizy Opened to the World! Being offered with the radio application for Ukrainian users, fizy opened its doors to the world for the first time in 2017 in Ukraine. In 2018, fizy was first launched in Germany in March, followed by Belarus in May. fizy, which registered a tremendous impact, was launched in Germany with Tarkan on a six concert, special Germany tour. Thanks to the various social media schemes, fizy users in Germany won invitations to these concerts, and the chance to meet with the artist. In April, the “on demand” structure was brought into use in fizy in Ukraine, whereby the number of users began to increase rapidly. The efforts continue to enable the use of fizy in more countries in 2019.

fizy — TURKEY’S MUSIC PLATFORM Expanding Music Archive The music archive is expanding rapidly with Users have experienced a fizy, the most downloaded and popular music the addition of new audio and video content in much stronger and more platform in Turkey ended 2018 with new records. the scope of agreements made with the most binding user experience As well as fizy Social, fizy Web Player, CarPlay professional content firms and content distributors with fizy Social, enabling and Mobile Connect that entered our lives in in their fields day by day. Currently, there are them to share the playlists 2018, existing features* like high audio quality, live approximately 25 million different pieces of they prepared with other concert broadcasts, artists’ performances not content in the fizy archive. fizy, the only music fizy users, follow and available in any other medium, and Turkey’s most platform to include audio content and video listen to the playlists that popular radio channels provided users 48 minutes content plus dozens of radio channels on the are shared with everyone. of music and entertainment daily. same platform, continues to work on expanding the fizy catalog/content. In 2018, 7 million songs were listened at average on a daily basis on fizy, which reached 21 million Brand New Features! downloads to date. Users have experienced a much stronger and more binding user experience with fizy Social, *High Audio Quality: fizy Premium users can listen enabling them to share the playlists they prepared to songs with high audio quality, i.e. 320 kbps with other fizy users, follow and listen to the (AAC). playlists that are shared with everyone. The new fizy Web Player eagerly awaited by desktop *More Radio Stations: Users can access Turkey’s users, was brought into service with its newly most popular radio channels located on the radio added radio and video features, on the road to tab through fizy application. globalization. Besides, users also started to enjoy unlimited music through fizy with the CarPlay *Custom Video Content: fizy users can access feature in their cars. Login to the application, the video content, acoustic shots, and fizy concert key to a perfect fizy experience, is integrated with recordings that will not be available anywhere Mobile Connect making fizy experience seamless. else. In addition, this year fizy supported valuable events. These were; 2018 OPERATIONS 65 ANNUAL REPORT 2018 REPORT ANNUAL TURKCELL İlhan Erşahin’s Istanbul Sessions and Birsen Tezer and Birsen Tezer Sessions Istanbul İlhan Erşahin’s live broadcast were performances Cappadox fizy. through Music Festival fizy: Bodrum the of among the sponsors fizy was year, This 4-8 in Bodrum held on August which was festival, D-Marin. Gülsin Say, such as Fazıl stars hosted festival The Lauren Pluhar, Christina Karahan, Murat Onay, Ólafsson and Víkingur Alina Pogostkina, Fagan, Hillel Zori, Ulucan, as Sevil and virtuosos Avital, Avi Gülru Erçağ, Çağ Erman Türkili, Yazıcı, İbrahim and Thomas Camille Dorukhan Doruk, Ensari, ensembles in addition to Çumburidze, Veriko Orchestra, Symphony such as the Presidential and the LUDWIG Quartet the Olten L’Arpeggiata, Music Festival, Bodrum of In the scope Orchestra. through live broadcast were concerts numerous fizy. Nights Starry Turkcell held at the was event Nights Starry Turkcell The again this year. once Stage Topuzlu Cemil Harbiye all concerts event, the 10-concert Throughout Approximately fizy. through live broadcast were live watched music lovers 400 thousand held on competitions With with fizy. broadcasts the fizy application, of media accounts the social and the concerts, to invitation both fizy users won the artists. meet to a chance fizy HSMC gained 62% 62% fizy HSMC gained st fizy High School Music Contest fizy High Music Contest School fizy High School Music Contest, one of one of Music Contest, fizy High School st time in 2018, and sponsored by fizy, was was fizy, by and sponsored time in 2018, st th The 21 The successfully staged. successfully art 9 contemporary Cappadox, of In the context 141 of and a total 65 workshops, performances, a contemporary music, live of consisting events workshops, performances, artistic art exhibition, tours, bike trekking, outdoor tastings, gastronomy organized were and meditation yoga jogging, Cappadox of In the music program at 21 venues. many people, 10 thousand in by participated folk, in rock, the stage to took artists important jazz and world music, folk Turkish electronic, 31 concerts. of in total music genres, Turkey’s largest music contests, was held during held during was contests, music largest Turkey’s again with the period, the January-April 2018 the contest of Communication fizy. of sponsorship the of the performances in January and began users of the likes for presented were contestants and Istanbul auditions in Ankara, fizy after through on audition the voting Following in March. Izmir, the won 6 groups of a total fizy, through videos finals on April 29. in the grand participate to right on live broadcast final on April 29 was grand The 21 The 13 hours. fizy for more new users compared to the previous year year the previous to users compared new more was consumption data while 144% increased registered. Festival fizy: Cappadox for organized Cappadox, music festival Pozitif’s the 4 The 21 The fizy fizy st 144% registered. fizy HSMC fizy HSMC st data consumption was was consumption data (HSMC) on April 29 was (HSMC) on April 29 was broadcast live on fizy for on fizy for live broadcast compared to the previous the previous to compared year while 144% increased while 144% increased year High School Music Contest Music Contest High School The grand finale of 21 finale of grand The 13 hours. The 21 The 13 hours. gained 62% more new users users new more 62% gained The Turkcell Starry Nights Nights Starry Turkcell The the held at was event Topuzlu Cemil Harbiye this again once Stage the ten- Throughout year. all concerts event, concert live broadcast were fizy. through 66 TURKCELL ANNUAL REPORT 2018

OUR DIGITAL SERVICES fizy Istanbul Music Week hosted a very special award ceremony in addition to the panels, concerts and signing days.

media accounts, music lovers won both invitations to the concerts and the chance to meet the artists.

fizy Music Awards were Presented to the Winners. The fizy Istanbul Music Week, apart from panels, concerts and signing days, also hosted a very special award ceremony. On the evening of September 20, the awards were presented to the winners during the fizy Music Awards held for the first time this year at Zorlu PSM.

Awards were given in 11 categories at the ceremony, at which Burcu Esmersoy hosted. During the opening speech of the award ceremony, Turkcell CEO Kaan Terzioğlu stated that the results of the fizy Music Awards were determined by taking into account the most listened to and followed data from publicly-available sources including fizy, underlining that the new jury in the digital world fizy Istanbul Music Week is data. The fizy Istanbul Music Week, which was held for the first time this year on September 18-23 at During the International Sezen Sokakta Documentary Zorlu PSM, was completed with great success. Antalya Film Festival, held During the International Antalya Film Festival, held Spreading over six days, the festival set out with for the 55th occasion this for the 55th occasion this year, a special preview the goal of being Turkey’s first and only popular year, a special preview was presented. ‘Sezen Sokakta’ documentary, cultural festival, and hosted signature days and was presented. “Sezen the production and shooting of which lasted 18 special concerts one from another, as well as Sokakta” documentary, months and was sponsored by fizy, premiered at panels and interviews, that inspire legendary the production and the Antalya Film Festival. musicians and young artists. The fizy Istanbul shooting of which Music Week took place at Zorlu PSM in five lasted 18 months and In the documentary, written by Erkan Güleryüz stages, with 36 concerts given by 300 musicians, was sponsored by fizy, and filmed by director Bedran Güzel, street as well as 13 panels of 47 speakers and five premiered at the Antalya musicians living in various cities of Turkey sang the signing days. Film Festival. songs of Sezen Aksu. In the ‘Sezen Sokakta,’ street musicians selected by Erkan Güleryüz covered During the festival, participated in by 25 thousand Sezen Aksu songs with acoustic performances in music lovers by the end of the 6 days, legendary select locations in Ankara, Eskişehir, Istanbul, Izmir, musicians such as MFÖ, Athena, Bülent Ortaçgil, Mardin, Antalya and Cappadocia. The final shoot Teoman, Şebnem Ferah, Kenan Doğulu, Selda of the project in Kanlıca, Istanbul, was completed Bağcan, Nil Karaibrahimgil, mor ve ötesi and with the surprise participation of Sezen Aksu Gripin, and young stars such as Kalben, Edis, Ece herself. During the 55th Antalya Film Festival, Seçkin and Alper Erözer had met with their fans. an audience of 2 thousand participated in a Performances during the fizy Istanbul Music Week special preview, open to the public, setting a reached fizy users through the fizy application in record in the festival’s history. Sezen Sokakta was a total of 12 hours of live broadcasts, whereby broadcast exclusively on fizy for 1 month. As of 210 thousand people watched the concerts in real November 2, the documentary had been viewed time. Again with the contests held through social by over 200 thousand people through fizy. 2018 OPERATIONS 67 ANNUAL REPORT 2018 REPORT ANNUAL TURKCELL TV+ started live broadcasting. While we we While broadcasting. live TV+ started events, important concerts, various broadcast also bring we and magazine programs, sports and users organizations sports live important programs produce to will continue We together. broadcasts match horse racing, such as e-sports, that embrace programs commentary and live increase and further audiences, sports’ those numbers. viewer prominent and the most blockbusters Hollywood’s users on TV+. meet to continue and series films, such as Batman vs. movies High box-office a just are and Transformers Wars Star Superman, them. of few increasingly are series where In this period popular bring the most we attention, drawing our through both customers, our to series new viewing video optional channels and our series service. box-office the highest broadcast to started We beautiful the most cinema, Turkish of movies movies Turkish prominent classics and the most on TV+. box new designed specially our launched We users, home our to service a better provide to generation a new enjoy enabling them to users box, new our With experience. television as TV+ as well and YouTube, lifebox fizy, enjoy can the best offer to continue We televisions. on their home users on demand to experience viewing and our box supported HD) 4K (Ultra with our with our In addition, platform. on our 4K content home users will all our feature, world application applications of hundreds to access shortly have lifebox along with fizy, and WSJ, such as Twitch and YouTube. on appearing of strategy our of In the scope Apple deployed respectively we screen, every TV and the Smart TV applications Android TV, home users who are to offer which we TV+, of we Thereby, customers. internet fiber Superonline on which our screens of the number increased television generation the new enjoy users can broadcasts also watch users can Our experience. feature, reflection using TV+’s by TV sets, on their mobile devices. on their viewing a unique TV and video offer We that improvements with infrastructure experience and enable us performance will TV+’s enhance listening By users. to made offers tailor provide to changing their account into take we users, our to on improving and work trends, and global needs single day. every TV+ experience the holistic reached 3.4 million as of the 3.4 million the as of reached (1) IPTV users and OTT only cumulative active users. active only cumulative IPTV users and OTT TV+ (1) TV+ continues to play an important role in Turkcell’s in Turkcell’s role play an important to TV+ continues access users to enabling its vision by operator digital wherever programs and television movies TV series, want. they and whenever TV daily generation this vision new of On the back mobile through TV+ customers time of viewing minutes. 81 to rose and tablets phones users active of Number fourth quarter of 2018. Offers, in which we provided provided in which we Offers, 2018. of quarter fourth as a needs call and fixed internet fiber television, campaigns. popular most among our ranked bundle, and mobile fixed customers’ our meeting While convergence with our in a single package needs of users the convenience also provide we offers, TV service. our with a single invoice receiving technical and superior rich content the In addition to we use, easier which enables TV+, of features new of a diversity to customers our introduced enrich our to continued We this year. content the increasing by channel choice national and local in HD and UHD channels broadcasting of number with the highest the platform TV+ became format. UHD channels in Turkey. of number the German of the broadcaster TV+ became football valuable most the world’s one of Bundesliga, the League, the UK Premier in addition to leagues, the in the world, league football prestigious most in the players basketball the best home to NBA, 1 such as Formula sport events motor and key world, tournament leading tennis world’s The and MotoGP. also were Champions League and FIBA Wimbledon, on TV+. broadcast 81 minutes 81 time of TV+ customers TV+ customers time of tablet rose to 81 minutes. 81 to rose tablet through mobile phones and and mobile phones through New generation TV viewing viewing TV generation New 68 TURKCELL ANNUAL REPORT 2018

OUR DIGITAL SERVICES lifebox has users in 155 countries, primarily in Ukraine, Germany, the US, Azerbaijan, Russia, China, Syria and the UK.

Thanks to the “Face and Object Recognition” feature launched in 2018, providing users with ease of use, lifebox began to automatically group Thanks to the “Face and photos based on faces and objects. The entire Object Recognition” photo archive is automatically grouped under feature launched in 2018, the smart album based on individuals, objects providing users with ease and places, and can be reached out through of use, lifebox began performing a search. to automatically group photos based on faces and Another innovative feature launched this year objects. by lifebox is “Auto Story Creation.” By creating automatic stories from the users’ lifebox archive, memories are kept alive. Users can immortalize these videos by easily sharing them on their social media accounts.

In June, with the new design, lifebox had been transformed into a platform that enables it to directly interact with users. On this platform, through which lifebox can interact with its users at more points, automatic cards and stories enable users to better preserve their memories.

lifebox has users in 155 countries, primarily in Ukraine, Germany, the US, Azerbaijan, Russia, China, Syria and the UK. In addition, in 2018, after collaboration with subsidiaries in Ukraine and Cyprus, the operator business partnerships continued with Moldcell in Moldova. Thanks to operator business partnerships, lifebox advances lifebox — BRAND NEW DESIGN MEETS THE by solidifying its presence abroad. USERS.

lifebox is available to operators throughout the With its features allowing the safe storage and World by providing language support in Turkish, sharing of photos, videos, music and documents, English, Arabic, German, Russian, Ukrainian and lifebox presented its brand-new features to users Romanian. In 2018, it also began to provide all over the world in 2018. With the number of files Spanish language support to further broaden its stored exceeding 3.5 billion, phone books can also audience. be backed up in lifebox. In 2018, the number of users who backed up their phone book in lifebox exceeded 1 million. Number of three-month active users rose up to 2.6 million.

2018 OPERATIONS 69 ANNUAL REPORT 2018 REPORT ANNUAL TURKCELL TURKCELL FAST LOGIN FAST TURKCELL Given the incidents recently experienced, digital digital experienced, recently the incidents Given information digital of and the security authentication vital most world’s digital the one of has become authentication is a customer Login Fast standards. mobile number, phone through provided service information protected reliably the most which tops which Login, Fast verification. in personalized list solutions that reliable the most one of became is compatible the world, to introduced Turkcell the by provided service, with the Mobile Connect which service, The (GSMA). Association GSM World with 15.3 million in 2018, steps significant marked application global the first became users, registered set criteria sustainability the commercial meeting worldwide. (GSMA) Association GSM the World by with global story this success share both to In order Mobile different on information and give players Summit Mobile Connect applications, Connect by and hosted GSMA by organized was Istanbul held with was 10-11. event The on October Turkcell where 150 people, approximately the participation of DT, such as KPN, providers and service operators Bharti Payfone, Airtel, Telecom, Tunise Umniah, SKT, JT Global, Group, Zain Infocert, Microsoft, Megafon, Teleoptima Jio, Reliance Magyar, BICS, Telesign, Union and Trans Clayster, Experian, Mobile, Global together. came of users as active 8.2 million three-month Reaching used has been Login Fast 2018, of quarter the fourth 232 million for services 40 different over in across date. to times Turkcell’s to as the gateway described Login, Fast in is used economy, and the digital world digital including the popular applications, Turkcell numerous “Dergilik” application and magazine newspaper “My Account.” application services and customer services customer in Turkcell’s used it is In addition, funding and on crowd site, travel in the Fulltrip portal, Beehive. platform Quiz (the such as Hadi Live applications Many application), Piri (the travel online game application), Beyoğlu of application (the lifestyle Smart Beyoğlu the one of Beyoğlu, Municipality that introduces (the Kimboo Istanbul), of districts popular most Turkey’s of and N11.com (one game platform) social among the service are brands) leading e-commerce and secure the smooth from benefit to providers Turkcell. by provided service login joint out carried Turkcell Login the Fast In 2018, part as an integral with Paycell activities integration and close platform, e-Commerce secure Turkcell’s of the Turkcell receive to entitled were 10 services to stamp. e-Commerce Secure YAANİ – TURKEY’S SEARCH ENGINE SEARCH TURKEY’S – YAANİ Turkey’s search engine Yaani was introduced introduced was engine Yaani search Turkey’s for out stands Yaani 2017. users in October to more Turkish, of comprehension precise its corresponding results of demonstration relevant the and the ability offer to content, searched to subscribers Turkcell for pages results search It makes packages. data their consuming without venues displaying the closest by a difference has Yaani searches. users in location-based to user amid intense 7.6 million downloads reached on the place the first made it to Yaani interest. App on both apps free downloaded most of list 2 just of in a matter Playstore, and Google Store introduced. being after days as a mobile browser, designed was Yaani Initially, via accessed be it could shortlybut thereafter, and mobile browsers. web through yaani.com.tr location-based its for attention draws Yaani the results view enabling users to feature, search search on the location based them, to closest users search while Yaani example, For initiated. the monitor also can they in theaters, movies for are movies those where theaters, movie closest to places alternative seeking those Or, playing. and cafes the restaurants access easily can eat, with contact there and get them, to closest information. Turkey for days important also remembers Yaani main users on its for logo a distinct and displays day. special each for page on October anniversary first its Celebrating features. its expand to continues Yaani 2018, 25, Shopping Search added recently the most With the sought of a comparison it provides Vertical, supplier and price of on the basis products for another to switch users to for the need without page. For services. with Turkcell is integrated Yaani directly can on Yaani users who search example, article magazine through or the relevant access Dergilik. of with the rich content integration Turkcell Fast Login, Login, Fast Turkcell significant which marked with in 2018, steps 15.3 million registered the became users, application global first the commercial meeting criteria sustainability GSM the World by set (GSMA) Association worldwide. Celebrating its first its first Celebrating on October anniversary continues Yaani 2018, 25, its features. expand to recently the most With Shopping Search added a it provides Vertical, the sought of comparison on the basis products for and supplier price of users for the need without page. another to switch to 70 TURKCELL ANNUAL REPORT 2018

OUR DIGITAL SERVICES

Beehive is a crowd-funding platform initiated in 2016 to support Turkey’s entrepreneurial ecosystem, and pioneers a first in this field for technology initiatives in Turkey.

Twin Science Set, one of the first 3 initiatives to PLAYCELL raise funds in Beehive, opened to the world and represented Turkey at the World Science Fair. Twin Science Set, one of Launched for children under 12 years of age the first 3 initiatives to as a trusted game platform, Playcell reached Another opportunity was created for raise funds in Beehive, 18.7 million visitors and 81 million page views in entrepreneurs at Beehive, which quickly became opened to the world and its first year. Playcell, compatible with desktop, the market leader in terms of the fund size represented Turkey at the mobile web and Android devices, enables users reached. And by launching Beehive Store, Turkey’s World Science Fair. to access the service anytime, anywhere as first market place specific to ventures, we enable they wish. Setting out with a content strategy easy access to the products and services that that always puts children’s development at the have successfully completed the funding phase. forefront, Playcell aims to make parents feel A number of initiatives successfully funded at comfortable, while entertaining children with the Beehive sell their products on turkcell.com.tr, games selected with care. Turkey’s leading e-commerce platform.

BEEHIVE – TURKEY’S CROWD FUNDING Another important development for the PLATFORM entrepreneurial world of 2018 was Turkcell’s TRY 100 thousand cloud computing support to Beehive is a crowd-funding platform initiated entrepreneurs. It enables entrepreneurs in Turkey in 2016 to support Turkey’s entrepreneurial to launch their applications, mobile and websites ecosystem, and pioneers a first in this field for to the world via Turkcell’s secure cloud, and to technology initiatives in Turkey. Founded as a benefit from Turkcell support while expanding venture itself, Turkcell mediates in the foundation their businesses. Moreover, Turkey’s entrepreneurs of new Turkcells. can also safeguard identity security of their digital customers with Turkcell Fast Login, and can Beehive enables project owners to secure the benefit from Paycell privileges in digital payment. financial resources they need to launch their Entrepreneurs started to make their application products with the support of individuals in society, as of December 2018 in order to benefit from in large and small amounts, rather than a specific this support. And with this support extended to person or institution. More than 6 thousand entrepreneurs in the scope of the fight against project applications have been submitted to inflation, Turkcell protects entrepreneurs from Beehive so far. Out of 65 projects selected, 32 informatics-related costs which have been have successfully completed their campaigns and impacted by foreign exchange fluctuations. raised more than TRY 5.5 million in funds. Those TRY 5.5 million initiatives to have successfully attracted funds and More than 6 thousand FULLTRIP started mass production, have already begun to project applications make a difference in the world. They have also have been submitted to Fulltrip, the new address of end-to-end travel brought global awards to Turkey thanks to the Beehive thus far. Out of 65 planning that we launched in October 2017, value add they created. Local drone Ape X, set projects selected, 32 have brought many innovations to the sector in 2018 as a record in Turkey, by obtaining TRY 783,955 in successfully completed their a new player in the tourism sector. support in 2018. Ape X was selected as one of campaigns and raised more the world’s 20 most innovative drone initiatives in than TRY 5.5 million in funds. With Fulltrip’s personalized travel experience, the DISC2018 Drone Innovation Venture Contest people can perform all travel planning on a single organized in partnership with Wamda Capital platform. All transactions related to travel from A and Krypton Labs. The Smart Stick WeWALK, to Z such as car rental, cruises, airport information successfully raising its target fund within twenty and transfer, hotel reservation, travel guide, plane four hours, won a gold award in the health and and visa services can be performed through well-being category at the Edison Awards. 2018 OPERATIONS 71 ANNUAL REPORT 2018 REPORT ANNUAL TURKCELL TURKCELL KOPILOT – YOUR VEHICLE IS SAFE IS VEHICLE YOUR – KOPILOT TURKCELL SUPERCAM exclusive to İddaa fans, we offer live scores from from scores live offer we İddaa fans, to exclusive in our a difference and make the world all over system Smart Analysis Turkey’s with application artificial intelligence. by enriched and England’s Liga La Spain’s In addition to and France’s the Bundesliga League, Premier in 2018, World content in our included Ligue 1 were on on Goals provided the content which enriched Mobile. have years which for services, tracking Vehicle were only, fleets corporate by utilized been time the first individual use only for for launched to thanks Kopilot, Turkcell through in July 2018 and communication sales extensive Turkcell’s is connected device Kopilot Turkcell The network. OBD2 Connector Control System the Vehicle to and has an cars 2) of Diagnostics (On-Board with paired Once Sim card. IoT embedded smartphones, to downloaded the application flow information instant provides Kopilot Turkcell superior with its Kopilot, Turkcell the users. to the driving dimension to brings a new features, driving on smart and safe Focusing experience. provided the services beyond far features with its Turkcell system, tracking a classic vehicle by and vehicle the passenger, maximizes Kopilot of information with the flow experience travel trustworthy As drivers’ the driver. to it provides simultaneously works Kopilot Turkcell companion on smartphones downloaded with the application smarter. cars and makes key provides Turkey, for a first Kopilot, Turkcell and travel such as usage details information and automobile and score, profile driver statistics, of safety the vehicle to while contributing profile, the drivers. to customers our to offered was SUPERCAM with home and workplace of the safety ensure June as of options camera and outdoor indoor appreciated it was a short time, Within 2018. keen customers of hundreds by and purchased from and workplaces homes their protect to incidents. undesired had started SUPERCAM months, a few Within customers. than a thousand more serve to a solid experience offer to continues SUPERCAM with improve that we smart features with its day and increase each technologies developing day. day by customers its of the number GOALS ON MOBILE – CUSTOM SERVICE FOR FOR SERVICE CUSTOM – MOBILE ON GOALS FANS THE Fulltrip. In addition to these services, Fulltrip offers offers Fulltrip services, these addition In to Fulltrip. on the based experience travel a personalized by booking of Ensuring ease users. its of habits is also Fulltrip records, search displaying the latest communication generation with new integrated in BiP’s page the Fulltrip Through BiP. platform service customer digital it offers field, discover Fulltrip support. 24/7 instant and provides experience from space storage 25 GB of all passengers gives BiP, through gift a 1 GB internet and offers lifebox equipped Fulltrip, users access Our abroad. valid with Fast assurance Turkcell with end-to-end using by sign up just and can technology, Login through payments and make phone numbers, their platform. the national payment infrastructure, Paycell travel digital to breath a new has brought Fulltrip holiday planning end-to-end with its platforms in the industry a pioneer and has also been service, the first for services loan online travel offering by Turkcell’s with Financell, In collaboration time. 24 month up to offers Fulltrip financing company, holiday on plans. installments than which has more platform, Fulltrip The 4 thousand 120 airlines, over hotels, 220 thousand tour a thousand and over companies rental car also mobile through service commenced options, advantageous Various July. as of phone application made transactions users for await campaigns application. Fulltrip through fans for designed on Mobile applications, Goals Our users a simpler its offer now the big 4 teams, of renewed interface with its experience and faster on Goals on Mobile 1903, Goals Through in 2018. on and Goals on Mobile 1907 Goals Mobile 1905, customers our provide we applications, Mobile 1967 and live videos special newsflashes, goals, with live stats, as score as well the world, all over from scores during games. commentary and live tables league application, Score on Mobile Live Goals our Through 4 thousand car rental rental car 4 thousand thousand tour options. tour thousand companies and over a a and over companies hotels, over 120 airlines, 120 airlines, over hotels, The Fulltrip platform has has platform Fulltrip The more than 220 thousand than 220 thousand more 220 thousand Fulltrip has brought a a has brought Fulltrip to air fresh of breath platforms travel digital with its end-to-end planning service, holiday a and has also been by in the industry pioneer loan travel online offering time. the first for services 72 TURKCELL ANNUAL REPORT 2018

OUR DIGITAL SERVICES

With the audio description technology of My Dream Companion we launched in December 2015, the visually impaired can follow all movies at all movie theaters in Turkey without missing any visual detail.

Turkey without missing any visual detail. My Dream Companion application automatically syncs with the movie anywhere during the film; and in scenes where there is no dialogue, by describing all visual details with external sound, it improves the viewing experience of the visually impaired. The audio description service, implemented for the first time in the world delivered 130 movies playing at movie theaters, and a 14-episode TV program, to the visually impaired. The service has been awarded in the category of Accessibility and Integration to Social Life at GSMA 2016, and also named the application with the highest social impact in the MY DREAM COMPANION MEFFYS 2016.

In the scope of My Dream My Dream Companion serves through the 8020 In July 2016, we implemented a pilot project Companion service, the short number used by the visually impaired, using beacon technology to improve the public visually impaired follow iOS, and Android operating systems, which are transport experience of the visually impaired in the current agenda across compatible with the My Dream Companion cooperation with the Gaziantep Metropolitan various categories such as mobile application and www.hayalortagim.com Municipality. With this project, visually impaired science and technology, website. It is a free service open to all operators’ people in Gaziantep can access information such health, sports, politics subscribers. In the scope of the service, the as the arrival of the bus they are waiting for while and the economy, as well visually impaired follow the current agenda at the bus stop; the stops they pass while on the as enjoying up to date across various categories such as science bus, and arrival at their final destination via the My articles from over 500 and technology, health, sports, politics and the Dream Companion application. Additionally, while columnists. In addition, economy, as well as enjoying up to date articles the visually impaired user waits at the bus stop, they have access to from over 500 columnists. In addition, they have the driver of that bus is informed that a visually intellectual content access to intellectual content such as thousands impaired individual will board their bus. In order such as thousands of of audio books, as well as educational materials to implement the transportation technology in audio books, as well as and magazines. different cities, demo studies with municipalities educational materials and continue. magazines. Through My Dream Companion application, which makes use of beacon technoloy, visually My Dream Companion’s navigation technology impaired users obtain detailed information on was combined with audio description stores as they pass them at a total of 28 shopping technology. The audio descriptions of the work centers in the 12 cities including Istanbul, Ankara, of art exhibited in Yapı Kredi Cultural Center are Gaziantep, Konya, Kayseri, Nevşehir, Adana, Izmir, delivered to visually impaired art lovers through Bursa, Antalya, Mersin and Kocaeli, as well as the application. At the same time, users can also Özyeğin University and Yapı Kredi Cultural Center. utilize navigation services within the museum. In addition, they benefit from navigation service for areas such as shops, lifts, help desks and Following movies, the audio description restrooms. technology extended its use to TV programs. The weekly TV program “Bilin Deneyin” on CNN Turk With the audio description technology we was audio described simultaneously through the launched in December 2015, the visually impaired My Dream Companion application for the visually can follow all movies at all movie theaters in impaired. 2018 OPERATIONS 73 ANNUAL REPORT 2018 REPORT ANNUAL TURKCELL TURKCELL BIG DATA SERVICES DATA BIG TURKCELL ACADEMY TURKCELL With Turkcell Big Data Services, we continue to to continue we Services, Big Data Turkcell With across customers corporate our to services provide processes, business develop to sectors diverse and conduct decisions data-based make among numerous analysis, customer-competitor Smart Capabilities Turkcell With functions. other different from that customers ensure we services, in all databases customer their keep sectors mechanisms while creating up-to-date, sectors analytics location With financial fraud. prevent to that helps and analysis reports provide we services, as advertising, such processes, plan business to of and the opening positioning branch routing, their the mobility of upon data based stores new Analytical Turkcell customers. potential and current users to for supporting services provide Services, in serve we In addition, data. own their interpret decision-support systems data-driven the field of models, analytical These models. with analytical own their concerning models prediction essentially such as new metrics various consider customers, churn tendency, customer acquisition, customer and discount- elasticity price demand forecast, via Turkcell provided software through coupons, will We sharing. data any without Database developed services innovative offer to continue business that digitize Turkcell of the umbrella under our without period, in the upcoming processes in either invest having to customers corporate hardware. or software the access freely users to allows Academy Turkcell and anytime needs their for find useful they training launched service, Academy Turkcell The anywhere. experience, the learning reshape to in 2014 across content learning users digital delivers innovation, such as technology, categories various leadership marketing, development, personal website its through programs and certification Academy Turkcell The and mobile application. where as a platform created has been application development personal own plan their users can by prepared trainings 1.5 thousand with over and educators, renowned including world experts, information all necessary access they one where developments. their and track mobile, on their packages training new the launch of With step the first in 2018, programs and certificate and packages training paid offer to taken was in different the market, to programs certification these With needs. different and for categories themselves users develop programs, certificate such as Human in areas certification and receive Training. Skills and Basic Law Leadership Resources, MY SIGN LANGUAGE SIGN MY HOPE HELLO My Sign Language application, launched in August in August launched application, My Sign Language between the communication is facilitating 2017, who individuals and the ones impaired hearing supporting the self- sign language, don’t know individuals. impaired the hearing of development a simultaneous this application, of In the scope Sign into text and spoken written of translator dictionary including a digital sign Language current words, 3.5 thousand over of equivalents and child development on personal content news, The accessed. be can and sign language trainings charge of free downloaded be can application and the data all operators of the customers by for free is completely within the application used customers. Turkcell implemented solutions the digital In addition to the visually of participation and full the equal for a life, in social and hearing-impaired impaired to initiated was project mobile application new individuals with autism. of support the education launched mobile application, “Hello Hope” The in Syrians in support of 2016 in September a major the language barrier, overcoming in life in social participation their to obstacle the Through 1 million users. reached Turkey, audio instant access users can application, languages, and Turkish in the Arabic translation and words Turkish used frequently the most learn and check and audio format, in written sentences also application The pronunciation. own their in in daily life useful information to access allows with a Center, Call as the Arabic as well Turkey, single click. conducted the survey of the results to According in the on the application, 2017 at the end of the the application, of section learning Turkish children for also classified words, of number 1 and exceeded increased has been and adults, thousand. was section news Arabic the In addition, access to need at Syrians’ addressing launched, users can In this section, on daily life. information news. and Turkish the international access the by charge of free used be can application The all operators. of customers With Turkcell Big Data Big Data Turkcell With to continue we Services, our to services provide customers corporate sectors diverse across develop them to enabling make processes, business decisions data-based customer- and conduct analysis, competitor other among numerous functions. 74 TURKCELL ANNUAL REPORT 2018

OUR DIGITAL SERVICES

We continue to accompany employees’ developmental journey with the Turkcell Academy Corporate learning platform.

By integrating Fast Login and Paycell in September In 2018, more than 5 million trainings were 2017, we allowed our customers to enter the assigned to over 150 companies and application automatically, and to quickly purchase 100 thousand users on the Turkcell Academy In 2018, more than 5 the packages they wanted by using the mobile Corporate Learning Platform, which continues to million trainings were payment. evolve with Turkcell Technology. In 2018, numerous assigned to more than innovations were added to the product through 150 companies and The Turkcell Academy mobile application was the information bank, automatic training planning 100 thousand users on downloaded by 2.8 million users in 2018, with and new interface studies. the Turkcell Academy approximately 2.3 million learning videos viewed. Corporate Learning E-COMPANY Platform. Enriched with Turkcell’s technology and education know-how, as well as its content network Turkcell e-Company, launched in the second half partnership with the world’s leading institutions, of 2017, received the best cloud product award Turkcell Academy aims to create opportunities in of the year in the IDC Cloud 2018 assessment. It the information access and personal development supports the digital transformation of companies of users supported by Turkcell’s mobile strength. and enables them to manage their financial processes on a single platform by use of its TURKCELL ACADEMY CORPORATE accounting and e-transformation products. Turkcell e-Company provides its customers with We continue to accompany employees’ the convenience of managing their business developmental journey with the Turkcell Academy processes through devices such as phones, Corporate learning platform. computers and tablets, among others, in all environments where the internet is available, We launched the Turkcell Academy Corporate thanks to cloud technology. On our platform, learning platform in 2015. End-to-end services developed according to international security are provided to our corporate customers through standards with Turkcell quality and assurance, online training available on the platform, creating all of the customers’ data is stored safely at the a more efficient employee development path. Turkcell Data Center. As well as our corporate customers, our e-Company product is actively With new generation learning methods, we used at Turkcell, Group companies and Turkcell develop over 100 thousand employees from Communication Centers. companies of diverse dynamics operating in sectors such as retail, health, technology, FILIZ finance, food, services and energy, throughout Turkey. On this platform, we enable companies As the world’s first digital operator, we have to personalize their own training management launched Turkcell Filiz in November 2018 in order platforms and design end-to-end in-house to become a leader in digital agriculture. Turkcell learning processes such as planning, reminders Filiz IoT device and mobile application enables and the reporting of trainings. We provide mobile farmers to increase productivity. Farmers track access to rich content trainings at any time. their fields and get recommendation on irrigation We support mobile transformation initiatives of and fungal disease management. institutions by contributing to the more efficient development of human resources and corporate ecosystems, and ways of doing business. 2018 OPERATIONS 76 TURKCELL ANNUAL REPORT 2018

TURKCELL SALES CHANNELS

We continue to provide services and solutions to our customers through our Turkcell consumer sales channel, alternative sales channels, Turkcell fiber and DSL solution centers, corporate sales and online channels.

We provided services to our retail customers at approximately 1.5 thousand Turkcell stores and around 4.5 thousand digital sales points. The transformation was completed as of the start of 2018.

and around 4.5 thousand digital sales points. On SALES CHANNEL STRUCTURE the other hand, changing customer trends were closely monitored and advanced store concepts We deliver all of the advantages, campaigns, were implemented at selected special points. devices, services and facilities offered by Turkey’s leading communication and technology company The scope and penetration of the Certificate Turkcell, to our customers. We continue to provide Program, launched in 2017 and prepared for our services and solutions to our customers through store employees, was increased. New employees our Turkcell consumer sales channel, alternative were certified in just one month, while 94% of sales channels, Turkcell fiber and DSL solution the total 8,350 employees were certified. An centers, corporate sales and online channels. advanced certification program was launched for experienced employees. In this context, about 300 Within the framework of our integrated structure, employees had one week face-to-face training we present our fixed and mobile converged through cooperation with Marmara University. Turkcell solutions throughout Turkey at our Turkcell Our employees entitled to receive advanced and Turkcell Plus stores. We work towards certification were rewarded with extended ensuring uniform service quality at every sales benefit packages. point.

The product portfolio of Turkcell stores was OUR RETAIL CHANNEL enriched with new products including Paycell products, TV+ and Superbox. Meanwhile, the In our retail channel, holistic digital transformation, invoices of more than 150 institutions serving the foundations of which were laid in 2017, across Turkey became payable at Turkcell stores. continued at full steam. Turkcell stores, the transformation of which was completed as of As the most important step in digital the start of 2018, delivered the latest technologies transformation, strategic infrastructure investments and digital services to our customers with Turkcell were initiated at stores where physical quality in approximately 1.5 thousand locations transformation was completed. 2018 OPERATIONS 77 ANNUAL REPORT 2018 REPORT ANNUAL TURKCELL OUR CORPORATE SALES CHANNEL SALES CORPORATE OUR CHANNEL SALES ONLINE OUR of fizy, TV+, lifebox, Dergilik, BiP, My Account and and My Account BiP, Dergilik, lifebox, TV+, fizy, of IVR (Interactive The customers. by products UpCall reduce to used technology, Response) Voice the of item the primary cost times, conversation all digital sale of the for utilized was channel, efficiency. increased providing services, structure a segmented through serve We and small- large strategic, public, including all our in Turkey. customers scale telecom integrated end-to-end provide We and most largest with Turkey’s services Corporate on our force sales widespread through companies digitize We Channel. Sales corporate IT services, integration, system our solutions. and cloud center data applications, in our share revenue our increased we In 2018, and contributed front the fixed on products products with these profitability Company to corporate And for importance. strategic of digital lead to continue we customers, at aimed expertise creating by transformation areas. and solutions in these sectors at our working people 2.3 thousand With active perform we Solution Centers, Corporate companies. small and medium-sized to sales Global our from services provide we Additionally, companies’ those all of for Center Bilgi Call management portfolio also provide We requests. of with a staff calls regular conducting by services managers. 500 portfolio to close Channel dominated Sales In 2018,Online heavily in Turkey market the e-commerce 35% to had reached We 2017. to compared the reflecting by customers, e-commerce more and category of basis on the growth stable visitors. of also on the number range, product model communication the phygital Combining increased we 2017, vision of with the digitalization channels through sales with all our coordination Days. such as Yellow communication 360 degree and digitalization of an indicator as In addition, e-commerce our of 70% mobile transformation, mobile website our through realized was volume application. and the My Account we and orders, traffic In line with the increasing channels in digital in our invest to will continue and design. experience user and improve 2019, modeled will launch omni-channel schemes We while channels, sales Turkcell of on the strengths customers. our for propositions value new creating OUR ALTERNATIVE SALES CHANNEL CHANNEL SALES ALTERNATIVE OUR The first major change occurred in the supply in the supply occurred change major first The catalog, the product 2018, As of chain model. stores, at all Turkcell customers our to presented the centrally With standardized. centrally was advantageous more structure, catalog managed high quality of and products options purchasing in stores. placed were standards supply to partners began business retail Turkcell catalog. a digital through products commercial in the products of indicators Performance monitored be to began processes procurement ensured. with efficiency transparently, the through gained the experience With the stores, Turkcell exclusive of transformation channel was sales the non-exclusive of structure the of optimization Upon also wholly renewed. started Points Sales Turkcell structure, distribution Point. Sales Digital the name of under operate to in a via tablets, serve to began Points Sales Digital personal The stores. as in Turkcell way, paperless transported be to started customers our of data 4.5G network. superior Turkcell’s through safely Stores Turkcell Points, Sales Digital of In the focus availability the widespread by differentiated were services. and products basic of at our process the digitalization link of As the last which digitizes GO Project, the Turkcell stores, and customers employees our of the interaction sales GO, to Thanks launched. was during sales and understandable a simple, adopted screens were employees Store structure. transparent with our screens at the sales look to enabled needs customer understand better customers, and information, and product the data to thanks its With needs. those to tailored products offer the time GO has shortened simple architecture, job in their specialize to employees store new for products. the new about and learn which reached Channel, Sales Alternative On our on focused we 12 million of units, volume a sales customers our to and services bringing products them. need they whenever reach which we channel through every turned We earning by channel, a sales into the customer written to and adding focus competence sales Bank Channels, Chain, channels such as Telesales, WEB Chat and proactive Media, Social Flagship, a leading Channels played Sales Alternative chat. such as TV+, services, digital in delivering role Energy, Turkcell customers. our and fizy to lifebox were BiP and Dergilik SUPERCAM, Kopilot, Paycell, Use Active The as priority products. positioned use the active increase to launched was Project 2018 has been a year in in a year has been 2018 Sales Online which our the Channel dominated in sector e-commerce 2017. to compared Turkey reach to It managed e-commerce 35% more in 2018 customers by 2017, to compared stable its reflecting of on the basis growth and product category also on the number range, visitors. of We provide end-to- provide We telecom end integrated with Turkey’s services and most largest force sales widespread Sales Corporate on our digitize We Channel. through companies integration, system our corporate IT services, center data applications, solutions. and cloud 78 TURKCELL ANNUAL REPORT 2018

CARRIER RELATIONS AND WHOLESALE

We lead the change in Turkey’s telecommunications sector. We have become the most important capacity and internet provider of many neighboring countries.

We lead the change in Turkey’s During the event, participated in by 300 senior telecommunications sector through business executives from 40 countries, we discussed partnerships with national and international 2018 issues and evaluated new cooperation By enabling other national operators in roaming, interconnection, wholesale opportunities that will add value to the sector. operators to utilize our voice and wholesale data services. own infrastructure, we INFRASTRUCTURE SHARING AND JOINT both created new business TURKEY, MAIN INTERNET ROUTE INFRASTRUCTURE areas and pioneered successful and major We have become the most important capacity By enabling other national operators to utilize projects that pave the and internet provider of many neighboring our infrastructure, we both created new business way for the technological countries with the activities conducted since 2008 areas and pioneered successful and major transformation of our towards our vision of transforming the Silk Road projects that pave the way to technological country. into the Fiber Road, and our main strategy of transformation of our country. positioning Turkey as the primary internet route, with Istanbul as the regional internet hub. We played a leading role in the initiation and progress of the installation of joint infrastructure Through our collaborations with the world’s solutions that will enable our country to reach leading operators, we have served as a bridge information in the fastest and cheapest manner, providing wholesale customers with uninterrupted facilitate information processing, ensure access from east to west, at the speed of light. information storage and create a competitive environment for all service providers, with a ISTANBUL, THE TRAFFIC EXCHANGE HUB OF focus on real productivity in increasing richness THE REGION of services. We continue to contribute to this development. In the scope of our wholesale data services, our international carrying capacity has exceeded TURKCELL USERS ALSO ROAM LIKE HOME 7 Tbps. We cooperated with the world’s largest WHILE ABROAD. 7 Tbps global traffic exchange platforms and played a In the scope of our major role in their decision to enter Turkish market. We began to act as a group regarding wholesale data services, Thus, we have taken another crucial step in agreements reached with other operators in the our international carrying transforming Istanbul into the traffic exchange hub scope of international roaming. And we have capacity has exceeded of the region. We have also played a significant been able to position the efficiency gained 7 Tbps. We cooperated with role in bringing content providers to the point through our increasing cooperation with many the world’s largest global where they wish to provide their services from major international operators as a benefit for our traffic exchange platforms Istanbul. consumer and corporate customers’ international and played a major role tariffs. in their decision to enter WE EVALUATED 2018 ISSUES AT THE Turkish market. WHOLESALE INTERNATIONAL OPERATORS Roam Like Home package that started with 51 CUSTOMER EVENT. countries today covers 85 countries. We have ensured that our subscribers travelling abroad to We organized an event in Antalya on October enjoy the benefits of packages charged at their 1-3, 2018 geared at continued contribution to the domestic tariffs, and are able to meet all their strategy of turning Turkey into a regional digital communication needs through advantageous hub, positioning Istanbul as its technology center. offers. 2018 OPERATIONS 79 ANNUAL REPORT 2018 REPORT ANNUAL TURKCELL MY COMPANY MY CONSULTANT APPLICATION CHAT&CHATBOT In February 2019, My Account application was was application My Account 2019, In February with new and enriched Operator as Digital renamed features. to specific application My Company our With enable company we customers, corporate our transactions execute collectively to representatives With on a single platform. lines all their to related about representatives inform we notifications, instant out carry enabling them to And by lines. company offers appropriate to such as switching transactions on a changes as SIM card as well and campaigns, we and online, documentation, line without basis In 2018, lives. their to and convenience bring speed by executed were 200 million transactions and its in My Company companies 150 thousand applications. web applications, 14 different our for services provide We the over sent requests, 35 thousand and meet application with our month per application, our of motivation biggest The team. consultant the solve instantly is to team, Consultant Application face potentially could customers that our problems content. while experiencing consultant application our transformed we In 2018, the into via e-mail, served which we process, customers our deliver to chat method application service. instant all our serve we consultant, the application With without in 5 languages, simultaneously customers users and others. Turkcell between distinguishing Dergilik TV+, lifebox, fizy, such as BiP, applications Our information, customers’ our meet us to enabled and entertainment reading, storage, messaging, the infrastructures, through life to related needs other the data in a way engineers, own our by developed With country. our of within the borders is retained

FAST LOGIN LOGIN FAST ACCOUNT MY By integrating Fast Login to Turkcell’s many digital digital many Turkcell’s to Login Fast integrating By customers’ improved we channels and applications, of the problem and solved experience login is a customer Login Fast password. forgetting via mobile phone provided service authentication GSM numerous by and is supported number, GSM World through the world across operators solution Mobile Connect global (GSMA)’s Association digital to login facilitating Login, Fast infrastructure. 15.3 million to reached channels and applications users. registered meet to developed application, My Account Our and which habits, and digital needs the customer and sales service preferred the most became 38.8 million reached customers, channel among our application, On the My Account in 2018. downloads users in the active which has 19.2 million three-month 300 million conducted customers our quarter, fourth their monitoring In addition to month. per transactions application, with the My Account balances remaining switch and instantly reach able to are customers our most and campaigns services the packages, to we notifications, our With use. their for suitable at switches the right make customers that our ensure time. the right the customers our provide we In addition, our With offers. and accessory device appropriate the of display the status we module, tracking cargo purchase. they products in 2018 campaign and Win the Shake continued We Shake With weekly. that changed with surprise gifts packages internet customers our award we and Win, week. each services and digital access only have not customers our Moreover, also to but and products, transactions Turkcell to transactions and perform products, Superonline 300 thousand Nearly within the same application. performing My Account, used customers Superonline month. per 1.8 million transactions

With our My Company My Company our With to specific application customers, corporate our enable company we to representatives execute collectively to related transactions single on a all lines their platform. CUSTOMER EXPERIENCE FOCUS EXPERIENCE CUSTOMER 38.8 million downloads in 2018. in 38.8 million downloads service and sales channel among our customers, reached reached customers, among our channel and sales service and digital habits, and which became the most preferred preferred the most and which became and digital habits, Our My Account application, developed for customer needs needs customer for developed application, My Account Our 80 TURKCELL ANNUAL REPORT 2018

CUSTOMER EXPERIENCE FOCUS

We have reduced the transaction time by 60% using the Secure Digital Signature application. In this respect, we achieved savings of TRY 22 million as a result of completing 15 million transactions using the digital signature to date.

SOCIAL MEDIA

We serve our users 24/7 with a total of 47 accounts on Facebook, Twitter, Instagram, YouTube and LinkedIn. We respond to the 150 thousand comments of 50 thousand social media users on average, per month. We establish dialogues with users according to the nature of the medium used and our brand positioning, supporting them across all our digital applications.

ENVIRONMENTALLY FRIENDLY INVOICE

We aim to ensure that invoices are always sent to our applications such as My Account, GNÇ and our customers in a secure, timely and transparent Platinum, we ensure that our customers perform their way. In this respect, by using digital channels in transactions on Turkcell lines while utilizing the unique We started providing delivery of invoice, we contribute to both rapid benefits we provide them. For all these services service to our customers delivery to our customers and environmental and channels, we developed service platforms, on with artificial intelligence conservation. In 2018, we were ranked 1st in the which our customers can reach us quickly and easily, based Turkcell Assistant. world among telecom companies by reaching an whenever and wherever they want, without having environmentally friendly invoice subscription and to talk. delivery rate of 97% for mobile consumers, 88% for mobile corporate, 96% for fixed consumer and 95% Our customers can contact us via instant messaging for fixed cumulative. if they have an inquiry about their lines, or our applications. We offer an average of 1.3 million chat SECURE DIGITAL SIGNATURE AND SMART services each month in 5 different channels. We IDENTITY have digitized the instant written service we offer to our customers through artificial intelligence based Our Secure Digital Signature application enables Chatbot, Determinist Chatbot, and Selective Chatbot signatures to be appended by special pressure technologies. We are able to conclude approximately pen on touch screens such as tablets, in the digital 40% of the contacts for the customers we serve medium instead of on printed paper, while the using our Chatbot technologies. Following the launch concluded agreement is safely stored in the digital of our newly built artificial intelligence-based Turkcell environment. Assistant, we see these rates reaching nearly 80% levels and we are planning its rapid expansion. Elements that distinguish the signature appended on the tablet are measurable technical data such as We continue to work on our artificial intelligence- pressure, acceleration and speed information. based Chatbot activities with a perspective to enrich scenarios and channels, enabling the growth of With Secure Digital Signature, we ensure a paper data analytics models by maintaining our past data free environment at all our stores, and provide our analysis live. We also continuously monitor customer customers a more reliable, swift and easy digital insights and make necessary updates accordingly. experience. We have reduced the transaction time by 60% using the Secure Digital Signature application. 2018 OPERATIONS 81 ANNUAL REPORT 2018 REPORT ANNUAL TURKCELL CUSTOMER EXPERIENCE STREGTHENED BY BY STREGTHENED EXPERIENCE CUSTOMER INTELLIGENCE ARTIFICIAL PERFORMANCE EXPERIENCE CUSTOMER MANAGEMENT ABROAD CARD SIM A SENDING We continuously collect our customers’ feedback in in feedback customers’ our collect continuously We services products, our improve to interaction every customers 200 thousand Around and processes. month. us each and grade experiences their share to efforts our improve aim to we feedback, this With levels. higher still our into technologies new integrate to continue We Customer.” the of the “Voice hear better to processes survey our into artificial intelligence integrated We interpret instantly to 2018 of at the beginning system methods, survey our diversifying By surveys. customer within surveys conduct to studies began we customers. more to out reach to in order applications accelerated we team, experience As the customer minimize to in 2018 projects artificial intelligence our customer and increase processes in our human effort determined that we the 30 projects 4 of satisfaction. Artificial four these With in 2018. live went as priorities 12.1 million in total, TRY saved we projects, Intelligence year. every 2.6 million which will saved be of TRY provide also we with the financial benefits, Together experience. in customer improvements significant had customers that our the experience monitor We Experience the Customer through on a daily basis have that we 400 metrics with over Dashboard, infrastructure. data and an automated determined, that the experience ensure we On this platform, Group Turkcell throughout that all functions metrics and that demarcated, clearly are for responsible are on them. based taken are actions specific the and improve the complaints reduce aim to We the defining by satisfaction customers’ our of level for Turkey on a map of in detail needs improvement separately. and district province each the best receive customers that our ensure We may they wherever but only in Turkey, not service, SIM customers’ our where In cases in the world. be we while abroad, down broken or lost, are cards the address to charge of free SIM card send a new have we So far, in the world. anywhere give they 200 countries, in customers our to delivery performed Ethiopia and from to Republic the Dominican from of ensuring the continuation Mexico, to Singapore abroad. communication their TURKCELL EVREKA TURKCELL VOICE CUSTOMER’S THE TO LISTEN WE CHANNELS… ALL THROUGH In this respect, we achieved savings of TRY 22 million 22 million TRY of savings achieved we In this respect, 15 million transactions completing of as a result the foresee We date. to signature using the digital and achieving million 150 of documents digitalization the digital savings once 40 million in cost TRY at all our is completed transformation signature trees mature 20 thousand As a result, points. service will conserved. be water of tons and 342 thousand the expansion Turkey, for a first implements As Turkcell around contribute to is predicted Signature Digital of economy. 300 million the Turkish to TRY towards swiftly more move we In this context, And regarding benefit. customer for digitalization are we Turkcell, as technology, Smart Identity institutions with all relevant activities our conducting as a pioneer. remain to and companies Turkcell through experience the customer test We and channel employees, customers with our Evreka developmental and evaluating problems, any tackling and products our for concepts and innovative areas services. BiP SMS or through contests users to invite We and feedback ideas, their for In exchange channels. participating users compete determinations, problem Turkcell to thanks prizes various for other with each infrastructure. gamification Evreka’s the through the Customer of the Voice to listen We based designed which we platform, Evreka Turkcell on traditional and save model, on the Crowdsourcing resources. and research testing in the completed were contests different Thirteen than and more platform gamification our of year first we Among these, shared. were posts 15 thousand that will 1,500 actions either over monitor to continue a cost provide or experience, customer improve advantage. and to listen we team, experience As the customer channel at every the customer” of the “voice interpret we on the feedback Based interact. which we service. customer our perfect to strive we receive, customers with our in touch had got we In 2018, Chat and Media, Social Center, Call through the and interpreted analyzed We channels. Digital improve to 23.2 million of customers statements on these Based service. better and provide ourselves, and areas developmental our identify we studies, initiatives. improvement 23.2 million improvement initiatives. improvement of 23.2 million customers 23.2 millionof customers to improve ourselves, and and ourselves, improve to In 2018, we had got in touch in touch had got we In 2018, on these studies, we identify identify we studies, on these provide better service. Based Based service. better provide our developmental areas and and areas developmental our Digital channels. We analyzed analyzed We channels. Digital We accelerated our our accelerated We artificial intelligence to in 2018 projects customer increase the 4 of satisfaction. we that 30 projects as priorities determined in 2018. live went Center, Social Media, Chat and Chat and Media, Social Center, and interpreted the statements the statements and interpreted with our customers through Call Call through customers with our 82 TURKCELL ANNUAL REPORT 2018

CUSTOMER EXPERIENCE FOCUS

We focus on critical moments in the experience of our corporate postpaid customers, concerning their voice, internet, SMS packages and campaigns.

for over 24 hours. We provide 4 GB mobile data TRANSMISSION OF NETWORK REQUESTS support to these customers. By sending 778 THROUGH MY ACCOUNT thousand promo codes, we ensured uninterrupted We presented an service for 589 thousand of our customers in 2018. uninterrupted service We have digitized network complaints diagnostic scheme for our customers set ups. Our clients can diagnose their problem by FACILITIES FOR OUR CORPORATE CUSTOMERS waiting for installation tapping My Account/Help/Search/Connection Control on the fixed front, or and reach the solution. We focus on critical moments in the experience for those experiencing a of our corporate postpaid customers, concerning malfunction for over 24 What Have We Done? their voice, internet, SMS packages and hours. We provide 4 GB »» We are trying to understand the problems our campaigns they utilize. We aim to become mobile data support to customers are experiencing, with a total of 15 indispensable in our customers’ eyes. We do this these customers. inquiries. We summarized our inquiries in the by stretching the rules in campaign and package following main topics: switches, and by informing them in a timely »» Use in Abroad fashion of the appropriate offers on our digital »» Calling Abroad channels, facilitating life for everyone in contact »» SMS Blocking with the customer, gathering the information »» SMS Forwarding that our customers need, and solving problems »» Secure Internet Profile Control at source by simplifying the proposals in our »» Outgoing Communication campaign systems. Thus, we continue to improve »» Incoming/Outgoing Communication the experience offered to our customers by removing technical constraints and strengthening After obtaining information on their network our channels. status, our customers may apply for complaint, and then track the process in detail from the When our customers with own businesses wish related screens. to switch their consumer lines to the corporate segment to benefit from our corporate services, NEW GENERATION DIGITAL SERVICE: SERVICE we do not reflect the cancellation fees that SUSPENSION IS ON OUR DIGITAL CHANNELS normally arise from withdrawal from the consumer line campaigns to which our customers In order for our customers to obtain the same had committed. Thus, we ensure the satisfaction service on all channels, we have transferred our of our 17 thousand customers each month by service suspension process to the web and My positioning them with the right offer. For our Account. We have enabled them to register the corporate customers who log in to the “My service suspension request on whichever date Account” application and monitor their remaining they wish, or withdraw the request as they prefer, balance, after having used more than 80% of their without the need to contact the call center or existing package, we proactively offer the most visiting a dealer. appropriate additional package and we perform 5 thousand sales accordingly per month. For our Approximately 4 thousand customers performed 26 thousand corporate customers who complain transactions through our digital channels without of exceeding their quota, or for usage without a calling the Call Center. package, we establish contracts by upselling them and eliminate those complaints at first contact, PROMO CODE SCHEME and without asking for additional fee.

We presented an uninterrupted service scheme for our customers waiting for installation on the fixed front, or for those experiencing a malfunction 2018 OPERATIONS 83 ANNUAL REPORT 2018 REPORT ANNUAL TURKCELL On the back of hedging instruments, we maintained maintained we instruments, hedging of On the back solid generating FX risk at a minimum level, hedge Moreover, TL depreciation. despite profits, allowing volatility, minimized principles accounting the throughout profits quarterly net predictable for year. the for had made preparations we In 2017, capital our to with respect trade currency local Yuan in Chinese trade and conducted expenditures to efforts our continued we In 2018, time. the first for made in the payments trade currency local prioritize and the credibility protect to suppliers in order our to lira. Turkish the of value which standard, 16 Leases IFRS to respect With periods in accounting implemented be to started among been have we 2018, 31, December after which companies pioneering of the small number starting period accounting for adaption the initiated in the accounting Moreover, 2018. on January 1, started we 2018, on January 1, starting period 9 – Financial IFRS implement successfully to Contracts from Revenue 15 - and IFRS Instruments exemplary with our standards with Customers management. process digitalization, vision of with Turkcell’s In accordance that we indicators performance the key allowed we transferring time by in real monitored be to report the increasing thereby platform, the digital them to operations. our of efficiency as finance operations successful our to Thanks numerous granted been have we management, Turkey, Awards the Bonds & Loans At awards. the London-based by held annually in Istanbul financing the best reward to Media Group GFC in awards received we the year, of transactions were that we awards The categories. 4 different US$ 500 million with a issuance bond for granted a 125 million by sukuk issuance TRY maturity, 10 year and the time, the first for company telecom Turkish Bank Development the Chinese of expansion scope by use in 3 currencies enabling its agreement loan presence our strengthened companies, group our in the financial markets. position and pioneering

As the finance management of Turkcell, taking taking Turkcell, of management As the finance sustaining to contributed we steps, timely and sound of and profitability structure sheet balance robust challenging by shaped which was in 2018 Group our global and on a local conditions macroeconomic scale. with combined performance operational Strong main pillars of strategy, Hedging Model Business our hedging rate FX & interest pricing, right which are achieve us to enabled and liquidity management, value, shareholder and create profitability strong headwinds. macroeconomic despite USD 500 million Eurobond 10-year, our With Turkish the first became we in April, issuance 2015. since bond issue a 10-year to company under sheet balance our has strengthened This while confirming financing conditions, favorable forward, Going Turkcell. in confidence market debt our of tenure the average keep plan to we the bond In addition to at 4-5 years. portfolio liquidity our strengthen to continued we issuance, while registering financing sources, and diversify lease financing, with vendor the market for firsts debt and other securities asset-backed certificates, instruments.

At the Bonds & Loans the Bonds & Loans At held Turkey, Awards the by annually in Istanbul Media GFC London-based best the reward to Group financing transactions received we the year, of in 4 different awards categories. SUCCESSFUL FINANCE MANAGEMENT FINANCE SUCCESSFUL was shaped by challenging macroeconomic conditions. conditions. challenging macroeconomic by shaped was balance sheet structure and profitability of our Group in 2018 which which in 2018 Group our of and profitability structure sheet balance Taking timely and sound steps, we contributed to sustaining robust robust sustaining to contributed we steps, and sound timely Taking 84 TURKCELL ANNUAL REPORT 2018

SOCIAL RESPONSIBILITY

In recognition of its social responsibilities and with the promise of allocating 1% of its revenues to the social responsibility projects, Turkcell continued to pursue its social-benefit focused projects in 2018, at the same pace.

of technology based on the needs of society and to establish a healthy relationship between society and technology. In this respect, Turkcell Foundations aims to carry out research and development as well as scientific and educational activities, and to support scientists and the skilled workforce that the country and society need in every aspect.

HELLO HOPE PROJECT

The Syrian war that started in 2012 created a vast humanitarian drama, causing the broadest migration movement seen in the region since the Second World War. As over 6 million Syrians left their country, Turkey opened its doors to over 3.5 million of them, in doing so becoming the largest host nation.

Since our establishment, we have met our As Turkey’s Turkcell, with the awareness of our responsibility to society through projects implemented responsibility, we have planned all of our actions so with our stakeholders in diverse fields such as as to support long-term solutions, primarily those As Turkcell, the pillars education, culture, arts and sports. meeting urgent needs. In the scope of the Hello Hope of our corporate social project, we initiated partnerships with experts in their responsibility projects As Turkcell, the pillars of our corporate social fields from the Ministry of Interior, Directorate General are the United Nations responsibility projects are the United Nations of Migration Management, Disaster and Emergency Sustainable Development Sustainable Development Goals and Turkey’s Vision Management Authority (AFAD) and the Turkish Red Goals and Turkey’s Vision 2023. We reflect the expectations of our stakeholders Crescent. With the Hello Hope Project, proceeding 2023. to all our business processes, and in two phases, we maintain our services through a we build our social responsibility projects in light of our mobile application and Hello Hope Technology Center. focus on “equality of opportunity.” In another phase of the Hello Hope project, we TURKCELL FOUNDATION launched a Technology Center at the Kahramanmaraş Temporary Housing Center in association with AFAD Turkcell allocates one percent of its revenues for the and Prodea Systems. benefit of the society by obtaining authorization from the General Assembly each year. In this respect, At our Hello Hope Technology Center, we provide; Turkcell took another step and established the Turkcell Foundation in October 2018. The resolution »» The first free fiber internet connection service regarding the establishment of Turkcell Foundation offered for the education of Syrians in Turkey, has been submitted to shareholders’ attention at the »» The Hello Hope application; a solution for learning General Assembly meeting held on March 30, 2018. Turkish and accessing communication and The Foundation has 14 Board of Trustees members, 5 information over Turkcell T tablets, as well as Board of Directors members, and 3 Audit Committee providing an opportunity of listening to music over members. fizy and watching TV on Turkcell TV+, »» Khan Academy’s K12 training, content on news and The foundation aims to enable the development of health. science and technology in our country and extend it internationally, to engage in activities to enable use 2018 OPERATIONS 86 TURKCELL ANNUAL REPORT 2018

SOCIAL RESPONSIBILITY

With the “Whiz Kids Project” we aim to enable students with the potential to steer the future from all over Turkey to realize their potential, and access to future technologies.

The trainings that aim to bring out the creativity and potential of talented children, allow students to create their own product by combining numerous variables, by teaching them to design and produce using three-dimensional printers, program their own mobile applications with App Inventor, and construct their own electronic circuits.

Technology laboratories in 33 BİLSEM were completed in the scope of the Project, which has been initiated in 2016 in eight provinces including, Istanbul (Bahçelievler), Adana, Ankara, Şanlıurfa, Ordu, Kütahya, Erzincan, and Kocaeli (Tevitöl). We reached out to 27 provinces in the scope of our Turkcell Whiz Kids Project.

In the scope of the project; we also provide technological support to certain successful schools beyond the scope of BILSEM. In 2018, we set up a Whiz Kids class in Ordu Kökenli Middle School, in addition to those established in 2016 in Kocaeli Tevitöl School, in 2017 in Gökçeada Greek Middle Our efforts to ensure a greater inclusion of Syrians School and High School, as well as in Mardin Midyat in social life through technology and communication Sivrice Middle School, whereby those students also have been communicated at various organizations In the new period, the had the opportunity to benefit from the Project. including the GSMA, the United Nations and Whiz Kids Project’s the World Economic Forum, and have received distance learning system In the new period, the Whiz Kids Project’s distance numerous awards on international platforms. is also being updated. learning system is also being updated. The updated The updated Whiz Kids Whiz Kids training portal will be switched to the The UN Global Compact platform has selected training portal will be Open edX infrastructure, which is also used by Turkcell CEO Kaan Terzioğlu as the pioneer of switched to the Open edX Stanford, MIT, and Cambridge and Sorbonne “Sustainable Development Goals” for his efforts with infrastructure, which is universities. With the new system, the Whiz Kids respect to Syrian refugees. also used by Stanford, portal is transforming into a rich educational MIT, and Cambridge and resource, including trainings such as Arduino, Scratch, TURKCELL WHIZ KIDS PROJECT Sorbonne universities. Space Sciences and Robotics, to the benefit of all students in Turkey. Turkcell hit the road to assist Turkey’s greatest resource, uniquely talented students, to overcome In the scope of the Project so far; impossibilities and enable them access the educational opportunities required to develop them »» 33 laboratories were established in 27 provinces through new generation technology and learning. and more than 30 thousand uniquely talented With the “Whiz Kids Project” initiated under the students were reached over three years. auspices of the Ministry of National Education and »» Maker and coding kits were distributed to under the roof of Science and Art Centers (BİLSEM), approximately 25 thousand students at 100 we aim to enable students with the potential to Bilsem and 4.5 thousand students were provided steer the future from all over Turkey to realize their face-to-face trainings. potential, and access cutting-edge technologies. 2018 OPERATIONS 87 ANNUAL REPORT 2018 REPORT ANNUAL TURKCELL DQ DIGITAL INTELLIGENCE DIGITAL DQ Ordu won First Prize in the FIRST LEGO League League LEGO in the FIRST Prize First won Ordu “the the theme of under organized Tournament with in 2016, in Izmir Meeting” are Heroes Science Nutrition on into Waste “Turn named Project their in Istanbul, place took the tournament, At Time.” Solution Award, the Innovative received they in the world participate qualified to and were represented students Our in the US. tournament being as well, there successfully country our As Turkcell, Award.” Special the “Project of worthy to indifferent be to not committed are we and the laboratory With efforts. such valuable in the students our to provided that we equipment support them we Kids Project, the Whiz of scope success. of up the ladder higher in reaching Turkey, of the future kids, our introduces Turkcell as the defined Project, intelligence with the digital and capabilities. literacy digital for standard world developed platform, the DQ online training With 8-12 years, aged children for Park Yuhyun Dr. by the digital of with the risks cope to learn children requirements, its to adapt able to and are world while playing games. technical, core the eight children gives training The cyber privacy, of competencies and social mental with cyberbullying, coping thinking, critical security, digital time management, screen empathy, digital footprint. and digital identity better to children will enable our training The by offered the opportunities from benefit the of citizens effective and become technology world. digital ort was provided to children children to provided ort was S One-on-one supp who added value to Turkey by reaching out to to out reaching by Turkey to value who added Gökçeada Sivrice, such as Ordu, stories success and Tevitöl. through the Whiz Kids training portal, through through portal, Kids training the Whiz through online training of hours 150 thousand which over provided. were » supported be to continued been have tudents » Sivrice Dream: Mardin Dream: Sivrice Middle School, Sivrice Midyat Mardin of Students in robotics, successes of level great who achieved Tournament League Lego the First to attended (Science Derneği “Bilim Kahramanları by organized can “you who said all those Against Club).” Hero team Dream Sivrice dreaming,” stop it, achieve not true. come dreams made their the regional attended first team Dream Sivrice for pay to the means Lacking championship. transportation, support for obtaining by tickets, then in the finals, for in Istanbul participated they Championship in Spain Open the FLL European Prize. First the Rising Star won they where lab equipped up a “Maker” set we As Turkcell, circuits electronic notebooks, with 3D printers, Kids Whiz in support of equipment and robotics in the children for training provided We in Mardin. and mobile application coding robotics, of areas As Turkcell, trainers. specialized with development Midyat Mardin of sponsor the official became we LEGO in the FLL (FIRST Middle School Sivrice tournament. League) the Out to Reaching Success Technological The Village in Ordu… Kökenli from World village… a tiny from that emerged A huge dream in Village Kökenli of students talented The » » As Turkcell, we set up a up a set we As Turkcell, lab in Midyat “Maker” equipped School Sivrice with 3D printers, electronic notebooks, and robotics circuits support to equipment Kids in Mardin. Whiz 88 TURKCELL ANNUAL REPORT 2018

SOCIAL RESPONSIBILITY

Within the framework of the “Women Developers of the Future” trainings, to which close to 1,400 women applied, we provide online mobile application development lectures across Turkey on weekdays, and classroom lectures in 18 cities at the weekends.

and improve women’s employment capacity and entrepreneurship in this area. We support them in catching the wave of the software era, and in being one step ahead in terms of entrepreneurship through familiarity with mobile technology.

Within the framework of the “Women Developers of the Future” trainings, to which close to 1,400 women applied, we provide online mobile application development lectures across Turkey on weekdays, and classroom lectures in 18 cities (Istanbul, Ankara, Izmir, Şanlıurfa, Gaziantep, Diyarbakır, Trabzon, Kayseri, Antalya, Denizli, Van, Adana, Karabük, Eskişehir, Sivas, Aydın, Samsun ve Elazığ) at the weekends.

One of the outputs of our “Women Developers of the Future Projects” with most concrete data is Tester Women. We employed 100 women, who had received training as remote software testing experts, thereby creating a new business model in Turkey. Among the women trained in the women Developers of the Future Project, 100 WOMEN DEVELOPERS OF THE FUTURE successful women at the end of a four-stage election process, began testing Turkcell’s digital One of the outputs of our In 2017 we took our “Future Developers” Project, products and services having also completed the Women Developers of the launched five years ago to activate our country’s Mobile Application Test Training. Women who Future Project’s with most potential in the IT sector, to another level with participated from twenty-one provinces continue concrete data is Tester “Women Developers of the Future.” to contribute to both Turkcell Family and our Women. We employed 100 customers with more than 4 thousand findings, women, who had received With this project we are aiming to support and 359 ideas, 55 of which were implemented, training as remote Turkey’s digital transformation, increase the and a number which are currently at the software testing experts, share of software exports in line with 2023 planning phase. With Tester Women, Turkcell has thereby creating a new targets, increase the use of domestic product implemented a new, inclusive and sustainable business model in Turkey. in the IT industry, contribute to the economy by business model never attempted before. supporting women for entrepreneurship, provide more women the opportunity to enter the IT The 2018 launch of the Project, notable for its sector, spread the culture of producing, sharing, contribution to Turkey’s economy, was hosted and implementing knowledge, and expand by Mrs. Emine Erdoğan and held at the Beştepe entrepreneurship culture. People’s Culture and Convention Center, with the participation of 2,000 people. The purpose of the project initiated together by Turkcell, TOBB (Union of Chambers and Commodity Exchanges of Turkey) and the TOBB Women Entrepreneurs Council is to support women in developing mobile applications by educating them on software, 2018 OPERATIONS 89 ANNUAL REPORT 2018 REPORT ANNUAL TURKCELL With the technology classes established at all 16 at all 16 established classes the technology With throughout students the visually impaired for schools development for prepared are students Turkey, for and opportunities employment, towards training. technology through provided are progress computer the hearing-impaired, for 20 schools At are workshops necessary and other classes for people young prepare to established computer design, in graphic employment fields. and similar technologies according provided are trainings Specialized their to contribute to individual interests to gain fundamental and enable them to development at state employment for skills required computer companies. and private institutions without “Education of the scope within tours Cultural under Turkcell, by conducted Program” Boundaries National Education of the Ministry of the auspices education, special who need disabled children for year. the second for continue to included were Erzurum and Izmir Van, year, This 1,200 students by attended which were tours, these 135 students of A total year. last families and their and 350 220 in Erzurum, in Van, parents and their which were in the tours, participated in Izmir, unable disabled children, for Turkcell by initiated financial due to in, live the city they experience to Van from sites historical Many disability. or difficulties to Ephesus and from Minarets, the Twin to Castle were Terrace Viewing Castle Maiden’s the Edremit In the scope guides. tour by accompanied explored, students 3 thousand over thus far, the Project, of their and explored experienced have Turkey across senses. using their cities PEOPLE WITHOUT BOUNDARIES WITHOUT PEOPLE BOUNDARIES WITHOUT EDUCATION PROGRAM As the Turkcell family, we attach great importance importance great attach we family, As the Turkcell all for opportunities equal of provision to and the economic for society our of segments taking and are country, our of development social we this vision, of In light in this regard. firm steps the fields under of solutions in a diversity provide facilitate to Boundaries” without “People of roof integrate better and the disabled, of the lives the daily life. them into disabled of support the development We within the and employment education in students Boundaries without the Education of framework the under in June 2015 initiated we Program National Education. of the Ministry of auspices the competence increase aims to program The needs, education with special disabled children of life. participation in social their ensure and to over 2015 since the program, of In the scope with special disabled students 10 thousand at 84 reached been have needs education 45 provinces. across schools disabilities are with mild mental Students at life business post-school for prepared being Education in 48 Special workshops professional Education the Turkcell through established Centers the skills they With Program. Boundaries without services, and travel in accommodation acquire and handicrafts services, and beverage food their for prepared are students workshops, graduation. after employment students Education without without Education In the scope of the the of In the scope 2015 over 10 thousand 10 thousand over 2015 10 thousand 10 thousand disabled students with with students disabled special education needs needs education special have been reached at 84 at 84 reached been have Boundaries program, since since program, Boundaries schools across 45 provinces. across schools As the Turkcell family, we we family, As the Turkcell importance great attach equal of provision to all for opportunities society our of segments and economic the for our of development social taking and are country, in this regard. firm steps 90 TURKCELL ANNUAL REPORT 2018

SOCIAL RESPONSIBILITY

Turkcell has so far granted scholarships to over 100 thousand young people and contributed to tens of thousands of young people’s chance of obtaining a profession.

century. Additionally, an outdoor sports area and recreational facilities were built. As a continuation of this project, we continued to strengthen friendship between the two countries by sponsoring an exhibition. Turkcell hosted the Communication in Art themed Art Exhibition showcasing the art work of 42 visual artists from Turkey and Greece, in cooperation with the İmroz Education and Culture Association and the Greek Community. In total 110 art works including sculpture, painting and photography were on show at the exhibition, where artists displayed personalized communication concepts and conveyed a communication message through the medium of visual art. The exhibition reached art lovers in Athens, Thessaloniki, Izmir and Istanbul.

School construction and restoration activities continues each year with the inclusion of new schools to the scope of the program.

DISABILITY FOOTBALL FEDERATION SPONSORSHIP

We support our activities in different fields to enable disabled citizens to participate more in daily life with our sporting projects. We continue EDUCATION SCHOLARSHIPS AND SCHOOL our disability sports sponsorships initiated with RENOVATIONS the cooperation of the Blind Sports Federation We support our activities in football branch with Hearing Impaired Sports in different fields to In the scope of education, approximately 8,000 Federations, the Physically Disabled Sports enable disabled citizens high school and university students receive Federation and the Special Athletes Federation. to participate more in educational scholarships each year. Turkcell has Within the framework of the disability football daily life with our sporting so far granted scholarships to over 100 thousand sponsorships we initiated in cooperation with the projects. young people and contributed to thousands of Turkish Football Federation, we provide sponsorship young people’s chance of obtaining a profession. support for both the national team and the leagues of 4 federations. In the context of school renovation projects, within the framework of the protocol signed Our Amputee National Team became the European with the Ministry of National Education and Champions in 2017, sustaining the European Istanbul Governorship; Sâmiha Ayverdi Anatolian Championship success of our Visually Impaired High School, Fatih Vocational and Technical National Team of 2015. The Amputee Football Anatolian High School, and Vatan Vocational National Team competed and ranked second in and Technical Anatolian High School were the 2018 World Cup and brought happiness to the renovated. A technology class was built for the country. We are sincerely hoping to achieve similar historical Gökçeada Greek Middle School and successes in other disability branches over the High School, which reopened in 2015 after half a coming years. 2018 OPERATIONS 91 ANNUAL REPORT 2018 REPORT ANNUAL TURKCELL TANGO WITHOUT BOUNDARIES WITHOUT TANGO TRAINING TANGO ONLINE In the scope of the project, close to 50 visually 50 visually to close the project, of In the scope in employed are people and hearing-impaired Turkcell. with the support of Istanbul Istanbul by implemented unique project, This Turkcell, by and supported Enterprise Social one of consisting couples together brought and one with hearing-impaired visually-impaired which initially team, The tango. through person, and four visually impaired four of consisted with continue will now indiviuals, impaired hearing with the that started journey The crowd. a larger opens now Museum, Dialogue Turkcell of guides all impaired visually and hearing to doors its only not Moreover, join. who wish to people who wishes also anyone but disabled individuals, this unique experience. share can to and “My Sign Language” Companion” “My Dream with Turkcell implemented applications, the tango into also integrated were technology, also include a training applications The training. and hearing visually impaired for package individuals learn enabling them to impaired impaired Hearing on an online platform. tango training watch can dance individuals who wish to and in with sign language, in this package videos an have all In addition, figures with subtitles. detail the visually impaired. for visual description, instant Impact the Digital won Museum Dialogue Turkcell Boundaries. without with Tango in London Award ACADEMY WITHOUT BOUNDARIES WITHOUT ACADEMY MUSEUM DIALOGUE TURKCELL Turkcell Academy’s online education platform platform online education Academy’s Turkcell trainings special offers www.turkcellakademi.com individuals under impaired visually hearing and for Boundaries.” without “Education of the category impaired the hearing for programs training Many development, personal to technology from ranging are leadership to world the business and from There with the sign language option. provided teach that impaired the hearing for trainings are in cooperation prepared Sign Language” “Turkish Impaired, the Hearing of Federation with the Turkish that the visually impaired for as trainings as well and iOS smartphone to usage specific teach that programs educational Additionally, Android. parents to offered are support child development children. and visually impaired with hearing have we and services products the In addition to without “People of roof the under developed the disabled of enrichen the lives to Boundaries” and equal active their and ensure people, also conducting are we participation in daily life, provide to projects responsibility social new in believe We solutions. and permanent thorough provide to awareness creating of the importance with the Hence, problems. social solutions to we exhibition in Silence” the “Dialogue inclusion of in the Dark” exhibition, the “Dialogue transformed Social with the Istanbul in cooperation initiated a permanent into Istanbul, İBB and Metro Enterprise, Dialogue the name “Turkcell under museum the hosting which has been museum, The Museum:” in the Dark ExhibitionDialogue with the support of a different to visitors introduces 2014, since Turkcell along with visually and hearing-impaired world in the the “Dialogue with the inclusion of guides, exhibition, Silence” We believe in the in the believe We creating of importance provide to awareness social solutions to with the Hence, problems. the “Dialogue inclusion of we exhibition in Silence” the “Dialogue transformed in the Dark” exhibition, in cooperation initiated Social with the Istanbul İBB and Metro Enterprise, a permanent into Istanbul, the under museum Dialogue name “Turkcell Museum.” Turkcell Dialogue Museum Museum Dialogue Turkcell Impact the Digital won with in London Award Boundaries. without Tango 92 TURKCELL ANNUAL REPORT 2018

SOCIAL RESPONSIBILITY

Considering humans, economy and environment as a whole, Turkcell takes every step with an awareness of sustainability. Turkcell both protects environment and reduces Turkey’s energy bill.

Data for 2012, 2013, 2014, 2015, 2016 and 2017 has SUSTAINABILITY INITIATIVES been included for the purpose of interpretation of our economic, social and environmental We closely monitor We attach great importance to compliance performance, and enabling comparisons between our carbon footprint with environmental principles, which are among the periods. Stakeholders’ feedback is important in combating climate the United Nations Development Program’s in helping us to enhance our sustainability change, and we annually Sustainable Development Goals. While supporting performance and improve our reporting. For increase the use of sustainable industrialization with our technology, this reason, stakeholder opinions gathered from renewable energy sources we build our infrastructure with consideration for various channels, which are related to several of in our business processes the future of the climate and the environment. our applications and initiatives, are included in the in targeting reduced And in developing our services, we aim to reduce report. carbon emissions. our environmental impact.

Energy Saving Initiatives We closely monitor our carbon footprint in Considering humans, economy and environment combating climate change, and we annually as a whole, Turkcell takes every step with an increase the use of renewable energy sources awareness of sustainability. By employing energy- in our business processes in targeting reduced saving technologies and implementations at every carbon emissions. In order to improve our energy stage of our business processes. Turkcell both efficiency, we focus on energy saving in our protects environment and reduces Turkey’s energy process improvement efforts. We also reduce our bill. waste and dispose of it by separating it at source.

Turkcell, the very first mobile operator with In 2017, we ranked 1st in the world among telecom ISO 50001 - ISO 14064, ISO 50001 and ISO companies by reaching an environmentalist 14064 Certification invoice subscription and delivery rate of 97% for We are moving forward with a systematic, mobile and 85% for the fixed segment customers. transparent and proactive approach in our efforts to fight against climate change. We follow our Sustainability Report 2017 performance in line with the targets that we set With our sustainability report published in August out. We are continuing to lead the market in the 2018, we shared our sustainability management development of the solutions in the management approach and the sustainability practices and of energy and the greenhouse gasses. performance of the operating period between January 1, 2017 and December 31, 2017 with our We have proven to be an environmentally friendly stakeholders in full transparency. company with human and benefit-oriented initiatives bound to international standards in This report, in which we adopted the social, economic and environmental areas of internationally accepted sustainability reporting influence. We have fulfilled all our responsibilities standard of the Global Reporting Initiative (GRI) regarding greenhouse gas standards, and in 2015 G4 Sustainability Reporting Principles as a guide, we became the very first telecom operator that also contains the seventh Communication on received “ISO 14064 – Accounting and Verification Progress of the United Nations Global Compact of Corporate Greenhouse Gas Emissions” (UNGC), of which we have been a signatory certification in Turkey. party since 2007. We have declared our support for, and our progress regarding UNGC’s principles in the area of human and employee rights, the environment and the fight against corruption. 2018 OPERATIONS 93 ANNUAL REPORT 2018 REPORT ANNUAL TURKCELL maintaining our position on the 2018 list of the the of list on the 2018 position our maintaining 2015 since included been have in which we index criteria the selection that meet practices our for Index. Sustainability the BIST for (CDP) Project Disclosure Carbon the that had internalized As a company early change at a very climate to awareness and the risks studying been have we stage, change, climate by created opportunities new our as a part of studies these having adopted in CDP participated we In 2018, plans. strategic sharing the Project), Disclosure (Carbon Turkey 2017 on our prepared we report comprehensive with the public. performance including stakeholders, our all of incorporate We the into and customers, employees suppliers, our making efforts, sustainability our of processes on processes our part of an integral sustainability principle. In 2017, we continued our efforts and have again again and have efforts our continued we In 2017, With ISO 14064 certification. to entitled been and savings solutions the efficiency over saved we 2017, throughout implemented million. 33 and TRY energy 95 million of kWh electricity the total to corresponds amount The a one for homes 36 thousand by consumed in invested capital total Turkcell’s period. year reached systems friendly environmentally 185 million in 2017. TRY Index Sustainability BIST our sustaining of the principle adopt We and environmental in social, effectiveness with the areas, governance corporate operator, digital Turkey’s being of responsibility within the industry. position our of and in light companies provides Index Sustainability BIST The making of means evaluation a performance plans and future their to improvements also index The objectives. new establishing with the opportunity to companies provides skills regarding risk management their develop and accountability transparency, corporate of proud are we As Turkcell, issues. sustainability TRY 33 million. 33 TRY savings solutions we savings solutions we 2017, we saved over 95 95 over saved we 2017, With the efficiency and and the efficiency With implemented throughout throughout implemented million kWh of energy and and energy million of kWh 95 million kWh We adopt the principle the principle adopt We our sustaining of in social, effectiveness and environmental governance corporate with the areas, being of responsibility operator, digital Turkey’s position our of and in light within the industry. 94 TURKCELL ANNUAL REPORT 2018

SPONSORSHIPS

Turkcell has maintained its pioneering efforts to develop sports in Turkey and help Turkish athletes and National Teams in their journey of gaining both national and international recognition for many years.

In the scope of individual amateur sports, we continued our support for the disciplines of running, fishing and golf, organizing events under our name throughout the year.

Turkcell, supporting Turkish sports since its establishment, both through sponsorship and raising awareness, gathered all related efforts under the umbrella of its brand, TURKSPORU. Turkish athletes marked the year 2018 with these sponsorships. Thanks to Turkcell’s support, they won world and European championships, raising our flag to the very top of the staff.

OUR AMPUTEE NATIONAL TEAM IS THE WORLD RUNNER UP!

In the Amputee Football World Cup in Mexico, our National Amputee team outpointed their rivals, winning the 2nd place. As Turkcell, with our vision of contributing to the development of TURKSPORU and with awareness of supporting the development of disabled sports in Turkey, we granted our athletes a TRY 1 million success bonus. In the coming years, we will continue our support, to experience this pride in other disability sports branches.

WE HAVE EXTENDED OUR COOPERATION WITH THE PHYSICALLY DISABLED SPORTS FEDERATION IN SUPPORT OF ALL BRANCHES!

In 2018, we continued to support our activities in diverse fields to enable our disabled people to more actively engage in daily life. This year, we continued our support for disability sports, which OUR CONTRIBUTION TO THE DEVELOPMENT OF we began in cooperation with the Blind Sports TURKISH SPORTS CONTINUES. Federation, in the discipline of football with Hearing - Impaired Sports Federation and the Special Athletes Turkcell has maintained its pioneering efforts to Federation sponsorships. We broadened the scope We extended our support develop sports in Turkey and help Turkish athletes of our cooperation with the Physically Disabled for disabled sports to all and National Teams in their journey of gaining both Sports Federation to cover all branches. Within branches! national and international recognition for many the framework of these sponsorships, we support years. In 2018, we continued our support for our both the National Team and the league of each National Teams in the fields of football, athletics, and federation. Our collaboration was crowned with the swimming, as well as sailing and physically disabled world’s most respected public relations award, the sports. IPRA Golden World Awards. 2018 OPERATIONS 95 Turkcell Gallipoli Marathon, Gallipoli Marathon, Turkcell th ANNUAL REPORT 2018 REPORT ANNUAL TURKCELL Turkey’s first thematic marathon, in the unique in the unique thematic marathon, first Turkey’s on Gallipoli Peninsula the historical of atmosphere participated athletes 5 thousand Over 14. October in the marathon. channel aired marathon a dedicated Through register to participants enabled we within BiP, through information sharing related the event, for On the day with them. communication one-to-one all our fizy for free identified we the marathon, of the to listen enabling them to runners with chips, the made for custom lists jogging Turkish/foreign able to were participants our In addition, marathon. through packages travel advantageous purchase Fulltrip. which we forest, Peace the Turkcell enlarged We of planting by years in previous created and Çınarlı in the Güzelyalı trees 20 thousand additional new 10 thousand planting by region, seedlings. the marathon, support for our will continue We a unique fans and sports athletes which provides come. to the years over running experience, We crowned the successful performance of of performance the successful crowned We Athletics in the European with achievements 2017 Guliyev Ramil in Berlin in 2018. Championships in all time in Europe of fastest second ranked European becoming category, the 200 meter a brought Capello Yasmani Meanwhile, Champion. hurdles in the 400 meter country our to medal silver in the Can with Yasemin bronze won We finals. the 100 meter At category. women’s 5,000 meter bronze another added Jak Ali Harvey men finals, the ended successfully We collection. medal our to national that our Medal with the Silver tournament category. in the 4x100 meters won team in the Peace for Ran Fans Sports of Thousands Gallipoli Marathon. Turkcell the 4 organized We we initiated in 2013. At the 2018 European Swimming Swimming European the 2018 At in 2013. initiated we made Güneş Zeynep V. in Glasgow, Championship mixed women’s in the 200 meter the finals it to national our this success, In addition to category. in four country our for swam successfully swimmers tournament. semi-finals in the same of the number of the growth had supported We to reached which recently athletes the licensed over to out reached have we In athletics 224,076. that had our races in 78 athletes young 32 thousand name and support. place in the in the place st place in the world, and and in the world, place th UNINTERRUPTED SUPPORT FOR FOOTBALL FOR SUPPORT UNINTERRUPTED PROJECTS ATHLETICS AND SWIMMING OUR Silver Group made us proud at the Sheboygan 2018 2018 at the Sheboygan made us proud Group Silver Sailing Championship. World Paralympic At the Physically Disabled Sailing branch in Turkey, in Turkey, Sailing Disabled branch the Physically At 5 of the winner Ulaş, Miray Having committed to being the “Official the “Official being to Having committed have we in 2002, Sponsor” Communication the A National of sponsorship our maintained 2005. since as the “main sponsor” Team, Football Support to Sector Private the Greatest Provide We sports. Amateur 28 million in the TRY a total invest plan to We in 2013, initiated projects and athletics swimming Youth of Ministry the Turkish of the auspices under have we this project, With 2020. until and Sports term and longest the greatest providing been in Turkey. date to sports amateur support to the of step at every involved actively are We of the number increase which aims to project, and and athletics, in swimming athletes active work We arena. in the international success targets across Federations and Swimming with the Athletics the implementation from ranging areas, many models management and modern innovative of to athletes, young of the pool of and expansion corporate development, athlete elite of continuity development. and technological in the semi-finals achievements see to began We the of with the objectives and finals in accordance that Projects Performance and Athletics Swimming Hüseyin Akbulut, the winner of the 1 the of the winner Akbulut, Hüseyin Turkcell Gallipoli Gallipoli Turkcell th We enlarged the Turkcell the Turkcell enlarged We which forest, Peace in previous created we 20 of planting by years in the trees thousand and Çınarlı Güzelyalı planting by region, 10 thousand additional seedlings. new We organized the the organized We 4 Marathon, Turkey’s first first Turkey’s Marathon, with thematic marathon, more of the participation athletes. than 5 thousand 96 TURKCELL ANNUAL REPORT 2018

SPONSORSHIPS

The Turkey Athletic Talent Screening and Orientation to Sports Project, officially sponsored by Turkcell, the lead supporter of TURKSPORU continues to train the champion athletes of the future.

The two-day tournament was attended by the President of the Turkish Football Federation Yıldırım Demirören, Turkcell CEO Kaan Terzioğlu, and key figures from the business world including Fikret Öztürk and Cemal Kalyoncu.

Following on from Bodrum, Turkcell Platinum united golf lovers in Samsun on September 1-2, 2018. Nearly 100 golfers competed in the tournament held this year for the first time in Samsun in the scope of the Turkcell Platinum Golf Challenge. The two-day tournament was attended by the President of the Turkish Golf Federation Ahmet Ağaoğlu and Turkcell CEO Kaan Terzioğlu, as well as key figures from the business World. As part of the tournament, the golf course in Samsun was opened.

The Turkcell Platinum Golf Challenge was held at the Kemer Country Golf Club in Istanbul Athletic Talent Screening Project Shaping the on October 19-20-21. Close to 300 golfers Future of TURKSPORU participated in the three day tournament, being The Turkey Athletic Talent Screening and Orientation The Turkcell Platinum held for the fourth time this year. to Sports Project, officially sponsored by Turkcell, Bosphorus Cup 2018 was the lead supporter of TURKSPORU, and initiated attended by over 100 Set Sail for Freedom with the Turkcell Platinum together with the Ministry of Youth and Sports and boats from around the Bosphorus Cup! the Ministry of National Education, continues to train world. The Turkcell Platinum Bosphorus Cup 2018, one of the champion athletes of the future. 46,884 athletes, Turkey’s key sporting events in the international who are qualified from among 423,557 students arena, saw its 16th outing on September 29-30, during the first phase screening kicked off in May, 2018 this year, attended by over 100 boats from started to the second training module of 4 months. around the world. After two days of uninterrupted excitement, the team to lift the grand cup this The second phase student screening of the year was “Istanbul Cerrahi Cheese” led by Levent largest infrastructure project in Turkish sports Peynirci. history is ongoing. The second phase screening began with the new academic term and as of Business World Goes Fishing with Turkcell November end, 611,802 primary school 3rd grade Platinum in Seferihisar and Çeşme. students had been reached. So far, the physical The Turkcell Platinum International Fishing data of over 1 million children has been scanned Tournament was held in Seferihisar on September for the project, which targets to reach 1.5 million 20-23, and in Port Alaçatı on October 4-7. The students at the end of the 2 screening phases. tournament which outsets an international atmosphere due to the significant interest from We Brought Golf Enthusiasts Together with the the foreign participants, since its inception hosted Turkcell Platinum Golf Challenge Tournament. numerous contestants from across the world once Over 100 golfers competed in the tournament again this year. held in Bodrum this year for the second time in the scope of the Turkcell Platinum Golf Challenge. 2018 OPERATIONS 97 ANNUAL REPORT 2018 REPORT ANNUAL TURKCELL The audition videos posted on the fizy High School on the fizy High School posted audition videos The had 2.8 million users, by visited platform, Music Contest within 3 weeks. votes thousand 291 over received School High İMKB Fine Arts Safranbolu Karabük The among 35 high schools in the event prize first won on the final day. competed Geceler) Yıldızlı (Turkcell Nights Starry Turkcell between place which took Nights, Starry Turkcell With music lovers 2018, 10, 30 and September August While concerts. summer of series a wonderful enjoyed at the the concerts enjoyed people 55 thousand live broadcast were they Theater, Air Open Harbiye 400 thousand approximately by and watched on fizy, people. stories Instagram media schemes, the social With while 65 thousand 2.4 million times, viewed were the made for custom in 11 participated people contests access. gained people and 825 thousand concerts, a classic event, which became Nights, Starry Turkcell together music lovers again brought once this summer air. in the open Music Week fizy Istanbul time in the first for staged Music Week, fizy Istanbul and Turkish culture popular and combining Turkey, signing days, five hosted one roof, music under pop 25 stages. and 300 musicians on five 36 concerts The event. in the six-day participated people thousand individuals the “top” where Night, fizy Music Awards has awarded, were in 2018 platform the digital of with live and Turkey the music agenda in Istanbul set panel and 47 discussions 13 full-fledged broadcasts, speakers. on the place took performance musical of 50 hours and AMFI Studio Platinum Stage, Turkcell Stage, Turkcell through Center and Arts Performance within the Zorlu In addition 300 musicians. over by given 36 concerts Music Week fizy Istanbul participants, 25 thousand to fizy users 210 thousand by watched were concerts in total. 12 hours nearly of broadcast a live through anniversary of the high school music contest music contest the high school of anniversary st CULTURE AND THE ARTS ARTS THE AND CULTURE We perceive culture and the arts as pertaining to to as pertaining and the arts culture perceive We to the desire With values. important most Turkey’s the became we values, these support and raise both Sakıp of sponsor and Technology Communication in 2014. Museum Sabancı and the arts support culture to will continue We and that improves technology our integrating by museums. into life facilitates Launch fizy Germany with year last in Turkey that started cooperation Our overseas. has expanded megastar, Turkey’s Tarkan, in 6 with 7 concerts cooperation our continued We launch in fizy’s as part of organized cities, German that country. fizy users during concerts to privileges provided We our broadcast We people. 50 thousand by watched on TV channels the with Tarkan, shot commercials, while we media airing in Germany, and digital radio and venues concert popular the most decorated in the with fizy advertisements Germany of streets our With programs. communication our of scope had followers our of dozens media schemes, social Tarkan. meet to the chance in continued with the megastar cooperation Our video 2 new released We at the same pace. Turkey record and achieved and October, in March clips and the first them for presenting by figures viewing 2 of a period for view fizy users to for only time, weeks. fizy High Music Contest School 21 The was held with the sponsorship of fizy. The contest contest The fizy. of held with the sponsorship was 557 high schools from participation intense featured in 49 provinces. people music lovers enjoyed enjoyed music lovers a wonderful series of of series a wonderful 400 thousand people. 400 thousand thousand people enjoyed enjoyed people thousand 400 thousand 400 thousand broadcast live on fizy, and and on fizy, live broadcast With Turkcell Starry Nights Nights Starry Turkcell With watched by approximately approximately by watched summer concerts. While 55 55 While concerts. summer the concerts at the Harbiye at the Harbiye the concerts Open Air Theater, they were were they Theater, Air Open 98 TURKCELL ANNUAL REPORT 2018

HUMAN RESOURCES

We conduct our Human Resources practices at Turkcell with an innovative approach on the basis of a platform. We meet all requirements of being a digital operator with an effective management approach through our unique and flexible human resources perspective.

In today’s world, we now know the importance of providing solutions customized to needs, and we respect the individual differences of our employees. Accordingly, our Flex HR practices offered to employees as human resources, enable each employee to shape and personalize almost every practice to their own needs.

In 2018, we have taken many important steps towards becoming the “Digital Human Resources Department of the Digital Operator” with efforts on both the technology and working culture fronts. We prioritized the digitization of our processes, while we further developed our Flex platform by creating value from data derived from our new digital tools.

MORE EFFECTIVE, AGILE HUMAN RESOURCES WITH FLEXSOURCING

As Turkcell Group Human Resources, we work with a flexible and agile organization. Aimed at taking full advantage of the talents and experience of our employees, in 2018, we increased our number of agile teams by 20% to 85, and employees in agile teams by 44% to 900. In addition, in 2018 for THE “FLEX” HUMAN RESOURCES OF THE the first time, we established agile teams working DIGITAL AGE cross functions, creating an agile coach role to We support talented support those teams. people to develop We are in an era of excitement for all, with diverse competencies the world moving from a capital to a platform The progress achieved in 2018 with these agile that enable them to economy, as companies rapidly undergo the teams has encouraged us to further benefit assume more effective process of digitalization. effectively from them, and we have started to offer roles. Accordingly, project-based internal crowdsourcing opportunities we both invest in our As Turkcell Human Resources, we have adapted under FlexSourcing. employees and employ our practices to the digital era and the younger our work force much generation. Maintaining our leadership in the area FlexSourcing has been launched as a practice more effectively through of technology and innovation is only possible if enabling our employees to work on projects that crowdsourcing. we take a leading role in every field, including are beyond their responsibilities, thereby expanding the management of our human resources and their impact, while allowing us to use our talent the setting of our vision. For this very reason, pool more effectively. While FlexSourcing increases we approach our HR practices at Turkcell with inter-team interaction, the formation of agile a wholly innovative approach, viewing them as teams serves better those projects set to carry our a flexible platform. We have named this” Flex,” company a step forward, and has now became a and we are implementing a more effective routine part of our business. management approach with our one of a kind practices. 2018 OPERATIONS 99 ANNUAL REPORT 2018 REPORT ANNUAL TURKCELL OUR FLEX FEEDBACK SYSTEM: REFLEX SYSTEM: FEEDBACK FLEX OUR TO IS FOCUS OUR MODEL: BEHAVIOR TURKCELL JOB EVERY FROM BENEFIT OUT BRING Thanks to the Flex Performance system, during the during the system, Performance the Flex to Thanks score their process employees our period, targeting work their enable that will goals both with their cards and metrics accurate most with the evaluated be to In case managers. their by set support the goals during the position duty or change of a possible of and the system to access have employees our year, of the requirements to according goals their update short-term set can employees In addition, the day. the time, over and, duties specific by required goals additional goals. and set these replace can our period, evaluation During the performance of the commonality monitor able to are employees and track Company, the of with those goals their the Target through goals their of ratio the realization within the Flex schemes Tree and Initiative Tree system. Performance more are employees our this process, Throughout we Coaches” the “Performance by supported closely with together units, business their from selected have Partners. Business Human Resources their feedback, supporting continuous structure its With the provides System Performance the Flex the monitor closely to employees our opportunity for performance. on their work their of impact is success collective that our know we Turkcell, At among communication strong to thanks possible digital our renewed have we Hence, ourselves. we where ReFlex, and developed system feedback and make achievements other’s each appreciate on other each to suggestions and substantial positive development. of areas our and the personal for importance great It is of give us to one of each of development professional joint any after other each to feedback constructive partners project or team with our out carried project employees Our of it. out a “reflex” and create in connection ReFlex other each give able to are their of and sub-goals with the main objectives which the application, through criteria performance easily lives, our partof a regular feedback makes application ReFlex The on mobile devices. accessible personal their observe users to Turkcell also enables and to retrospectively, processes development progress. their monitor also Operator a Digital be that to belief It is our model and behavior work of notion a fresh requires Turkcell’s redefined have We employees. our for a long and detailed after Model Behavioral New employees. our with conducted evaluation FLEXTALENT: RIGHT TALENT, RIGHT TEAM, RIGHT RIGHT TEAM, RIGHT TALENT, RIGHT FLEXTALENT: PROJECT PERFORMANCE OUR PERFORMANCE: FLEX “FLEX” MORE EVEN IS SYSTEM In our era data is one of the most valuable assets. assets. valuable the most is one of data era In our and process interpret obtain, we today Because the effective For before. seen as never in detail data platform, Resources Human our of functioning on the skills, data flexibility, for redesigned which we had to employees our of and interests experience words, In other database. our in defined properly be of data possible accurate the most required we and designed we this purpose, For employees. our in 2018. platform the FlexTalent implemented on platform, and social professional is our FlexTalent page. a profile have employees which all Turkcell about information all kinds of share employees Our from page, profile FlexTalent on their themselves professional their to in the Company position their are they groups the project from experience, the foreign from receive, they the awards to involved play, they the instruments to speak they languages keep. they the pet support to they the team and from reach to it is possible with the FlexTalent, In addition, on expertise their regarding employees Turkcell to out Engine) Search (Turkcell “T-Search” through topic any professional establish and with FlexTalent, integrated groups. activity social or teams work with a employees Turkcell provides FlexTalent, themselves, and express prove unique opportunity to hence prospects, and social professional to access HR professionals. for tool it is a highly competent profiles FlexTalent time, of a shortWithin period will the be employees Turkcell by personally created in HR employees our for reference of primary source processes. evaluation and candidate FlexSourcing carried operations of the range Operator, As a Digital is so diverse in Turkcell required and the expertise out a single system for outcome that it is an expected value The results. short business in measuring fall to of the umbrella under performed activity each of that on it is so great expended and labor Turkcell, and meticulous fair the most deserve employees our performance. work their of measurement up set which we System, Performance Flex The accurate in the most performance measure to and evaluation targeting allows manner, and fair of and dynamics with the needs in accordance performance than standardized rather job, each management. FlexTalent, provides provides FlexTalent, with employees Turkcell a unique opportunity and express prove to to access themselves, and social professional it is a hence prospects, for tool highly competent HR professionals. 100 TURKCELL ANNUAL REPORT 2018

HUMAN RESOURCES

Behind our new Turkcell Behavior Model lies our vision of becoming a “Digital Operator” aiming to touch 1440 minutes of our customers’ lives every day.

We have created our new behavior model Another benefit of the apprenticeship program is that brings the “Let’s Bring out a Benefit in Every that it allows employees who work together, but in Activity We Carry Out” principle into focus with our different departments, to develop empathy through One of our new tools employees. a clearer perspective on each other. Thanks to the which is to guide Apprenticeship Program, Turkcell employees better employees on their career Behind our new Turkcell Behavior Model lies our comprehend each other and develop the ability journey, and ensure they vision of becoming a “Digital Operator” aiming to to work as a single team even during the most discover their potential, touch 1440 minutes of our customers’ lives every day. challenging times, as a more harmonious larger team. is the Apprenticeship We know that the only criterion to determine how Program. many of those 1440 minutes we can be by their side, Through the Apprenticeship Program, 95 Turkcell is, in their eyes, the value of the benefits we create employees had the opportunity to experience for them. For this very reason, we expect each different departments in 2018, also bringing with Turkcell Group employee to question themselves them a different vision to the teams they joined as while doing their job in terms of its actual benefit. apprentices. Our expectation from our employees is to create benefit not only for our customers, but as Turkcell WITH GNCYTNK, THE FUTURE WILL COME WITH employees, also for ourselves, our team, and our TURKCELL. country. In 2018, tens of thousands of successful young Our behavior model, designed together with people applied for GNCYTNK, Turkey’s first and our employees, is intended to guide us on how most comprehensive young talent recruitment to achieve the benefits we have created. For us, program. 62 thousand candidates applied to the “Running in Pursuit of Their Dreams” when doing program, with its enriched application, evaluation their job, enjoying the pleasure of “Achieving Success and recruitment processes through methods such Together,” progressing with solid steps by “Creating as mobile platforms, as well as gamification and Value from Data,” and “Winning Through Without video interviewing. Among the applicants, 232 young Giving Up” are the must-have behavior of Turkcell people were placed to full time roles in Turkcell. employees, to bring out the ‘benefits’ that will lift them to their highest goals and dreams. Our young employees who started working through GNCYTNK program underwent an efficient FOR THOSE WHO WANT TO MASTER THEIR JOB: orientation process, including applications that bring APPRENTICESHIP PROGRAM Turkcell into the virtual reality environment, activities that combine games and learning, and social One of our new tools which is to guide employees responsibility projects. Our young employees, on their career journey, and ensure they discover who started working GNCYTNKs who started professional life at Turkcell their potential, is the Apprenticeship Program. through GNCYTNK in September 2018, were included in an intensive program underwent training program prepared by Turkcell Academy, in Within the framework of this eye-catching program, an efficient orientation order to quickly adapt them to Turkcell. identified by Turkcell employees as ‘inspiring’, it process, including is possible for them at any level of seniority to applications that bring EVEN HIGHER WITH YUPO participate as an “apprentice” of another team for Turkcell into the virtual a week. For example, a Marketing Manager can reality environment, We believe that Turkcell employees who pursue work as an apprentice for one week at the Legal activities that combine success at Turkcell, and who proactively strive to team and obtain a basic knowledge and valuable games and learning, create benefit for their customers, their country, experience in an area beyond their immediate and social responsibility their team, and themselves, eminently deserve a expertise. projects. motivational privilege. For this reason, in 2018, we initiated YUPO (High Potential). 2018 OPERATIONS 101 ANNUAL REPORT 2018 REPORT ANNUAL TURKCELL employees presents, of which 79 were for military military for which 79 were of presents, employees 175 babies, newborn for 260 were send-offs, service promotions. and 45 were marriages for were Guide Leave Maternity our featured we year This Working our mothers, for especially prepared for compiled guides, Guide and orientation Models expats. our developed which we application, our of In the scope their maximize to employees Turkcell starter fresh for processes, all preparation transferred we experience, day the to offer our accepted they moment the from environment the digital to work, commenced they new all our offer we Hence, via kariyer.turkcell.com.tr. a that befits day experience first a great employees Operator. Digital that we realized we all, over Turkey Turkcell As for everywhere. employees all Turkcell unite to needed site our perform to started we As human resources, means (BirlİKteyiz “BirlİKteyiz” named which we visits, İK stand letters while the capital Together, Are We In the manner. structured in a more HR in Turkish.) for with Turkcell contacted we the BirlİKteyiz, of scope 621 of a total for locations in 30 different employees in 2018. times Finally, this year we launched a project in cooperation in cooperation a project launched we this year Finally, of On behalf (Earth Doktorları Doctors). with Yeryüzü surgery the eye cover to began we employees, our eyes their opening person, a visually impaired of cost In this manner, birthdays. employees’ on our life, to the to eyes their opened people 365 visually impaired 365 days. over world EMPLOYEE JOURNEY: BETTER TOGETHER BETTER JOURNEY: EMPLOYEE Turkcell experience is not just about working at at working about just is not experience Turkcell employee Each Turkcell a big family. We’re Turkcell. and lives their of moments precious experiences As Human roof. the Turkcell under milestones key these recall them to for work we Resources, possible, way beautiful in the most experiences they like feel employees that all Turkcell and ensure family. a giant to belong digitized we 2018 of in the beginning this reason, For In Program. Journey Employee our of the data our gave we the year, throughout this context, YUPO is a system based on the volunteer principle. principle. on the volunteer based YUPO is a system Turkcell to out reach YUPO to designed We take and who can talents, with distinctive employees individuals These high performance. to talents those this realizing by future Turkcell’s will determine values and with the culture in harmony performance the company. of all employees, to is open YUPO program The the candidate who meet seniority, of independent in the process. involved be and wish to criteria of in this program who participate Candidates and a development to subject are will, own their as YUPOs upon if designated program networking preselection. the certificate priority in attending YUPOs enjoy as as well universities, international of programs programs, apprenticeship and international domestic able are they addition, In and seminars. conferences networking various through impact their increase to to and gain access them, to provided opportunities know-how. their share in which to platforms for newborn babies, babies, newborn for 45 were promotions. 45 were 260 Newborn 260 Newborn which we digitized in the in the digitized which we Within the context of our our of the context Within which 79 were for military military for which 79 were our employees presents, of of presents, employees our beginning of 2018, we gave gave we 2018, of beginning 175 were for marriages and and marriages for 175 were service send-offs, 260 were 260 were send-offs, service Baby Welcome Baby Employee Journey Program, Program, Journey Employee 102 TURKCELL ANNUAL REPORT 2018

HUMAN RESOURCES

2018 was a year where we took firm steps towards becoming the Digital Human Resources of the World’s First Digital Operator by digitizing our HR processes.

In 2018, we established and activated HR Data Warehouse, which substantially contributes to Human Resources Analytics and facilitates the collection of all employee data in a single source system, as well as the evaluation of relationships among the data through multidimensional analysis.

In addition, 2018 was a year where we took WE TURN ANALYTICAL DATA INTO VALUE FOR important steps towards becoming the Digital HUMAN RESOURCES. Human Resources of the World’s First Digital Operator by digitizing our HR processes using Our Human Resources Analytics studies, conducted concepts such as artificial intelligence and machine to determine our strategies and actions with data- learning. We can proudly say that our efforts in based predictions, continued to accelerate with the Human Resources Analytics pioneered data-based digitalization breakthroughs we have carried out in decision-making culture in Human Resources field, to 2018. Throughout the year, we worked to maximize become widespread, inspiring the sector in Turkey. the employee experience with the help of Human Resources Analytics, and to develop processes and AN EMPLOYER BRAND BEFITTING A DIGITAL organizational studies by interpreting them with OPERATOR analytical data models. One of them, HR Dashboard, which entered our lives in 2018, enables us to track Turkcell, as the world’s first and only Digital Operator, HR metrics that include our employees’ information is an ever-growing consumer brand, as well as instantly and via mobile. an employer brand that speaks to our employees who created the brand, and the wider business In 2018, we established and activated HR Data community. We conduct communications both Warehouse, which substantially contributes to through traditional and digital media for the business Human Resources Analytics and facilitates the community and potential employee candidates, and collection of all employee data in a single source explain the experience of working at Turkcell, and system, as well as the evaluation of relationships our life within the company. among the data through multidimensional analysis. 2018 OPERATIONS 103 ANNUAL REPORT 2018 REPORT ANNUAL TURKCELL DIGITAL FACE OF INTERNAL COMMUNICATION INTERNAL OF FACE DIGITAL KNOW TO GET WE CONVERSATIONS, FLEX WITH BETTER. OTHER EACH TURKCELL HEARTS: BIGGEST TURKEY’S VOLUNTEERS As we offer our customers all the communication all the communication customers our offer As we so Operator, as a Digital future the digital of means and understanding the same standards also accept Turkcell where communications, internal in our superior Turkcell’s through in touch stay employees technology. to also started in which Turkcell the year was 2018 and in effectively, tools communication use digital In communication. internal for ways, of a variety made we channels, digital our diversifying addition to our of the integrity to improvements and design, language communication inter-medium roof. the brand under the which befits magazine @Trkcll, digital Our various features Operator,” a “Digital of employees achievement employees’ Turkcell from ranging news products latest our to fields, and social in professional to within Turkcell activities and from and services, and the country our from developments industry distinctive is another Mobilim integration world. wider accessed be which can magazine, our of feature online. our of outputs the latest one of Conversations, Flex a is in HR, understanding communication flexible Turkcell to listen we where series mini video sincere this series, With employees. Turkcell from projects Turkcell precious about talk both we in 2018, initiated and potential employees all Turkcell to projects and also introduce media, social through candidates, projects. these for the stage behind the hidden heroes that series the mini talk interest, considerable Due to scheme within Human Resources, as a pilot started teams in different working guests with their continues Turkcell. of voluntarily made up of Volunteers, As Turkcell again once we employees, Group Turkcell assembled with in 2018 aid projects pioneering numerous initiated employees. Turkcell support of and material the moral that the greatest believe we Volunteers, As Turkcell is the country our to will provide we benefit namely children. the future, to make we investment this focused we years, as in previous this reason, For The having financial difficulties. also on children year and enthusiasm with worked Team Volunteer Turkcell as grow children help our to 2018 throughout love and questioning environmentalist curious, tech-savvy, skills. communication individuals with strong ACTIVITIES THAT CONNECT US TO EACH OTHER OTHER EACH TO US CONNECT THAT ACTIVITIES MORE EVEN AN ARE SPORTS AND LIVING HEALTHY TURKCELL A OF PART INDISPENSABLE LIFE. EMPLOYEE’S TOGETHER: SUCCESS CELEBRATE WE TURKCELL AT REWARDING As those who carry the brand that connects people people connects that the brand who carry As those life to also connected are we forward, a step life to one another. to employees, as Turkcell and in general, and events many undersigned we in 2018, Therefore, employees, our of the motivation boost to campaigns by energy, with full projects new upon and embark communication. and inter-team intra our strengthening senior our brought frequently we Specifically, employees Turkcell with together team management concept, leadership’ the ‘servant of in the scope and our brand our of the stance which sums up both normal quite It became within Turkcell. style leadership executives senior our see to employees Turkcell for a fun take to or day, on ashoura serving desserts General and Assistant CEO our by visited break, shifts. Managers during long night Turkish for enthusiasm our reflect we As Turkcell, of number The activities. sports in-house our to sports rose year, at 14 last Teams, Sports Corporate Turkcell Women’s our of with the establishment 16 in 2018 to of the establishment With teams. and Chess Football our implemented have we team, football women’s our (football, all branches across teams men and women swimming, tennis, table tennis, volleyball, basketball, chess). paddle, cycling, sailing, running, in all athletes our for much success brought 2018 teams our of the achievements shared We branches. the year, throughout employees with all Turkcell In that way, on-site. supporting at competitions, them the on occasion, and, joy the enthusiasm, shared we athletes. our of disappointment our celebrate to care great take we Turkcell, At those motivate and to together, achievements personal their for out who stand employees Kaan CEO our in 2018, In this context, achievements. 60 to Prize Special the CEO awarded Terzioğlu achievements, outstanding their for employees Turkcell Vice Executive our Similarly, thanking them personally. who 656 employees to Awards CXO gave Presidents their through benefit and created made a difference work. mobile platform, Reward Instant our to thanks In 2018, say ‘thank had the opportunity to have executives our in order teams their to a small reward gift and to you’, efforts. and continuous success their recognize to Flex Conversations, one of one of Conversations, Flex our of outputs the latest communication flexible is a in HR, understanding series mini video sincere Turkcell to listen we where Turkcell from projects employees. 2018 brought much much brought 2018 in athletes our for success shared We all branches. our of the achievements with all Turkcell teams the throughout employees supporting them at year, on-site. competitions, 104 TURKCELL ANNUAL REPORT 2018

HUMAN RESOURCES

One of the most noteworthy projects of this year was the Toy Project, where we gave Emocan toys, which we bought with the donations received from Turkcell employees, to our little ones receiving treatment in hospital.

We enabled our employees to dispose of their organic waste separately from other wastes in the Zero Waste bins placed throughout the plaza, in order to collect our organic waste separately.

One of the most noteworthy projects of this year »» Antalya Kumluca Sarıcasu Special Education was the Toy Project, where we gave Emocan toys, School: Handicrafts, technology design and visual which we bought with the donations received arts lecture support from Turkcell employees, to our little ones receiving »» Foster Parents Seminar treatment in hospital. ORGANIC WASTE STATION Some of the other projects that our volunteers executed this year are: With the organic waste station we established at Turkcell Küçükyalı Plaza, we became one of the »» Izmir Maltepe Çiğli Primary School: Cleaning first companies in Turkey to support the Zero Waste supplies, library, book and chess set support campaign. »» Trabzon Çamlıyurt Primary School: Clothing, library and chess set support We enabled our employees to dispose of their »» Hatay Gazi Middle School: Award and toy support organic waste separately from others in the Zero for the winners of the reading contest Waste bins placed throughout the plaza, in order to »» Kayseri Closed Women’s Prison: Clothing and toy collect our organic waste separately. We started to support collect the waste tea leaves of brewed tea in these »» Urfa Hanedan Primary School: Clothing, stationery bins, located in kitchens areas. and school supplies support »» Erzurum Çatlı Primary School: Stationery and In addition, we separately collect the waste from school supplies support restaurants, cafes and dining halls within the plaza »» Konya Ahmet Haşhaş Primary School: Kite festival and send it to our organic waste station on a daily »» Van Hasbey, İnköyü, Yemişlik and Abalı Schools: basis. Stationery, clothing, educational game and toy support 2018 OPERATIONS 105 ANNUAL REPORT 2018 REPORT ANNUAL Development Plan to convey our knowledge, knowledge, our convey Plan to Development TURKCELL th AWARDS WE RECEIVED THIS YEAR AS TURKCELL TURKCELL AS YEAR THIS RECEIVED WE AWARDS RESOURCES: HUMAN their expectations, and share our experiences in in experiences our and share expectations, their with the university met In doing so we life. working representatives. the new of design the education evaluated We in Preschool and Safety with the “Health generation of story our also shared We workshop. Education” and our OHS, in the field of transformation digital in our risk factors psychosocial against practices at the representatives with sector journey, employee at group part in the working took We symposiums. the 11 experience and suggestions. and suggestions. experience been have we Human Resources, As Turkcell categories, numerous across awards by honored and projects practices pioneering our to related the year: throughout Brand Employer Best Awards: Talent LinkedIn Brand Employer Best Summit: Branding Employer Low- Best System, Rewarding Effective Most Stevies: Technology Use of Best Event, Big-Effect Budget Communication Internal Best in Human Resources, Human Best Program, Recruitment Best Practices, Employee Resources Learning Unique and Innovative Hall: Best Brandon Blended Use of Best The Program, and Development Best Program, Onboarding Hire New Best Learning, Program Certification Leadership Best Awards: Asian Leadership management the top for Program Development Safety Employee Best OHS Awards: Helmet Crystal Practices Health Employee Best Practices,

th WE ARE TURKCELL EMPLOYEES, WE ARE ARE WE EMPLOYEES, TURKCELL ARE WE PRECAUTIONS TAKE WE VALUABLE, This year, as Turkcell Group Occupational Health Health Occupational Group as Turkcell year, This a cooperation signed we Team, (OHS) and Safety of Directorate with the General protocol of the Ministry of and Safety Health Occupational for and İSGAM Services and Social Labor Family, and national for activities and promotion training organizations. international the “9 hosted we as Turkcell, In addition, All waste collected in our organic waste station is is station waste organic in our collected All waste a 30-day treatment after fertilizer into transformed use this to started We machine. a compost use of by and plants areas in landscaping high-quality fertilizer which this fertilizer, also distribute We plaza. in our in small the soil, for and nutritious useful is extremely who employees our to intervals at regular packages, at home. plants and who have it, requested around from fertilizer of 1,358 kg produced We 3 in the first generated waste organic of 5 tons at Turkcell the project commenced we after months Plaza. Küçükyalı International Occupational Health and Safety and Safety Health Occupational International In this context, Ministry. our by organized Congress” living ergonomic offices, in our design the safe corporate our areas, social activities, conditions, system management and safety health occupational won mobile applications and our Radar” “Turkcell comprising the visiting delegation of the admiration professionals, safety occupational officials, Ministry experts. and human resources academicians of Directorate with the General Together the Ministry of and Safety Health Occupational and İSGAM, Services and Social Labor Family, of and Health the Occupational implemented we to In order Project. Students University for Safety understand OHS, opinions on people’s gauge young 5% 8% 21% 22% 52% 66% 34% 48% 44%

Female Female Male Post Graduate & PhD Graduate Post Undergraduate Degree Two-year High School Other Female Manager Female Male Manager EMPLOYEE PROFILE PROFILE EMPLOYEE The number of Turkcell Turkcell of number The is 4,065 and employees Turkcell of the number is employees Group December as of 20,120, 2018. 31, The demographic information information demographic The the data indicates above presented Turkey. Turkcell of 106 TURKCELL ANNUAL REPORT 2018

TURKCELL ACADEMY

As Turkcell’s corporate university, we aim to spread the culture of learning, among our employees in accordance with the mission of enabling renewal, change and transformation.

We believe that institutions and individuals need the level of expertise of its employees in this area to review and renew their vision and mission with the Digital Masters program. In the context of along their journey of development. As Turkcell’s Digital Masters Program prepared in cooperation with We carry Turkcell into corporate university, we aim to spread the culture Udacity and Turkcell, online trainings were provided the future with learning of learning, among our employees in accordance in the fields of Data Foundation, Introduction to models that make a with the mission of enabling renewal, change and Programming, Business Analyst, Data Analyst, Machine difference worldwide. transformation. We prepare Turkcell and Turkey Learning and Artificial Intelligence. During the 8 month for the future by enabling our employees to gain program, 721 out of 1,093 participants were granted new competencies required by the business lines, Udacity Nanodegree certification by completing the professions and occupations that are created with training and projects. the new technologies which guide our corporate business plans. During the program, 25 participants selected by MIT (Massachusetts Institute of Technology) received We are renewing our measurement and evaluation training on IoT, the main source of future technologies, approach this year, with the introduction of long- from leading professors at MIT. With the training term training programs which are available to all received, our participants will continue to create employees and which are participated in on a global solutions by producing innovative products voluntary basis. As an indicator of our employees’ and services across many areas such as health, learning efforts and achievements, we renewed our agriculture, logistics, education and the environment, individual and corporate learning index. not only for our customers but also for Turkey.

We aim for our new “Learning Index” to further WE EDUCATE AND STRENGTHEN TURKEY strengthen the integration of all our human resources WITH TURKCELL DEVELOPERS OF THE FUTURE, processes such as performance, career and training/ TURKEY’S LARGEST SOFTWARE COMMUNITY. development. Developers of the Future has been providing free As Turkcell Academy, we undersigned major initiatives software, training, development and attainment in 2018, to prepare our thousands of employees and opportunities since 2013. In order to develop lives business partners within our ecosystem, and the through technology, and contribute to the realization wider society for the future. of the dreams of all segments of society, we eliminate the digital divide, inequality of opportunity, With our “Master’s Program,” initiated nearly two years financial impossibilities, insufficient supply and lack ago, we achieved firsts that make a big difference of role models. We strive for Turkey to become a for in-house training. We have adopted an approach leading country in software development. With of “equal opportunities for everyone” in trainings. the Turkcell Developers of the Future Platform, we Regardless of their duties and responsibilities within strengthen Turkey by offering an integrated training the company, we provide all our willing employees and development solution in many areas that add with the opportunity to develop themselves. value to the society, primarily Women Developers of the Future, Tester Women and Children. WITH TURKCELL DIGITAL MASTERS PROGRAM, WE HAVE LAUNCHED THE LARGEST IN-HOUSE WE ARE PREPARING TURKEY FOR THE FUTURE DIGITAL TRANSFORMATION INITIATIVE IN THE WITH NEW TECHNOLOGICAL TRAININGS. WORLD. We have signed agreements with Turkish content Having focused on developing pioneering products providers, all experts in their fields, in order to attract and services that will shape the future world with those people working across diverse technologies the new generation technologies, Turkcell maximized to our Developers of the Future community, and to 2018 OPERATIONS 107 CENTURY SKILLS. CENTURY ST ANNUAL REPORT 2018 REPORT ANNUAL TURKCELL WE EQUIP CHILDREN WITH 21 WITH CHILDREN EQUIP WE WE PREPARE THE LEADERS OF THE FUTURE. THE OF LEADERS THE PREPARE WE project with participation of Mrs. Emine Erdoğan. Erdoğan. Emine Mrs. of with participation project with more this year women more reach aim to We content. comprehensive With Turkcell’s Children Develop the Future Project, Project, Future the Develop Children Turkcell’s With 7-18 between aged 660 children to coding taught we the Scratch through fashion in an entertaining years Code. by developed trainings and App Inventor the MIT Scratch of the translation lead We MIT. org, million children 33 by used actively platform coding animations and games, develop to the world, around Turkish. into stories on based Programs Development Leadership with together and strategies, initiatives Turkcell’s prepare Operator, a Digital being vision of Turkcell’s the new for leaders as pioneer leaders Group Turkcell with leading universities collaboration through World and in Turkey. the World around and institutions in six different implemented are programs These aspiring managers from ranging levels, leadership of on the development focusing C-Level, to Leaders. Group Turkcell 700+ approximately the program, Transformation” Business “Digital The and Program, Leadership the IMD Global of focus in School IMD Business by directors to provided managers this year our all of for designed was 2017, a digital becoming vision of support Turkcell’s to 15 volunteer by delivered was program The operator. IMD Global the who had completed directors, 500 nearly of group a target to Program, Leadership managers. was program certification “BuildingThe Leaders” with the collaboration and implemented designed aspiring managers and new for University Koç of program eleven-day This groups. target manager Thinking, the Strategic develop to is intended and Digital Finance Networking, Marketing, Strategic group. the target of focus Transformation mentoring internal implement to continue We approach, as Teachers” with the “Leader programs leaders model role where sessions and the C-Lounge success their share Group the Turkcell in and beyond “GNCMNTR The journeys. and leadership stories our for program mentoring a reverse Program,” mentoring receive which they managers in C-Level GNCMNTR The 2018. in started people, young our from a where practice, mentorship is an innovative practice, about insights his/her conveys employee Y generation a to technologies, and new jobs new world, the new generation. senior of executive C-Level WOMEN DEVELOPERS OF THE FUTURE THE OF DEVELOPERS WOMEN WE HAVE TOUCHED THE LIVES OF 4 MILLION MILLION 4 OF LIVES THE TOUCHED HAVE WE PEOPLE. With the “Women Developers of the Future Project” Project” the Future of Developers the “Women With and the TOBB with Turkcell in cooperation initiated women provided we Council, Entrepreneurs Women and in 18 cities, training software of with 6 months 319 mobile applications. develop them to supported the in-class and who completed women 761 of out trainings, Development Mobile Application remote ideas. project with 203 mobile applications developed the completed who successfully Of the 660 women the of Developers in the Women process training carry to Turkcell by employed 100 were Project, Future and services. products Turkcell of tests end-user out of 21 cities from women, test 100 expert day, Every and services products Turkcell experienced Turkey, working, remote with the possibility of end-to-end the made from be to that need improvements shared the to and contributed end-user, a real of perspective On November and services. products of development Center, Convention Presidential at the Ankara 27, the Future of Developers Women launched we To date, 4 million users from 100 countries have have 100 countries 4 million users from date, To the from hours 400 thousand for benefited content which includes portal, Future of Developers technologies, new to related and children adults for programming. mobile and web and primarily Turkish which has Platform, the Future of On the Developers people 17 thousand users, registered 137 thousand and the online trainings completed successfully have achievement. of certificates 37 thousand received platform, an online training only offer do not We software largest Turkey’s also become have but mobile application face-to-face providing community, at 105 students 10 thousand for training development of provinces the 81 in the TRNC and across universities, country. our present the most up-to-date content. In this respect, In this respect, content. up-to-date the most present will possess Platform the Future of the Developers agenda, the current to pertinent content important game training, web training, such as database machine learning science, data training, programming learning. and deep people 17 thousand 17 thousand entitled to 37 thousand 37 thousand to entitled 137 thousand registered registered 137 thousand On the Developers of the the of On the Developers online trainings and were and were online trainings users, 17 thousand people people 17 thousand users, Future Platform, which has which has Platform, Future successfully completed the the completed successfully certificates of achievement. of certificates 108 TURKCELL ANNUAL REPORT 2018

TURKCELL ACADEMY

Turkcell Academy offers a custom prepared one year training program for young people who are employed within the scope of GNCYTNK Program, launched by Turkcell to hire talented young people.

benefit from Coding and Robotics Coding trainings. THE FIRST STEP OF THE LONG-TERM 105 of our successful young talents benefited EDUCATION, DEVELOPMENT JOURNEY- from the opportunity of studying abroad at the Turkcell Academy initiated TURKCELL ACADEMY GNCYTNK PROGRAM headquarters of corporate universities. two major training programs in 2018 with Turkcell Academy offers a custom prepared one Our New Business World is Here Module: the Massachusetts year training program for young people who are GNCYTNKs developed their financial perspectives. Institute of Technology, employed within the scope of GNCYTNK Program, They heard about Turkcell’s activities in different one of the world’s leading launched by Turkcell to hire talented young people. business areas from their CEO. universities. In the program formed by 6 modules; hundreds of trainings with themes Turkcell Employees Culture is Here Module: They attended seminars Are Here, Customer is Here, Technology is Here, on civilizations, psychology and leadership Our New Business World is Here, Culture is Here, approaches. Entrepreneur Leaders are Here - are offered through a variety of learning methods where Entrepreneur Leaders are Here Module: digital, experiential and face-to-face learning are MIT-Turkcell Innovation & Leadership Bootcamp implemented together. specifically designed for GNCYTNKs will be implemented together with Massachusetts Turkcell Employees Are Here Module: GNCYTNKs Institute of Technology (MIT), one of the leading came together with Turkcell leaders to hear from universities across the globe. them about our company.

ANOTHER GLOBAL FIRST FROM TURKCELL Customer is Here Module: After receiving training AND MIT: TURKCELL IOT BOOTCAMP on Turkcell Customer values, our GNCYTNKs PROGRAM & INNOVATION AND LEADERSHIP served our customers at all customer touch DEVELOPMENT PROGRAM EXCLUSIVE TO points across Turkey for 15 days, gaining on-site TURKCELL experience.

Turkcell Academy initiated two major training Technology is Here Module: In this module, they programs in 2018 with the Massachusetts received trainings from Turkcell teams and Institute of Technology, one of the world’s leading from the corporate universities of technology universities. MIT IoT Bootcamp and MIT-Turkcell companies such as Huawei, Oracle, Cisco, Innovation & Leadership Bootcamp are the Ericsson, Nokia, DELLEMC in order to develop their first training programs specially designed for a technology vision. They had the opportunity to 2018 OPERATIONS 109 ANNUAL REPORT 2018 REPORT ANNUAL TURKCELL TECHNOLOGY DEVELOPMENT PROGRAM DEVELOPMENT TECHNOLOGY THE WITH TURKEY DEVELOPING ARE WE TECHNOLOGY ADVANCED MOST COUNTRY’S PROGRAMS. CERTIFICATION RETAILING In parallel with developing technologies and and technologies with developing In parallel on focused we priorities, strategic Turkcell’s & Android, iOS Hadoop, Big Data, of the topics 5G LTE, Virtualization, IoT, UX, Analysis, Business Development “Technology in our and Security of hours 123 thousand provided We Programs.” through employees 2.5 thousand our for training and in-class trainings. platforms online training rapid ensure to aimed “NT Expert Program” The Network the changing Turkcell to adaptation in the competencies develop and to World, of In the scope Network. the main domains of 34 people with Huawei, organized this program, their completed teams among Network selected in-class their receiving by journey developmental in trainings and implementation in Turkey training China. meeting about a lot care we Academy, As Turkcell in technology expectations customer increasing employees our of and the development retailing, stores in our customers who will advise our transformation. digital our of within the scope the content updating been have we 2016, Since Program Certification Retailing Technology our of train to in order with innovations year every the biggest one of workforce, the advanced in the World. transformation the digital of driver Program Certification Retailing Technology The the world’s by this year rewarded has been in the “Best Hall, Brandon firm, consulting largest category. Program” Certification HAP+ LAB CX With the MIT IoT Bootcamp Program, Turkcell Turkcell Program, Bootcamp the MIT IoT With teams its and prepares in the future invests digital for technologies on new working transformation. in Turkcell learning support continuous we In 2018, solutions that make with development a difference. the that will benefit HAP+ trainings Through we employees, Turkcell of development personal perspectives with new employees our provided methods visions through their and broadened learning and distance learning such as experiential with seminars learning face-to-face in addition to and in-class trainings. Experience Customer the “CX Lab With customer our enabled we Program,” Development Experience Customer design to teams experience Perspective,” Focused with a “Design journeys this improve them the opportunity to providing in doing business, of and the way perspective Turkcell. company by MIT. Under the MIT-Turkcell Innovation Innovation the MIT-Turkcell Under MIT. by company which through program, Bootcamp & Leadership the leaders, and young new train plans to Turkcell training and intensive special received GNCYTNKs and practices, with MIT content together blended will be teams project selected The one week. for around implemented be to camps in boot involved the world. Within the Technology the Technology Within Program, Development 123 thousand provided we 2.5 for training of hours employees thousand training online through and in-class platforms trainings. With the MIT IoT the MIT IoT With Program, Bootcamp in the invests Turkcell its and prepares future on new working teams digital for technologies transformation. 110 TURKCELL ANNUAL REPORT 2018

TURKCELL ACADEMY

We did not only increase the technical competence of our employees, but also targeted for them to better serve our customers and provide the best customer experience.

We made our staff ready for the field transformation, by combining different training technologies with numerous training courses, from orientation training for staff in the field to focus trainings compatible with business strategies.

We did not only increase the technical We are also glad to hear from the business competence of our employees, but also targeted teams we have been servicing that our customer for them to better serve our customers and satisfaction and employee loyalty ratios saw provide the best customer experience. In this a positive increase once the Basic Certificate respect, we provided trainings to develop Program had been put into practice. We made competency and behavior in the scope of our staff ready for the field transformation, by the Certificate Program. We measured our combining different training technologies with employees’ competencies with Online Evaluation numerous training courses, from orientation Center inventories prepared with real customer training for staff in the field to focus trainings scenarios in order to understand the extent to compatible with business strategies. 10 thousand which our messengers internalized their trainings, of our field employees were better equipped and the extent to which they use the outputs of and specialized thanks to the Turkcell Academy these trainings in stores. Certificate. In addition to Basic Certification, we continue to deepen the expertise of our employees with vertical expertise through the Advanced Certificate Program, IoT, Turkcell Financial Services, Digital Service and Solutions Certificate Programs. 2018 OPERATIONS 111 ANNUAL REPORT 2018 REPORT ANNUAL TURKCELL WE ARE ALSO DEVELOPING THE EXPERTISE EXPERTISE THE DEVELOPING ALSO ARE WE DISTRIBUTORS. OUR OF We continue to develop KVK and GENPA KVK and GENPA develop to continue We of with the needs in accordance employees designed we In this direction, world. the future KVK and for specifically programs certification targets and performance requirements GENPA In the Academy. Turkcell of with the leadership implemented we programs certification of scope 900 for solutions training and in-class digital programs the training through in total, employees management, product sales, on leadership, functional and specific culture corporate vision seminars on organized We areas. focus with humanity topics and economics technology, ensure fields to in their experts who are speakers current of a command have that employees classroom basic digitized We developments. and sales in the leadership included trainings in the first program the certification of programs employees new enabled thereby We 2 years. the Through the trainings. from benefit to and Sales implemented, solutions development with certified were teams Management Product 100% success. WE SUPPORT YOUNG PEOPLE WITH A A WITH PEOPLE YOUNG SUPPORT WE TECHNOLOGY. IN FUTURE PROMISING While we support the studies of local and and local of support the studies we While people help young we groups, national research business new for equipped better become to through journey development during their areas with prepared we programs the technology support the we While Turkcell. of the expertise in the field of working PhD students of research play an we with scholarships, artificial intelligence a qualified workforce in generating role important 18 certificate through sector the information for our shared have we which through programs students. university of with thousands know-how universities, prestigious most Turkey’s 10 of At Mobile Communications planned have we courses Testing and Software Technologies trainers. Academy Turkcell with our together youth introduce both we courses, these Through and support sector the technology to in Turkey and background know-how employees’ our the ensure we In addition, development. in experts who are managers, our participation of university by planned in the activities fields, their sharing sessions, information conduct to students, students our of and support the development In 2018, programs. short-term training with our 10 almost to out reach had the opportunity to we students. thousand In the scope of of In the scope programs, certification by designed custom Academy Turkcell the needs to according targets and performance we KVK and GENPA, of and digital implemented solutions in-class training 900 employees for the through in total on programs training product sales, leadership, corporate management, and specific culture areas, focus functional While we support the support the While we and Local of studies National Research support we Groups, become to people young new for equipped better during areas business journey development their the technology through prepared we programs of with the expertise Turkcell. 112 TURKCELL ANNUAL REPORT 2018

OUR SUBSIDIARIES lifecell became the first operator to introduce Ukrainians to 4.5G on March 30 and strengthened its digital operator position in the market with a smartphone penetration of 75.9%.

subscribers in almost 30 countries on 4 continents with its roaming partnerships. Lifecell, which provides its subscribers with the highest quality internet experience, started to serve with 4.5G network on 1,800 MHz to more than 230 settlements on July 1.

lifecell enriched its digital services portfolio in line with Turkcell’s digital services strategy and increased the penetration of these services on its customer base. In addition to the previously launched lifebox, fizy, lifecell, Dergilik, and LifeSport applications, a number of new applications and services such as TV+, All Recipes, Games Club, Kids Club and Fitness have been introduced to users.

Paycell, a subsidiary of lifecell, is ready to provide its services to its Ukrainian customers after receiving all necessary permits from the National Bank of Ukraine and obtaining the payment infrastructure operator status. lifecell Ahmet Akça, Chairman of the Board of Turkcell, lifecell became the first Having commenced operations in February 2005 joined the National Investment Council of Ukraine operator that launched in Ukraine, lifecell has a population coverage of as a member with the decision of the President the 4.5G network on 2600 92.2% and a geographical coverage of 94.6%. The of Ukraine Petro Poroshenko. As an advisory body MHz frequency in various Company has 7.3 million three-month active, 9.9 under the authority of the Ukrainian President, the city centers of Ukraine on million registered customers. lifecell is the market Council has brought together 20 top executives March 30. leader in Ukraine in terms of smartphone penetration of world-leader companies in their fields and which is 75.9%. In 2018, number of three-month representatives of the Ukrainian state bodies to active subscribers using 3G+ and 4.5G exceeded improve the country’s investment ecosystem and 4 million while mobile data usage per user grew by organize the investment regulation. 128%. lifecell’s revenue in TRY terms increased 39% and reached TRY 924 million. lifecell was the first company to launch SMS donations, by providing short codes to the non-profit 2018 was an important year for lifecell after being organizations in the country. The Company is the named the leader of the new generation internet. technologic sponsor of the National Football Team At the 2,600 MHz and 1,800 MHz frequency auctions of Ukraine, the Premium Sponsor of FK Dynamo that were held on January 31 and March 12, Kiev, and also the official technology partner of the respectively lifecell acquired the widest spectrum Ukrainian National Paralympic Committee. per subscriber, ensuring the highest quality mobile internet for the LTE subscribers nationwide. lifecell sponsored the 5th IT Arena, one of the leading IT and technology conference in Eastern Europe, lifecell became the first operator that launched the during which lifecell CEO İsmet Yazıcı introduced the 4.5G network on 2600 MHz frequency in various Turkcell’s vision and development and impact of 5G. city centers of Ukraine on March 30. Following the lifecell founded the 3rd “lifecell laboratory” in Kharkiv successful launch of 4.5G in the domestic market, National University of Radio Electronics and enable lifecell started to provide LTE services to its travelling students to reach modern telecommunication materials and join workshops. 2018 OPERATIONS 113 quarter, the Company the Company quarter, rd ANNUAL REPORT 2018 REPORT ANNUAL TURKCELL Turkish people in Germany to read and follow and follow read to in Germany people Turkish sources. local through in Turkey developments In 2016, Turkcell Grup pioneered a first in TRNC and in TRNC and a first Grup pioneered Turkcell In 2016, Lifecell, brand digital new launching its by the world and internet, on the operated which exclusively operator. digital first the world’s became the population 100% of covering infrastructure its With the of on data based 62% of share and a market Technologies and Communication Information the 3 as of Authority continued its operations as the leader operator of the the of operator as the leader operations its continued TRNC. to in 2018 LTD Digital Lifecell Having established Kıbrıs Kuzey in the TRNC, services internet fixed offer operator digital integrated the first became Turkcell customers, its to offerings converged provide to services. internet and fixed GSM including both 13.8% by grew Kıbrıs Turkcell Kuzey of revenues The 180.1 million in 2018. TRY to and reached EUROPE TURKCELL as a Mobile Virtual in 2010 in Germany Founded provides Europe Turkcell (MVNO), Operator Network customers 200 thousand approximately to services with conducted cooperation marketing through global Turkcell’s under Operating Telekom. Deutsche its has set Europe Turkcell 2018, as of lifecell brand digital Turkcell’s of the export for as Europe course spread to It is intended services. and products lifebox, Dergilik, fizy, such as BiP, services innovative Europe. to Germany from Fulltrip TV+ and Yaani, and communications innovative most Turkey’s dimension a new has added BiP, platform experience identify users to BiP enabled habits. communication to on and Turkey in Germany both phone numbers their a different of the need without the same platform communicate and to phone, second or SIM card with very in Turkey lines mobile and fixed both quality, with HD sound packages advantageous fizy aims to music catalogs, expanding its With living in the citizens for irreplaceable become with important success great Achieving Germany. fizy has in Turkey, the music industry to contributions music the digital of the representative also become rich its to thanks in Germany, Turkey of infrastructure archive. changed that publishing platform the digital Dergilik, also in available is now in Turkey habits reading than more Offering unique content. with its Europe in readers its to and magazines newspapers 700 the opportunity provides Dergilik platform, the digital and magazines popular Turkey’s all of read to it enables In addition, also offline. newspapers Yalta European European Yalta th KUZEY KIBRIS TURKCELL KIBRIS KUZEY BeST lifecell became a partner in the 15 a partner became lifecell Kuzey Kıbrıs Turkcell was established in 1999 as a in 1999 as a established was Kıbrıs Turkcell Kuzey Having operated Turkcell. of subsidiary 100% owned agreement a revenue-sharing as part of 2007 until Northern Cyprus of Republic with the Turkish the Company Department, Telecommunication in the same contract license GSM an 18 year signed year. Having joined Turkcell Group in July 2008, BeST BeST in July 2008, Group Turkcell Having joined was Network) (Belarusian Telecommunications in in Belarus 3G service offer to operator the first of coverage has a population BeST 2009. November as of 97.7% of coverage and a geographical 99.9% 2018. year-end offer to started BeST Having 1.6 million subscribers, infrastructure LTE through 2016 in August 4G service LTE 4G provides BeST beCloud. by established of cities and major all regions across services, Belarus. consisting portfolio has a wide product BeST as as well packages and data voice various of its enriched Company The offers. and digital terminal in line with Turkcell’s portfolio service and products and solutions on services digital providing of strategy fizy, BiP, included BeST In this respect, scale. a global Club and Kids Game Apps TV+, Magazines, lifebox, portfolio. services digital its to Club applications customer 4G LTE the growing of As a result BeST’s usage, data and increasing penetration compared 11.7% currency in local by grew revenues million 124.9 BYN reaching year, the previous to revenues the Company’s basis, On a TRY in 2018. million. 292.9 TRY 39.2% to by increased subsidiary owned as 99.9% established Lifetech, telecommunication of in the area serve to BeST of and information solutions, and infrastructure development software technologies, communication Turkcell out carries successfully systems, and security 2018. as of with 200 employees projects Group Strategy (YES) Annual Meeting, which brought brought which (YES) Annual Meeting, Strategy 28 countries, from 600 participants over together the included the meeting of Participants in Kiev. politicians, futurists, makers, leading decision world’s and media technology as security, well as investors, experts. moved the Company operations, its Having enriched Technical the lifecell to next headquarters its to and synergy the harmony, increasing Center; all departments. between efficiency

TRY 292.9 million. million. 292.9 TRY Yalta European European Yalta On a TRY basis, the the basis, On a TRY th Company’s revenues revenues Company’s increased by 39.2% to 39.2% to by increased lifecell became a partner a partner became lifecell in the 15 Strategy (YES) Annual (YES) Annual Strategy which brought Meeting, 600 over together 28 from participants in Kiev. countries, TRY 292.9 million 292.9 TRY 114 TURKCELL ANNUAL REPORT 2018

OUR SUBSIDIARIES

Acting as the strategic business partner of its customers, Turkcell Global Bilgi aims to increase the customer satisfaction and revenues of companies by delivering customized solutions meeting the needs of over 60 companies, including Turkcell itself.

lifebox, personal data storage service developed by GLOBAL TOWER Turkcell by using entirely local sources, has become one of lifecell’s most important products with its Global Tower, the first and only telecommunications Turkcell Global Bilgi features including German language support and infrastructure and tower company in Turkey, now ranked 1st place in the automatic backup, freeing up device storage, faces operates in 4 countries. Global Tower provides “Best in Customer and object recognition for photos easy sharing, fast, infrastructure services to telecom operators, radio Service” category at and secure access. and TV broadcasters, internet service providers, the World finals of energy companies and public institutions. In addition, the “2018 Top Ranking TURKCELL GLOBAL BİLGİ Global Tower commenced operating in the field of Performers” awards of satellite services in 2018 within the framework of its “ContactCenterWorld,” Turkcell Global Bilgi offers new generation creative end-to-end service concept. Global Tower currently the world’s largest call solutions in customer experience by closely offers over 2 thousand closed circuit satellite center sector event. monitoring technological innovations in addition to services from its own infrastructure with geographic its 19 year experience in customer service. Acting redundancy, and aims to increase its product range as the strategic business partner of its customers, and service diversity by following the trends in Turkcell Global Bilgi aims to increase the customer satellite sector. Global Tower has a market share of satisfaction and revenues of companies by delivering around 20% in the satellite broadband industry. customized solutions meeting the needs of over 60 companies, including Turkcell itself. Global Tower increased its net revenues by 32% to TRY 338 million(1) in 2018. In the medium term, the With 14 locations in Turkey and 5 in Ukraine, Turkcell Company anticipate increasing its revenues annually Global Bilgi operates in 19 locations in total as of the by 25%- 30%(3) on average. In 2018, EBITDA(2) rose end of 2018, providing employment to approximately 60% to TRY 223 million. The medium term EBITDA 12 thousand people with a 9 thousand desk capacity. growth expectation is at 25%-30%(3) on average. The With 7,300 female employees, the ratio of women consolidated tenancy ratio was 1.60x in 2018, and is employed in total at Turkcell Global Bilgi is 61%. targeted to reach 1.80x-1.90x(3) range in the medium term. Turkcell Global Bilgi, which realized the first technology investment in the east of Turkey with the Global Tower is currently Turkey’s first and Europe’s Erzurum Call Center, is also the first, and still the only fifth largest telecommunications infrastructure Turkish call center to serve abroad with its Ukrainian company with a total site portfolio of 10,581, of investment. The Company ranks among the top 500 which: IT companies in Turkey. Turkcell Global Bilgi ranked »» 8,501 are in Turkey 1st in the “Best in Customer Service” category at the »» Owned: 3,943 World finals of the “2018 Top Ranking Performers” »» Operated: 2,334 awards of “ContactCenterWorld,” the world’s largest »» Contract Management: 2,224 call center sector event. »» 1,132 are in Ukraine (Owned) »» 833 are in Belarus (Right of Use) Turkcell Global Bilgi manages communication with »» 115 in TRNC (Right of Use) the end-consumer through many channels such as face-to-face service, telephone, audio and video response systems (IVR and IVVR), e-mail, SMS, web (1) Net revenues do not include reclassification revenues. (2) Including the impact of new IFRS standard. chat, next generation customer experience platform (3) Please note that this paragraph contains forward looking Global Tower, the first and BiP and social media. It also develops tailor made statements based on our current estimates and expectations only telecommunications regarding market conditions for each of our different businesses. solutions for its customers through its design team, No assurance can be given that actual results will be consistent infrastructure and tower with such estimates and expectations. For a discussion of factors which handles customer services end-to-end to company in Turkey, now that may affect our results, see our Annual Report on Form 20-F create a unique customer experience. for 2017 filed with U.S. Securities and Exchange Commission, and in operates in 4 countries. particular, the risk factor section therein. 2018 OPERATIONS 115

ANNUAL REPORT 2018 REPORT ANNUAL TURKCELL urkcell Ödeme ve Elektronik Para Hizmetleri A.Ş. A.Ş. Hizmetleri Para Elektronik ve Ödeme urkcell TURKCELL ÖDEME VE ELEKTRONİK ELEKTRONİK VE ÖDEME TURKCELL (TURKCELL HİZMETLERİ* PARA SERVICES) PAYMENT *After the registration of the General Assembly resolution on on Assembly resolution the General of the registration *After will A.Ş. Hizmetleri Ödeme Turkcell name of trade the 20.02.2017, A.Ş. Hizmetleri Para Elektronik ve Ödeme as Turkcell to referred be T extended company, services the payment (TÖHAŞ), the from obtained permit operational its of the scope with Institution, a Payment as operate to in 2016 BRSA products the new With in 2017. license an E-Money it has both in 2018, developed and collaborations and network, and merchant customer its expanded to experience payment and secure a simple provided customers. its to services payment quick and easy offers TÖHAŞ million 5 and over merchants member 3 thousand over the Paycell to Thanks brand. with the Paycell customers card and Paycell card credit Mobile Application’s customers its has enabled TÖHAŞ feature, registration phone number using just purchases secure make to phone any 24/7 to money transfer to information, using QR technology. pay and to wish, they numbers application, the Paycell in 2017, Paycell by Launched all has gathered on which Paycell the single platform in 2018. 2.6 million downloads reached services, its of at the launched Card, Paycell the prepaid Additionally, sale in D&R stores for offered has been 2017, end of Turkcell 5 thousand as in as well branches and PTT 1 million has exceeded sales card of number The stores. network. point sales extensive of with the contribution product payment invoice the addition of Following the increased Paycell solutions in 2017, payment its to collected are which invoices of institutions of number per collected were invoices 5 thousand While 232. to the representatives, payment invoice 700 from month month per 160 thousand reached collection of number Having 2018. of as representatives thousand 6 over with in share channels and its payment existing its improved diversify plans to Paycell in 2018, market the payment digital new providing by network merchant member its transportation from customers its financial solutions to finance personal and from management, account to in the mobile app, its through management credit to period. upcoming brand a strong becoming towards initial steps its Taking corporate its renewed Paycell 2018, half of in the first among its appreciation earn to and started identity a it’s bank, a pro not with the “It’s audience target enjoyed commercials Respective slogan. bank” bro outreach wide achieving appreciation, considerable brand Turkcell’s dissemination. organic through figures of with the appreciation also supported image was the audience.

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infrastructure infrastructure only, Europe’s 5 Europe’s only, Turkey’s first and and first Turkey’s largest tower and and tower largest tenance services, tenance ellite service and facilities. and facilities. service ellite ld and sell services, ontract management services, management ontract easing services, easing st important players in the Turkish financing sector. financing sector. in the Turkish players important st L Bui C Main Sat TÜRKİYE urkcell Finansman A.Ş. received its operational permit permit operational its received Finansman A.Ş. urkcell » » » » » TURKCELL FİNANSMAN FİNANSMAN TURKCELL (CONSUMER FINANCE COMPANY) FINANCE (CONSUMER T Agency and Supervision the Banking Regulation from in approximately serve to and started 2016, in March under Turkey throughout stores Turkcell 3 thousand the quality to Turkcell carrying brand, the Financell solutions payment flexible provide to sector finance financial loans. through needs device customers’ for of size which has an asset Finansman A.Ş., Turkcell and 2018 of year-end 5 billion by than TRY more 11.5 around billion to in loans TRY has granted new through growth its will continue Company The (insurance Sigorta A.Ş. such as Turkcell lines, business in 2018. founded company) 4.6 million customers to date, became one of the the one of became date, to 4.6 million customers mo Global Tower’s main areas of activity are: activity of areas main Tower’s Global » » » » » the transformation follows closely Tower Global telecommunication the global of process to management tower from sector, infrastructure include and plans to management, infrastructure its within sector in this lines business emerging new introduce both it aims to In this respect, operations. its and continue technologies, new to country our It is periods. in the upcoming momentum growth country in our that the mobile operators observed the infrastructure attitude towards a positive have Tower, Global by led model sharing and consolidation step A critical developments. with global in parallel through efficiency resource of in terms taken be can arrangements. regulatory related KKTC UKRAYNA BELARUS Launched by Paycell Paycell by Launched the Paycell in 2017, the single application, on which Paycell platform all its of has gathered 2.6 million reached services, in 2018. downloads Global Tower is Turkey’s is Turkey’s Tower Global fifth and Europe’s first telecommunications largest company infrastructure of portfolio site with a total 10,581. 116 TURKCELL ANNUAL REPORT 2018

OUR SUBSIDIARIES

Turkcell Technology has received many prestigious awards in consequence of the innovative and original technologies it has produced in 2018.

Customer Relationship Management and Solutions, İNTELTEK Network Management Solutions, New Generation Value Added Services, Mobile Financial Systems, While more than 10 İnteltek (55% owned by Turkcell, 20% by Intralot SA, Music and Entertainment Services, IPTV Services, million unique users in and 25% by Intralot Iberia Holding SA) conducts Mobile Marketing Solutions, Internet of Things (IoT), total have played games Head Agency, Central System Administration and Geographic Information Systems, Voice Identification, through Playcell and Risk Management operations in the scope of sports AR/VR, 5G infrastructure projects, Mobile BiP Gaming in 2018, the betting games administration in Turkey. communication solutions, Campaign Management Tavla Go application, the Systems and Over-the-Top (OTT) solutions. first board game that Inteltek has been positioned as one of the world’s we developed, has been largest operators in the state-controlled betting Turkcell Teknoloji carries out its technology and downloaded by more than games sector with its “iddaa” brand. Between software export activities in the Commonwealth 240 thousand players. 2004 and 2018, the contribution of public revenues of Independent States, the Middle East, Africa and originating from “iddaa” to the Turkish economy on Europe regions, and continues its sales and the basis of tax and sports, reached almost USD 14 after-sales maintenance activities abroad with a billion. total of 24 products. Among the products designed and developed by Turkcell Technology, RoamSelect Inteltek entered the digital gaming sector with BiP is used in 10 countries, SimSelect in 7 countries, and Gaming, the game platform developed on Turkcell Campaign Management System in 4 countries. BiP application in 2017. Inteltek introduced secure In 2018, digital services produced by Turkcell game platform Playcell for kids, as well as the Tavla Technology were sold to Moldova. We continue Go (Backgammon Go) application for Turkish game our search for new markets in order to increase our lovers in 2018, achieving significant success within a sales. short time.

With national and international patent applications, While more than 10 million unique users in total have Turkcell Technology aims to be a pioneering played games through Playcell and BiP Gaming in technology company on a global scale. The 2018, the Tavla Go application, the first board game patent application process makes a significant that we developed, has been downloaded by more contribution to differentiating the services and than 240 thousand players. products of Turkcell Technology, and rendering them competitive, with export potential. The Company TURKCELL TEKNOLOJİ continues to work intensively and shares this (TURKCELL TECHNOLOGY) experience with universities, incubators, SMEs and other business partners to ensure that the process As one of Turkey’s largest R&D centers, Turkcell gains wider recognition. With the 1,172 national and Technology conducts its R&D and innovation 108 international patent applications made since activities with over 700 R&D personnel at Küçükyalı 2008, Turkcell Technology is the leader in Turkey’s With national and Technology Plaza. This center, running end-to-end telecommunications sector. international patent product and service development processes under applications, Turkcell the same structure, also offers different products, Turkcell Technology ensures the development Technology aims to be a services and infrastructures to 15 countries, in of innovative products and services through the pioneering technology addition to Turkcell Group companies. use of advanced technologies by taking part in company on a global international fund-supported R&D projects, and scale. The focus areas of Turkcell Technology include; interacts with ecosystems enabling it to enter new Roaming Solutions, Smart SIM Card Solutions, Big markets. At the same time, further development of Data Processing, Business Intelligence Applications, expertise is ensured by conducting joint research Smart Cloud Platform and Platform Based and technology studies with leading organizations Solutions, Location Based Services and Platforms, 2018 OPERATIONS 117

ANNUAL REPORT 2018 REPORT ANNUAL TURKCELL urkcell Enerji Çözümleri ve Elektrik Satış Ticaret A.Ş. A.Ş. Elektrik Satış Ticaret ve Enerji Çözümleri urkcell TURKCELL ENERJİ ÇÖZÜMLERİ VE VE ÇÖZÜMLERİ ENERJİ TURKCELL ELEKTRİK SATIŞ TİCARET TİCARET SATIŞ ELEKTRİK commenced providing services to customers with with customers to services providing commenced the “Enerjicell” having registered brand the “Enerjicell” in 2018. name and logo brand in experience customer the best provide to In order activities sales its initiated had Enerjicell the sector, customer retail With customers. at retail aimed made Enerjicell Turkey, the whole of covering sales to targeting the market into entry an impressive in the electricity players the major one of become the counters to service it provided In addition, sector. taking the year, throughout Group within Turkcell the corporate of all needs meet to steps important competencies its and developing segment, customer operations. on-site for when the first as the year attention draws 2018 the of within the framework sown were seeds Acting solutions. and smart digital energy vision of spreading of with the strategies in accordance production energy renewable energy, uninterrupted developed Enerjicell projects, efficiency and energy storage energy on residential-type projects pilot In this plants. power solar and roof-type systems roof- for launched been have projects respect, and locations at different plants power solar type various of systems storage energy residential-type monitors actively Enerjicell installed. been have sizes the end to them deliver to and strives all projects and innovative generating by conveniently user unique financing models. lifecell Ventures’ mission is to deliver digital digital deliver mission is to Ventures’ lifecell money TV, music, entertainment, communications, and cloud applications, e-commerce transfer, provide to technology It also leverages solutions. the around experience digital with a new consumers compete to operators enable telecom and to world, effectively. the digitize to aims Ventures lifecell the first context, In this industry. telecommunications realized solution partnership digital was international with sharing model the revenue through in 2017 the “BiP” with Moldcell operator European Eastern the following 2018, In February products. and “lifebox” Ventures lifecell Congress, Mobile World Barcelona operators, of with dozens workshops organized on digital services consultancy whileproviding to the Caribbean from operators to transformation Asia Minor. of the countries to Africa and from Nepal, (TURKCELL ENERGY SOLUTIONS) ENERGY (TURKCELL T in their fields. In this context, Turkcell Teknoloji is a is a Teknoloji Turkcell In this context, fields. in their and Celtic ITEA of directors of board the of member and carries EUREKA, of the umbrella under clusters projects innovative developing by tasks active out and the innovative As part of clusters. within those projects and services product commercial potentially on information that focus with ITEA conducted that clusters and with the Celtic topics technology and all information infrastructure, on network, focus aid and funding on them, built verticals technology in consortiums involving by support secured TUBİTAK the to contribution In this respect, in Turkey. formed is sustained. ecosystem the Turkish of development Technology Turkcell cluster, the EUREKA Apart from made on invitations the IT-focused to responds the by funded directly 2020 platform, the Horizon ideas project with new Commission, European In on this front. studies in intensive and engages Machine AR-VR, where projects, these addition to and IoT Blockchain, Artificial Intelligence, Learning, Turkcell used; intensively are 5G technologies expands that further ideas develops Technology and that have know-how, technological existing our and software marketable turn into to the potential products. prestigious many has received Technology Turkcell and the innovative of in consequence awards in 2018. it has produced original technologies technologies, new of the production Pioneering important has also conducted Technology Turkcell technology, the dissemination of into research and Technical Academic many and produced platforms on national and international Publications in 2018. with collaborations its enriched Technology Turkcell R&D projects include joint These in 2018. universities and areas focus in line with strategic determined enrich customer solutions to innovative that generate and PhD programs postgraduate experience; campus; Technology at the Turkcell organized technology providing and conferences trainings Talent and the Young universities, at various transfer start graduates at enabling aimed new Program in line with their Teknoloji at Turkcell career their targets. VENTURES lifecell subsidiary is a 100% Turkcell Ventures lifecell In line with in the Netherlands. established enhancing its priority of strategic Group’s Turkcell aims to Ventures lifecell activities, international and OTT and services products digital its spread and global regional to services (over-the-top) markets. lifecell Ventures aims to aims to Ventures lifecell the digitize telecommunications In this context, industry. international the first solution digital realized partnership was the through in 2017 sharing model revenue European with Eastern with Moldcell operator the “BiP” and “lifebox” products. 118 TURKCELL ANNUAL REPORT 2018

AWARDS

Turkcell has been named the leader of the “Communication” category at The One Awards - Integrated Marketing Awards that Marketing Türkiye organized in cooperation with Akademetre, Turkey’s prominent market and consumer research company.

FEBRUARY

Turkey’s Most Effective 50 CHRO Survey Turkey’s Most Effective 50 Chief Human Resources Officers (CHRO) were determined in cooperation with Fortune Türkiye and DataExpert in an attempt to draw attention to the proactive role and importance of the CHRO function in the current global economy and the variable nature of the workplace environment. Turkcell Human Resources Executive Vice President Seyfettin Sağlam was ranked on the list.

Purchasing and Supply Chain Management Summit With our “Supply Chain Transformation Project,” we were granted “The Best Purchasing 4.0 Project” award at the 7th Purchasing and Supply Chain Management Summit organized by the Purchasing Professionals and Executives Association (TÜSAYDER).

MARCH JANUARY

5G MENA Summit At the Şikayetvar A.C.E. R&D Center Awards 5G MENA Summit, which brings together the (Achievement in Customer The best R&D centers have been rewarded at the mobile telecommunication industry of our region Excellence) Awards 2018, 6th Private Sector R&D and Design Centers Summit in Dubai, was held on April 9-10, 2018. Within the where brands ensuring organized by the General Directorate of Science scope of the event, 5G MENA Awards were given. the highest customer and Technology of the Ministry of Science, Ayşem Ertopuz, Digital Services and Solutions satisfaction in Turkey Industry and Technology. The Turkcell Teknoloji Executive Vice President, a nominee for the are determined, Turkcell R&D Center was ranked 1st place in the “Computer Assistant General Manager of the Year award, became the leader in the and Communication Sector” category. received it. Communication category. The ONE Awards - Integrated Marketing A.C.E Awards Awards At the Şikayetvar A.C.E. (Achievement in Customer As Turkcell, we have been named the leader Excellence) Awards 2018, where brands ensuring of the “Communication” category at The One the highest customer satisfaction in Turkey are Awards - Integrated Marketing Awards that determined, Turkcell became the leader in the Marketing Türkiye organized in cooperation Communication category. Also; Turkcell Mobile with Akademetre, Turkey’s prominent market was ranked in 3rd place in the Mobile Phone and consumer research company. Turkcell was category, Turkcell TV+ 2nd in the Digital Platform deemed worthy of this award for the first time. category, and Turkcell Superonline 2nd in the Internet Service Providers category. 2018 OPERATIONS 119

th in the Telephone in the Telephone st High School Music Music High School th anniversary in the in the anniversary ANNUAL REPORT 2018 REPORT ANNUAL th TURKCELL World Procurement Awards 2018 2018 Awards Procurement World th MAY Turkey Social Media Awards Social Media Turkey in organized has been Media Awards Social Turkey BoomSonar. and Türkiye with Marketing cooperation the telecommunication of the leader company, Our in the Real-Time award the Gold received category, up not was with “BiP - What category Campaign Exclusive in the Digital award and running?”; the Silver - with Yaani category Engine Campaign - Search a for Engine Campaign a Search Design to How and the Bronze Before?”; Existed that Never Product Communication Responsibility in the Social award Destek.” – Canlara Fixer with “Life category Awards A.L.F.A. 3 at the the top among ranking brands Those brands acknowledged which have Awards,” “A.L.F.A. 2015, since experience customer the best creating 1 ranked Turkcell identified. were occasion this year. Turkcell was deemed worthy of of worthy deemed was Turkcell this year. occasion National Football with the Amputee multiple awards, fizy 20 sponsorship, Team We also received a worldwide award for projects projects for award a worldwide also received We In this procurement. in the field of implemented winners in the were we held in London, organization category. collaboration” “external communications sector, the Turkish Public Relations Public Relations the Turkish sector, communications the Golden winners of awarded (TÜHİD), Association 17 in its Awards Public Relations Turkey Compass Contest sponsorship, and Turkcell Life Fixer/Canlara Fixer/Canlara Life and Turkcell sponsorship, Contest Destek. 12 Operator category, while Turkcell Superonline was was Superonline while Turkcell category, Operator category. Providers Service in the Internet the leader Compass Gold 46 its Celebrating prize in the “SaaS/ in the prize st time in India, with 2 awards. Turkcell Turkcell 2 awards. with time in India, th APRIL World HRD Congress World HRD Congress, World the from returned Turkcell the 27 held for Akademi was named “Training Company of the the of Company “Training named was Akademi solutions, training and different innovative its for Year” Banu İşçi Manager General Akademi while Turkcell Leadership” Women the “World received Sezen category. and technology in the telecom award Awards Cloud IDC Türkiye at the IDC Türkiye in 2 categories awards won We the 1 won Turkcell Awards. Cloud Employer Brand Summit Brand Employer the of worthy deemed has been company Our at the sector its of award Company” Admired “Most the of event the prestigious Summit, Brand Employer Human Resources. field of Awards Phoenix people touching projects of the supporter Turkcell, the from an award has received life, and improving the where Awards In the Phoenix Crescent. Green and institutions people rewarded Crescent Green addictions and adopted against who had struggled the received Turkcell as a mission, lifestyle a healthy held was ceremony The Award’. Responsibility ‘Social Hall with Concert Rey Reşit Cemal at the Istanbul Erdoğan. Tayyip Recep President the participation of İsmail Bütün President Vice Executive Marketing Turkcell. of on behalf the award received Cloud Software Service” category with E-Company, with E-Company, category Service” Software Cloud in the “Iaas/ up prize the runner received while we category Service” Infrastructure/Platform PaaS/Cloud Continuity Business Server Virtual Turkcell our for product. Our company has been has been company Our the of worthy deemed Company” Admired “Most at the its sector of award Summit, Brand Employer event the prestigious Human the field of of Resources. In the Phoenix Awards Awards In the Phoenix Crescent the Green where and people rewarded had who institutions against struggled and adopted addictions as a lifestyle a healthy received Turkcell mission, Responsibility the ‘Social Award’. 120 TURKCELL ANNUAL REPORT 2018

AWARDS

We have been awarded the grand prize in the IoT Solution Provider category at the “IoT World Europe Awards” for a project we initiated with Ericsson, within the scope of London Tech Week, one of the world’s most prestigious platforms, organized in London.

ETİKA 2017 Turkey Ethics Awards JUNE The Turkcell Group Internal Audit team won the ETİKA 2017 Turkey Ethics Award, within the scope The Turkcell Supply Chain Loyalty Magazine Awards of Turkey Ethics Award, which evaluates institutions’ team returned with the The winners of the Loyalty Magazine Awards business ethics and related commitments. Our Golden Award from 2018, rewarding the most successful customer Company was the first company in the sector to the International CSR loyalty programs in Europe, Middle East and Africa be deemed worthy of the award for the Ethical Excellence Awards held at region was manifested. At the award ceremony Values Center Association (EDMER). the Royal Academy of organized in London, Turkcell was deemed worthy Dramatic Art (RADA). of the Best Use of Analytics & Data award with Mobile Europe Awards the Next Best Action Platform. Gediz Sezgin received the CTO of the Year award organized by UK-based Mobile Europe, one of the IoT World Europe Awards key reference points of the telecom industry. We also received an important award in the field of Internet of Things with the “Smart Parking ContactCenterWorld.com EMEA Region Lot Project.” We have been awarded the grand Turkcell Global Bilgi won the world championship prize in the IoT Solution Provider category at in the “Best in Customer Service” category at the the “IoT World Europe Awards” for a project we “2018 Top Ranking Performers” Awards, which initiated with Ericsson, within the scope of London identifies the best of the sector. The event is Tech Week, one of the world’s most prestigious organized by the “ContactCenterWorld.com,” one platforms, organized in London. of the most prestigious organizations of the call center sector worldwide. Telecoms World Middle East We were recognized in the Innovation Awards 2018 Great Place to Work category for the “Water Irrigation” smart irrigation Turkcell Global Bilgi, Turkey’s customer experience systems study. solutions center, has been identified as one of the best employers of 2018 in the +2,000 (institutions CIPS MENA Awards where 2,000 and more people work) category of In this organization held in Dubai, we were the Turkey’s Best Employers Survey, for its successful awarded in the social responsibility field for and effective Human Resources practices. our project, positioned under the title of “Green Procurement.” Turkey’s Most Admired Call Centers Call Center Life magazine, published to develop JULY and promote the call center sector and strengthen sectoral communication, rewarded the “Most International Corporate Social Responsibility Admired Call Centers” in 2018. Turkcell received the Excellence Awards “Most Admired Telecommunications Call Center for The Turkcell Supply Chain team returned with Customer Satisfaction” Award, while Turkcell Global the Golden Award from the International CSR Bilgi won the “Most Admired Outsource Call Center” Excellence Awards held at the Royal Academy of Award. Dramatic Art (RADA).

The Most Effective 50 CFO Award WARC Awards The third outing of the most effective 50 CFO The “news is on-air” project initiated together research, launched by cooperation between with TV channels for BiP to become a habit in Fortune Turkey and DataExpert in 2015, was held daily life, received the Bronze award at WARC, in in 2018. Bülent Aksu from TURKCELL took place in the Effective Native - Special Award, as well as the list. Partnerships and Sponsorship categories. 2018 OPERATIONS 121 occasion occasion th time this year, time this year, th ANNUAL REPORT 2018 REPORT ANNUAL TURKCELL OCTOBER Crystal Apple Awards Crystal Turkey’s Awards, Apple the Crystal marked Turkcell event. and creativity marketing important most a total won Turkcell ceremony, the awards At awards. Crystal which 3 were of 15 awards, of as the Turkcell Apple named Crystal In addition, the past over Creativity Encouraging Advertiser 30 years. Awards Impact Digital the Digital from returned project Tango Turkcell’s prestigious the most one of Awards, Impact in organized and world, in the digital awards Digital Use of Best namely, with 3 awards; London, Viral Corporate Best Aid a CSR Campaign, to and Media. Digital Use of and Best Campaign, Awards Brand Cool Türkiye Marketing named has been Turkcell operator digital Turkey’s Brands in the Cool the Year” of Brand the “Coolest with Marketing in cooperation conducted Survey Türkiye. and Roamler Türkiye the 4 for conducted In the survey, we, as Turkcell, were awarded on the 4 awarded were as Turkcell, we, in the GSM operator category. category. operator in the GSM Europe 2018 Awards Management Supply team Chain Management Supply Turkcell Our at the in 2 branches awards has received event Europe 2018 Awards Management Supply in Prague. CIPS and ProcureCon, by organized in the ‘Call Center Service’ category this year in in this year category Service’ Center in the ‘Call st SEPTEMBER SEPTEMBER IT 500 Awards IT 500 Awards Bilgi ranked Global Turkcell years, As in previous 1 Turkey’s single comprehensive survey in the field in the field survey single comprehensive Turkey’s based prepared was survey The informatics. of companies of revenues sales net on the 2017 in Turkey. sector in the information operating Awards CSR Excellence International The were we held in London, In this organization category in the Equal Opportunities awarded youth at providing aimed projects our for and refugees women, as for as well employment, Turkey. of areas living in rural Awards Stevie Turkcell held in London, Awards Stevie In the 2018 one gold, of consisting 12 awards received seven across awards and 10 bronze one silver categories. Awards Owl The survey our for acknowledged were We customer dynamics, market that evaluated perceptions and brand loyalty expectations, as action into insights transforming altogether, and CEM teams. Sales Marketing, Turkey’s digital operator operator digital Turkey’s named has been Turkcell the of Brand the “Coolest Brands in the Cool Year” conducted Survey with in cooperation and Türkiye Marketing Türkiye. Roamler Turkcell marked the the marked Turkcell Apple Awards, Crystal important most Turkey’s and creativity marketing the awards At event. won Turkcell ceremony, of 15 awards, of a total Crystal which 3 were awards. 122 TURKCELL ANNUAL REPORT 2018

AWARDS

Our customer satisfaction program won 1st place in the world in the “Best Customer Experience” category at the Contact Center World “2018 Top Ranking Performers awards” organized in Prague on November 9.

IPRA Golden World Awards Awards organized for the 2nd time this year by Turkcell won 2 awards at the IPRA Golden World LinkedIn, the world’s largest professional network. Awards, the world’s most prestigious public Turkcell Academy was relations award. At the award ceremony held in Turkey’s Most Effective 50 CMOs awarded 1st prize in Barcelona, Turkcell, the supporter of Turkey in sports The most effective 50 CMOs of Turkey have been the Best Leadership for the disabled, received the gold award in the announced. According to the results of the survey Development Program ‘Sponsorship Category’ for its Amputee National conducted in cooperation with Fortune Türkiye and for Top Management Team main sponsorship. Meanwhile, fizy won first DataExpert, İsmail Bütün was one of the names to category. place in the ‘Arts and Entertainment’ category, thanks make the list. to the cooperation realized with Tarkan for his album “10.” Contact Center World Our customer satisfaction program won 1st place Asian Leadership Awards in the world in the “Best Customer Experience” Turkcell Academy was awarded 1st prize in the category at the Contact Center World “2018 Top Best Leadership Development Program for Top Ranking Performers awards” organized in Prague on Management category. November 9.

NOVEMBER Felis Awards Our company has made its mark in the MediaCat MMA, The Smarties Felis Awards ceremony held for the 13th time this We returned with 8 awards, including 3 international year. On the night of the ceremony, where the most and 5 in Turkey from the MMA, The Smarties Awards. effective and creative communication works of the During the award ceremony held at Swissotel The sector were rewarded, Turkcell received 23 awards, Bosphorus in Istanbul, we received: a gold award 8 of which were Felis and 15 Achievement Awards. internationally and a silver award in Turkey with “Hello Hope” in the Social Impact/Not For Profit Brandon Hall Group Excellence in Talent category; a gold award in Turkey with “Seeing Acquisition Awards Through Disabilities” in the Innovation category; Our Turkcell Marketing Masters Program received a bronze award in Turkey with “Seeing Through a Golden Award in the Best Unique and Innovative Disabilities” in the Brand Awareness category; a silver Learning and Development Program, and The award internationally and a gold award in Turkey Best Blended Training Program. Turkcell received with “Seeing Through Disabilities” in the Mobile Video a gold award in the Brandon Hall Best New Hire category; a gold award internationally and a gold Onboarding program category within the scope award in Turkey with “BiP - WhatsApp Down” in the of young talent recruitment program, and a Silver Mobile Search category. award in the Brandon Hall Best Certification Program within the scope of field certification program. IDC Retail Awards Our Artificial Intelligence and Digital Analytics team DECEMBER received a runner-up prize in the Best Innovation with Disruptive Technologies branch for our Smart IDC IoT, Analytics, Big Data & AI Conference Our Turkcell Marketing Refrigerator Monitoring System technology at the Our Artificial Intelligence and Digital Analytics team Masters Program received Technology Awards organized within the framework collected awards in the five categories at the IDC a Golden Award in of the IDC Turkey Retail Executive Summit 2018. IoT, Analytics, Big Data & AI Conference. the Best Unique and Innovative Learning and LinkedIn Talent Awards Bosphorus IT Awards Development Program, Our company was named “Best Recruiter Brand Turkcell was the winner in the best and The Best Blended of the Year” within the scope of the Turkey Talent telecommunication company category, at the 18th Training Program. Bosphorus IT Awards. CORPORATE GOVERNANCE 123 ANNUAL REPORT 2018 REPORT ANNUAL TURKCELL SHARE AND BOND BUYBACK BUYBACK BOND AND SHARE PRINCIPLES BUSINESS OUR Our Company’s Board of Directors decided to to decided Directors of Board Company’s Our buy and to transactions, buyback share execute our protect to in an attempt bonds Company’s our that may perception instability any against investors arise in the short subsequent and medium-term; and/or 2016, July 15, and after on, the events to of global reflection negative the potentially due to Accordingly, on Turkey. volatility macroeconomic Board’s Markets the Capital of within the framework 2016, and July 25, 2016 July 21, dated announcements the authorize to has resolved Directors of the Board buyback share execute to management Company with bonds, Company’s our buy and to transactions, 150 million. The TRY of amount a maximum fund 300 TRY to raised has been amount maximum fund shares 16,077,517 this context, Within million2017. in 170.2 TRY for in exchange back bought been have USD 15.5 of with a nominal value million, and bonds 2016. since repurchased, been million have Principles. Governance Corporate Adopt We the Turkcell by adopted policies work basic The include accessibility, Department Relations Investor and analysts, stakeholders to feedback rapid transparently, stakeholders of and the informing we Accordingly, timely fashion. and in a consistently modern through all investors to information disclose such as our instruments technology and accessible Relations Investor website, up-to-date user-friendly, on a timely basis. and Twitter (IR App) Application and deep have members team Relations Investor and sector the Company of understanding active in communicating proactive and are dynamics, manner. in a comprehensive story the Company’s has an team Relations Investor Turkcell While in the Company of understanding accurate it and opportunities, model analyzing the business Company’s its of with the grasp a difference makes these communicating effectively and by strategies establish aims to team The investors. to strategies inquiries The with investors. relationships long lasting in met are and analysts investors of and requests

th CAPITAL MARKET INSTRUMENTS PERFORMANCE INSTRUMENTS MARKET CAPITAL Turkcell shares commenced trading simultaneously simultaneously trading commenced shares Turkcell Stock York and the New (BIST) at the Borsa Istanbul traded are 11, on July Shares 2000. (NYSE) Exchange and as at the BIST, symbol ticker the TCELL under the TKC (ADS) under Shares Depository American 5 shares. 2 ADSs represent at the NYSE. symbol ticker has a nominal value capital issued Turkcell’s 2.2 billion, including 2.2 billion shares, TRY of Having a market 1. TRY of with a nominal value each 26.8 billion 5.1 billion) (USD as of TRY of capitalization company the only Turkish Turkcell, 2018; 31, December the 6 has become the NYSE, and BIST on both listed largest among the companies trading on BIST. trading among the companies largest Receipts Depositary American Turkcell’s of size The is 75.1 million. 2018 year-end as of with a a bond issued Turkcell 2015, On 16 October USD 500 million 10 of and maturity of nominal value the first undersigned Turkcell On April 11, 2018, years. maturity by 10-year of issuance and only Eurobond its since markets in international company a Turkish Having a nominal value in 2015. issuance previous the 5.80%, of rate USD 500 millionof and a coupon (Euronext Exchange on the Irish Stock is listed bond Dublin). 81.00% constitute investors institutional Turkcell’s its of 36.9% Additionally, base. the shareholder of in North America, located are investors institutional and 18.5% in Europe 34.2% in the UK and Ireland, institutional 53.0% of While (including Turkey). than more investors, focused “Value” are investors in investing been have investors institutional 90% of (Source: period. than a one year more for Turkcell investors foreign of share The January 2019). IPREO, 89.05% in 2018. to increased float free in Turkcell’s of float in the free investors foreign of share The 65.12.% in the same period. reached Borsa Istanbul

largest among the companies trading on BIST. trading the companies among largest The size of Turkcell’s Turkcell’s of size The Depositary American year-end as of Receipts is 75.1 million.2018

th INVESTOR RELATIONS RELATIONS INVESTOR 6 company listed on both BIST and the NYSE, has become the the has become and the NYSE, BIST on both listed company billion) as of December 31, 2018; Turkcell, the only Turkish only Turkish the Turkcell, 2018; 31, billion) December as of Having a market capitalization of TRY 26.8 billion (USD 5.1 26.8 billion (USD 5.1 TRY of capitalization a market Having 124 TURKCELL ANNUAL REPORT 2018

INVESTOR RELATIONS

We shared our strategy and medium-term guidance with approximately 340 participants during Capital Markets Day that we held on March 14, in Istanbul.

»» Data usage and growth »» Regulation and tax regulations »» Share performance and dividend »» Shareholder structure

In return for these efforts, in 2018, Turkcell won the 2nd place in the “Best Analyst Day” award in the EMEA Region technology category, while the Treasury and Capital Markets Management Director Zeynel Korhan Bilek won 3rd place in the “Best IR Professional” awards in the EMEA region based on the “Institutional Investor” evaluation, participated in by over 500 international portfolio managers and analysts.

We Strive to Provide Maximum Benefit and Create Value for Turkcell and Our Stakeholders. As Turkcell Investor Relations, our primary goal is to increase the market capitalization of our Company and the trading volume of Turkcell’s shares. Within this context, our target is to develop and deepen the fastest and most accurate manner within the Turkcell’s investor profile, and increase the weight framework of related legislation and regulations. As and number of long-term investors in the institutional the Investor Relations Department, throughout 2018: As Turkcell Investor investor base. Relations, our primary »» We held 568 meetings with institutional goal is to increase the On the other hand, investor relations standards are investment funds, market capitalization shaped by the constantly developing and intensifying »» We participated in 15 investor conferences and 3 of our Company and needs of the capital markets. At this point, the roadshows, the trading volume of implementation of any practice that carries a »» We shared our financial results in 4 Turkcell’s shares. Within publicly-traded company one step ahead of others, teleconferences during the year, this context, our target creates a difference that add strategic value to the »» We shared our strategy and medium-term is to develop and deepen companies and contributes to the Turkish Capital guidance with approximately 340 participants Turkcell’s investor profile, Markets. during Capital Markets Day that we held on and increase the weight March 14, in Istanbul, and number of long- On March 14, 2018, Turkcell Investor Relations »» Over a thousand phone and email requests were term investors in the organized Capital Markets Day, to explain first-hand received throughout the year, and we responded institutional investor base. to its stakeholders the strategic transformation it has to all of them. been undergoing, along with digital services as well as its 3 year guidance. The Capital Markets Day, an The main topics of questions most frequently asked all-day event held in Istanbul, has been participated to the Investor Relations in 2018: in by 340 people, reaching a broad audience through live broadcast. At this meeting, where the »» Digital services and our transformation strategy digital transformation story and medium-term »» Sources and sustainability of growth expectations were appreciated by stakeholders, »» Medium-term financial expectations investors, analysts and credit rating experts had the »» The impact of macroeconomic changes on opportunity to directly ask questions to Turkcell’s business model and financials management team, and to better understand its »» Hedging instruments and their use perspectives. CORPORATE GOVERNANCE 125 TKC TCELL BUY 82% HOLD 18% Ticker Symbol Ticker ISIN: XS1298711729 ISIN: XS1803215869 ANNUAL REPORT 2018 REPORT ANNUAL NYSE TURKCELL Borsa Istanbul Stock Exchange Stock Irish Stock Exchange Irish Stock Exchange Irish Stock ANALYST RECOMMENDATIONS ANALYST Turkcell is actively covered by 28 brokerage houses, approximately half half approximately houses, 28 brokerage by covered is actively Turkcell were there 2018, the end of As of organizations. foreign which are of with a and no analysts with a “hold,” 5 analysts with a “buy,” 23 analysts recommendation. “sell” WE CARE ABOUT SUSTAINABILITY. ABOUT CARE WE In 2014, Borsa Istanbul launched the Sustainability Index. This index index This Index. the Sustainability launched Borsa Istanbul In 2014, sustainability-related significant to approach company’s each indicates including global world, the wider and Turkey both for important issues as well including water, resources, natural of the depletion warming, enables the index In total, and employment. safety, as healthcare, an independent from assessed be to and decisions activities companies’ to Entitled Borsa Istanbul. by confirmed and subsequently perspective, comprising the period for Index among the Sustainability ranked be the of the 44 companies one of Turkcell, 2019, 2018-October November inception. its in it since included has been index,

7.41 7.83 8.28 7.43 7.84 9.76 9.41 8.76 7.01 5.33 5.58 3.80 12.91 12.06 12.01 9.04 9.47 10.33 8.24 10.38 8.28 8.15 14.37 12.17 9.26 10.71 11.33 10.41 14.37 15.65 9.70 10.99 7.10 5.77 9.47 5.62

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April 2018 April

March 2018 March February 2018 February

BIST 100 BIST January 2018 January TCELL Share Share Country ADR Bond Bond Closing Highest Highest Lowest TKC (USD) TKC Closing Highest Lowest TCELL (TRY) TCELL STOCK EXCHANGE SYMBOLS EXCHANGE STOCK SHARE PERFORMANCE (RELATIVE) (2018) (RELATIVE) SHARE PERFORMANCE WE MAKE A DIFFERENCE WITH OUR COMMUNICATION. OUR WITH DIFFERENCE A MAKE WE 0,6 0,7 0,8 0,9 1 1,1 1.2 Turkcell believes in simultaneous and open communication with its with its communication open and in simultaneous believes Turkcell use technological we Relations, Investor As Turkcell stakeholders. as well (IR App), application Relations such as the Investor instruments and Public Disclosure the website channels such as as communication our to and timely information accurate extensive, provide to Platform follow can and analysts investors our IR App, the Turkcell With investors. result financial and operational announcements, recent most Turkcell’s in both and annual reports presentations releases, press announcements, and tablets, smartphones based and Android and English on iOS Turkish of the interface this year, In addition, location. any time and from at any presenting today renewed, was page web Relations Investor the Turkcell structure. friendly a more-user visitors SHARE INFORMATION* SHARE *Share prices are adjusted for dividend payments. dividend payments. for adjusted are prices *Share Bloomberg) (Source: 126 TURKCELL ANNUAL REPORT 2018

CREDIT RATINGS

Turkcell receives ratings from two leading international credit rating agencies.

Long Term Credit Rating Outlook Date

Fitch BB+ Negative July 2018

S&P BB- Stable August 2018

INVESTOR RELATIONS CONTACT INFORMATION

Tel : +90 (212) 313 18 88 Fax : +90 (216) 504 40 58 E-mail : [email protected] Web : https://www.turkcell.com.tr/en/aboutus/investor-relations Address : Turkcell Küçükyalı Plaza, Aydınevler Mahallesi İnönü Caddesi No: 20 B Blok Küçükyalı Ofispark, 34854 - Maltepe/Istanbul CORPORATE GOVERNANCE - - - - 127 0% 0% No. Yes Yes Cash 0.67% 0.02% 28.07% EUR 383 15.11.2018 11.01.2019 11.01.2019 26.10.2018 AZN 100,000 EUR 19,530,177 Ratio of of Ratio Voting Rights At Owned End of The Day (%) financial asset sold financial asset Baltech Investment LLC Investment Baltech AZN 51,000 (Inteltek’s stake) (Inteltek’s AZN 51,000 Not required by the legislation. by required Not Ratio of of Ratio Shares At Owned End of The Day (%) Azerinteltek QSC (“Azerinteltek”) QSC Azerinteltek financials as of November 30, 2018. 2018. 30, November financials as of Peer Company and trading multiples and trading Company Peer ANNUAL REPORT 2018 REPORT ANNUAL Information and entertainment services and entertainment Information One of the other two shareholders of the the of shareholders two the other One of calculated to be TRY 58.2 million based on 58.2 million on based TRY be to calculated The profit generated with this transaction is is with this transaction generated profit The The parent-subsidiary relationship is ceased. relationship parent-subsidiary The Ratio of of Ratio Voting Rights Owned The At Beginning Day (%) of TURKCELL Ratio of of Ratio Shares Owned The At Beginning Day (%) of Nominal Nominal of Value Shares At Owned End of The Day (TRY) Nominal Nominal of Value Shares Owned The At Beginning Day of (TRY) 827,750 15,249,767 16,077,517 0.693% 0.693% 0.731% 0.731% Net Nominal Nominal Net of Value Transactions (TRY) - Total Total Nominal of Value Sold Shares (TRY) Total Total Nominal of Value Shares Purchased (TRY)

Reason for not Preparing Valuation Report if it was not Prepared not if it was Report Valuation Preparing not for Reason if Exists Report in Valuation Determined Value Report with Valuation in Accordance performed be not wasn’t/will if Transaction Reasons Value Determination Method of Non-current Financial Asset Non-current of Method Determination Value Prepared? be Report Did Valuation Board Decision Date for Use of Sales Profit if Exists Profit Sales Use of for Date Decision Board Bought Party Counter of Title/Name-Surname CMB Regulations? to According Party a Related Party Is Counter if any Party with Counter Relation if Exists Signing Date Agreement Effects on Company Operations on Company Effects Transaction After Arised Profit/Loss if Exists? Used be Profit will Sales How Ratio of Transaction Value to Sales in Latest Annual Financial Statements of Company (%) Company of Annual Financial Statements in Latest Sales to Value Transaction of Ratio Total Ratio of Shares Owned in Capital of Non-current Financial Asset After Sales Transaction (%) Transaction Sales After Financial Asset Non-current of in Capital Owned Shares of Ratio Total (%) Transaction Sales After Financial Asset in Non-current Owned Ratio Right Voting Total Company of Financial Statements Disclosed in Latest Assets Total Sold to Financial Asset Non-current of Ratio (%) Were Majority of Independent Board Members’ Approved the Board Decision for Sale? for Decision the Board Approved Members’ Board Independent Majority of Were Sold Financial Asset Non-current of Title sold Financial Asset Non-current of Activity Field of sold Financial Asset Non-current of Capital Completed be was/will on which the Transaction Date Conditions Sales Sold Shares of Nominal Value Share Per Price Sales Value Sales Total (%) Financial Asset Non-current of Capital to Sold Shares of Ratio Board Decision Date for Sale for Date Decision Board 31.12.2018 827,750 Transaction Transaction Date

REPORTING PERIOD REPORTING IMPORTANT DEVELOPMENTS AFTER THE THE AFTER DEVELOPMENTS IMPORTANT The details of the transaction are listed below. listed are transaction the details of The Within the scope of our Board of Directors’ share buy-back decisions on July 27, 2016 and January 30, 2017, our company purchased a total a total purchased company our 2017, and January 30, 2016 on July 27, decisions buy-back share Directors’ of Board our of the scope Within this With 2018. 31, December on 9,997,061 TRY 12.08 totaling TRY of 11.89 – 12.24 with an average TRY of range at a price 827,750 shares of 0.731%. has reached capital in company’s shares our of the ratio transaction, Announcement Regarding the Share Buy-back Transactions Buy-back the Share Regarding Announcement 02.01.2019 11.01.2019 Shares QSC the Sale Azerinteltek of of the Completion Regarding Announcement 128 TURKCELL ANNUAL REPORT 2018

IMPORTANT DEVELOPMENTS AFTER THE REPORTING PERIOD

With reference to our announcement dated November 16, 2018, the transfer of shares held by our Company’s 55% owned subsidiary İnteltek İnternet Teknoloji Yatırım ve Danışmanlık Ticaret A.Ş. (“İnteltek”) in its 51% owned subsidiary Azerinteltek QSC (“Azerinteltek”) with a nominal value of AZN 51,000 to Baltech Investment LLC, shareholder of Azerinteltek with a 24.5% shareholding, has been completed on January 11, 2019 for a total consideration of EUR 19,530,177.

01.02.2019

Announcement Regarding the Decision on Inteltek’s Participation in Spor Toto Tender

Our Company’s Board of Directors has decided that our 55% owned subsidiary İnteltek İnternet Teknoloji Yatırım ve Danışmanlık Ticaret A.Ş. is to participate in the “Tender on Fixed Odds and Pari-Mutuel Betting Games Based on Sports Competitions Shall Be Made by Spor Toto Directorate through Private Legal Entities,” which is announced to be held on February 11, 2019, in accordance with the tender provisions and specifications which were published in the Official Gazette dated January 11, 2019 and No.30652.

01.02.2019

Announcement Regarding the Capital Increase in Lifecell Ventures

The capital of our 100% owned subsidiary Lifecell Ventures Coöperatief U.A. (“Lifecell Ventures”) is increased by TRY 5,000,000 (EUR 825,982). Our Company’s pre-emption rights with respect to the capital increase is fully paid.

05.02.2019

Announcement Regarding the Decision to Issue Lease Certificates

Our Company’s Board of Directors approved issuance of management agreement based lease certificates in accordance with capital markets legislation by our wholly owned subsidiary Superonline İletişim Hizmetleri A.Ş. through an Asset Leasing Company in the domestic market, in Turkish Lira terms, at an amount of up to TRY 500 million, with maturities up to 12 months, at one or more tranches, without public offering, as private placement and/or to be sold to institutional investors.

13.02.2019

Announcement Regarding Spor Toto Tender in which Our Subsidiary Inteltek Participated

“Tender on Fixed Odds and Pari-Mutuel Betting Games Based on Sports Competitions Shall Be Made by Spor Toto Directorate through Private Legal Entities” was held and on February 13, 2019 the final offers were submitted. The official result of the tender will be announced following the decision of the Tender Committee. The revenues subject to the tender comprises 1% of our consolidated revenues.

25.02.2019

Announcement Regarding the Signing of a Long Term Loan Agreement

Our Company signed a loan agreement of US$ 150 million with J.P.Morgan Chase Bank N.A., London Branch and AB Svensk Exportkredit within the framework of the insurance of the Swedish Export Credit Agency (EKN) in order to fund the procurement of products and services from Ericsson AB and Ericsson Telekomünikasyon A.Ş. The availability period of the loan is until April 2021, to be utilized in three equal tranches each with a maturity of 10 years. The total annual cost of the loan is LIBOR+2.10% for the first tranche and fixed 5.35% for the second and third tranches. CORPORATE GOVERNANCE 129 ANNUAL REPORT 2018 REPORT ANNUAL TURKCELL Our application with respect to issuing debt instruments with an amount up to US$750,000,000 or its equivalent in another currency, to be sold in sold in be to currency, in another equivalent its or US$750,000,000 up to with an amount instruments issuing debt to with respect application Our the Capital by approved been has public offering without abroad, qualified investors to sales and/or placement private through markets, international floating and/or with fixed and terms types and in various tranches more in one or will issued be instrument debt The 2019. 7, on March Board Markets the issuance. of at the date conditions the market as per determined be to rates interest in the United herein, described the securities to with respect an offer constitute not only and does purposes information for appears announcement This Any registration. from an exemption or registration absent States sold in the United or offered be may not securities Such elsewhere. or America of States prospectus. a duly registered of means will made by only be States in the United securities of public offering Announcement Regarding Capital Markets Board’s Approval of Debt Instrument Issuance Instrument Debt of Approval Board’s Markets Capital Regarding Announcement 08.03.2019 Our Company’s Board of Directors has decided on March 7, 2019 to appoint Mr. Bülent Aksu as a Board Member to the seat, which had become vacant vacant which had become the seat, to Member as a Board Aksu Bülent Mr. appoint to 2019 7, on March has decided Directors of Board Company’s Our Code. Commercial Article the Turkish to 363 of pursuant resignation, Pakdemirli’s Bekir Mr. following Announcement Regarding the Board Member Appointment Member the Board Regarding Announcement 07.03.2019 The announcement with respect to issuance decision has been previously deferred. previously has been decision issuance to with respect announcement The Our Company evaluates the use of various long term debt instruments in international markets in accordance with our active and efficient balance sheet sheet balance and efficient active with our in accordance markets in international instruments debt long term various the use of evaluates Company Our issue debt to certificate issuance of the approval for 2019 28, on February Board Markets Capital made to has been An application principles. management abroad, qualified investors to sales and/or placement private through currency, in another equivalent US$ 750 million its up to or with an amount instruments with and in accordance Association Articles of article our 25 of by Directors of Board our to the authority granted to pursuant public offering without floating and/or with fixed and terms types and in various tranches more in one or will issued be instrument debt The legislation. Board’s Markets Capital the issuance. of at the date conditions the market as per determined be to rates interest Announcement Regarding Capital Markets Board Application for Debt Instrument Issuance Instrument Debt for Application Board Markets Capital Regarding Announcement 28.02.2019 İnteltek, which has been operating İddaa game since 2004, has been one of the greatest supporters of the sports since its establishment, and contributed and contributed establishment, its since the sports of supporters the greatest one of has been 2004, İddaa game since operating which has been İnteltek, Inteltek by the law will exercised be from stemming rights our process, the tender to respect With industry. the sports of the development to significantly time frame. within the respective With reference to our announcement dated February 13, our 55% owned subsidiary İnteltek İnternet Teknoloji Yatırım ve Danışmanlık Ticaret A.Ş. (“İnteltek”) (“İnteltek”) A.Ş. Danışmanlık Ticaret ve Yatırım Teknoloji İnternet İnteltek subsidiary 55% owned our 13, February dated announcement our to reference With Directorate Toto Spor Shall Be Made by Competitions on Sports Based Games Betting and Pari-Mutuel Odds on Fixed that the “Tender notified has been consolidated our 1% of comprise revenues respective The bidder. the other to awarded was tender The is concluded. Entities” Legal Private through process. and the transfer ongoing contract our considering lower be to is expected contribution while 2019 revenues Announcement Regarding the Result of the Spor Toto Tender in which Our Subsidiary İnteltek Participated İnteltek Subsidiary in which Our Tender Toto the Spor of the Result Regarding Announcement 28.02.2019 Lifecell Digital’s business model is based on charging consultancy, brand and license fees in return for provision of digital service infrastructure and know- infrastructure service digital of provision for in return fees and license brand consultancy, on charging is based model business Digital’s Lifecell expansion global our to start a robust will initiate subsidiaries, Group’s our through success with proven services digital Our operators. respective to how agreements. with the announced Our subsidiary Lifecell Ventures Coöperatief U.A. (“Lifecell Digital”) signed cooperation agreements with ALBtelecom SH.a. (ALBtelecom) of Albania, CG Corp Corp CG Albania, of (ALBtelecom) SH.a. with ALBtelecom agreements cooperation signed Digital”) (“Lifecell U.A. Coöperatief Ventures Lifecell subsidiary Our digital international our of within the scope Moldova of with Moldcell agreement the existing following Carribean of Group Digicel and Nepal of Global 3 million, will of Albania in with a population which operates ALB Telecom, 39 countries. in total services digital our the use of which will allow business copilot and (OKUDO) Dergilik Yaani, fizy, include to offerings its and then will expand customers, its to services BiP and lifebox Lifecell’s offer to initially start services these will integrate and the Pacific America Central in the Caribbean, 31 countries in operating Group Digicel with the cooperation. in accordance first willlaunch Nepal’s Group, CG the part of Global, Corp CG signed, the agreement With operations. of countries in its operators of the infrastructure into customers. 30 million potential around to Login and Fast (OKUDO) Dergilik TV+, fizy, lifebox, BiP, services digital our that will offer operator digital Announcement Regarding Cooperation Agreements Signed by Lifecell Ventures Lifecell by Signed Agreements Cooperation Regarding Announcement 27.02.2019 130 TURKCELL ANNUAL REPORT 2018

2018 FINANCIAL YEAR CORPORATE GOVERNANCE PRINCIPLES COMPLIANCE REPORT

STATEMENT OF COMPLIANCE WITH CORPORATE GOVERNANCE PRINCIPLES

Turkcell İletişim Hizmetleri A.Ş. (“Turkcell” or the “Company”) is aware of its responsibilities towards its stakeholders, with the belief that high standards of corporate governance are key to maintain successful business practices and to provide long-term economic value to the company’s shareholders. Within this framework, having adopted the principles of “equality,” “transparency,” “accountability” and “responsibility” that constitute the basis of corporate governance in its activities, the Company exercises due diligence with regard to compliance with the Capital Markets Law (“CML”) and the secondary regulations and resolutions of the Capital Markets Board (“CMB”).

Corporate governance mechanisms established with the creation of the Investor Relations Department at the time of the IPO, and gained momentum in 2003, are being implemented thanks to the corporate governance efforts launched in line with the corporate governance principles.

Turkcell İletişim Hizmetleri A.Ş. places a great importance on the full compliance with Corporate Governance Principles.

In the activity period that ended as of 31 December 2018, our company has adopted and fully implemented the mandatory corporate governance principles set forth in the annex of the Corporate Governance Communiqué and the relevant legislation. Moreover, as a positive development, partial compliance has been achieved with respect to the principle no. 4.3.7 as a result of the fact that the 3 members sitting in the board of directors beside the independent members were elected by the General Assembly in the General Assembly Meeting for the 2017 accounting period. Full compliance is aimed at the following General Assembly Meetings.

Although full compliance with non-mandatory corporate governance principles provided for in the relevant legislation is aimed, it has yet to be achieved due to the challenges in the implementation of certain principles, the conflicts arising between some principles and the current structure of the Company and the market.

Currently, the principles yet to be fully complied with so far have not led to any conflicts of interest between the stakeholders.

In the activity period that ended as of 31 December 2018, necessary explanations are provided in the annual report, relevant sections of the Corporate Governance Compliance Report (“CGCR”) and the Corporate Governance Information Form (CGIF) and this report as to the corporate governance principles in the annexes of the Communiqué on Corporate Governance with which the compliance is achieved as well as the ones that are not yet complied with.

Taking into account the amendments of the regulations and the practices, future efforts will continue to improve our corporate governance practices including the limited number of unimplemented principles and, to ensure, within the framework of these principles, the better operation of the mechanisms with respect to the corporate governance practices of the our company.

Should the CGCR or CGFS be amended within the activity period, a material event disclosure will be made, and this amendment will be included in the interim activity reports. CORPORATE GOVERNANCE 131 meetings. Explanation legislation are in effect. are legislation with the media afterwards. Media is not invited to the general the general to invited Media is not made before the general assembly assembly the general made before No information regarding this kind of this kind of regarding No information ANNUAL REPORT 2018 REPORT ANNUAL assembly meeting convened in 2018 but but in 2018 convened assembly meeting results of the meeting have been shared shared been have the meeting of results Thresholds determined by the respective respective the by determined Thresholds following the routine information requests requests information the routine following activities were received from such person such person from received were activities X Not TURKCELL Applicable X X Partial No Exempted COMPANY COMPLIANCE STATUS COMPLIANCE COMPANY X X X X X X X X X Yes 1.3.8 - Members of the board of directors who are are who directors of the board of 1.3.8 - Members and auditors, agenda items, with specific concerned who as the officers as well persons, related other the financial of the preparation for responsible are Shareholders’ at the General present were statements Meeting. Meeting Shareholders’ the General agenda of 1.3.10 - The and the amounts detailing item a separate included all and contributions. donations of beneficiaries held open was Meeting Shareholders’ 1.3.11 General - The having without including the stakeholders, the public, to speak. to the right 1.1. FACILITATING THE EXERCISE OF SHAREHOLDER OF SHAREHOLDER THE EXERCISE FACILITATING 1.1. RIGHTS 1.5.1 - The company pays maximum diligence to the the maximum diligence to pays company 1.5.1 - The minority rights. of exercise 1.5. MINORITY RIGHTS 1.5. 1.4. VOTING RIGHTS VOTING 1.4. from shareholders preventing is no restriction 1.4.1 - There rights. shareholder their exercising that carry shares have not does company 1.4.2 - The rights. voting privileged voting its exercising withholds from company 1.4.3 - The any of Meeting Shareholders’ at the General rights such in case with which it has cross-ownership, company control. management provides cross-ownership the use extend Association Articles of 1.5.2 - The than one less who own those to minority rights of the and expand shares, the outstanding of twenthieth the minority rights. of scope 1.3.2 - The company ensures the clarity of the General the General the clarity of ensures company 1.3.2 - The on the agenda does and that an item Assembly agenda, multiple topics. cover not 1.2.1 - Management did not enter into any transaction that that transaction any into enter did not 1.2.1 - Management audit. special of the conduct complicate would ASSEMBLY GENERAL 1.3. 1.2. RIGHT TO OBTAIN AND REVIEW INFORMATION REVIEW AND OBTAIN RIGHT TO 1.2. 1.1.2 - Up-to-date information and disclosures which may which may and disclosures information 1.1.2 - Up-to-date to available are rights shareholder of the exercise affect website. at the corporate investors informed have information 1.3.7 - Insiders with privileged on conducted transactions about directors of the board activities the company’s of within the scope behalf their at the presented be to transactions these for in order Meeting. Shareholders’ General CORPORATE GOVERNANCE COMPLIANCE REPORT COMPLIANCE GOVERNANCE CORPORATE 132 TURKCELL ANNUAL REPORT 2018

2018 FINANCIAL YEAR CORPORATE GOVERNANCE PRINCIPLES COMPLIANCE REPORT

CORPORATE GOVERNANCE COMPLIANCE REPORT

COMPANY COMPLIANCE STATUS

Not Yes Partial No Exempted Explanation Applicable

1.6. DIVIDEND RIGHT 1.6.1 - The dividend policy approved by the General Shareholders’ Meeting is posted on the company X website.

1.6.2 - The dividend distribution policy comprises the minimum information to ensure that the shareholders X can have an opinion on the procedure and principles of dividend distributions in the future.

1.6.3 - The reasons for retaining earnings, and their X Turkcell distributed dividend in 2018. allocations, are stated in the relevant agenda item.

1.6.4 - The board reviewed whether the dividend policy balances the benefits of the shareholders and those of X the company.

1.7. TRANSFER OF SHARES 1.7.1 - There are no restrictions preventing shares from Without prejudice to 137/3, due to Article X being transferred. 7.2 of the AoA we ticked the “partial” box.

2.1. CORPORATE WEBSITE 2.1.1 - The company website includes all elements listed in X Corporate Governance Principle 2.1.1.

(Communique on Material Events 2.1.2 - The shareholding structure (names, privileges, Disclosure Article-16/2 Central Securities number and ratio of shares, and beneficial owners of X Depository is updating the respective more than 5% of the issued share capital) is updated on information available in PDP under the the website at least every 6 months. General Information heading.

Certain parts of corporate web site is 2.1.4 - The company website is prepared in other selected available in English, Arabic and Russian foreign languages, in a way to present exactly the same X language in addition to that Investor information with the Turkish content. Relations page is provided in English as well.

2.2. ANNUAL REPORT 2.2.1 - The board of directors ensures that the annual report represents a true and complete view of the X company’s activities.

2.2.2 - The annual report includes all elements listed in X Corporate Governance Principle 2.2.2.

3.1. CORPORATION’S POLICY ON STAKEHOLDERS 3.1.1 - The rights of the stakeholders are protected pursuant to the relevant regulations, contracts and within X the framework of bona fides principles.

3.1.3 - Policies or procedures addressing stakeholders’ X rights are published on the company’s website.

3.1.4 - A whistleblowing programme is in place for X reporting legal and ethical issues.

3.1.5 - The company addresses conflicts of interest X among stakeholders in a balanced manner. CORPORATE GOVERNANCE 133 Explanation company practices. company We do not have a syndicate. have do not We Employees participation to the the participation to Employees ANNUAL REPORT 2018 REPORT ANNUAL regulations of the company and various and various the company of regulations management is facilitated through internal internal through is facilitated management Not TURKCELL Applicable X X Partial No Exempted COMPANY COMPLIANCE STATUS COMPLIANCE COMPANY X X X X X X X X X X X X X Yes scriptions and performance criteria criteria and performance scriptions e working environment for employees is is employees for environment e working tomers are notified of any delays in handling in handling delays any of notified are tomers asures (procedures, trainings, raising awareness, awareness, raising trainings, (procedures, asures he company ensures freedom of association and and association of freedom ensures he company he company complied with the quality standards with the quality standards complied he company he company has in place adequate controls to to controls adequate has in place he company ­ ­ T Cus ­ A saf Me ­ - T ­ - Job de ­ - T ­ ­ - T 3.3.8 - 3.3.9 maintained. goals, monitoring, complaint mechanisms) have have mechanisms) complaint monitoring, goals, protect and to discrimination, prevent to taken been and emotional mental, physical, any against employees mistreatment. bargaining. collective for the right supports have been prepared for all employees, announced to to announced all employees, for prepared been have employee determine to account into them and taken remuneration. 3.2.2 - Surveys/other research techniques, consultation, consultation, techniques, research 3.2.2 - Surveys/other conducted were etc. method observation interviews, that on decisions stakeholders from opinions obtain to them. affect significantly 3.3.6 3.3.7 - 3.2. SUPPORTING THE PARTICIPATION OF THE OF THE THE PARTICIPATION SUPPORTING 3.2. MANAGEMENT IN THE CORPORATION’S STAKEHOLDERS with respect to its products and services. products its to with respect and information sensitive of the confidentiality protect and suppliers. customers its of secrets business their requests. their 3.4.1 satisfaction. customer full ensure to and operated satisfaction, customer its measured he company 3.4. RELATIONS WITH CUSTOMERS AND SUPPLIERS AND CUSTOMERS WITH RELATIONS 3.4. 3.4.2 - 3.4.3 - 3.4.4 3.3.1 - The company has adopted an employment policy policy an employment has adopted company 3.3.1 - The plan for and a succession opportunities, ensuring equal positions. managerial all key 3.3. HUMAN RESOURCES POLICY RESOURCES HUMAN 3.3. 3.2.1 - The Articles of Association, or the internal the internal or Association, Articles of 3.2.1 - The the regulate reference/manuals), of (terms regulations in management. employees participation of documented. are criteria 3.3.2 - Recruitment on human resources has a policy company 3.3.3 - The employees. for trainings organises and development, inform to organised been have 3.3.4 - Meetings the company, of on the financial status employees and health. education planning, career remuneration, notified were representatives, their or 3.3.5 - Employees, the related opinion of The them. impacting decisions of also taken. unions was trade 134 TURKCELL ANNUAL REPORT 2018

2018 FINANCIAL YEAR CORPORATE GOVERNANCE PRINCIPLES COMPLIANCE REPORT

COMPANY COMPLIANCE STATUS

Not Yes Partial No Exempted Explanation Applicable

3.5. ETHICAL RULES AND SOCIAL RESPONSIBILITY 3.5.1 -­ The board of the corporation has adopted a code X of ethics, disclosed on the corporate website.

3.5.2 ­- The company has been mindful of its social responsibility and has adopted measures to prevent X corruption and bribery.

4.1. ROLE OF THE BOARD OF DIRECTORS 4.1.1 -­ The board of directors has ensured strategy and risks do not threaten the long­-term interests of the X company, and that effective risk management is in place.

4.1.2 -­ The agenda and minutes of board meetings indicate that the board of directors discussed and approved strategy, ensured resources were adequately X allocated, and monitored company and management performance.

4.2. ACTIVITIES OF THE BOARD OF DIRECTORS 4.2.1 - The board of directors documented its meetings X and reported its activities to the shareholders.

Since duties and responsibilities of the Board of Directors are determined by 4.2.2 ­- Duties and authorities of the members of the X the Commercial Code we do not have board of directors are disclosed in the annual report. specific chapter in our annual report regarding this topic.

4.2.3 - ­The board has ensured the company has an internal control framework adequate for its activities, size X and complexity.

4.2.4 -­ Information on the functioning and effectiveness of the internal control system is provided in the annual X report.

4.2.5 -­ The roles of the Chairman and Chief Executive The roles of chairman and chief executive X Officer are separated and defined. officer of our Company are separated.

4.2.7 - T­ he board of directors ensures that the Investor Relations department and the corporate governance committee work effectively. The board works closely X with them when communicating and settling disputes with shareholders.

The company has subscribed to a 4.2.8 -­ The company has subscribed to a Directors and Directors and Officers liability insurance Officers liability insurance covering more than 25% of the X with a policy limit more than %25 of the capital. capital.

4.3. STRUCTURE OF THE BOARD OF DIRECTORS 4.3.9 -­ The board of directors has approved the policy on its own composition, setting a minimal target of We do not have a policy which restrains 25% for female directors. The board annually evaluates X female candidates from being appointed its composition and nominates directors so as to be as a board member. compliant with the policy.

4.3.10 - ­At least one member of the audit committee has X 5 years of experience in audit/accounting and finance. CORPORATE GOVERNANCE 135 Explanation been evaluated. been outside counsel in 2018. counsel outside in more than one committee. in more disclosed in the annual report. disclosed of board members and executives is is and executives members board of There is no rule which restricts board board is no rule which restricts There ANNUAL REPORT 2018 REPORT ANNUAL No service has been received from an an from received has been No service member to serve outside the company. outside serve to member Aggregate amount of the remuneration the remuneration of amount Aggregate Board of Directors’ performance has not has not performance Directors’ of Board they are serving as a committee member member serving as a committee are they Due to the number of the board members, members, the board of the number Due to X Not TURKCELL Applicable X X X X Partial No Exempted COMPANY COMPLIANCE STATUS COMPLIANCE COMPANY X X X X X X X X X Yes er of the board has one vote. the board of er oard member attended the majority of the the the majority of attended member oard es of all committee meetings are kept and and kept are meetings all committee of es xternal consultancy services are used, the the used, are services consultancy xternal ard minutes document that all items on the on the that all items document minutes ard ommittees have invited persons to the meetings the meetings to persons invited have ommittees he individual remuneration of board members members board of he individual remuneration he board has a charter/written internal rules rules internal has a charter/written he board he company did not extend any loans to its its to loans any extend did not he company he opinions of board members that could not not that could members board he opinions of he board has formally approved a minimum time a minimum time approved has formally he board here are limits to external commitments of board board of commitments external to limits are here Minut ­ ­ Bo ­ C ­ Each b T ­ Bo ­ ­ T Each memb ­ ­ - T ­- T - T ­ ­- If e ­ - T - T ­ 4.5.8 - members. board to reported 4.4. BOARD MEETING PROCEDURES BOARD 4.4. board directors or executives, nor extended their lending lending their extended nor executives, or directors board or loans, those of the amount enhanced or period loans extend and did not thereon, conditions improve provided or parties third title by credit a personal under them. of in favour such as surety guarantees in the annual report. is disclosed and executives 4.6.1 it has whether review to evaluation performance effectively. responsibilities all its discharged aboard hasconducted directors of he board 4.4.7 4.5.6 - 4.5.7 in the annual is stated the provider of independence report. RIGHTS FINANCIAL 4.6. 4.6.4 4.6.5 4.5.5 - committees. theBoard’s inonlyoneof serve members ard views. their obtain to necessary as deemed 4.5. BOARD COMMITTEES BOARD 4.5. agenda are discussed, and board resolutions include include resolutions and board discussed, agenda are if any. opinions dissenting director’s members’ board of informed are Shareholders members. Shareholders’ at the General commitments external Meeting. defining the meeting procedures of the board. of procedures the meeting defining attend the meeting, but did submit their opinion in written opinion in written did but submit their the meeting, attend members. other to presented were format, 4.4.1 - in person. meetings board 4.4.2 - the to relevant and documents which information by members. all board supplied to be should agenda items 4.4.3 4.4.4 - 4.4.5 - 4.4.6 - 136 TURKCELL ANNUAL REPORT 2018

2018 FINANCIAL YEAR CORPORATE GOVERNANCE PRINCIPLES COMPLIANCE REPORT

CORPORATE GOVERNANCE INFORMATION FORM

1. SHAREHOLDERS 1.1. Facilitating the Exercise of Shareholders Rights In 2018, Investor Relations Department attended 15 investor conferences The number of investor meetings (conference, seminar/etc.) organised by the and 3 road shows, and organized Capital Markets Day and held 568 company during the year meetings in total with analysts and corporate mutual funds. 1.2. Right to Obtain and Examine Information The number of special audit request(s) 0 The number of special audit requests that were accepted at the General 0 Shareholders’ Meeting 1.3. General Assembly Link to the PDP announcement that demonstrates the information requested by https://www.turkcell.com.tr/en/aboutus/investor-relations Principle 1.3.1. (a-d) Whether the company provides materials for the General Shareholders’ Meeting in Provided in English as well. English and Turkish at the same time The links to the PDP announcements associated with the transactions that are not approved by the majority of independent directors or by unanimous votes of No transaction has been executed in the context of Principle 1.3.9 present board members in the context of Principle 1.3.9 The links to the PDP announcements associated with related party transactions in No related party transaction has been executed above the thresholds. the context of Article 9 of the Communique on Corporate Governance (II-­17.1) The links to the PDP announcements associated with common and continuous transactions in the context of Article 10 of the Communique on Corporate No related party transactions have been executed above the threshold. Governance (II-­17.1) The name of the section on the corporate website that demonstrates the donation https://www.turkcell.com.tr/en/aboutus/investor-relations/corporate- policy of the company governance/donation-policy The relevant link to the PDP with minute of the General Shareholders’ Meeting where https://www.kap.org.tr/en/Bildirim/674316 the donation policy has been approved The number of the provisions of the articles of association that discuss the Not available. participation of stakeholders to the General Shareholders’ Meeting Identified stakeholder groups that participated in the General Shareholders’ Meeting, Not available. if any 1.4. Voting Rights Whether the shares of the company have differential voting rights No In case that there are voting privileges, indicate the owner and percentage of the There is no preferential share class. voting majority of shares. The percentage of ownership of the largest shareholder 51% 1.5. Minority Rights Whether the scope of minority rights enlarged (in terms of content or the ratio) in No the articles of the association If yes, specify the relevant provision of the articles of association. Not available. 1.6. Dividend Right The name of the section on the corporate website that describes the dividend https://www.turkcell.com.tr/en/aboutus/investor-relations/corporate- distribution policy governance/dividend-policy Minutes of the relevant agenda item in case the board of directors proposed to the general assembly not to distribute dividends, the reason for such proposal and Dividends are distributed in 2018. information as to use of the dividend. PDP link to the related general shareholder meeting minutes in case the board of Dividends are distributed in 2018. directors proposed to the general assembly not to distribute dividends CORPORATE GOVERNANCE 20 137 Ethics Committee our Annual Report. our Turkish and English Turkish Resources sections. Resources Governance section. Governance shareholder meeting notification meeting shareholder The link to the related PDP general PDP general the related to link The https://www.kap.org.tr/en/Bildirim/671368 0 attached to our Annual Report. our to attached https://www.kap.org.tr/en/sirket- disclosure of IFRS report which is which is report IFRS of disclosure th directors by insiders insiders by received by by received ANNUAL REPORT 2018 REPORT ANNUAL declarations declarations the board of of the board The number of of number The We do not receive such services in 2018. such services receive do not We N/A disclosure of IFRS report which is attached to to which is attached report IFRS of disclosure and Developments in Our Companies sections. Companies in Our and Developments attached to our annual report, under Section 4. Section under annual report, our to attached th of General General of It is not disclosed in the website of the Company. of in the website disclosed It is not transactions TURKCELL in relation to to in relation related party party related or paragraph paragraph or Shareholders’ Shareholders’ bilgileri/genel/4028e4a1486ec80a0148c55510d71d31 The number of of number The Meeting minutes minutes Meeting the relevant item item the relevant https://www.turkcell.com.tr/en/aboutus/investor-relations , https://www.turkcell.com.tr/en/aboutus/investor-relations them Information provided in 39 provided Information assembly assembly corporate corporate submitted. Specify the the Specify contains all all contains No question No question page of the the of page name of the the name of Etik Kurulu Aydınevler Mah. İnönü Cad. No.20, Küçükyalı / İstanbul / Küçükyalı No.20, İnönü Cad. Mah. Aydınevler Etik Kurulu website that that website meeting and and meeting in the general in the general all responses to to all responses questions asked asked questions Information provided in Annual Report-Social Responsibility and Human and Human Responsibility in Annual Report-Social provided Information Information provided in our website under “Investor Relations>Corporate Relations>Corporate “Investor under website in our provided Information Information provided in Annual Report-Other Issues Regarding Corporate Corporate Regarding Issues in Annual Report-Other provided Information Information provided in 37 provided Information Information Filings under 4. section which is attached to our annual report. our to which is attached section Filings 4. under Information Information provided in Annual Report-Telecommunications Sector in Turkey in Turkey Sector in Annual Report-Telecommunications provided Information Governance>Board Committees” heading and in the Corporate Governance Governance heading and in the Corporate Committees” Governance>Board for or against or for E-mail: [email protected] Address: Turkcell İletişim Hizmetleri A.Ş. A.Ş. Hizmetleri İletişim Turkcell Address: E-mail: [email protected] Information provided in the Corporate Governance Information Filings, which is which is Filings, Information Governance in the Corporate provided Information https://www.kap.org.tr/en/sirket-bilgileri/ozet/1103-turkcell-iletisim-hizmetleri-a-s iliskileri/documents/pdf/meetingminutes_29032018.pdf and also indicates for each resolution the voting levels levels the voting resolution each for and also indicates Specify the name of the page of the corporate website website the corporate of page the the name of Specify https://s2.turkcell.com.tr/SiteAssets/Hakkimizda/yatirimci- that contains the General Shareholders’ Meeting minutes, minutes, Meeting Shareholders’ the General that contains by proxy by of shares shares of Percentage Percentage represented represented GSM 0.01% 82.59% directly directly of shares shares of Percentage Percentage present at the at the present 82.6% General General Meeting rate to the the to rate Shareholder Shareholder participation participation Shareholders’ Shareholders’ 0 Meeting requests received by by received The number number The clarification clarification the company the company Shareholders’ Shareholders’ regarding the the regarding of the agenda agenda the of of information information of of the General General the of e) The page numbers and/or name of the sections in the Annual Report that that in the Annual Report the sections name of and/or numbers page The e) corporation of the of interest on the conflicts the information demonstrate such as investment on matters services it purchases that among the institutions to in order the corporation by taken and the measures and rating consulting of interest conflicts these from avoid that in the Annual Report the sections name of and/or f) numbers page The that the direct subsidiaries ownership on the cross the information demonstrate 5% exceeds the capital to contribution g) The page numbers and/or name of the sections in the Annual Report that that in the Annual Report the sections name of and/or numbers page g) The the of training and professional rights on social the information demonstrate the of in respect responsibility social corporate of and activities employees results and environmental social that arises activities corporate 29/03/2018 General General Meeting Date 3. STAKEHOLDERS 3. on Stakeholders Policy Corporation’s 3.1. the that demonstrates website on the corporate the section name of The policy severance or remedy employee c) The page numbers and/or name of the sections in the Annual Report that that in the Annual Report the sections name of and/or numbers page c) The and in a year meetings board of on the number the information demonstrate meetings these to the members of the attendance that in the Annual Report the sections name of and/or numbers page ç) The which may in the legislation on amendments the information demonstrate the corporation of the activities affect significantly in the Annual Report the sections name of and/or numbers page d) The the against filed lawsuits on significant the information that demonstrate thereof results the possible and corporation to in relation to subject was the company convictions definitive of number The rights employee of breach the alert (i.e. mechanism for responsible the person of position The mechanism) whistleblowing alert mechanism the company of detail contact The a) The page numbers and/or name of the sections in the Annual Report that that in the Annual Report the sections name of and/or numbers page a) The of the board of the members of on the duties the information demonstrate on and declarations the company of out conducted and executives directors members board of independence 2.2. Annual Report 2.2. that Annual Report in the the sections name of and/or numbers page The principle 2.2.2. by requested the information demonstrate If applicable, specify the name of the sections of the website providing the list the list providing the website of the sections the name of specify If applicable, more own indirectly or who directly beneficiaries) (ultimate shareholders of the shares. than 5% of that in the Annual Report the sections name of and/or numbers page The b) structure the board within formed on committees the information demonstrate 2. DISCLOSURE AND TRANSPARENCY AND DISCLOSURE 2. Website Corporate 2.1. the information providing the website of sections the the name of Specify the Principle 2.1.1. by requested List of languages for which the website is available is which the website for languages of List General Assembly Meetings Assembly General 138 TURKCELL ANNUAL REPORT 2018

2018 FINANCIAL YEAR CORPORATE GOVERNANCE PRINCIPLES COMPLIANCE REPORT

3.2. Supporting the Participation of the Stakeholders in the Corporation’s Management Name of the section on the corporate website that demonstrates the internal Not available. regulation addressing the participation of employees on management bodies Corporate bodies where employees are actually represented Not available. 3.3. Human Resources Policy Board of Directors, when necessary, get involved to the procees through The role of the board on developing and ensuring that the company has a Nomination Committee within the framework of the Committee’s succession plan for the key management positions roles&responsibilities. Hiring process is carried out by taking Equal Opportunities Policy into consideration under the responsibility of the HR Department. During the hiring process objective criteria such as; a. Being Turkish citizen or having work permit in Turkey b. Completion of military service c. Not to be deprived from civil rights d. Not to have a disease that will prevent him/her from working or pose a The name of the section on the corporate website that demonstrates the threat to the environment e. Not to be sentenced for an infamous crime f. Not human resource policy covering equal opportunities and hiring principles. Also under obligation of an involuntary servitude g. To have a graduate degree h. provide a summary of relevant parts of the human resource policy. To have required skills determined specifically to the title and role (such as experience, field of graduation, certificate etc.) ı. “Close Relatives” (Spouses, brothers/sisters, children, father, mother, uncle, maternal aunt, paternal aunt) of people working in Turkcell Group companies may not be employed in Turkcell Group Companies, are taken into consideration. Employees with no past experience are assessed within the special hiring programs such as GNCYTNK. Whether the company provides an employee stock ownership programme There isn’t an employee stock ownership programme The name of the section on the corporate website that demonstrates the human resource policy covering discrimination and mistreatments and the https://www.turkcell.com.tr/en/aboutus/investor-relations/corporate- measures to prevent them. Also provide a summary of relevant parts of the governance/code-of-ethics human resource policy. The number of definitive convictions the company is subject to in relation to Not available. health and safety measures 3.5. Ethical Rules and Social Responsibility The name of the section on the corporate website that demonstrates the code https://www.turkcell.com.tr/en/aboutus/investor-relations/corporate- of ethics governance/code-of-ethics The name of the section on the company website that demonstrates the corporate social responsibility report. If such a report does not exist, provide the Corporate Social Responsibility information about any measures taken on environmental, social and corporate governance issues. For our Company it is essential to carry out its activities in a fair, honest, legal and ethical manner. Turkcell Group Anti-Bribery and Corruption (“ABC”) Policy demonstrates and reflects our Company’s Board of Director’s commitment to the highest prevailing national and international anti-corruption and bribery standards. Turkcell expects the same degree of commitment from group companies as well.

Within the main framework of the ABC Policy; in April 2018 Corporate Governance & ABC Program Office has been established and an ABC program which provides necessary risk based trainings and establishes Any measures combating any kind of corruption including embezzlement internal communication, and takes necessary preventive measures to ensure and bribery compliance with the rules has been initiated. With the establishment of the ABC Office, direct and efficient channels have been designed to access the Board of Directors, its committees and Senior Management with respect to ABC compliance related matters. ABC Office is the first contact point so that values and processes set by the ABC Program to be understood well and set these in motion along with Company’s dynamics. (Please see https://www.turkcell.com.tr/en/aboutus/investor-relations/corporate- governance/anti-bribery-and-corruption-policy to obtain more information on our ABC Policy.) CORPORATE GOVERNANCE 1 14 No No No No 139 Yes Yes Yes Yes Not 5 Years’ 5 Years’ And/Or And/Or Whether Whether On Audit, On Audit, Finance Or Or Finance Experience Experience Accounting Accounting Ahmet Akça Ahmet The Director Director The Has At Least Least Has At Not available. Not ­ ­ - - ­ - No No No or Not Muhterem Kaan Terzioğlu Kaan Muhterem Whether Whether Ceased to to Ceased Satisfy The The Satisfy She/He is the is the She/He Director Who Who Director Independence Independence No evaluation has been conducted. has been No evaluation No disclosure has been made in PDP. has been No disclosure Not Not Not Not Not Not ANNUAL REPORT 2018 REPORT ANNUAL By The The By Director Director CEO and Chair functions are not combined. not are functions and Chair CEO considered considered considered considered considered considered Committee Considered Considered Nomination Nomination Independent Independent Whether the the Whether members have A group signature authorization. signature A group have members TURKCELL Not available. Not Not available. Not Not available. Not Information provided in Annual Report-Risk Assessment section. Assessment in Annual Report-Risk provided Information There is no executive member within the Board of Directors and all board and all board Directors of within the Board member is no executive There The Independency Declaration Independency The Link To PDP Notification That Includes Includes That PDP Notification Link To https://www.kap.org.tr/en/Bildirim/266009 https://www.kap.org.tr/en/Bildirim/266009 https://www.kap.org.tr/en/Bildirim/266009 https://www.kap.org.tr/en/Bildirim/266009 https://www.kap.org.tr/en/Bildirim/266009 https://www.kap.org.tr/en/Bildirim/266009 Board Date To To Date Election Election The First First The 11/03/2013 11/03/2013 11/03/2013 29/03/2018 29/03/2018 29/03/2018 Not independent director Not independent director Not independent director Independent Independent director Independent Independent director Independent Independent director Whether Whether Independent Or Director Not ­ I Non- executive Non- executive Non- executive Non- executive Non- executive Non- executive Whether Whether Executive Or Director Not tenmark Activity of the Board of Directors of the Board of Activity Hasan Tuvan Yalım Hasan Tuvan Ingrid Maria S Mustafa Kıral Mustafa Mehmet Hilmi Güler Mehmet Atilla Koç Atilla Ahmet Akça Ahmet Name, Surname of of Surname Name, Member Board Whether all board members released from their duties at the GSM at the duties their from released members all board Whether Whether the board evaluation was externally facilitated externally was evaluation the board Whether and authorities, duties delegated with specific member(s) board the of Name(s) such duties of and descriptions any or the audit committee to auditors internal by presented reports of Number the board to committee relevant that the annual report of number page or the section name of the Specify controls internal of the effectiveness of the review the summary of provides the Chairman Name of the CEO Name of the relevant the link to provide combined: are functions and Chair If the CEO roles such combined for the rationale providing PDP announcement by caused be damage that may that any stating the PDP notification Link to is duties their of during the discharge directors of the board of the members capital the company’s 25% of exceeding amount an for insured current that demonstrates website on the corporate the section name of The directors women targeting policy diversity Directors of within the Board directors female of and ratio number The 4. BOARD OF DIRECTORS- OF BOARD 4. conducted evaluation board the last of Date 4.2. Composition of Board of Directors of Board of Composition 140 TURKCELL ANNUAL REPORT 2018

2018 FINANCIAL YEAR CORPORATE GOVERNANCE PRINCIPLES COMPLIANCE REPORT

4. BOARD OF DIRECTORS-II­ 4.4. Meeting Procedures of the Board of Directors Number of physical board meetings in the reporting period (meetings in person) 13 Director average attendance rate at board meetings 99.9% Whether the board uses an electronic portal to support its work or not No Number of minimum days ahead of the board meeting to provide information 5 days before the meeting. to directors, as per the board charter The name of the section on the corporate website that demonstrates We do not disclose the charter in the company’s website. information about the board charter Number of maximum external commitments for board members as per the We do not have such policy. policy covering the number of external duties held by directors 4.5. Board Committees Information provided in our website under “Investor Relations>Corporate Page numbers or section names of the annual report where information about Governance>Board Committees” heading and in the Corporate Governance the board committees are presented Information Filings under 4. section which is attached to our annual report. https://www.turkcell.com.tr/en/aboutus/investor-relations/corporate- Link(s) to the PDP announcement(s) with the board committee charters governance/board-committees

Composition of Board Committees-I­

Whether Name Of Committees Defined As Name-­Surname of Whether Board Names Of The Board Committees Committee Chair “Other” In The First Column Committee Members Member Or Not Or Not Audit Committee Audit Committee Ahmet Akça Yes Board member Audit Committee Audit Committee Mehmet Hilmi Güler No Board member Audit Committee Audit Committee Atilla Koç No Board member Corporate Governance Committee Corporate Governance Committee Mehmet Hilmi Güler Yes Board member Corporate Governance Committee Corporate Governance Committee Ingrid Maria Stenmark No Board member Corporate Governance Committee Corporate Governance Committee Zeynel Korhan Bilek No Not board member Corporate Governance Committee Corporate Governance Committee Emre Alpman No Not board member Nomination Committee Nomination Committee Ahmet Akça Yes Board member Nomination Committee Nomination Committee Mehmet Hilmi Güler No Board member Nomination Committee Nomination Committee Atilla Koç No Board member Committee of Early Detection of Risk Committee of Early Detection of Risk Mehmet Hilmi Güler Yes Board member Committee of Early Detection of Risk Committee of Early Detection of Risk Hasan Tuvan Yalım No Board member Remuneration Committee Remuneration Committee Atilla Koç Yes Board member Remuneration Committee Remuneration Committee Mehmet Hilmi Güler No Board member Remuneration Committee Remuneration Committee Mustafa Kıral No Board member CORPORATE GOVERNANCE 3 2 6 8 0 141 To The Board The To Reports On Its On Its Reports The Number Of Of Number The our Annual Report. our Activities Submitted Submitted Activities 3 2 5 8 0 Operational Review section. Review Operational In Person governance/board-committees governance/board-committees governance/board-committees governance/board-committees governance/board-committees governance/compensation-policy Meetings Held Held Meetings ANNUAL REPORT 2018 REPORT ANNUAL The Number Of Of Number The 25% 50% Not available in the annual report. Please see: see: Please in the annual report. available Not see: Please in the annual report. available Not see: Please in the annual report. available Not see: Please in the annual report. available Not see: Please in the annual report. available Not disclosure of IFRS report which is attached to to which is attached report IFRS of disclosure 100% 100% 66.6% th TURKCELL Committee The Percentage Percentage The Directors In The In The Directors Of Independent Of Independent ­ 50% 100% 100% 100% 100% https://www.turkcell.com.tr/en/aboutus/investor-relations/corporate- https://www.turkcell.com.tr/en/aboutus/investor-relations/corporate- https://www.turkcell.com.tr/en/aboutus/investor-relations/corporate- https://www.turkcell.com.tr/en/aboutus/investor-relations/corporate- https://www.turkcell.com.tr/en/aboutus/investor-relations/corporate- https://www.turkcell.com.tr/en/aboutus/investor-relations/corporate- Of Non xecutive xecutive Information provided in Annual Report-Turkcell Group: 2018 Financial & Financial & 2018 Group: in Annual Report-Turkcell provided Information Directors e Information provided in 38 provided Information The Percentage Percentage The Remuneration Committee Remuneration Nomination Committee Audit Committee Audit Name of committees defined as as defined committees Name of column “Other” in the first ­ II ­ III II ­ xecutive directors are presented. are directors xecutive ­e Board Committees- Board Remuneration Committee Remuneration Committee of Early Detection of Risk of Early Detection of Committee Risk of Early Detection of Committee Nomination Committee Corporate Governance Committee Governance Corporate Committee Governance Corporate Names Of The Board Committees Board Of The Names Committee Audit Specify the section of website where remuneration policy for executive and and executive for policy remuneration where website of section the Specify non- 4.6. Financial4.6. Rights are achievement and their targets and financial the operational where Specify name in the annual section or number (Page report annual in your presented report) Specify where the activities of the corporate governance committee are are committee governance the corporate of the activities where Specify name in section or number (Page website or report annual in your presented the annual report/website) in your presented are the nomination committee of the activities where Specify name in the annual report/ section or number (Page website or annual report website) are risk committee of detection the early of the activities where Specify name in section or number (Page website or report annual in your presented the annual report/website) in presented are committee the remuneration of the activities where Specify name in the annual section or number (Page website or annual report your report/website) and senior members board for the individual remuneration where Specify name section or number (Page annual report in your presented are executives in the annual report) 4. BOARD OF DIRECTORS- OF BOARD 4. in your presented are the audit committee of the activities where Specify annual report/ name in the section or number (Page website or annual report website) 4.5. Composition of Board Committees- Board of Composition 142 TURKCELL ANNUAL REPORT 2018

OTHER ISSUES REGARDING CORPORATE GOVERNANCE

Board Member Name-Surname Duties Outside The Group: Company Name Duties Outside The Group: Title/Position Akça Lojistik Hizmetleri ve Ticaret A.Ş. Chairman of the Board of Directors Member of the Board of Directors Ahmet Akça BİM A.Ş. (Independent) Bezmialem Vakıf Üniversitesi Chairman of the Board of Trustees Atilla Koç - - Member of the Board of Directors Mehmet Hilmi Güler ICBC Turkey Bank A.Ş. (Independent) Kabine Danışmanlık Ticaret Ltd. Şti. Manager Chairman and Member of the Board of Hasan Tuvan Yalım Cukurova Telecom Holdings Limited Directors Neo Skola Eğitim Danışmanlık ve Ticaret A.Ş. Member of the Board of Directors LetterOne Technology Senior Partner Mustafa Kıral FreedomPop and Hadi Live Holdings Limited Member of the Board of Directors Head of CEO Office Strategy & Combined Telia Company Assurance TeliaSonera Asia Holding B.V. Member of the Board of Directors TeliaSonera UTA Holding B.V. Member of the Board of Directors Ingrid Maria Stenmark Sonera Holding B.V. Managing Director Telia Resurs AB Member of the Board of Directors Telia Netherland Holding AB Member of the Board of Directors Turkcell Holding A.Ş. Member of the Board of Directors

CORPORATE GOVERNANCE

143 ANNUAL REPORT 2018 REPORT ANNUAL TURKCELL CONCLUSION OF THE SUBSIDIARY REPORT SUBSIDIARY THE OF CONCLUSION Details of services provided and/or fixed asset purchases/sales performed under operational activities carried out between our Company and and Company our between out carried activities operational under performed purchases/sales asset fixed and/or provided services of Details in this Report. included are 2018 year during the fiscal with the market in conformity fully that are subsidiaries its and/or Holding A.Ş. Turkcell Details of the legal transactions of our Company with Turkcell Holding A.Ş. and its subsidiaries during the fiscal year 2018 are given in the above above in the given are 2018 year during the fiscal subsidiaries its and Holding A.Ş. Turkcell with Company our of transactions the legal of Details in avoided or taken action any nor subsidiaries its one of Holding A.Ş or Turkcell of made in favor transaction legal any is neither There tables. Holding A.Ş. Turkcell by directive upon subsidiaries its one of or Holding A.Ş. Turkcell of favor Conclusion of the Report on the relationship among the Parent Company and the subsidiaries as per Article 199 of the Turkish Commercial Commercial Article the Turkish 199 of as per and the subsidiaries Company among the Parent on the relationship the Report of Conclusion Code: 01.01.2018-31.12.2018 FISCAL YEAR 01.01.2018-31.12.2018 144 TURKCELL ANNUAL REPORT 2018

TELECOMMUNICATIONS SECTOR IN TURKEY

According to the Information and Communication Technologies In terms of the revenues obtained from subscribers, Turkcell’s market Authority (“ICTA”) Market Data report, published by the regulatory share stood at 45.2%, Vodafone’s at 30.6% and Avea’s at 24.3% authority of our sector, the number of players operating in the Turkish electronic communications sector was 448 as of the 3rd THE BROADBAND INTERNET MARKET quarter of 2018, and the number of authorizations granted to these players was 794. The number of broadband internet subscribers, at around 6 million in 2008, had reached 73.8 million (13 million fixed broadband, 60.8 In the first 3 quarters of 2018, the total net sales revenues of mobile million mobile broadband subscribers) as of the end of the 3rd operators Turkcell Iletişim Hizmetleri A.Ş. (“Turkcell”), Vodafone quarter of 2018. Meanwhile, the annual rate of increase in the total Telekomünikasyon A.Ş. (“Vodafone”), Avea Iletişim Hizmetleri A.Ş. number of internet subscribers was 8.5%. The number of xDSL (“Avea”) and Türk Telekomünikasyon A.Ş. (“Türk Telekom”) were subscribers exceeded 9.2 million and fiber subscribers exceeded approximately TRY 33.5 billion, while the net sales revenues of other 2.6 million. The total length of the fiber infrastructure of alternative operators were realized at TRY 10.4 billion. The total amount of operators had reached 71,563 km. investments made by Turkcell, Türk Telekom, Avea and Vodafone in the same period was around TRY 4.1 billion. The total amount of revenue in relation to internet service providers in the 3rd quarter of 2018 exceeded TRY 5.8 billion. The average MOBILE MARKET monthly usage of fixed broadband internet subscribers reached 93.9 GB. Approximately 68% of fixed broadband subscribers in There are 80.6 million mobile subscribers in total in our country, Turkey prefer packages offering connection at a speed of corresponding to a penetration rate of approximately 99.8% as 10-30 Mbps. of the 3rd quarter of 2018. (Mobile penetration rate excluding the population aged 0-9 years: 113%). The share of service provided with xDSL technology by alternative operators in the broadband industry was at 18.4% as of the 3rd In the 3rd quarter of 2018, the number of 4.5G subscribers stood quarter of 2018. at 69.3 million, while the number of 3G subscribers decreased to 8.6 million. With 3G and 4.5G services, the number of mobile TV MARKET broadband subscribers who get Internet service from mobile computer and phone rose to 60.8 million. As of the 3rd quarter of 2018, there are 16 operators, which have the Cable Broadcast Service (CBS) authorization. While the number of As of the 3rd quarter of 2018, 55.7% of mobile subscribers were on Türksat’s cable TV subscribers is 1.22 million; among the operators postpaid tariffs, while 44.3% were on prepaid tariffs. The number providing IPTV services, Superonline has 580 thousand and TTNet of prepaid mobile broadband subscribers was 25.2 million and the has 700 thousand subscribers. number of postpaid mobile broadband subscribers was 35.6 million, while the number of M2M subscribers reached 5 million. Among those operators authorized to provide satellite platform services, Dijital Platform Teknoloji Hizmetleri A.Ş. (Digitürk), Demirören In the 3rd quarter of 2018, the number of mobile numbers ported TV Digital Platform İşletmeciliği A.Ş. (DSmart), Platformturk Dijital decreased by 1.7% compared to the previous quarter to 2.7 million. Platform Hizmetleri A.Ş. (Filbox) and TTNET A.Ş. (Tivibu) are actively As of November 14, 2018, 120 million mobile number portability providing services. transactions were realized in total. FIXED VOICE MARKET In terms of market share distribution based on the number of subscribers, Turkcell has a 43.3%, Vodafone a 30.9% and Avea a As of the end of the 3rd quarter of 2018, there are 11.5 million fixed 25.8% market share. Approximately 88.2% of mobile subscribers are telephone subscribers in our country, while the penetration ratio of consumer and 11.8% are corporate subscribers. the population is 14.3%.

Average monthly data usage of mobile broadband was at 4.7 GB levels, while the data usage of subscribers whose devices and SIM cards were compatible with the 4.5G service, realized at 7.6 GB. Total mobile traffic volume for the third quarter of 2018 increased by 2.7% compared to the same period of last year, and registered at 70.6 billion minutes. TURKCELL ANNUAL REPORT 2018 145

DEVELOPMENTS IN OUR COMPANIES

DEVELOPMENTS AT OUR COMPANIES REGULATORY DEVELOPMENTS – SECTORAL REGULATIONS

TURKCELL SİGORTA ARACILIK HİZMETLERİ A.Ş. (INSURANCE MOBILE ELECTRONIC COMMUNICATION SERVICES RETAIL PRICE COMPANY) CAP REGULATION Turkcell Sigorta Aracılık Hizmetleri Anonim Şirketi (the insurance The retail price cap regulation, from which our Company has been company) was established on June 19, 2018 to act as an intermediary for exempted since 2016, has been reinstated as of October 1, 2018. On all types of insurance activities in accordance with the provisions of the the other hand, with the official letter of the Ministry of Transport and relevant legislation on insurance brokerage activities, with its capital fully Infrastructure, General Directorate of Communication dated 17.08.2018 funded by Turkcell Finansman Anonim Şirketi. Our Company has made and numbered 63000, it has been stated that, as the Ministry’s the necessary applications for registry with the Insurance Agents Board. policy, the retail price cap regulation that Turkcell and Vodafone are subject to, will also be applied to TT Mobil, in order to offer mobile TURKCELL ÖDEME ve ELEKTRONİK PARA HİZMETLERİ A.Ş. (“TÖHAŞ”) communication services in a liberated, fair and sustainable competitive TÖHAŞ was authorized to operate as a payment institution in 2016. environment, and to protect the rights of consumers. In this regard, it is Accordingly, it gained the status of being Turkey’s first “payment indicated it is deemed appropriate for ICTA to conduct the necessary institution” to receive an operational permit in the mobile payment area. duties, processes and inspections in order to ensure uniformity of It has been authorized to act as an “electronic money institution” in 2017. the implementation, and to reduce bureaucratic procedures. In this Within the framework of the aforementioned authorization, TÖHAŞ can context, the “Mobile Electronic Communication Services Retail Price Cap issue electronic money, while acting as an intermediary in the payment Regulation has been approved so as to be binding for all three mobile of institutional bills. operators with the ICTA decision dated 20.09.2018 and numbered 2018/ DK-ETD/279. As per Paragraph 12.1 (b) of Law numbered 6493, TÖHAŞ was authorized to operate as a payment facilitator on December 27, 2018 by BRSA. This LAWSUIT FILED FOR THE CANCELLATION OF THE BOARD’S payment service consists of the execution of payment transactions, DECISION ISSUED IN 2013 REGARDING ACCESS TO MOBILE including transfer of funds on a payment account with the user’s NETWORKS AND CALL ORIGINATION MARKET payment service provider, direct debits, including one-off direct debits, In the lawsuit filed for the cancellation of the ICTA’s decision dated payment transactions through a payment card or a similar device, and 18.02.2013 and numbered 2013/DK-SRD/105 regarding the approval credit transfers including standing orders. of the Final Document on the “Access to Mobile Networks and Call Origination Market”; the Market Analysis Final Document subject Sofra Kurumsal ve Ödüllendirme Hizmetleri A.Ş. (“Sofra A.Ş.”) was to this decision of the Authority, as well as the proceeding, through established on July 27, 2018 by registration at the Istanbul Trade Registry which the Authority defined our Company as an operator holding Office. TÖHAŞ, Posta ve Telgraf Teşkilatı A.Ş., and Belbim Ödeme Significant Market Power (SMP) in the Access to Mobile Networks Hizmetleri ve Elektronik Para A.Ş. has an equal shareholding in Sofra A.Ş. and Call Origination Market, deciding to impose certain obligations Within the framework of the trade agreements contracted with Sofra to our Company in this regard, the court has justified the claims of A.Ş.’s member companies, the Company plans to issue meal cards and our Company and cancelled the actions and decisions subject to the transportation cards to be integrated into these meal cards. lawsuit.

Upon this development, the ICTA added the ‘Joint SMP Evaluation’ section to the cancelled market analysis with the Board decision dated

22/03/2018 and numbered 2018/DK-SRD/93, and approved the ‘Access SECTORAL AND FINANCIAL INFORMATION to Mobile Networks and Call Origination Market Final Document.’

ICTA BOARD DECISION REGARDING POSTPONEMENT OF THE DEREGULATION OF THE ACCESS TO MOBILE NETWORKS AND CALL ORIGINATION MARKET In the scope of the ‘Mobile Access and Call Origination Market’ document, approved by the ICTA Board Decision dated 12.04.2017 and numbered 2017/DK-SRD/124, it has been stated that, the market would be deregulated as of 12/04/2018 and the obligations imposed on our Company would be removed, at the end of a one-year transition period within the deregulation of the aforementioned market, unless the ICTA Board decides otherwise, taking into account market developments. 146 TURKCELL ANNUAL REPORT 2018

DEVELOPMENTS IN OUR COMPANIES

As a consequence of the evaluation of the applications made to the FAIR USE POLICY (FUP) REGULATION Authority by the operators with various competitive concerns regarding With the ICTA Board decision dated 27.12.2016 and numbered deregulation of the related market in the process, ICTA has decided, with 2016/DK-THD/518 regarding Fair Usage Policy (FUP), tariffs with Fair the Board Decision dated 04/04/2018 and numbered 2018/DK-SRD/104, Usage Policy in fixed broadband shall be terminated as of 31.12.2018. to continue monitoring developments in the mobile communication With the implementation of the relevant decision, offers with FUP in the services market and to extend the defined transition period by one year fixed broadband market have been terminated, while unlimited and until 12/04/2019 and for the obligations imposed on Turkcell as part of quota packages continue to be offered. the market analysis approved by the Board Decision dated 22/03/2018 and numbered 2018/DK-SRD/93 to remain valid during this period. RULES AND PROCEDURES IN REGARD TO THE IMPLEMENTATION OF THE ADDITIONAL CLAUSE 37 OF TELEGRAM AND TELEPHONE LAW ICTA BOARD DECISION REGARDING THE POSTPONEMENT OF THE NO 406 DEREGULATION OF THE SMS/MMS TERMINATION SERVICE WITHIN With the regulation, approved by the ICTA’s Board decision dated THE SCOPE OF THE MOBILE CALL TERMINATION MARKET ANALYSIS 27.09.2018 and numbered 2018/DK-YED/285, the obligations regarding Within the framework of the market analyses conducted by the ICTA, the Treasury Share, which must be paid by the operators listed in before the end of the one-year transition period for the deregulation of Annex 37 of Telegram and Telephone Law No. 406; the principles and the SMS/MMS termination service as part of the Mobile Call Termination procedures to be applied for not paying the Treasury Share in full, or Market Analysis published upon the approval of the Board with the in due time; as well as the methods for follow-up and collection have decision dated 19.04.2017 and numbered 2017/DK-SRD/131, the Board been determined. has issued a further decision. As per the decision dated 12.04.2018 and numbered 2018/DK-SRD/111, it has been decided that the SMS/MMS THE LAW ON THE AMENDMENT OF CERTAIN TAX LAWS AND OTHER termination service should remain regulated within the framework of the LAWS NO 7061 obligations set by the Authority within the scope of the said Mobile Call The aforementioned Law provides an opportunity for restructuring Termination Market Analysis. the ongoing disputes related to the Treasury Share (HP), Contribution Share to the Authority’s Expenses (KMKP), Administrative Fees, Universal NETGSM - REJECTION OF THE LAWSUIT REGARDING THE Services Contribution Payment fee (EHKP) and radio fees, and the ANNULMENT OF THE ICTA DECISION ON THE EXCLUSION relevant penalty, late payment interest, default interest and legal OF CALLS ORIGINATING FROM ABROAD FROM REFERENCE expenses and restructuring the HP, KMKP, Administrative Fees and EHKP INTERCONNECTION OFFERS for the periods which investigations are ongoing, or has not been yet Netgsm had filed a lawsuit requesting the annulment of the Information initiated. In this context, The Company restructured the ongoing disputes Technologies and Communication Board’s decision dated 27.09.2011 and with respect to the HP, EHKP, KMKP, administrative fees, radio fees and numbered 2011/DK-07/501 in regard to the exclusion of calls originating the relevant penalty, late payment interest, default interest and legal from abroad, from the operators’ Reference Interconnection Offers. The expenses and 62 lawsuits. The lawsuits with respect to the HP, KMKP, court decided to reject the lawsuit in favor of our Company. Thus, the EHKP and radio fees have been settled. In addition, the Company Board decision may continue to be implemented, and operators will be increased the tax base regarding the HP, EHKP, KMKP and administrative able to freely determine the fee to be applied for calls originating from fees for the periods for which investigations are ongoing, or has not abroad. been yet initiated and these periods have been closed to examination.

ANNULMENT OF THE BOARD DECISION ALLOWING TURK TELEKOM ICTA BOARD DECISIONS REGARDING ‘THE REFUND/USE TO PROVIDE RETAIL INTERNET SERVICES OF REMAINING TRY BALANCES IN CANCELLED PREPAID A lawsuit has been filed for the cancellation of the Board decision SUBSCRIPTIONS AND ‘THE TRANSFER OF NON-REFUNDED dated 04.08.2011 and numbered 2011/DK-10/411, which allowed Türk BALANCES IN PREPAID SUBSCRIPTIONS TO THE UNIVERSAL SERVICE Telekomünikasyon A.Ş., a SMP in the wholesale broadband market, to FUND’ offer retail broadband internet services. Initially, the Court has accepted By the Board decision dated 12.04.2018 and numbered 2018/DK-THD/116 the stay of execution request in favor of our Company, and then (Board decision numbered 116), the ICTA first introduced obligations for accepted the case. ICTA and Türk Telekom both appealed the decision. operators in regard to the remaining balances in cancelled prepaid Consequently, The Council of State rejected the request of appeal subscriptions. The ICTA revised the operators’ obligations and introduced and approved the decision of the First Instance Court in favor of our new ones to grant rights to prepaid subscribers to get refund. Following Company. In accordance with the decision of stay of execution and the aforementioned regulation, operators were notified of the Board annulment, it has been ensured that Türk Telekom will not be allowed to decision dated 16.04.2018 and numbered 2018/DK-THD/123 in June provide retail internet services, and also administrative fine against Türk 2018 obligations on operators to transfer the non-refunded balances Telekom has been imposed. including i) those that could not be returned pursuant to ICTA Board TURKCELL ANNUAL REPORT 2018 147

decision numbered 116 within two years, to subscribers who have REGULATION ON THE PROVISION OF SITE SELECTION terminated their subscriptions, , ii) those that could not be refunded to CERTIFICATE, AND DETERMINATION OF THE FEES FOR ELECTRONIC the prepaid subscribers as of the notification date of the ICTA Board COMMUNICATION STATIONS decision numbered 123; to the Universal Service Fund at the end of two Regulation on the provision of site selection certificate, and determination years. Our Company has filed a lawsuit against the aforementioned of fees for the electronic communication stations was published on regulation claiming that the section of the Board’s decision regarding the January 27, 2018 within the scope of sub-paragraph (r) added to the first ICTA Board Decision numbered 123 about the balances not previously clause of Article 15 of the Municipality Law dated 3/7/2005 and numbered refunded is in contradiction with the retrospectivity principle of the law. 5393. With this regulation, principles and procedures related to the site selection certificate, as well as the fees to be charged in exchange for END TO END DOMESTIC 5G PROJECT AND APPLICATION TO TÜBİTAK the certificates given to the electronic communication stations used in the TEYDEB SYSTEM fixed and mobile communication infrastructure, or networks, have been An application was made to the TÜBİTAK TEYDEB system for funding determined. In this context, the site selection certificate and fee will not the “End to End Domestic and National 5G Network Project,” initiated be received for the electronic communication stations established within by the 17 member companies of the Communication Technologies the boundaries of the adjacent area of the municipality before 6/12/2012, Cluster (HTK)’s, as well as three operators, 10 universities, six techno cities the date when law numbered 6360 and dated 12/11/2012 was published (technology parks) and the OSTİM Organized Industrial Zone. The project in the Official Gazette. The site selection certificate for these stations shall aims to ensure that 5G technologies are commissioned in 2020 in our be deemed to have been received. For those electronic communication country at the same time as the whole world. It is stated that the project stations, established within the boundaries of the adjacent area of will provide employment opportunities to over two thousand people. the municipality, between 6/12/2012 and the date when this regulation became effective, and which did not hold site selection certificates, the Our company is positioned as a stakeholder to support the project security certificate alone will be presented, and application will be made by providing feedback in R&D activities and testing opportunities to the relevant administration by paying the related fee. for prototypes to be produced within the scope of the projects at laboratories and within systems. Electronic communication stations can be established without obtaining a building license and occupancy permit, in cases where compliance JOINT USE OF INFRASTRUCTURE WITHIN THE SCOPE OF IMT with the provisions of “Planned Areas Zoning Regulation” which became AUTHORIZATION effective as of October 1, 2017, and “Regulation on the provision of the Pursuant to the verbal and written request made to the ICTA by our site selection certificate, and determination of fees for the electronic company, with the Board decision dated 07.02.2018, the ICTA has communication stations” is provided. decided to authorize other operators to utilize transmission lines and equipment (radio line, router, etc.) owned by the mobile network REGULATION ON THE AMENDMENT TO THE ELECTRICITY INTERNAL operators and used as part of their IMT network. In this manner, some of FACILITIES REGULATION Turkcell’s equipment is now being used by Superonline. Amendments have been made in Article 69 of the “Electricity Internal Facilities Regulations” of the Ministry of Energy, which entered into force on RADIOLINK FREQUENCY PLANNING AND USE OF EQUIPMENT 04.11.1984. The amendment obligates the indoor electronic communication HAVING DOMESTIC GOODS CERTIFICATION facilities to be in compliance with the current Technical Specifications Following the ICTA Board decision dated 10.01.2018, operators shall for Indoor Electronic Communication Facilities prepared and published present, within the framework of the relevant legislation the “Domestic by the Information and Communication Technologies Authority. With Goods Certificate” granted for the radio link devices to be used when this amendment to the regulation which was based on PTT technical making radio link frequency allocation on the 7 GHz, 13 GHz and 80 GHz specifications (in practice, Türk Telekom specifications) in its previous bands. version, a standardization has been introduced where no technical specifications of any company are imposed in vertical manufacturing. In 112 BASED IN-VEHICLE EMERGENCY CALL SYSTEM (E-CALL) this manner, it became a rule to make an examination, in compliance with Developments in the information and communication sector bring about PAİY during the issuance of the residential usage license, to ensure the personal security, cyber security and national security risks. In addition, establishment and existence of an infrastructure that can be benefitted in the event of a need to call back the number that originated the by more than one user at the same time, in line with the specification e-Call from the Emergency Call Centers, problems that may occur in prepared by the ICTA.

connection processes to be made through foreign operators potentially SECTORAL AND FINANCIAL INFORMATION increases the possibility of loss of life and property. Taking such risks into ANNEX SUPPLEMENTED TO THE ARTICLE 79 OF THE MUNICIPALITY consideration, an ICTA decision dated 22.01.2018 has been issued in order REVENUES LAW NUMBERED 2464, WITH LAW NUMBERED 7099 to eliminate these risks, and to ensure that the necessary information With the law numbered 7099, an annex has been supplemented to systems and services are provided from the local and national sources to Article 79 of the Municipality Revenues Law numbered 2464. Accordingly, the utmost degree. uniformity was ensured in excavation fees, ground destruction costs, and fines applicable by municipalities for violations regarding these matters. LAUNCH OF EHABS This regulation stipulates that the unit prices and tariffs to be determined As a result of studies carried out by ICTA, the Electronic Communication by the Ministry of Environment and Urbanization as well as by the Ministry Infrastructure Information System has started to be used as of November of Transport and Infrastructure shall be taken into consideration when 2018. The system contains information on the fixed and mobile network determining fees. infrastructure of the operators and updates on the infrastructure information are made via web services. Operators are obliged to use EHABS for making facility sharing and right of way transactions by 21.01.2019. 148 TURKCELL ANNUAL REPORT 2018

DEVELOPMENTS IN OUR COMPANIES

CONSUMER RIGHTS REGULATION REGARDING THE ELECTRONIC PROTECTION OF PERSONAL DATA: COMMUNICATION SECTOR All provisions of the regulation, which allows subscription contracts to REGULATION ON MEASURES TO BE TAKEN IN AREAS SUCH be made in the electronic environment, entered into force on April 28, AS COUNTERS, PAY DESKS AND DESKS WHERE SERVICES ARE 2018. In this context, precautions have been taken against circulation of PROVIDED photocopied ID cards in the physical environment. It has been regulated The decision of the Personal Data Protection Board dated December that copies of ID cards, which operators are obligated to take from of 21, 2017 and numbered 2017/62 was published on the Official Gazette subscribers during the establishment of the contract, should be taken dated January 25, 2018. In this context, it was decided that necessary from their originals, and only transferred to the appropriate electronic technical and administrative measures are to be taken by the public environment. In addition to these developments, various regulations and private sector institutions and organizations, serving with more regarding consumer rights in the electronic communication sector have than one employee, and providing services with adjoining desks. These been introduced. institutions and organizations include primarily banking and health services, mail and cargo services, tourism agencies, the customer PROCEDURES AND PRINCIPLES REGARDING THE SETTLEMENT OF service departments of chain stores, institutions carrying out various CONSUMER AND USER COMPLAINTS BY OPERATORS AND SERVICE subscription operations, as well as municipalities, tax and civil registry PROVIDERS offices. In addition, pursuant to Article 12 of the Law on the Protection The regulation approved by the Board decision dated May 22, 2018, of Personal Data numbered 6698, it was decided to take measures to differently from previous regulations, has in its scope all applications prevent unauthorized people from crossing the counter, pay desk, and coming from different (all kinds) channels that are complaints in nature, desk areas, and to prevent people who receive services close to each New methods have been designated for receiving complaints and other, at the same time; from hearing, seeing, learning or acquiring each resolving them using the complaints system to be established by the other’s personal data. operators through the integration of infrastructure with the ICTA.

REGULATION ON PROCESSING SPECIAL CATEGORIES OF PERSONAL PROCEDURES AND PRINCIPLES ON MEASURES FOR COMMUNITIES IN DATA NEED OF SOCIAL SUPPORT The Personal Data Protection Board’s decision regulating technical “Procedures and Principles on Measures for Communities in Need of Social measures to be taken by the data controller for processing special Support” prepared by the ICTA for the determination of the measures categories of personal data, dated 31.01.2018 and numbered 2018/10 has to be taken for the socially vulnerable, have been published so as to be been published in the Official Gazette on March 7, 2018. effective as of January 1, 2019. With this regulation, which repealed the Board’s previous decisions regarding the disabled, it became mandatory COMMUNIQUE ON PROCEDURES AND PRINCIPLES REGARDING for operators with more than 200 thousand subscribers, to provide special INFORMATION TO BE PROVIDED TO DATA SUBJECTS tariffs that include economic advantages for people with disabilities, The Personal Data Protection Board published “the Communiqué on the widows and orphans of the martyrs of war and the line of duty, as well Procedures and Principles Regarding Information to be Provided to Data as veterans and to launch of special call centers for disabled subscribers Subjects ” in the Official Gazette dated March 10, 2018 and numbered and to provide services from other operation channels. 30356. The Communique regulates that the information to be provided to data subjects by data controllers should cover at least, identity of the CHANGES IN CLI PROCEDURES AND PRINCIPLES data controller and of its representatives, the purpose for which personal Changes to the Principles and Procedures for the Use of Caller Line data will be processed, the means of collection, with whom and for Information (CLI) have been made with the ICTA Board decision dated what purpose personal data could be shared, the legitimate ground of July 23, 2018, where the rules for displaying alphanumeric CLI have been processing and other rights of the data subject. modified for the delivery of message services such as SMS and MMS. The use of internet domain names and website addresses as CLI has been COMMUNIQUE ON THE PROCEDURES AND PRINCIPLES REGARDING prohibited. In the case that the CLI contains the first and last name of the APPLICATION TO THE DATA CONTROLLER sender, the Place of Residence Document shall be submitted in addition to The communique, which determines the means of application to the the ID card of the sender. data controller, as well as the fees in cases where a transaction requires additional cost, has been published by the Personal Data Protection WLR NUMBER PORTABILITY Board in the Official Gazette dated March 10, 2018, becoming effective A temporary alternative method for the porting of numbers within the on the same day. Wholesale Line Rental (WLR) system has been identified, so that these numbers can start to be ported until changes to the number portability system are completed. Portability transactions have commenced as of September 28, 2018. TURKCELL ANNUAL REPORT 2018 149

REGULATIONS ON DATA CONTROLLER REGISTRY Currency” published in the Official Gazette dated January 25, 2018 and The exemptions of registration and the deadlines for registering with the numbered 30312, a limitation has been imposed on foreign currency Data Controllers Registry are regulated by the Personal Data Protection borrowing by people who reside in Turkey. According to the regulation, Board with resolutions dated 19.07.2018, and numbered 2018/87 and it is stated that foreign currency credits can be used domestically or 2018/88. abroad under certain conditions.

LIMITATION IN THE NUMBER OF INSTALLMENTS Pursuant to “The Decree (Decree No: 85) in Regards to Amendment in Pursuant to “The Regulation in regards to the Amendment to the Bank the Decree Numbered 32 Concerning Protection of the Value of Turkish Cards and Credit Cards Law” which has been published in the Official Currency” has been published in the Official Gazette dated September Gazettes dated August 15, 2018 and numbered 30510, and dated 13, 2018 and Numbered 30534, except for cases specified by the Ministry, November 27, 2018 and numbered 30608; the installment period for cash people who reside in Turkey shall not determine the contract prices and withdrawals as well as purchases of goods and services, to be realized other payment obligations that arise from these contracts, denominated by credit cards, including the periods that the installment of the debt for in, or indexed to foreign currency. These include securities and real estate a certain fee after the purchase of goods or services or in which the purchase and sale contracts between each other, all kinds of movable payment has postponed shall not exceed 12 months. In the purchase of and real estate rental contracts, including vehicle and financial leasing, electronic goods, this time of period will be applied as three months. as well as leasing contracts for business, service and artwork. The last In addition, in the telecommunication expenditures by credit cards, but exceptional cases have been published in the Official Gazette dated which do not contain any concrete goods or services, such as a gift November 16, 2018 and numbered 30597. voucher, installment cannot be applied. REGULATIONS ON PRICE TAG Pursuant to “The Regulation in regards to the Amendment on the As per “The Regulation in Regards to the Amendment on the Price Tag Regulation in the Procedures and Principles to be Applied in Retail Trade” Regulation,” published in the Official Gazette dated September 18, 2018 which has been published on the Official Gazettes numbered 30510 and numbered 30539, it became mandatory to display the following and dated August 15, 2018, numbered 30549 and dated September 28, details on tags and lists: “Sales price of goods and the start date of the 2018, and numbered 30609 and dated November 28, 2018, “goods and unit price implementation, as well as the shape, logo or mark identified services” defined as “all kinds of goods and services, which are subject and announced by the Ministry for goods manufactured in Turkey.” In to retail trade, and which are sold to retailers and consumers.” addition, it has been regulated that the specifications of the form and scope of the tags will also be applied to the “tariff and price lists.” According to these regulations, the installment period has been determined as three months in sales of television and audio and video As per “The Communique on the Use of Domestic Production Logo systems, and as six months in the sales of computers, tablet PCs, on Price Tags” published in the Official Gazette dated October 5, 2018 and mobile phones with a price exceeding TRY 3,500. The 6-month and numbered 30556, the procedures and principles regarding the installment period, for mobile phone sales exceeding TRY 3,500, is use of the domestic production logo, which have to be included on applied as 12 months until January 31, 2019. the tags, and the price lists of the goods offered to consumers, have been determined. Accordingly, it became mandatory to display “the Pursuant to “The Regulation in Regards to the Amendment on the production place of goods, the distinctive feature of goods, sales price Regulation on the Establishment and Operating Principles of Financial including all taxes, unit price of goods, sales price of goods and the Leasing, Factoring and Financing Companies” which has been published start date of the unit price implementation, as well as the shape, logo or on the Official Gazettes dated August 15, 2018 and numbered 30510, mark identified and announced by the Ministry for goods manufactured and dated November 27, 2018 and numbered 30608; the maturity of in Turkey,” on the tags and price lists, with a domestic production logo loans extended cannot exceed 6 months for the purchase of tablets and to be placed in a manner so as to be easily visible and readable. In computers, 12 months for mobile phones with a price of up to TRY 3,500, addition, the local production logo should be placed on tags and price and 6 months for mobile phones with a price higher than TRY 3,500. The lists, in the original colors and figures as specified in the logo attached to 6-month maturity limit of loans extended for the purchase of mobile the Communique. phones with a price exceeding TRY 3.5 thousand is applied as 12 months until January 31, 2019. It has stated that the same maturities shall be REGULATION IN REGARDS TO THE AMENDMENT TO THE applied in the restructuring of these loans. REGULATION ON PAYMENT SERVICES AND ELECTRONIC MONEY ISSUANCE, AND PAYMENT INSTITUTIONS AND ELECTRONIC MONEY SECTORAL AND FINANCIAL INFORMATION REGULATION ON CONCORDAT INSTITUTIONS (“REGULATION”) As per “The Code of the Amendment Regarding the Code of The regulation in regard to Law numbered 6493 on Payment Services Enforcement and Bankruptcy and Certain Codes” published in the and Electronic Money Transfer, and Payment Institutions and Electronic Official Gazette dated March 15, 2018 and numbered 30361; the Money Institutions has been amended by the Banking Regulation and suspension of bankruptcy has been abolished, and the provisions of Supervision Agency (BRSA). Within the scope of this amendment, which concordat have been amended. has been published in the Official Gazette and become effective on October 12, 2018, the guidelines and restrictions on service provision REGULATIONS ON PROTECTION OF THE VALUE OF TURKISH were determined. CURRENCY As per “The Communique in Regards to Amendment (Communique No: 2008-32/46) in the Communique (Communique No: 2008-32/34) on the Decree Numbered 32 regarding Protection of the Value of the Turkish 150 TURKCELL ANNUAL REPORT 2018

TURKCELL GROUP: 2018 FINANCIAL & OPERATIONAL REVIEW

Our audited annual consolidated financial statements including our consolidated statements of financial position as of December 31, 2018 and 2017 and our consolidated statements of profit and loss, comprehensive income, changes in equity and cash flows for the two years in the period ended December 31, 2018 and the related notes included in this annual report have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS Report”). The following financial and operational overview focuses principally on the developments and trends in our business in the full year 2018 and should be read in conjunction with the IFRS report. The figures are expressed in Turkish Liras (TRY) unless otherwise stated. A year on year comparison of key indicators is provided and figures in parentheses following the operational and financial results for the year end 2018 refer to the same item for the year end of 2017 unless otherwise stated.

In the tables totals may not foot due to rounding differences. The same applies to the calculations in the text.

TURKCELL GROUP: FINANCIAL SUMMARY

Profit & Loss Statement (million TRY) FY17 FY18 Change% Revenue 17,632.1 21,292.5 20.8% Cost of revenue(1) (8,753.2) (9,858.0) 12.6% Gross Margin(1) 50.4% 53.7% 3.3 pp Administrative expenses (645.2) (673.4) 4.4% Selling and marketing expenses (2,005.4) (1,626.7) (18.9%) Net impairment loses on financial and contract assets - (346.4) n.m EBITDA(2) 6,228.3 8,788.0 41.1% EBITDA Margin 35.3% 41.3% 6.0 pp Depreciation and amortization (2,597.0) (4,288.0) 65.1% EBIT(3) 3,631.3 4,500.0 23.9% Net finance income / (costs) (322.9) (1,687.0) 422.5% Finance income 818.3 1,932.1 136.1% Finance costs(4) (1,141.2) (3,619.1) 217.1% Other income / (expense) (698.9) (140.1) (80.0%) Non-controlling interests (58.6) (156.3) 166.7% Share of profit of equity accounted investees - (0.1) n.m Income tax expense (571.8) (495.5) (13.3%) Net Income 1,979.2 2,021.2 2.1%

(1) Excluding depreciation and amortization expenses. (2) EBITDA is a non-GAAP financial measure. (3) EBIT is a non-GAAP financial measure and is equal to EBITDA minus depreciation and amortization expenses. (4) Fair value loss and interest expense in relation to derivative instruments reported under finance cost were netted off from respective fair value gain and interest income in relation to derivative instruments reported under finance income. Historical periods were restated to reflect this change.

Consolidated Balance Sheet Data (Year End) (million TRY) 2017 2018 Change % Cash and cash equivalents 4,712.3 7,419.2 57.4% Total assets 33,982.5 42,765.3 25.8% Long term debt 8,258.0 13,119.6 58.9% Total debt 12,536.1 20,155.5 60.8% Total liabilities 18,937.4 26,711.7 41.1% Total equity 15,045.1 16,053.6 6.7% TURKCELL ANNUAL REPORT 2018 151

Summary Consolidated Cash Flow Statement (in TRY millions) 2017 2018 Change % Net cash inflow from operating activities 3,101.3 5,829.9 88.0% Net cash outflow from investing activities (3,304.6) (4,535.6) 37.3% Net cash (outflow)/inflow from financing activities (1,566.7) (534.4) (65.9%) Effects of exchange rate changes on cash and cash 430.1 1,947.0 352.7% equivalents Cash and Cash Equivalents 4,712.3 7,419.2 57.4%

Profitability and Solvency Ratios (%) 2017 2018 Change % Gross Profit Margin(1) 50.4% 53.7% 3.3 pp EBITDA Margin 35.3% 41.3% 6.0 pp Net Profit Margin 11.2% 9.5% (1.7 pp) Total Liability / Equity Ratio 125.9% 166.4% 40.5 pp Net Debt / EBITDA Multiple 1.3x 1.4x 0.1x

(1) Excluding depreciation and amortization expenses.

Selling and marketing expenses: Selling and marketing expenses as EXPLANATIONS: a percentage of revenues was at 7.6% (11.4%). Selling expenses and marketing expenses decreased 2.5 pp and 0.4 pp, respectively as a Revenue1: Turkcell Group revenues rose by 20.8% to TRY 21,292 percentage of revenues. million (TRY 17,632 million).

Please note that starting from Q418 frequency usage fees related to »» Turkcell Turkey revenues, at 86% of Group revenues, grew by 18.2% prepaid subscribers reported under selling and marketing expenses to TRY 18,266 million (TRY 15,450 million). were classified under net impairment loses on financial and contract assets item. Prior years’ financials have not been restated - Data and digital services revenues grew by 16.4% to to reflect this change. Frequency usage fees related to prepaid TRY 11,997 million (TRY 10,304 million). subscribers amounted to TRY 142 million for the full year.

- Wholesale revenues grew by 54.9% to TRY 910 million Net impairment loses on financial and contract assets: Net (TRY 587 million). impairment loses on financial and contract assets amounted to TRY 346 million in 2018 »» Turkcell International revenues rose by 36.5% to TRY 1,457 million (TRY 1,067 million). EBITDA(3) rose by 41.1% resulting in an EBITDA margin of 41.3% (35.3%).

»» Other subsidiaries’ revenues grew by 40.8% to TRY 1,570 million »» Turkcell Turkey’s EBITDA rose by 34.7% to TRY 7,534 million (TRY 1,115 million). (TRY 5,594 million), while its EBITDA margin rose 5.0 pp to 41.2% (36.2%). Cost of revenue (excluding the depreciation and amortization): »» Turkcell International EBITDA increased to TRY 613 million Cost of revenue decreased to 46.3% (49.6%) as a percentage of (TRY 264 million), while the EBITDA margin reached 42.1% (24.7%). revenues. This was mainly due to the decrease in radio costs »» The EBITDA of other subsidiaries rose by 73.0% to TRY 641 million (2.4 pp), interconnection costs (0.8 pp) and other cost items (TRY 370 million). (1.4 pp), despite the increase in TRX costs (1.3 pp) as a percentage of revenues.

Administrative expenses: Administrative expenses was at 3.2% (3.7%) as a percentage of revenues. Administrative expenses included a positive impact of TRY 133 million in 2017 due to the change we made in our doubtful receivable provision assumptions SECTORAL AND FINANCIAL INFORMATION based on improvement in collection performance.

Please note that starting from Q418 net impairment expense recognized on receivables reported under administrative expenses was classified under net impairment loses on financial and contract assets item. Prior years’ financials have not been restated to reflect this change. Net impairment expense recognized on receivables amounted to TRY 205 million for the full year.

(1) Please refer to the notes to the consolidated financial statements for the definition of Turkcell Turkey, Turkcell International and other subsidiaries. (2) “Other subsidiaries” is mainly comprised of our information and entertainment services, call center business revenues, financial services revenues and inter-business eliminations. (3) EBITDA is a non-GAAP financial measure. 152 TURKCELL ANNUAL REPORT 2018

TURKCELL GROUP: 2018 FINANCIAL & OPERATIONAL REVIEW

Depreciation and amortization expenses: Depreciation and - Our consumer finance company had a debt balance of amortization expenses increased 65.1%. TRY 4,096 million, of which TRY 2,073 million (US$ 394 million) was denominated in US$, and TRY 1,171 million (EUR 194 million) in Net finance expense: The net finance expense rose to TRY 1,687 EUR with the remaining TRY 853 million in TRY. million (TRY 323 million). This was mainly due to higher net foreign exchange losses and higher interest expenses resulting from a larger »» TRY 719 million of IFRS 16 lease obligations is denominated in loan portfolio. TRY, TRY 40 million (US$ 8 million) in US$, TRY 195 million (EUR 32 million) in EUR and the remaining balance in other local currencies Asset held for sale and discontinued operations: In accordance (please note that the figures in parentheses refer to US$ or EUR with our strategic approach and IFRS requirements, Fintur is equivalents). classified as ‘held for sale’ and reported as discontinued operations as of October 2016. TRY 11,565 million of our consolidated debt is set at a floating rate. Excluding the consumer finance business borrowings, TRY 4,154 Income tax expense: The income tax expense decreased by 13.3%. million of consolidated debt will mature within less than a year.

Net income: We registered a net income of TRY 2,021 million (TRY Net debt as of December 31, 2018 was at TRY 12,736 million with a 1,979 million). Solid operational performance and prudent financial net debt to EBITDA ratio of 1.4 times. Excluding consumer finance risk management allowed us to register a strong net income for the company consumer loans, our telco only net debt was at TRY 8,565 full year, despite a challenging macro environment. million with a leverage of 1.0 times.

Total cash & debt: Consolidated cash as of December 31, 2018 Turkcell Group’s short FX position was at US$ 224 million as at decreased to TRY 7,419 million from TRY 8,749 million as of the end of Q418. (Please note that this figure takes into account September 30, 2018. Excluding the FX swap transactions for TRY advance payments and hedging, but excludes FX swap transactions borrowing, 74% of our cash is in US$ and 26% is in EUR. for TL borrowing).

Consolidated debt as of December 31, 2018 decreased to TRY 20,156 Capital expenditures: Capital expenditures including non- million from TRY 23,055 million as of September 30, 2018. Please operational items were at TRY 4,643.8 million (excluding the impact note that TRY 1,414 million of our consolidated debt is comprised of of new IFRS standards). lease obligations resulting from the implementation of IFRS 16. In FY18, operational capital expenditures (excluding license fees) at »» Consolidated debt breakdown excluding lease obligations the Group level was at 18.5% of total revenues. resulting from the implementation of IFRS 16: Capital expenditures (million TRY) FY17 FY18 - Turkcell Turkey’s debt was TRY 13,717 million, of which TRY 7,652 Turkcell Turkey (3,821.5) (3,793.0) million (US$ 1,455 million) was denominated in US$, TRY 5,775 Turkcell International(1) (246.6) (831.0) million (EUR 958 million) in EUR, TRY 193 million (CNY254 million) in Other Subsidiaries(1) (22.3) (19.8) CNY and the remaining TRY 96 million in TRY. Capex and License (4,090.4) (4,643.8)

- The debt balance of lifecell was TRY 925 million, of which (1) The impact from the movement of reporting currency (TRY) against local currencies of TRY 895 million (UAH 4,728 million) was denominated in UAH and subsidiaries in other countries is included in these lines. the remaining TRY 30 million (EUR 5 million) in EUR. Donations: Turkcell Group donated TRY 176 million to various associations, foundations and charitable organizations in 2018. TURKCELL ANNUAL REPORT 2018 153

OPERATIONAL REVIEW (TURKEY):

Summary of Operational Data FY17 FY18 y/y % Number of subscribers (million) 36.7 36.7 - Mobile Postpaid (million) 18.5 18.8 1.6% Mobile M2M (million) 2.3 2.4 4.3% Mobile Prepaid (million) 15.6 14.9 (4.5%) Fiber (thousand) 1,204.3 1,385.6 15.1% ADSL (thousand) 921.4 905.6 (1.7%) IPTV (thousand) 505.9 613.4 21.2% Churn (%)(1) Mobile Churn (%)(2) 1.9% 2.1% 0.2 pp Fixed Churn (%) 1.8% 1.8% - ARPU (Average Monthly Revenue per User) (TRY) Mobile ARPU, blended 29.8 33.9 13.8% Mobile ARPU, blended (excluding M2M) 31.6 36.2 14.6% Postpaid 43.0 48.2 12.1% Postpaid (excluding M2M) 48.5 54.9 13.2% Prepaid 14.9 16.9 13.4% Fixed Residential ARPU, blended 53.6 55.7 3.9% Average mobile data usage per user (GB/user) 3.9 5.2 33.3% Mobile MoU (Avg. Monthly Minutes of usage per subs) 347.1 359.5 3.6% blended (1) Presentation of churn figures has been changed to demonstrate average monthly churn figures for the respective quarters. (2) In Q117, our churn policy was revised to extend from 9 months to 12 months (the period at the end of which we disconnect prepaid subscribers who have not topped up above TRY10). Additionally, under our revised policy, prepaid customers who last topped up before March will be disconnected at the latest by year-end. Please note that figures for prior periods have not been restated to reflect this change in churn policy.

Our mobile subscriber base stood at 33.8 million by the end of the Fixed Residential ARPU rose 3.9% for the full year, positively year. We registered 347 thousand net postpaid subscriber additions impacted by the rise in multiplay subscribers with TV(4) to 48.6% of annually, while the share of postpaid subscribers reached 55.7% total residential fiber subscribers. (54.2%) of our mobile subscriber base. Meanwhile, our prepaid subscribers declined by 676 thousand annually. Please note that Average mobile data usage per user rose by 33.3% for the full year, 555 thousand prepaid subscribers, who last topped up between driven by higher data consumption of 4.5G users and rich digital January and March, were disconnected in accordance with our services offerings. Accordingly, the average mobile data usage of churn policy in Q418. 4.5G users was at 8 GB in December.

Our fixed subscriber base reached 2.3 million on 166 thousand 4.5G compatible smartphones increased to 18 million on 2.3 million annual net additions. We registered 181 thousand annual net annual additions in 2018 comprising 80% of total smartphones on additions to our fiber subscribers. IPTV subscribers exceeded 613 our network by the end of the year. thousand on 108 thousand annual net additions. Total TV subscribers including OTT only users reached 3.4 million(3) on 1.3 million annual (3) IPTV users and OTT only cumulative active users additions. (4) Multiplay subscribers with TV: Fiber internet + TV users & fiber internet + TV + voice users

The average monthly mobile churn rate was at 2.1% and the average monthly fixed churn rate at 1.8%.

Mobile ARPU (excluding M2M) rose 14.6% for the full year driven mainly by increased data and digital services usage and upsell performance. SECTORAL AND FINANCIAL INFORMATION 154 TURKCELL ANNUAL REPORT 2018

FORWARD LOOKING STATEMENTS

In 2019, we target Group revenue growth of 16% - 18%, an EBITDA margin of 37% - 40% and an operational capex to sales ratio(1) of 16% - 18%.

2019 GUIDANCE

16%-18% 37%-40% 16%-18% REVENUE EBITDA OP. CAPEX/ GROWTH MARGIN SALES(1)

(1) Excluding license fee

Please note that this paragraph contains forward looking statements based on our current estimates and expectations regarding market conditions for each of our different businesses. No assurance can be given that actual results will be consistent with such estimates and expectations. For a discussion of factors that may affect our results, see our Annual Report on Form 20-F for 2017 filed with U.S. Securities and Exchange Commission, and in particular, the risk factor section therein. TURKCELL ANNUAL REPORT 2018 155

REVIEW OF RISK ASSESSMENT

»» Competition in the Turkish telecommunications market may RISK MANAGEMENT AND INTERNAL CONTROL MECHANISM adversely affect the growth of our business and our financial condition. During the process of selecting the independent external »» Our growth strategy is partly dependent on new investment auditor; the Audit Committee considers the competencies and opportunities, which could affect our business and financial independence status of the independent audit firms, and advises condition, and the return on our investments cannot be guaranteed. the Board of Directors presenting a report about the most suitable »» Regulatory decisions and changes in the regulatory environment audit firm. could adversely affect our business and financial condition. »» Any downturn in the economy and instability in the political During our Company’s Ordinary general assembly meeting held on environment in Turkey and internationally may have an adverse March 29, 2018, PwC Bağımsız Denetim ve Serbest Muhasebeci Mali effect on our business and financial condition. Müşavirlik A.Ş. was appointed as the Company auditor for auditing »» We hold interests in several companies that may expose us to our Company’s financial statements of 2018 as per the Turkish various economic, business, political, social, financial, liquidity, Commercial Code (TCC).(1) regulatory and legal risks and may not provide the benefits that we expect, and our pursuit of acquisition opportunities may Moreover, the Internal Audit Function operates with the Board increase these risks. of Directors and is responsible for the auditing of Turkcell İletişim »» We are exposed to foreign exchange rate risks that could Hizmetleri A.Ş. and all of the group companies which are significantly affect our results of operation and financial position. subsidiaries, and reports the results of the audit carried out in line »» Reduction in cash generated from operations and increased with the International Standards for the Professional Practice of capital needs may increase our borrowing requirements, which Internal Auditing to the Audit Committee. The auditing activities of may increase our financing costs and our exposure to the risks the Internal Audit function mainly comprise of operational audits associated with borrowing. conducted pursuant to annual risk based audit plans and audits in »» We are subject to a variety of risks with respect to our Base accordance with Article 404 of the Sarbanes-Oxley Act. Transceiver Stations (“BTSs”) excellence. »» We face risks related to our dependence on network and IT Operational audit activities are carried out according to annual systems and the products and services we provide through third audit plans prepared with respect to a risk based audit approach. party suppliers as well as our exposure to technological changes Through conducting operational audits, Internal Audit function in the communications market, including industries where we evaluates and improves effectiveness of risk management, traditionally do not compete. control, and governance processes, provides assurance to Board »» Turkcell’s complex ownership structure and ongoing disagreements of Directors and Audit Committee. Thereby, helps Turkcell to among our main shareholders have adversely impacted and may accomplish its objectives. continue to impact decision making on important matters. These ongoing disputes may lead to further regulatory or legal actions, On the other hand, as we are listed on the New York Stock and affect the ownership and control of our company. Exchange in the United States, audits are conducted within the »» Our business, consolidated financial results and/or operational framework of the annual plan to provide assurance in terms performance could be adversely affected unless we retain our key of the adequacy and effectiveness of internal control system personnel, our partners and their employees. across Turkcell and Turkcell group companies, of which financial »» We are involved in various claims and legal actions arising in statements are consolidated, and whether this structure operates connection with our business, which could have a material effect effectively, in compliance with the provisions of Article 404 of the on our financial condition. Sarbanes-Oxley Act, which all publicly traded companies are »» Although we maintain and regularly review our internal control

required to comply with. All stages from the planning stage to SECTORAL AND FINANCIAL INFORMATION over financial reporting, there are inherent limitations on the the indentified internal control insufficiencies and following and effectiveness of our controls, particularly as our Company grows concluding actions of the audit activities carried out in accordance and enters into new businesses with said Article are reported to the Audit Committee, CEO and »» If we fail to comply with laws and regulations regarding CFO at regular intervals. unethical business practices, including bribery and corruption, and international sanctions, or if one of our key suppliers becomes subject to international sanctions, this could adversely affect our business and financial condition »» Our ADS price may be volatile, and purchasers of ADSs could incur substantial losses. »» Natural disasters and/or cyber-attacks, sabotages and extraordinary outages may pose various threats for our network and information technology infrastructure. 156 TURKCELL ANNUAL REPORT 2018

REVIEW OF RISK ASSESSMENT

The Internal Audit Unit also provides consultancy in current matters were worked with the business owners. One-to-one meetings were and matters requested by the management. held with each risk contact to create and develop the risk universe. The risk universe is created for each function / department with the The Internal Audit Unit reports the compliance practices as per inputs provided by the directors and the risk contacts. Turkcell Group Sarbanes Oxley Rule Act Section 404 to the Audit Committee has created awareness on the common risk culture in order to and CEO while Corporate Risk Management Unit reports to the standardize its corporate risk management efforts. Regular synergy Early Detection of Risks Committee. The Internal Audit mechanism meetings were held with central and support functions such as operates with a risk based audit approach. Within this scope, Strategy, Law, Finance, Network Technologies, Customer Experience functionally and institutionally probable risks are continuously and Information Technologies, Global Bilgi etc. monitored, where the risk analyses resulting from these conducted operations constitute the main input of audit activities. In 2000, Turkcell formulated its business continuity plans in a manner also encompassing its technical operations and repositioned its As of the end of the financial year of 2012, the “Early Detection business continuity plan as Business Continuity Management by of Risks Committee” has been in operation in order to perform broadening the extent thereof in 2004. activities in a manner affiliated with the Board of Directors within the scope of article 378 of the TCC and the Communiqué With the restructuring in 2011, the scope of the program expanded on Corporate Governance of the CMB. The Early Detection of so as to comprise Turkcell Group companies and suppliers. Risks Committee supports the Board of Directors by performing Turkcell Group Business Continuity Management System has been studies for the purpose of early detection of the risks which may structured and certified in a manner ensuring the continuity of our jeopardize the existence, development and continuity of the call, messaging, Internet, server services, data centers and societal Company, implementing the necessary measures related with the security services as per the international “ISO 22301, Societal identified risks and managing the risks. The Committee reports to security - Business continuity management systems” standard. the Board of Directors once every 2 months and these reports are Regular drills are conducted for our business continuity plans formed shared with an independent audit company. Board of Directors by considering the customers’ expectations, corporate policies and regularly provides an evaluation regarding the risks affecting the legal obligations in order to guarantee their operation in case of Company through the Early Detection of Risks Committee. emergency and disaster.

It is the responsibility of the Enterprise Risk Management team Thanks to our geographically dispersed technical infrastructure, to assess the risks and to report the risk prevention activities to extensive coverage, solution partner network, mobile exchanges, the Early Detection of Risk Committee and to coordinate the risk mobile base stations, additional capacity, emergency centers prevention activities with the directors and group companies and extensive experience in handling emergencies enable us to in Turkcell and Global Bilgi. Each director is responsible for the minimize the impact of risks as much as possible and additionally, Enterprise Risk Management activities in her/his unit. Enterprise Risk the experience of our Group companies in customer services, our Management team carries out the corporate risk management high speed fiber-optic infrastructure, data storage services and our duties together with directors, managers who directly reports experienced software development teams allow us to effectively to vice presidents, and risk contacts. Turkcell Enterprise Risk manage any disasters from another center, thereby ensuring the Management team aims to develop an approach, where risk continuity of our activities. management process is conducted in an integrated manner (1) Başaran Nas Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik A.Ş.’s (Başaran with the fundamental management processes. While enabling Independent Audit & Financial Consultancy Inc.) commercial name was changed as of the this, a framework associated with the process was identified in 12th of December 2016 to PwC Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik A.Ş. (PwC Independent Audit & Financial Consultancy Inc.). accordance with an Enterprise Risk Management procedure as per the COSO ERM framework and ISO 31000 standard. Group- wide risks are categorized establishing a risk library and standard risk definitions are created for each category. The risks that may be encountered in the business processes with functions are determined by taking into account the worst case scenario of each risk identified and included in the risk library with the business owners. By making the internal audit of the business owners, the controls they made to reduce the risk, the findings that caused the weaknesses and the action plans to eliminate these weaknesses TURKCELL İLETİŞİM HİZMETLERİ A.Ş. CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018 AND INDEPENDENT AUDITOR’S REPORT

This report is 119 pages Report of Independent Registered Public Accounting Firm To the Shareholders and Boards of Directors of Turkcell İletişim Hizmetleri A.Ş. Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated statements of financial position of Turkcell İletişim Hizmetleri A.Ş. (the “Company”) and its subsidiaries as of December 31, 2018 and 2017, and the related consolidated statements of profit or loss, other comprehensive income, changes in equity, and cash flows for each of the three years in the period ended December 31, 2018, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company’s internal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2018 and 2017, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2018 in conformity with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Change in Accounting Principle

As discussed in Note 2 to the consolidated financial statements, the Company changed the manner in which it accounts for revenues from contracts with customers and the manner in which it accounts for leases in 2018.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Annual Report on Internal Control Over Financial Reporting appearing on Item 15b of the 2018 Annual Report to Shareholders. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. SECTORAL AND FINANCIAL INFORMATION ------F1 159 269 654 980 5,299 11,338 55,927 35,026 96,060 981,396 273,776 104,102 155,634 (56,313) (44,776) 356,620 1,160,605 4,712,333 1,297,597 1,542,679 11,312,276 5,720,398 2,346,236 8,340,410 2,950,523 2,848,572 1,294,938 9,665,408 14,989,161 19,913,363 12,774,168 2,200,000 14,069,106 33,982,469 15,045,088 - - 269 3,513 19,413 9,409 13,533 15,425 42,454 711,928 115,001 35,026 ANNUAL REPORT 2018 REPORT ANNUAL 131,810 152,732 (34,871) 180,434 421,306 1,218,266 884,686 1,091,512 (141,534) 11,116,316 3,057,143 7,419,239 5,774,763 1,649,602 11,359,317 1,356,062 3,286,243 2,503,537 1,720,305 2,505,990 10,050,172 15,921,744 2,200,000 18,337,109 16,616,804 42,765,275 24,428,166 16,053,554 TURKCELL 31 December 201831 December 2017 December 31

11 17 12 21 21 19 19 18 15 14 16 22 23 25 25 38 24 34 20 20 Note

The above consolidated statement of financial position should be read in conjunction with the accompanying notes. the accompanying with in conjunction read be should financial of position statement consolidated above The

Telecommunication licenses Telecommunication Computer software Computer assets intangible Other Receivables from financial services from Receivables Property, plant and equipment plant Property, capital Share Right-of-use assets Right-of-use assets Intangible Inventories parties related Due from assets Contract financial instruments Derivative loss or profit through value at fair Financial asset income comprehensive other through value at fair Financial asset equivalents and cash Cash premium Share Other non-current assets non-current Other receivables Trade investments maturity Held to assets current Other shares Treasury paid-in capital Additional Reserves benefit termination employee of Remeasurements earnings Retained Investment properties Investment financial services from Receivables assets Contract assets tax Deferred investees accounted in equity Investments investments maturity Held to

Trade receivables Trade TURKCELL İLETİŞİM HİZMETLERİ A.Ş. HİZMETLERİ İLETİŞİM TURKCELL AS AT 31 DECEMBER 2018 DECEMBER 31 AT AS CONSOLIDATED STATEMENT OF FINANCIAL POSITION FINANCIAL OF STATEMENT CONSOLIDATED THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.) OTHERWISE UNLESS LIRAS TURKISH IN EXPRESSED ARE AND UNITS CURRENCY THOUSAND NEAREST THE Assets assets Total Equity equity Total Total non-current assets non-current Total assets current Total interests Non-controlling Subtotal sale as held for classified Assets holders of equity to attributable equity Total Company”) (“the AS Hizmetleri Iletisim Turkcell (ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO TO OFF ROUNDED BEEN HAVE NOTES AND STATEMENTS FINANCIAL CONSOLIDATED THE IN DISCLOSED AMOUNTS (ALL 160 TURKCELL ANNUAL REPORT 2018

TURKCELL İLETİŞİM HİZMETLERİ A.Ş. CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2018

(ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.)

Note 31 December 2018 31 December 2017 Liabilities Borrowings 28 13,119,636 8,257,995 Employee benefit obligations 29 224,747 197,666 Provisions 32 268,722 197,418 Deferred tax liabilities 18 862,360 651,122 Contract liabilities 31 131,598 - Other non-current liabilities 27 364,610 409,337 Total non-current liabilities 14,971,673 9,713,538

Borrowings 28 7,035,909 4,278,154 Current tax liabilities 133,597 103,105 Trade and other payables 33 3,788,174 3,696,466 Due to related parties 38 45,331 6,980 Deferred revenue 30 8,948 193,831 Provisions 32 307,068 835,199 Contract liabilities 31 255,756 - Derivative financial instruments 34 165,265 110,108 Total current liabilities 11,740,048 9,223,843

Total liabilities 26,711,721 18,937,381

Total equity and liabilities 42,765,275 33,982,469

The above consolidated statement of financial position should be read in conjunction with the accompanying notes. F2 SECTORAL AND FINANCIAL INFORMATION - - F3 161 0.68 0.70 2016 51,715 (0.02) 78,569 114,475 (42,164) - - - - 0.90 0.90 2017 74,438 58,630 ANNUAL REPORT 2018 REPORT ANNUAL - - (87) 0.93 0.93

2018 941,918 605,663 184,698 581,373 328,954 241,435 156,270 1,932,133 818,436 961,642 (381,582) (773,329) (312,801) (495,481) (571,758) (423,160) 6,565,109 5,952,936 4,934,479 2,177,335 2,037,7592,177,335 1,585,967 2,037,759 1,543,803 2,177,335 2,037,759 1,543,803 4,359,861 2,932,383 2,181,926 2,021,065 1,979,129 1,492,088 2,672,816 2,609,517 2,009,127 7,146,482 6,281,890 5,048,954 (3,619,091) (1,141,302) (1,134,441) 21,292,475 17,632,064 14,285,561 20,350,557 17,026,401 14,100,863 TURKCELL (1,686,958) (322,866) (172,799) (14,145,993) (11,350,174) (9,236,607)

6 6 9 8 8 5 5 101010 (1,626,714) (673,370) (2,005,420) (346,390) (645,196) (1,910,947) (721,849) 1010 (13,785,448) (360,545) (11,073,465) (276,709) (9,166,384) (70,223) 26 26 Note The above consolidated statement of financial position should be read in conjunction with the accompanying notes. the accompanying with in conjunction read be should financial of position statement consolidated above The TURKCELL İLETİŞİM HİZMETLERİ A.Ş. HİZMETLERİ İLETİŞİM TURKCELL FOR THE YEAR ENDED 31 DECEMBER 2018 DECEMBER 31 ENDED YEAR THE FOR CONSOLIDATED STATEMENT OF PROFIT OR LOSS OR PROFIT OF STATEMENT CONSOLIDATED THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.) OTHERWISE UNLESS LIRAS TURKISH IN EXPRESSED ARE AND UNITS CURRENCY THOUSAND NEAREST THE Other expenses Other tax income before Profit expense tax Income operations continuing from profit for share per earnings Basic and diluted TL) (in full the Company of owners attributable to Operating profit Operating income Finance costs Finance costs finance Net investees accounted equity of loss of Share operations continuing from Profit the Company) of owners to (attributable operations discontinued from (Loss) the year for Profit to: is attributable the year for Profit the Company of Owners interests Non-controlling Total the of owners attributable to profit for share per earnings Basic and diluted TL) (in full Company discontinued from /(loss) profit for share per earnings/(losses) Basic and diluted TL) (in full the Company of owners attributable to operations Selling and marketing expenses Selling and marketing expenses Administrative assets on financial and contract losses impairment Net Revenue financial services from Revenue revenue Total revenue of Cost financial services from revenue of Cost revenue of cost Total profit Gross financial services from profit Gross profit gross Total income Other (ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO TO OFF ROUNDED BEEN HAVE NOTES AND STATEMENTS FINANCIAL CONSOLIDATED THE IN DISCLOSED AMOUNTS (ALL 162 TURKCELL ANNUAL REPORT 2018

TURKCELL İLETİŞİM HİZMETLERİ A.Ş. CONSOLIDATED STATEMENT OF PROFIT OR LOSS FOR THE YEAR ENDED 31 DECEMBER 2018

(ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.)

Note 2018 2017 2016 Profit for the year 2,177,335 2,037,759 1,543,803

Other comprehensive income/(expense):

Items that will not be reclassified to profit or loss: Remeasurements of employee termination benefits 12,699 (3,738) (34,532) Income tax relating to remeasurements of employee termination benefits (2,794) 748 7,066 9,905 (2,990) (27,466)

Items that may be reclassified to profit or loss: Exchange differences on translation of foreign operations 424,817 27,959 63,920 Exchange differences arising from discontinued operations 425,371 72,190 154,552 Cash flow hedges – effective portion of changes in fair value 630,191 - - Cash flow hedges – reclassified to profit or loss 34 (611,035) - - Cost of hedging reserve – changes in fair value (390,267) - - Cost of hedging reserve – reclassified to profit or loss 42,665 - - Income tax relating to these items (154,409) (107,299) (87,381) -Income tax relating to exchange differences (226,667) (107,299) (87,381) -Income tax relating to cash flow hedges 34 72,258 - - 367,333 (7,150) 131,091 Other comprehensive income/(loss) for the year, net of income tax 377,238 (10,140) 103,625 Total comprehensive income for the year 2,554,573 2,027,619 1,647,428

Total comprehensive income for the year is attributable to: Owners of the Company 2,398,930 1,968,102 1,594,465 Non-controlling interests 155,643 59,517 52,963 Total 2,554,573 2,027,619 1,647,428

Total comprehensive income for the year attributable to owners of the Company arises from: Continuing operations 1,957,396 1,903,109 1,496,209 Discontinued operations 441,534 64,993 98,256 Total 2,398,930 1,968,102 1,594,465

The above consolidated statement of financial position should be read in conjunction with the accompanying notes. F4

SECTORAL AND FINANCIAL INFORMATION The above consolidated statement of financial position should be read in conjunction with the accompanying notes. accompanying the with conjunction in read be should position financial of statement consolidated above The F5

163

Included in Reserves in the consolidated statement of financial position. financial of statement consolidated the in Reserves in Included

(*)

3,7)1,5,1 59174118016,053,554 131,810 15,921,744 11,359,317 (34,871) 1,333,995 (810,192) 14,942 (271,130) 2,235,922 269 35,026 (141,534) 2,200,000 2018 December 31 at Balance

Dividends paid (Note 25) (Note paid Dividends 19000 18061 5,7)(1,949,379) (58,778) (1,890,601) (1,900,000) ------9,399 -

Disposal of subsidiaries of Disposal 2,8)(20,982) (20,982) ------

Acquisition of treasury shares (-) (Note 25) (Note (-) shares treasury of Acquisition (94,620) - (94,620) ------(94,620) -

Transfer to legal reserves legal to Transfer - - - (592,898) - - - - - 592,898 - - - -

Total comprehensive income/(loss) comprehensive Total ,0 ,2,6 ,9,3 5,4 2,554,573 155,643 2,398,930 2,021,065 9,905 894,295 (270,147) 14,942 (271,130) - - - - -

Total other comprehensive income, net of income tax income of net income, comprehensive other Total 67 377,238 (627) 377,865 - 9,905 894,295 (270,147) 14,942 (271,130) - - - - -

Change in cash flow hedge reserve hedge flow cash in Change (256,188) - (256,188) - - - - 14,942 (271,130) - - - - -

Remeasurements of employee termination benefits termination employee of Remeasurements 9,905 - 9,905 - 9,905 ------

Foreign currency translation differences translation currency Foreign 67 623,521 (627) 624,148 - - 894,295 (270,147) ------

ANNUAL REPORT 2018 REPORT ANNUAL

Other comprehensive income/(loss): comprehensive Other

Profit for the period the for Profit ,2,6 ,2,6 5,7 2,177,335 156,270 2,021,065 2,021,065 ------

Total comprehensive income/(loss): comprehensive Total

(44,776) 11,831,150 11,831,150 (44,776) 439,700 (540,045) - - 1,643,024 269 35,026 (56,313) 2,200,000 2018 January 1 at equity total Restated 55, 15,508,035 15,563,962 15,563,962 927

Changes in accounting policy (Note 2) (Note policy accounting in Changes 518,874 518,874 - 518,874 518,874 ------

55,927 15,045,088 15,045,088 55,927 14,989,161 11,312,276 (44,776) 439,700 (540,045) - - 1,643,024 269 35,026 (56,313) 2,200,000

TURKCELL 2018 January 1 at Balance

55,927 15,045,088 15,045,088 55,927 14,989,161 11,312,276 (44,776) 439,700 (540,045) - - 1,643,024 269 35,026 (56,313) 2,200,000 2017 December 31 at Balance

Dividends paid Dividends (3,050,928) (3,050,928) (60,222) (2,990,706) (3,000,000) ------9,294 -

Transfers - - - (447,820) - - - - - 447,820 - - - -

Total comprehensive income for the year the for income comprehensive Total 59,517 2,027,619 2,027,619 59,517 1,968,102 1,979,129 (2,990) 37,811 (45,848) ------

income tax income (10,140) 887 (11,027) - (2,990) 37,811 (45,848) ------

Other comprehensive loss for the year, net of of net year, the for loss comprehensive Other

Remeasurements of employee termination benefits benefits termination employee of Remeasurements (2,990) (2,990) - (2,990) - (2,990) ------

Foreign currency translation differences translation currency Foreign (7,150) (7,150) 887 (8,037) - - 37,811 (45,848) ------

Other comprehensive income/(loss): comprehensive Other

Profit for the year the for Profit 1,979,129 1,979,129 58,630 2,037,759 2,037,759 58,630 1,979,129 1,979,129 ------

Total comprehensive income/(loss): comprehensive Total

4,8)1,8,6 601755,3 16,068,397 56,632 16,011,765 12,780,967 (41,786) 401,889 (494,197) - - 1,195,204 269 35,026 (65,607) 2,200,000 2017 January 1 at Balance

4,8)1,8,6 601755,3 16,068,397 56,632 16,011,765 12,780,967 (41,786) 401,889 (494,197) - - 1,195,204 269 35,026 (65,607) 2,200,000 2016 December 31 at Balance

Acquisition of treasury shares (-) (Note 25) (Note (-) shares treasury of Acquisition (65,607) - (65,607) ------(65,607) -

Transactions with non-controlling interests non-controlling with Transactions 900 (9,000) (9,000) ------

Change in fair value of non-controlling interests non-controlling of value fair in Change 128,090 - 128,090 - - - 128,090 ------

Dividends paid Dividends 5,1)(51,416) (51,416) ------

Transfers Transfers - - - 16,148 - - - - - (16,148) - - - -

Total comprehensive income for the year the for income comprehensive Total 2,6)14208154455,6 1,647,428 52,963 1,594,465 1,492,088 (27,466) 263,065 (133,222) ------

income tax income 1322 263,065 (133,222) ------,4 103,625 1,248 102,377 - (27,466)

Other comprehensive income for the year, net of of net year, the for income comprehensive Other

Remeasurements of employee termination benefits benefits termination employee of Remeasurements (27,466) - (27,466) - (27,466) ------

Foreign currency translation differences translation currency Foreign 1322 263,065 (133,222) ------131,091 1,248 129,843 - -

Other comprehensive income/(loss): comprehensive Other

Profit for the year the for Profit ,9,8 1,492,088 1,492,088 ------1751,543,803 51,715

Total comprehensive income/(loss): comprehensive Total

Balance at 1 January 2016 January 1 at Balance 6 1,211,352 269 35,026 - 2,200,000 1,2)1,7,3 434876,8 14,418,902 64,085 14,354,817 11,272,731 (14,320) 138,824 (489,065) - -

Reeserve Reeserve premium capital shares capital option option reserve hedging reserve Total equity Total interests Total earnings benefit reserve

(*) (*) (*)

Legal Legal Share paid-in Treasury Share interest put put interest of Cost Hedging controlling controlling Retained termination translation

Additional Additional non-controlling non-controlling Non- employee of currency

Reserve for Reserve Remeasurements Remeasurements Foreign

THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.) OTHERWISE UNLESS LIRAS TURKISH IN EXPRESSED ARE AND UNITS CURRENCY THOUSAND NEAREST THE

(ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO TO OFF ROUNDED BEEN HAVE NOTES AND STATEMENTS FINANCIAL CONSOLIDATED THE IN DISCLOSED AMOUNTS (ALL

FOR THE YEAR ENDED 31 DECEMBER 2018 DECEMBER 31 ENDED YEAR THE FOR

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY IN CHANGES OF STATEMENT CONSOLIDATED TURKCELL İLETİŞİM HİZMETLERİ A.Ş. HİZMETLERİ İLETİŞİM TURKCELL 164 TURKCELL ANNUAL REPORT 2018

TURKCELL İLETİŞİM HİZMETLERİ A.Ş. CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2018

(ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.)

Note 2018 2017 2016 Cash flows from operating activities: Profit before income tax from Continuing operations 2,177,335 2,037,759 1,585,967 Discontinued operations - - (42,164) Profit before income tax including discontinued operations 2,177,335 2,037,759 1,543,803 Adjustments for: Depreciation and impairment of property, plant and equipment and investment properties 11-14 1,894,445 1,501,579 1,281,539 Amortization of intangible assets 12 2,393,529 1,095,401 921,812 Net finance (income)/expense 983,881 165,387 (117,598) Fair value adjustments to derivatives (1,719,610) (562,562) (383,452) Income tax expense 9 495,481 571,758 423,160 Gain on sale of property, plant and equipment (43,727) (33,837) (25,010) Unrealized foreign exchange losses on operating assets 2,954,304 966,340 545,287 Provisions 796,520 980,040 197,543 Share of profits of discontinued operations - - 42,164 Share of equity accounted investees 87 - - (Gain) on sale of subsidiary (110,308) - - Deferred revenue 30 54,391 131,486 (20,350) 9,876,328 6,853,351 4,408,898 Change in operating assets/liabilities Change in trade receivables 19 273,110 613,404 1,197,053 Change in due from related parties 38 (5,870) 1,107 7,514 Change in receivables from financial services 20 (69,991) (1,931,538) (2,396,372) Change in inventories 22 (76,883) 27,871 (62,090) Change in other current assets 23 53,957 (198,268) 643,444 Change in other non-current assets 17 142,133 15,012 78,770 Change in due to related parties 38 40,072 (4,099) 4,302 Change in trade and other payables 33 (501,980) (507,043) (2,733,901) Change in other non-current liabilities 27 (242,384) (82,018) (14,477) Change in employee benefit obligations 29 (32,764) (18,627) 15,151 Change in short term contract asset 21 (711,928) - - Change in long term contract asset 21 (3,513) - - Change in short term contract liability 31 255,756 - - Change in long term contract liability 31 131,598 - - Changes in other working capital (981,764) (265,518) 29,286 Cash generated from operations 8,145,877 4,503,634 1,177,578

Interest paid (1,658,308) (909,881) (434,521) Income tax paid (657,715) (492,487) (135,920) Net cash inflow from operating activities 5,829,854 3,101,266 607,137

Cash flows from investing activities: Acquisition of property, plant and equipment 11 (2,960,648) (2,937,195) (2,572,401) Acquisition of intangible assets 12 (2,264,912) (1,172,847) (855,097) Proceeds from sale of property, plant and equipment 103,864 58,740 49,639 Proceeds from advances given for acquisition of property, plant and equipment (204,817) 205,580 (209,686) Contribution of increase of share capital in joint ventures/associates (19,500) - - Proceeds from sale of subsidiary 118,528 - - Payments for held to maturity investment - (11,992) - Payment for financial asset at fair value through profit or loss 2,577 - - Payment for financial asset at fair value through other comprehensive income (42,454) - - Interest received 731,793 553,066 610,837 Net cash outflow from investing activities (4,535,569) (3,304,648) (2,976,708)

Cash flows from financing activities: Dividends received for treasury share 9,399 - - Capital decrease in subsidiaries - - (9,000) Proceeds from derivative instruments 1,054,345 - - Repayments of derivative instruments (710,522) - - Proceeds from issues of loans and borrowings 44,341,070 24,102,643 9,381,318 Proceeds from issues of bonds 2,188,313 209,808 167,500 Repayment of borrowings (43,987,127) (22,265,088) (4,932,768) Repayment of bonds (191,312) (379,660) - Dividends paid to shareholders (1,900,000) (2,990,706) - Dividends paid to non-controlling interest in subsidiaries (58,778) (60,222) (51,416) Acquisition of treasury shares (94,620) - (65,607) (Increase)/decrease in cash collateral related to loans (20,272) (183,518) 349,004 Payments of lease liabilities (1,164,879) - - Net cash (outflow)/inflow from financing activities (534,383) (1,566,743) 4,839,031

Net (decrease)/increase in cash and cash equivalents 759,902 (1,770,125) 2,469,460

Cash and cash equivalents at 1 January 4,712,333 6,052,352 2,918,796

Effects of exchange rate changes on cash and cash equivalents 1,947,004 430,106 664,096

Cash and cash equivalents at 31 December 24 7,419,239 4,712,333 6,052,352

The above consolidated statement of financial position should be read in conjunction with the accompanying notes. F6 SECTORAL AND FINANCIAL INFORMATION 1 7 7 3 3 6 6 6 9 8 4 0 6 71 12 16 19 19 7 7 9 7 F7 6 77 7 8 72 79 8 63 75 75 75 66 86 53 56 59 85 55 55 84 84 48 54 7 80 80 1 50 1 1 1 106 106 165 Page ANNUAL REPORT 2018 REPORT ANNUAL TURKCELL

Derivative financial instruments Derivative Related parties Related Loans and borrowings Loans Employee benefit Employee Earnings per share Earnings per Other current assets assets current Other Provisions Inventory Commitments and contingencies Commitments Other non-current liabilities non-current Other Expenses by nature by Expenses Investment property Investment Deferred tax assets and liabilities assets tax Deferred Impairment of assets of Impairment liabilities Contract Contract assets assets Contract Other non-current assets non-current Other Segment information Segment Revenue Finance income and costs income Finance Income tax expense tax Income Other income and expenses income Other Financial risk management Basis of preparation and summary of significant accounting policies accounting significant and summary of preparation Basis of Employee benefit expenses benefit Employee 3. Trade and other payables and other Trade 3.

1. Property, plant and equipment plant Property, 1. TURKCELL İLETİŞİM HİZMETLERİ A.Ş. HİZMETLERİ İLETİŞİM TURKCELL AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018 DECEMBER 31 ENDED YEAR THE FOR AND AT AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL CONSOLIDATED THE TO NOTES THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.) STATED.) OTHERWISE UNLESS LIRAS TURKISH IN EXPRESSED ARE AND UNITS CURRENCY THOUSAND NEAREST THE 37. 38. 29. 31. 32. 34. 15. Right of use assets use of Right 15. 3 Financial instruments 35. obligations and purchase Guarantees 36. information flow Cash 40. events Subsequent 41. 4. 5. 6. 8. 9. 14. operation sale discontinued for held Asset 16. 18. revenue and accrued receivables Trade 19. financial services from Receivables 20. 21. 22. 23. 26. 28. revenue Deferred 30. Subsidiaries 39.

Notes to the consolidated financial statements consolidated the to Notes entity Reporting 1. 2. 3. 7. 10. 1 assets Intangible 12. 13. 17. equivalents and cash Cash 24. Equity 25. 27. (ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO TO OFF ROUNDED BEEN HAVE NOTES AND STATEMENTS FINANCIAL CONSOLIDATED THE IN DISCLOSED AMOUNTS (ALL 166 TURKCELL ANNUAL REPORT 2018

TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018

(ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.)

1. Reporting entity

Turkcell Iletisim Hizmetleri Anonim Sirketi (the “Company”) was incorporated in Turkey on 5 October 1993 and commenced its operations in 1994. The address of the Company’s registered office is Maltepe Aydinevler Mahallesi Inonu Caddesi No: 20, Kucukyali Ofispark/ Istanbul. It is engaged in establishing and operating a Global System for Mobile Communications (“GSM”) network in Turkey and regional states.

In April 1998, the Company signed a license agreement (the “2G License”) with the Ministry of Transport and Infrastructure of Turkey (the “Turkish Ministry”), under which it was granted a 25 year GSM license in exchange for a license fee of $500,000. The License permits the Company to operate as a stand-alone GSM operator and releases it from some of the operating constraints in the Revenue Sharing Agreement, which was in effect prior to the 2G License. Under 2G licence, the Company pays in cash the Undersecretariat of the Treasury (the “Turkish Treasury”) a monthly tax levy namely ‘treasury share’ equal to 15% of the Company’s gross revenue from Turkish GSM operations. The Company continues to build and operate its GSM network and is authorized to, among other things, set its own tariffs within certain limits, charge peak and off-peak rates, offer a variety of service and pricing packages, issue invoices directly to subscribers, collect payments and deal directly with subscribers. Following the 3G tender held by the Information Technologies and Communications Authority (“ICTA”) regarding the authorization for providing IMT-2000/UMTS services and infrastructure, the Company has been granted the A-Type license (the “3G License”) providing the widest frequency band, at a consideration of EUR 358,000 (excluding Value Added Tax (“VAT”)). Payment of the 3G license was made in cash, following the necessary approvals, on 30 April 2009.

On 26 August 2015, “Authorization Tender on IMT Services and Infrastructure” publicly known as 4.5G license tender, was held by the ICTA and the Company was awarded with a total frequency band of 172.4 MHz for 13 years. The tender price is EUR 1,623,460 (excluding VAT of 18%). IMT authorization period expires on 30 April 2029 and operators were able to commence service delivery for 4.5G starting from 1 April 2016. 2x1.4 MHz frequency band in 900MHz spectrum and 2 units of 2x5 MHz frequency bands in 2100 MHz spectrum were commenced on 1 December 2015, while remaining packages were commenced on 1 April 2016. For details please refer to Note 12.

The Company is obliged to pay the ICTA a monthly treasury share equal to 90% of 15% of gross revenue and 10% is paid for a universal service fund. In addition, the Company pays annual contributions in an amount equal to 0.35% of net revenue to the ICTA’s expenses and 5% of net revenue to ICTA as a frequency fee (TRx).

The Company’s parent is Turkcell Holding A.S., which holds 51% of the Company’s shares as of 31 December 2018. The main shareholders of Turkcell Holding A.S. are TeliaSonera Finland Oyj (Sonera), Cukurova Group and Alfa Telecom Turkey Limited (“Alfa”) according to the information obtained from public sources.

After failure to comply with corporate governance principles for election of independent board members, the CMB appointed 3 independent board members and 4 members, of which 2 members were chosen from the independent nominees list submitted by Sonera, as board members who satisfy the independence criteria in 2013. On 29 March 2018, in accordance with the shareholder proposal at the Ordinary General Assembly, 3 new members were elected to serve for 3 years instead of 3 members who are appointed by the CMB and meet the independence criteria. Since a member of board of directors resigned from his assignment as of 11 July 2018, Turkcell’s Board of Directors consists of a total of 6 non-executive members including 3 independent members as of 31 December 2018.

F8 SECTORAL AND FINANCIAL INFORMATION F9 167 ANNUAL REPORT 2018 REPORT ANNUAL TURKCELL

ative financial instruments ative

onsideration payable in relation to the acquisition of Belarusian Telecom of the acquisition to in relation payable onsideration Deriv C

-

- TURKCELL İLETİŞİM HİZMETLERİ A.Ş. HİZMETLERİ İLETİŞİM TURKCELL AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018 DECEMBER 31 ENDED YEAR THE FOR AND AT AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL CONSOLIDATED THE TO NOTES THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.) STATED.) OTHERWISE UNLESS LIRAS TURKISH IN EXPRESSED ARE AND UNITS CURRENCY THOUSAND NEAREST THE

1. Reporting entity (continued) entity Reporting 1. and its the Company comprise 2018 31 December ended the year as at and for the Company of financial statements consolidated The the Company, of Subsidiaries venture. joint and a associates in interest Group’s the and “Group”) the as to referred (together subsidiaries and associate’s subsidiaries’ its of and each Company’s The 39. in Note disclosed are operations of nature and their locations their 2018. 31 December ended the year as at and for prepared are financial statements policies accounting significant of and summary preparation Basis of 2. to financial statements consolidated these of in the preparation adopted policies accounting the significant of a list provides note This all applied to the years consistently been have policies These below. notes other in the disclosed been already not have they the extent A.Ş. Hizmetleri İletişim Turkcell of consisting the Group for are financial statements consolidated The stated. otherwise unless presented, venture. joint and a in associates interest and the Group’s subsidiaries and its IFRS with Compliance (a) Financial Reporting International with in accordance prepared been have the Group of financial statements consolidated The under reporting companies applicable IC”) to (“IFRS Committee Interpretations the IFRS by issued and interpretations (“IFRS”) Standards (“IASB”). Board Standards Accounting the International by as issued IFRS with comply financial The statements IFRS. and financial year the previous of those with consistent are computation of and methods presentation policies, accounting The stated. otherwise unless period, reporting corresponding the year time for the first for Customers” with Contracts from “Revenue 15, and IFRS “Financial Instruments” 9, IFRS adopted Group The 1 commencing the year time for the first for “Leases” 16, IFRS adopt early to also elected Group The 1 January 2018. commencing January 2018. 2.ae.i. in Note explained are financial statements 16 on the consolidated 15 and IFRS IFRS 9, IFRS of adoption of impacts The as at and financial statements consolidated The the financial statements. amend and reissue to has the power Assembly General The 2018. on 15 February Directors of the Board issue by for authorized were 2017 31 December ended the year for of the Board issue by for authorized were 2018 31 December ended the year and for as at financial statements consolidated The its inclusion in for the originalof authorisation date after events subsequent reflect to and updated 2019 on 20 February Directors 20-F. on Form annual report convention cost Historical (b) the for and reclassifications adjustments with records, on the statutory based are financial statements consolidated accompanying The on a historical prepared been have financial statements The the IASB. by as issued IFRS with in accordance presentation fair of purpose value: at fair measured the following for except basis, cost (ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO TO OFF ROUNDED BEEN HAVE NOTES AND STATEMENTS FINANCIAL CONSOLIDATED THE IN DISCLOSED AMOUNTS (ALL 168 TURKCELL ANNUAL REPORT 2018

TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018

(ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.)

2. Basis of preparation and summary of significant accounting policies (continued)

(c) Functional and presentation currency

(i) Transactions and balances

Transactions denominated in foreign currencies are translated into the functional currency using the exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated into the functional currency using the exchange rates at that date.

Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are translated to the functional currency using the exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss. For example, translation differences on non-monetary assets and liabilities such as equities held at fair value through profit or loss are recognised in profit or loss as part of the fair value gain or loss and translation differences on non-monetary assets such as equities classified as at fair value through other comprehensive income are recognised in other comprehensive income.

Foreign exchange gains and losses are recognized in profit or loss, except:

• For capitalized foreign exchange differences relating to borrowings to the extent that they are regarded as an adjustment to interest costs eligible for capitalization.

Foreign exchange differences are deferred in equity if they relate to qualifying cash flow hedges and qualifying net investment hedges or are attributable to part of the net investment in a foreign operation. Foreign exchange gains and losses are presented in the statement of profit or loss on a net basis within finance income or finance costs.

(ii) Foreign operations

The results and financial position of foreign operations (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

• assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet • income and expenses for each statement of profit or loss and statement of comprehensive income are translated at average monthly exchange rates (unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions), and • all resulting exchange differences are recognized in other comprehensive income and accumulated in the foreign currency translation reserve, in equity.

On consolidation, exchange differences arising from the translation of any net investment in foreign entities, and of borrowings and other financial instruments designated as hedges of such investments, are recognized in other comprehensive income. When a foreign operation is sold or any borrowings forming part of the net investment are repaid, the associated exchange differences are reclassified to profit or loss, as part of the gain or loss on sale.

Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the closing rate.

F10

SECTORAL AND FINANCIAL INFORMATION

F11 169 ANNUAL REPORT 2018 REPORT ANNUAL TURKCELL TURKCELL İLETİŞİM HİZMETLERİ A.Ş. HİZMETLERİ İLETİŞİM TURKCELL AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018 DECEMBER 31 ENDED YEAR THE FOR AND AT AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL CONSOLIDATED THE TO NOTES THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.) STATED.) OTHERWISE UNLESS LIRAS TURKISH IN EXPRESSED ARE AND UNITS CURRENCY THOUSAND NEAREST THE 2. Basis of preparation and summary of significant accounting policies (continued) policies accounting significant and summary of preparation Basis of 2. and judgments estimates of Use (d) exercise to also needs Management estimates. accounting of the use requires financial statements the consolidated of preparation The estimates. these from may differ results Actual policies. accounting the Group’s in applying judgement in the recognized are estimates accounting to Revisions on an ongoing basis. reviewed are and underlying assumptions Estimates affected. periods future and in any revised are estimates in which the period the most that have policies in applying accounting judgments and critical uncertainty estimation, of areas about significant Information below: described are financial statements in the consolidated recognized the amounts on effect significant receivables doubtful for Allowance subscribers the Group’s the inability of from resulting losses estimated for receivables doubtful for an allowance maintains Group The receivables, trade of recoverability of on the likelihood the allowance bases Group The payments. required make to and customers or one of as a result impairment of evidence objective was when there receivables; and other financial services from receivables future on the estimated impact had an event and that loss event a loss asset of the initial recognition after that occurred events more reviewed. periodically is The allowance reliablyestimated. be could that of financial assets group or of the financial asset flows cash the of percentage as a specified calculated balances, receivable of in respect is determined expenses to charged allowance The becomes as the aging the receivable of increasing the allowance of the percentage with aging in each balance group, outstanding older. assets of lives and useful Capitalization and regularly is acquired at the time the asset management by estimated are assets Group’s the of values and residual lives useful The This the Group. to utility expected the assets’ of terms in assets its of life useful defines Group The appropriateness. for reviewed also follows the Group an asset, of life the useful In determining assets. similar with the Group of on the experience is based judgment the of lives useful The a change in the market. from improvements or arising on changes obsolescence commercial and/or technical agreements. the license of on the duration based are licenses telecommunication period license the In addition, 2008. on 26 August acquired licenses services UMTS and special GSM of has 10 years Belarusian Telecom financial on the consolidated amortization The fee. an insignificant for an additional 10 years for and signed committed has been the 2016, 1 March from Starting extended. be would the license of that the duration on the assumption recognized has been statements period. an unlimited issue and for on its decision authority’s the licensing of the date from is valid license revenue of presentation net versus Gross suppliers are with and costs customers from revenue services, of rendering or goods as principal in sale of acts the Group When and costs customer from revenue services, of rendering or goods in sale of as agent acts the Group When basis. on a gross reported agent principal as is acting or the Group Whether earned. margin the net representing basis, on a net reported suppliers are with partners; business and its the Group between the agreement of substance and legal form both of analysis on management’s depends flows. cash liabilities or assets, reported impact do not but and costs revenue reported of the amount impact such judgements (ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO TO OFF ROUNDED BEEN HAVE NOTES AND STATEMENTS FINANCIAL CONSOLIDATED THE IN DISCLOSED AMOUNTS (ALL 170 TURKCELL ANNUAL REPORT 2018

TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018

(ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.)

2. Basis of preparation and summary of significant accounting policies (continued)

(d) Use of estimates and judgments (continued)

Contracted handset sales

The Company, the distributors and dealers offer joint campaigns to the subscribers which may include the sale of device by the dealer and/or distributor and a communication service to be provided by the Company. The Company does not recognize any revenue for the device in these transactions by considering the below factors:

- the Company is not primary obligor for the sale of handset, - the Company does not have control over the sale prices of handsets, - the Company has no inventory risk, - the Company has no responsibility on technical compability of equipment delivered to customers - the responsibility after sale belongs to the distributor and - the Company does not make any modification on the equipment.

Multiple performance obligations and price allocation

In arrangements which include multiple elements where the Group acts as principal, the Group considers these bundled elements involve consideration in the form of a fixed fee or a fixed fee coupled with a continuing payment stream. A good or service is distinct if both of the following criteria are met:

• the good or service is capable of being distinct • the promise to transfer the good or service is distinct within the context of the contract.

The arrangement consideration is allocated to each performance obligation identified in the contract on a relative stand-alone selling prices. If an element of a transaction is not a distinct, then it is accounted for as an integral part of the remaining elements of the transaction.

Income taxes

The calculation of income taxes involves a degree of estimation and judgment in respect of certain items whose tax treatment cannot be finally determined until resolution has been reached with the relevant tax authority or, as appropriate, through formal legal process.

As part of the process of preparing the consolidated financial statements, the Group is required to estimate the income taxes in each of the jurisdictions and countries in which they operate. This process involves estimating the actual current tax exposure together with assessing temporary differences resulting from differing treatment of items, such as deferred revenue and reserves for tax and accounting purposes. The Group management assesses the likelihood that the deferred tax assets will be recovered from future taxable income and to the extent the recovery is not considered probable the deferred asset is adjusted accordingly.

The recognition of deferred tax assets is based upon whether it is probable that future taxable profits will be available, against which the temporary differences can be utilized. Recognition, therefore, involves judgment regarding the future financial performance of the particular legal entity in which the deferred tax asset has been recognized.

F12

SECTORAL AND FINANCIAL INFORMATION

171 F13 ANNUAL REPORT 2018 REPORT ANNUAL TURKCELL TURKCELL İLETİŞİM HİZMETLERİ A.Ş. HİZMETLERİ İLETİŞİM TURKCELL AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018 DECEMBER 31 ENDED YEAR THE FOR AND AT AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL CONSOLIDATED THE TO NOTES THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.) STATED.) OTHERWISE UNLESS LIRAS TURKISH IN EXPRESSED ARE AND UNITS CURRENCY THOUSAND NEAREST THE 2. Basis of preparation and summary of significant accounting policies (continued) policies accounting significant and summary of preparation Basis of 2. (continued) and judgments estimates of Use (d) assets liabilities and contingent contingent Provisions, and as a plaintiff (both and legal proceedings investigations of a number in is involved the Group 37, in Note and disclosed detailed As by evaluated are and litigations investigations these All of business. of course arising in the ordinary the year during as a defendant) accounted or and disclosed Assets” Liabilities and Contingent Contingent 37 “Provisions, IAS with in accordance Management the Group Group from differ might and litigations investigations these of outcome or results Future financial statements. in the consolidated and criteria recognition that appropriate believes Management the Group date, at the reporting As expectations. Management’s in is disclosed information and that sufficient assets liabilities and contingent contingent provisions, applied to are basis measurement and circumstances. conditions current considering by timing and amount nature, their understand enable to users to the notes review Annual impairment in impairment any suffered have use for available yet not asset and intangible goodwill annually whether tests Company The at reviewed are assets nonfinancial Company’s of amounts the carrying Additionally, Assets”. of 36 “Impairment IAS with accordance is amount recoverable the assets exists indication If any impairment. of indication is an there whether determine to date reporting each 13. in Note as discussed estimates of the use require calculations These calculations. disposal of cost less value on fair based estimated is there 2018, 31 December at As TL 19,897. to amounting region in Crimea assets its has impaired the Company 2014, at 31 December As TL 10,872). 2017: (31 December regions and Donetsk in Luhansk on assets no impairment on the subsidiaries effect an adverse have could in Belarus and Ukraine changes and economic political future potential and Current by that will taken be measures on the economic depends Belarus and Ukraine of stability economic The countries. in these operating beyond are processes These countries. in these processes and political administrative legal, the of and the outcomes the governments countries. in these established the subsidiaries of the control to related risks rate interest and currency foreign to may subject Belarus and Ukraine within operating the subsidiaries Consequently, necessarily that may not insolvencies, and personal in corporate liquidity and increase power, purchasing the subscriber’s borrowings, estimations management’s the Company contain financial statements consolidated accompanying The markets. in other observable be Belarus of situation economic future The in Belarus and Ukraine. operating subsidiaries its of and financial positions on the economic that their believes management the Group’s 2018, December at 31 As expectations. the Company’s from differ might and Ukraine in the businesses subsidiaries’ these of support the sustainability to measures in taking all the necessary is appropriate approach assessments. in the impairment used the financials projections of and the achievability circumstances current processes and valuation measurements value Fair value the fair In estimating purposes. financial reporting for value at fair measured and liabilities are assets the Company’s Some of not are 1 and 2 inputs Level Where is available. it the extent to data market-observable uses the Company a liability, or an asset of works management The necessary. if the valuation, perform to party qualified experts engage third can the Company available, about Information the model. to and inputs techniques valuation the appropriate establish to experts the qualified external with closely 35. in Note disclosed and liabilities are assets various of value the fair in determining used and inputs techniques the valuation (ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO TO OFF ROUNDED BEEN HAVE NOTES AND STATEMENTS FINANCIAL CONSOLIDATED THE IN DISCLOSED AMOUNTS (ALL 172 TURKCELL ANNUAL REPORT 2018

TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018

(ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.)

2. Basis of preparation and summary of significant accounting policies (continued)

(e) Changes in accounting policies

Other than the adoption of the new and revised standards as explained in Note 2(ae), the Group did not make any significant changes to its accounting policies during the current year.

As at 31 December 2018, interest expense/income and fair value of derivative financial instruments are shown netted off on consolidated statement of profit or loss (Note 8). The Company has presented financials of 31 December 2017 and 2016 accordingly. This classification has no impact on operating profit, profit for the year and cash flow statement.

Interest expense and income for derivative financial instruments and option premium charges are shown net of under finance income (Note 8).

(f) Changes in accounting estimates

If the application of changes in the accounting estimates affects the financial results of a specific period, the changes in the accounting estimates are applied in that specific period, if they affect the financial results of current and following periods; the accounting estimate is applied prospectively in the period in which such change is made. A change in the measurement basis applied is a change in an accounting policy, and is not a change in an accounting estimate.

The Company does not have significant changes in accounting estimates during the year.

(g) Comparative information and revision of prior period financial statements

The consolidated financial statements of the Group have been prepared consistent with prior periods.

F14 SECTORAL AND FINANCIAL INFORMATION F15 173 ANNUAL REPORT 2018 REPORT ANNUAL TURKCELL

air value of any asset or liability resulting from a contingent consideration arrangement, and arrangement, consideration a contingent from liability or resulting asset any of value air in the subsidiary. interest equity pre-existing any of value air air value of the assets transferred the assets of value air

quity interests issued by the Group by issued interests quity iabilities incurred to the former owners of the acquired business the acquired of owners the former to incurred iabilities l e the f the f the f

• • • • • TURKCELL İLETİŞİM HİZMETLERİ A.Ş. HİZMETLERİ İLETİŞİM TURKCELL AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018 DECEMBER 31 ENDED YEAR THE FOR AND AT AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL CONSOLIDATED THE TO NOTES THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.) STATED.) OTHERWISE UNLESS LIRAS TURKISH IN EXPRESSED ARE AND UNITS CURRENCY THOUSAND NEAREST THE Acquisition-related costs are expensed as incurred. expensed are costs Acquisition-related exceptions, limited with are, combination liabilities in a business assumed and liabilities and contingent acquired assets Identifiable date. at the acquisition values fair initially at their measured entity, in the acquired interest non-controlling any of amount transferred, the consideration of as the excess is measured Goodwill identifiable the net of value the fair over entity in the acquired interest held equity previously any of value fair and acquisition-date is the difference acquired, the business of assets identifiable the net of value than the fair less are amounts If those acquired. assets on entity in the acquired interest non-controlling any recognizes Group The purchase. as a bargain loss or in profit directly recognized net entity’s the acquired of share proportionate interest’s at the non-controlling or value at fair either basis an acquisition-by-acquisition assets. identifiable present their to discounted are the future in payable the amounts is deferred, consideration cash part of any of settlement Where at which a similar the rate being rate, borrowing incremental is the entity’s used rate discount The exchange. of as at the date value and conditions. terms comparable under financier an independent from obtained be could borrowing subsequently as a financial liability classified are Amounts a financial or liability. as equity either is classified consideration Contingent is not as equity classified consideration Contingent loss. or in profit recognized value in fair changes with value fair to remeasured comprehensive other through equity to as an adjustment is recorded at settlement loss gain or any Instead, remeasurement. to subject income. in interest held equity previously the acquirer’s of value carrying date the acquisition in stages, is achieved combination If the business in recognized are such remeasurement arising from gains losses or Any date. at the acquisition value fair to is remeasured the acquire loss. or profit 2. Basis of preparation and summary of significant accounting policies (continued) policies accounting significant and summary of preparation Basis of 2. accounting and equity consolidation of (h) Principles combinations (i) Business combination in a business transferred consideration The method. acquisition using the for accounted are combinations Business comprises: (ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO TO OFF ROUNDED BEEN HAVE NOTES AND STATEMENTS FINANCIAL CONSOLIDATED THE IN DISCLOSED AMOUNTS (ALL 174 TURKCELL ANNUAL REPORT 2018

TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018

(ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.)

2. Basis of preparation and summary of significant accounting policies (continued)

(h) Principles of consolidation and equity accounting (continued)

(ii) Subsidiaries

Subsidiaries are all entities over which the Group has control. The Group controls an entity when the group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.

The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above.

Intercompany transactions, balances and unrealized gains on transactions between group companies are eliminated. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the transferred asset.

Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated statement of profit or loss, statement of comprehensive income, statement of changes in equity and statement of financial position respectively.

Non -controlling interest has not been attributed to Belarus Telekom on the grounds that net assets of Belarus Telekom is negative, Belarus Telekom is financed solely by the Company and management’s assessment of relevant articles of the share purchase agreement with the non-controlling shareholder.

Turkcell Finansman A.Ş. (“Turkcell Finansman”) sold financial loans amounting to TL 87,589 to Aktif Yatırım Bankası A.Ş. Turkcell Varlık Finansmanı Fund (“Fund”) founded by Aktif Yatırım Bankası A.Ş. on 14 April 2017 in order to create funds for issuance of Asset Backed Securities (“ABS”) which will be issued by the Fund in a structure where Turkcell Finansman will act as the source organization. Turkcell Finansman similarly sold second financial loans amounting to TL 89,607 to Aktif Yatırım Bankası A.Ş. Turkcell Varlık Finansmanı Fund (“Fund”) founded by Aktif Yatırım Bankası A.Ş. on 22 August 2017, third financial loans amounting to TL 90,272 on 16 February 2018 and fourth financial loans amounting to TL 56,716 on 20 December 2018. Turkcell Finansman transferred its contractual rights to receive cash flows from the financial loans that have been sold to the Fund resulting in de-recognition of the related assets from its consolidated financial statements. Moreover, the Company did not consolidate the Fund since the activities of the Fund are not controlled by the Company and the Fund has been defined as a structured entity.

F16

SECTORAL AND FINANCIAL INFORMATION

F17 175 ANNUAL REPORT 2018 REPORT ANNUAL TURKCELL TURKCELL İLETİŞİM HİZMETLERİ A.Ş. HİZMETLERİ İLETİŞİM TURKCELL AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018 DECEMBER 31 ENDED YEAR THE FOR AND AT AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL CONSOLIDATED THE TO NOTES THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.) STATED.) OTHERWISE UNLESS LIRAS TURKISH IN EXPRESSED ARE AND UNITS CURRENCY THOUSAND NEAREST THE 2. Basis of preparation and summary of significant accounting policies (continued) policies accounting significant and summary of preparation Basis of 2. (continued) accounting and equity consolidation of (h) Principles interests (iii) in ownership Changes of owners equity with as transactions control of in a loss result that do not interests non-controlling with transactions treats Group The and non-controlling the controlling of amounts the carrying between in an adjustment results interest A change in ownership the Group. to the non-controlling of the adjustment the amount between difference Any subsidiary. in the interests relative their reflect to interests the Company. of owners attributable to equity within reserve in a separate is recognized received paid or consideration and any significant or control joint control, of a loss of because an investment for account equity or consolidate to ceases the Group When or in profit recognized carrying amount value the change in with fair its to remeasured is in the entity interest retained any influence, as an interest the retained for accounting subsequently of the purposes for amount the initial carrying becomes value fair This loss. in respect income comprehensive in other recognized previously amounts any In addition, financial or asset. venture joint associate, that amounts may mean This liabilities. or assets the related of disposed had directly the Group as if for accounted are that entity of loss. or profit to reclassified are income comprehensive in other recognized previously a only retained, is influence significant or control joint but is reduced associate an or venture in a joint interest If the ownership where loss or profit to reclassified are income comprehensive in other recognized previously the amounts of share proportionate appropriate. control common under combinations (iv) Business In a business 3. IFRS of the scope from excluded are control common under businesses or entities between combinations Business Any values. carrying at predecessor stated are entity the acquired and liabilities of assets control, common under combination at the entity the acquired and liabilities of the assets of value book and the aggregate given the consideration between difference entities both as if incorporated are and financial position results entity’s acquired The in equity. recognized is the transaction of date such where the Group, joined entity when either the date from using the results or combined, been had always and acquiree) (acquirer is later. a date interests non-controlling to relating shares over (v) Put option recognizes the Group interests, non-controlling held by subsidiary in an existing on shares the Group by is written option a put Where of the rewards and ownership risks If the put option. the reflect to amount the redemption of value a financial liability at the present the put between difference The is derecognized. interest the non-controlling Group, is attributable to option the put to relating shares 1 January 2009, after combinations business For in equity. is recognized derecognized interests liabilityoption and the non-controlling loss. or in profit recognized liability option the put are of value in the fair changes subsequent the fair between the difference from arises in equity included interests non-controlling to relating shares over option put for Reserve and the derecognized subsidiaries its one of in shares on non-controlling (“Fintur”) Holdings B.V. Fintur by written option the put of value option. that put to relating interests non-controlling (ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO TO OFF ROUNDED BEEN HAVE NOTES AND STATEMENTS FINANCIAL CONSOLIDATED THE IN DISCLOSED AMOUNTS (ALL 176 TURKCELL ANNUAL REPORT 2018

TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018

(ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.)

2. Basis of preparation and summary of significant accounting policies (continued)

(h) Principles of consolidation and equity accounting (continued)

(vi) Investments in associates and joint ventures

An associate is an entity over which the Group has significant influence, but not control or joint control. This is generally the case where the Group holds between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity method of accounting after initially being recognized at cost.

A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint arrangement. The results and assets and liabilities of joint ventures are incorporated in these consolidated financial statements using the equity method of accounting.

Under the equity method of accounting, an investment in an associate is initially recognized at cost and adjusted thereafter to recognize the Group’s share of the post-acquisition profits or losses of the investee in profit or loss, and the Group’s share of movements in other comprehensive income of the investee in other comprehensive income. Dividends received or receivable from associates are recognized as a reduction in the carrying amount of the investment.

When the Group’s share of losses in an equity-accounted investment equals or exceeds its interest in that entity, including any other unsecured long-term receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the other entity.

Unrealized gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in these entities. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of equity accounted investees have been changed where necessary to ensure consistency with the policies adopted by the Group.

On acquisition of an associate, any excess of the cost of the investment over the Group’s share of the net fair values of the associate’s identifiable assets and liabilities is recognized as goodwill, which is included in the carrying amount of the investment. Any excess of the Group’s share of the net fair value of the associate’s identifiable assets and liabilities over the cost of the investment is included as part of the Group’s share of the associate profit or loss in the period in which the investment is acquired.

The carrying amount of equity-accounted investments is tested for impairment in accordance with the policy described in (Note 16). The Group measures an associate that is classified as held for sale at the lower of its carrying amount at the date of classification as held for sale and fair value less costs of disposal. Equity accounting ceases once an associate is classified as held for sale.

(i) Financial instruments

(i) Classification

From 1 January 2018, the Group classifies its financial assets in the following measurement categories:

- those to be measured subsequently at fair value (either through OCI or through profit or loss), and - those to be measured at amortised cost.

The classification depends on the Group’s business model for managing the financial assets and the contractual terms of the cash flows.

For assets measured at fair value, gains and losses will either be recorded in profit or loss or OCI. For investments in equity instruments that are not held for trading, this will depend on whether the Group has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income (FVOCI).

The Group reclassifies debt investments when and only when its business model for managing those assets changes.

F18

SECTORAL AND FINANCIAL INFORMATION

177 F19 ANNUAL REPORT 2018 REPORT ANNUAL TURKCELL TURKCELL İLETİŞİM HİZMETLERİ A.Ş. HİZMETLERİ İLETİŞİM TURKCELL AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018 DECEMBER 31 ENDED YEAR THE FOR AND AT AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL CONSOLIDATED THE TO NOTES THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.) STATED.) OTHERWISE UNLESS LIRAS TURKISH IN EXPRESSED ARE AND UNITS CURRENCY THOUSAND NEAREST THE 2. Basis of preparation and summary of significant accounting policies (continued) policies accounting significant and summary of preparation Basis of 2. (continued) (i) Financial instruments and derecognition (ii) Recognition purchase to commits the Group on which the date date, on trade recognized are financial assets of and sales purchases way Regular or expired have the financial assets from flows cash receive to when the rights derecognized are Financial assets the asset. sell or ownership. of all and rewards the risks substantially has transferred and the Group transferred been have (iii) Measurement through value at fair not financial a of asset in the case plus, value fair at its financial a asset measures the Group initial recognition, At of costs Transaction the financial of asset. the acquisition attributable to directly that are costs transaction (FVPL), loss or profit loss. or in profit expensed are at FVPL carried financial assets solely are flows cash their whether when determining entirety in their considered are derivatives embedded with Financial assets principal and interest. of payment instruments Debt flow and the cash managing the asset for model business on the Group’s depends instruments debt of measurement Subsequent instruments: debt its classifies which the Group into categories measurement three are There the asset. of characteristics of payments solely represent cash flows those where flows cash contractual of collection held for that are Assets cost: - Amortised using income in finance is included financial assets these from income Interest cost. at amortised measured are principal interest and loss. or in profit directly is recognised arising on derecognition gain loss or Any method. rate interest the effective cash flows the assets’ where selling the financialfor assets, and flows cash contractual of collection held for that are Assets - FVOCI: OCI, through taken are amount in the carrying Movements at FVOCI. measured are principal and interest, of payments solely represent recognised which are gains and losses exchange and foreign income interest gains losses, or impairment of the recognition for except from in OCI is reclassified recognised previously gain loss or the cumulative is derecognised, the financial When asset loss. or in profit method. rate interest using the effective income in finance is included financial assets these from income Interest loss. or profit to equity instruments on a debt A gain loss or at FVPL. measured are FVOCI or cost amortised for the criteria meet that do not Assets - FVPL: arises. which it in in the period loss or in profit is recognised at FVPL measured that is subsequently instruments Equity fair present to has elected management the Group’s Where value. at fair investments all equity measures subsequently Group The or profit to gains and losses value fair of reclassification is no subsequent there in OCI, investments on equity gains and losses value as other loss or in profit recognised be to continue such investments Dividends from the investment. of the derecognition following loss is established. payments receive to right when the Group’s income losses Impairment as applicable. loss or profit of in the statement recognised are at FVPL financial assets of value in the fair Changes in fair changes other from separately reported not are at FVOCI measured investments on equity losses) impairment of reversal (and value. (ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO TO OFF ROUNDED BEEN HAVE NOTES AND STATEMENTS FINANCIAL CONSOLIDATED THE IN DISCLOSED AMOUNTS (ALL 178 TURKCELL ANNUAL REPORT 2018

TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018

(ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.)

2. Basis of preparation and summary of significant accounting policies (continued)

(i) Financial instruments (continued)

(iv) Impairment

From 1 January 2018, the Group assesses on a forward looking basis the expected credit losses associated with its debt instruments carried at amortised cost and FVOCI. The impairment methodology applied depends on whether there has been a significant increase in credit risk.

Loss allowances are measured on either the following bases.

• 12 month expected credit losses (ECLs): these are ECLs that result from possible default events within the 12 months after the reporting date; and • lifetime ECLs: these are ECLs that result from all possible default events over the expected life of a financial instrument.

The Group applies lifetime ECL measurement for all group companies except Turkcell Finansman A.S. which applies both 12 month and lifetime ECL (general approach).

(v) Derivatives and hedging activities

Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured to their fair value at the end of each reporting period.

Forward foreign exchange, interest rate and foreign exchange swaps (IRS, Cross Currency Swaps etc.) and option transaction fair values are calculated with market levels of interest rates and Central Bank of Republic of Turkey (CBRT) exchange rates via Bloomberg financial terminal. If market levels are not available for valuation date, fair value for forward contracts will be value of discounted future value of difference between contract price level and forward value of CBRT exchange rate with risk fee rates for the period. Interest rate and currency swaps will be valued with the difference of discounted cash flows of each leg of the swaps using risk free rates and CBRT exchange rates. Option transactions will be valued with option pricing models using risk free rates and CBRT exchange rates.

The accounting for subsequent changes in fair value depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. The group designates certain derivatives as hedges of a particular risk associated with the cash flows of recognised assets and liabilities and highly probable forecast transactions (cash flow hedges).

At inception of the hedge relationship, the Group documents the economic relationship between hedging instruments and hedged items including whether changes in the cash flows of the hedging instruments are expected to offset changes in the cash flows of hedged items. The Group documents its risk management objective and strategy for undertaking its hedge transactions.

Cash flow hedges that qualify for hedge accounting

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in the cash flow hedge reserve within equity. The gain or loss relating to the ineffective portion is recognised immediately in profit or loss.

Gains or losses relating to the effective portion of the change in intrinsic value of the options are recognised in the cash flow hedge reserve within equity. The changes in the time value of the options that relate to the hedged item (‘aligned time value’) are recognised within OCI in the costs of hedging reserve within equity.

Amounts accumulated in equity are reclassified in the periods when the hedged item affects profit or loss, as follows:

F20 SECTORAL AND FINANCIAL INFORMATION F21 179 ANNUAL REPORT 2018 REPORT ANNUAL TURKCELL

l assets at fair value through profit or loss, or profit through value at fair l assets o-maturity investments, and investments, o-maturity

ailable-for-sale financial assets. ailable-for-sale ans and receivables, av financia lo held-t

• • •

• TURKCELL İLETİŞİM HİZMETLERİ A.Ş. HİZMETLERİ İLETİŞİM TURKCELL AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018 DECEMBER 31 ENDED YEAR THE FOR AND AT AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL CONSOLIDATED THE TO NOTES THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.) STATED.) OTHERWISE UNLESS LIRAS TURKISH IN EXPRESSED ARE AND UNITS CURRENCY THOUSAND NEAREST THE The classification depended on the purpose for which the investments were acquired. Management determined the classification of of classification the determined Management acquired. were which the investments for on the purpose depended classification The at the end of this designation re-evaluated as held-to-maturity, classified assets of in the case and, recognition at initial investments its period. reporting each 2. Basis of preparation and summary of significant accounting policies (continued) policies accounting significant and summary of preparation Basis of 2. (continued) (i) Financial instruments (continued) and hedging activities (v) Derivatives (continued) accounting hedge for that qualify hedges flow Cash hedging gains and losses the deferred both a non-financial asset, of in the recognition results subsequently item the hedged - Where the asset. of the initial cost within included are any, if points, forward deferred or contracts the option of time value and the deferred loss. or profit affects item as the hedged loss or in profit recognised ultimately are amounts deferred The or in profit is recognised borrowings rate hedging variable swaps rate the interest portion of the effective to relating gain loss - The or borrowings. on the hedged expense time as the interest at the same cost finance within loss any accounting, hedge for the criteria meets longer no when a hedge or terminated, or is sold or expires, a hedging instrument When transaction the forecast until in equity at that time remains hedging in equity of costs and deferred loss gain or deferred cumulative the occur, to expected is no longer transaction the forecast When a non-financial of asset. in the recognition resulting occurs, loss. or profit to reclassified immediately are in equity reported hedging that were of costs and deferred loss gain or cumulative not that does instrument derivative any of value the fair in Changes accounting. hedge for qualify do not instruments derivative Certain loss. or in profit immediately recognised are accounting hedge for qualify and financial liabilities financial assets (viii) Offsetting has a the Group where financial position of in the statement presented amount and the net offset and liabilities are Financial assets and the asset realize to or basis on a net settle to intention is an and there amounts, the recognized offset to right legally enforcable the liabilitysettle simultaneously. 2017 31 December until applied policies - Accounting Financial instruments a result, As periods. prior for information comparative restate to not has elected but 9 retrospectively, has applied IFRS Group The policy. accounting previous the Group’s with in accordance for accounted be to continues provided information the comparative above. explained are policies accounting new Group’s The as follows. 9 are IFRS of on adoption that changed policies Accounting i) Classification categories: in the following financial assets its classified the Group 2017, 31 December Until (ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO TO OFF ROUNDED BEEN HAVE NOTES AND STATEMENTS FINANCIAL CONSOLIDATED THE IN DISCLOSED AMOUNTS (ALL 180 TURKCELL ANNUAL REPORT 2018

TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018

(ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.)

2. Basis of preparation and summary of significant accounting policies (continued)

(i) Financial instruments (continued)

Financial instruments - Accounting policies applied until 31 December 2017 (continued)

(ii) Reclassification

The Group could choose to reclassify a non-derivative trading financial asset out of the held for trading category if the financial asset was no longer held for the purpose of selling it in the near term. Financial assets other than loans and receivables were permitted to be reclassified out of the held for trading category only in rare circumstances arising from a single event that was unusual and highly unlikely to recur in the near term. In addition, the Group could choose to reclassify financial assets that would meet the definition of loans and receivables out of the held for trading or available-for-sale categories if the Group had the intention and ability to hold these financial assets for the foreseeable future or until maturity at the date of reclassification.

Reclassifications were made at fair value as of the reclassification date. Fair value became the new cost or amortized cost as applicable, and no reversals of fair value gains or losses recorded before reclassification date were subsequently made. Effective interest rates for financial assets reclassified to loans and receivables and held-to-maturity categories were determined at the reclassification date. Further increases in estimates of cash flows adjusted effective interest rates prospectively.

(iii) Subsequent measurement

The measurement at initial recognition did not change on adoption of IFRS 9.

Subsequent to initial recognition, loans and receivables and held-to-maturity investments were carried at amortized cost using the effective interest method.

Available-for-sale financial assets and financial assets at fair value through profit or loss were subsequently carried at fair value. Gains or losses arising from changes in the fair value were recognized as follows:

• for ‘financial assets at fair value through profit or loss’ – in profit or loss • for available-for-sale financial assets that are monetary securities denominated in a foreign currency – translation differences related to changes in the amortized cost of the security were recognized in profit or loss and other changes in the carrying amount were recognized in other comprehensive income • for other monetary and non-monetary securities classified as available-for-sale – in other comprehensive income

Details on how the fair value of financial instruments is determined are disclosed in Note 35.

(iv) Impairment

The Group assessed at the end of each reporting period whether there was objective evidence that a financial asset or group of financial assets was impaired. A financial asset or a group of financial assets was impaired and impairment losses were incurred only if there was objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event had an impact on the estimated future cash flows of the financial asset or group of financial assets that could be reliably estimated. In the case of equity investments classified as available-for-sale, a significant or prolonged decline in the fair value of the security below its cost was considered an indicator that the assets were impaired.

F22

SECTORAL AND FINANCIAL INFORMATION

181 F23 ANNUAL REPORT 2018 REPORT ANNUAL TURKCELL TURKCELL İLETİŞİM HİZMETLERİ A.Ş. HİZMETLERİ İLETİŞİM TURKCELL AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018 DECEMBER 31 ENDED YEAR THE FOR AND AT AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL CONSOLIDATED THE TO NOTES THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.) STATED.) OTHERWISE UNLESS LIRAS TURKISH IN EXPRESSED ARE AND UNITS CURRENCY THOUSAND NEAREST THE 2. Basis of preparation and summary of significant accounting policies (continued) policies accounting significant and summary of preparation Basis of 2. (continued) (i) Financial instruments (continued) 2017 31 December until applied policies - Accounting Financial instruments (continued) (iv) Impairment and the amount carrying the asset’s between as the difference measured was the loss of the amount and receivables, loans For at the financial discounted incurred) been not that have losses credit future (excluding flows cash future estimated of value present in recognised was the loss of and the amount reduced was the asset of amount carrying The rate. interest original effective asset’s loss impairment any measuring for rate the discount rate, interest had a variable investment held-to-maturity or If a loan loss. or profit impairment measure could the Group expedient, a practical As the contract. under determined rate interest effective the current was price. market using an observable value fair an instrument’s of on the basis an event to objectively related be could and the decrease decreased loss the impairment of the amount period, in a subsequent If, the previously of the reversal rating), credit in the debtor’s (such as an improvement recognized was the impairment after occurring loss. or in profit recognized was loss impairment recognized 35. in Note is described receivables trade of testing Impairment as the difference – measured loss the cumulative financial assets, available-for-sale for impairment of evidence objective was If there in profit recognized previously on that financial loss asset impairment any less value, fair and the current cost the acquisition between loss. or profit in and recognized equity from removed – was loss or in a subsequent loss or profit through reversed not were loss or in profit recognised that were instruments on equity losses Impairment period. be could and the increase period in a subsequent increased as available-for-sale classified instrument a debt of value If the fair reversed was loss the impairment loss, or in profit recognised was loss the impairment after occurring an event to related objectively loss. or profit through equivalents and cash (j) Cash call held at deposits cash on hand, includes equivalents cash cash and flows, cash of in the statement presentation of the purpose For readily that are less or months three of original with maturities highly short-term, liquid investments other financialwith institutions, in value. changes risk of an insignificant to subject and which are cash of amounts known to convertible receivables (k) Trade If business. of course in the ordinary performed services or sold goods for customers due from amounts are receivables Trade as non-current presented are they If not, assets. as current classified are they less or in one year is expected the amounts of collection assets. interest using the effective cost at amortized measured and subsequently value initially at fair recognized are receivables Trade policies. impairment the Group’s of a description 35 for Note See impairment. for provision less method, (ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO TO OFF ROUNDED BEEN HAVE NOTES AND STATEMENTS FINANCIAL CONSOLIDATED THE IN DISCLOSED AMOUNTS (ALL 182 TURKCELL ANNUAL REPORT 2018

TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018

(ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.)

2. Basis of preparation and summary of significant accounting policies (continued)

(l) Property, plant and equipment

(i) Recognition and measurement

Items of property, plant and equipment are stated at historical cost less depreciation and impairment losses. Property, plant and equipment related to the Company and its subsidiaries operating in Turkey are adjusted for the effects of inflation during the hyperinflationary period ended on 31 December 2005. Since the inflation accounting commenced on 1 January 2011, property, plant and equipment related to the subsidiaries operating in Belarus are adjusted for the effects of inflation. However, decrease in inflation rate in subsequent years led the three-year cumulative rate as of the end of 2014 to decrease to 65%. Accordingly, the economy of Belarus was considered to transit out of hyperinflationary status and 2015 is determined to be appropriate to cease applying IAS 29. Therefore, subsidiaries operating in Belarus ceased applying IAS 29 in 2015.

Historical cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets includes cost of materials and direct labor, any other costs directly attributable to bringing the asset to a working condition for its intended use and the costs of dismantling and removing the items and restoring the site on which they are located, if any.

Purchased software that is integral to the functionality of the related equipment is capitalized as part of that equipment. When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items of property, plant and equipment.

Gains and losses on disposals are determined by comparing proceeds with the carrying amount. There are recognized included in profit or loss.

Changes in the obligation to dismantle, remove assets on sites and to restore sites on which they are located, other than changes deriving from the passing of time, are added or deducted from the cost of the assets in the period in which they occur. The amount deducted from the cost of the asset shall not exceed the balance of the carrying amount on the date of change, and any excess balance is recognized immediately in profit or loss.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.

(ii) Subsequent costs

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the group and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged to profit or loss during the reporting period in which they are incurred.

F24

SECTORAL AND FINANCIAL INFORMATION

183 F25 3 – 5 years 4 – 6 years 4 – 8 years 2 – 10 years 5 – 10 years 3 – 25 years 3 – 25 years 4 – 20 years 21 – 25 years ANNUAL REPORT 2018 REPORT ANNUAL TURKCELL TURKCELL İLETİŞİM HİZMETLERİ A.Ş. HİZMETLERİ İLETİŞİM TURKCELL AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018 DECEMBER 31 ENDED YEAR THE FOR AND AT AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL CONSOLIDATED THE TO NOTES THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.) STATED.) OTHERWISE UNLESS LIRAS TURKISH IN EXPRESSED ARE AND UNITS CURRENCY THOUSAND NEAREST THE Telecommunications licenses Telecommunications

Mobile network infrastructure Mobile network infrastructure network Fixed equipment center Call fittings and fixtures Equipment, vehicles Motor terminals betting Central improvements Leasehold period. reporting each at the end of appropriate, if and adjusted reviewed, are values and residual lives useful methods, Depreciation costs (iv) Borrowing asset a qualifying of production or construction the acquisition, attributable to directly that are costs borrowing and specific General Qualifying sale. or use intended its for the asset and prepare complete to time that is required of during the period capitalized are sale. or use intended their for ready get time to of period a substantial take that necessarily assets are assets is assets on qualifying expenditure pending their borrowings specific of investment on the temporary earned income Investment capitalization. eligible for costs the borrowing from deducted incurred. are in which they in the period expensed are costs borrowing Other assets (m) Intangible licenses (i) Telecommunication during the inflation of the effects for adjusted cost at historical stated are licenses telecommunication acquired Separately losses. and impairment amortization less applicable, where period, hyperinflationary Amortization lives useful The period. the license to reference by basis on a straight-line loss or profit of in the statement is recognized Amortization as follows: are licenses telecommunication for Buildings 2. Basis of preparation and summary of significant accounting policies (continued) policies accounting significant and summary of preparation Basis of 2. (continued) and equipment plant (l) Property, (iii) Depreciation useful estimated their over values, residual their of net cost, their allocate to method using the straight-line is calculated Depreciation of the shorter over or life useful the asset’s over is depreciated leases finance under acquired and equipment plant property, The lives. the lease at the end of ownership will obtain that the group certainty is no reasonable there if term and the lease life useful the asset’s term. depreciated. is not Land as follows: are lives useful estimated The (ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO TO OFF ROUNDED BEEN HAVE NOTES AND STATEMENTS FINANCIAL CONSOLIDATED THE IN DISCLOSED AMOUNTS (ALL 184 TURKCELL ANNUAL REPORT 2018

TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018

(ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.)

2. Basis of preparation and summary of significant accounting policies (continued)

(m) Intangible assets (continued)

(ii) Computer software

Acquired computer software licenses are capitalized on the basis of the costs incurred to acquire and bring to use the specific software.

Costs associated with maintaining computer software programmes are recognized as an expense as incurred.

Development costs that are directly attributable to the design and testing of identifiable and unique software products controlled by the group are recognised as intangible assets when the following criteria are met:

• it is technically feasible to complete the software so that it will be available for use • management intends to complete the software and use or sell it • there is an ability to use or sell the software • it can be demonstrated how the software will generate probable future economic benefits • adequate technical, financial and other resources to complete the development and to use or sell the software are available, and • the expenditure attributable to the software during its development can be reliably measured.

Directly attributable costs that are capitalized as part of the software include employee costs and an appropriate portion of relevant overheads.

Research expenditure and development expenditure that do not meet the criteria above are recognized as an expense as incurred. Development costs previously recognized as an expense are not recognized as an asset in a subsequent period.

Capitalized development costs are recorded as intangible assets and amortized from the point at which the asset is ready for use.

Amortization

Amortization is recognized in the statement of profit or loss on a straight-line basis over the estimated useful lives. The useful lives for computer software are as follows:

Computer software 3 – 8 years

(iii) Other intangible assets

Other intangible assets that are acquired by the Group which have finite useful lives are stated at historical cost adjusted for the effects of inflation during the hyperinflationary period, where applicable, less amortization and impairment losses. Indefeasible Rights of Use (“IRU”) are rights to use a portion of an asset’s capacity granted for a fixed period of time. IRUs are recognized as intangible asset when the Group has specific indefeasible rights to use an identified portion of an underlying asset and the duration of the right is for the major part of the underlying asset’s useful economic life. IRUs are amortized over the shorter of the underlying asset’s useful economic life and the contract term.

F26 SECTORAL AND FINANCIAL INFORMATION 185 F27 15 years 7 – 10years 5 – 10 years 2 – 15 years 9 – 10 years ANNUAL REPORT 2018 REPORT ANNUAL TURKCELL

Central betting system operating right operating system betting Central base Customer name Brand use of right Indefeasible

Transmission line software Transmission TURKCELL İLETİŞİM HİZMETLERİ A.Ş. HİZMETLERİ İLETİŞİM TURKCELL AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018 DECEMBER 31 ENDED YEAR THE FOR AND AT AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL CONSOLIDATED THE TO NOTES THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.) STATED.) OTHERWISE UNLESS LIRAS TURKISH IN EXPRESSED ARE AND UNITS CURRENCY THOUSAND NEAREST THE

2. Basis of preparation and summary of significant accounting policies (continued) policies accounting significant and summary of preparation Basis of 2. (continued) assets (m) Intangible (continued) assets (iii) intangible Other Amortization periods: the following over method using the straight-line life useful a limited with assets intangible amortizes Group The (ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO TO OFF ROUNDED BEEN HAVE NOTES AND STATEMENTS FINANCIAL CONSOLIDATED THE IN DISCLOSED AMOUNTS (ALL Amortization methods, useful lives and residual values are reviewed, and adjusted if appropriate, at the end of each reporting period. reporting each at the end of appropriate, if and adjusted reviewed, are values and residual lives useful methods, Amortization Goodwill impairment for is tested it but amortized is not Goodwill assets. in intangible included is subsidiaries of on acquisitions Goodwill less at cost and is carried impaired, be might that it indicate in circumstances changes or events if frequently more or annually, the to relating goodwill of amount include the carrying an entity of on the disposal Gains and losses losses. impairment accumulated sold. entity cash-generating those is made to allocation The testing. impairment of the purpose for units cash-generating to is allocated Goodwill The arose. in which the goodwill combination the business from benefit to expected that are units cash-generating of groups or units the being purposes, management internal for is monitored at which goodwill level at the lowest identified are units of groups or units segments. operating properties (n) Investment and measurement Recognition for construction under (including property appreciation capital for yields and/or rental held for properties are properties Investment losses. and impairment depreciation less cost at historical stated are properties Investment such purposes). and no use from withdrawn is permanently property when the investment or disposal upon is derecognized property An investment as the (calculated the property of arising on derecognition gain loss or Any the disposal. from expected are benefits economic future in which in the period loss or in profit is included the asset) of amount and the carrying proceeds disposal the net between difference is derecognized. the property 186 TURKCELL ANNUAL REPORT 2018

TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018

(ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.)

2. Basis of preparation and summary of significant accounting policies (continued)

(n) Investment properties (continued)

Depreciation

Depreciation is calculated using the straight-line method to allocate their cost, net of their residual values, over their estimated useful lives. The estimated useful lives are as follows:

Investment Property 25 - 45 years

Depreciation methods, useful lives and residual values are reviewed, and adjusted if appropriate, at the end of each reporting period.

(o) Inventories

Inventories are stated at the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs necessary to make the sale. Cost of inventory is determined using the weighted average method and comprises all costs of purchase and other costs incurred in bringing the inventories to their present location and condition. Costs of purchased inventory are determined after deducting rebates and discounts. At 31 December 2018 and 2017, inventories mainly consisted of mobile phones, sim-cards, and other devices.

(p) Impairment of assets

Goodwill and intangible assets that have an indefinite useful life are not subject to amortization and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs of disposal. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting period.

(r) Employee benefits

(i) Short-term obligations

Liabilities for salaries including non-monetary benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognized in respect of employees’ services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as trade and other payables in the statement of financial position.

(ii) Termination benefits

In accordance with the labor law in Turkey, the Company and its subsidiaries in Turkey are required to make lump-sum payments to employees who have completed one year of service and whose employment is terminated without cause or who retire, are called up for military service or die. Such payments are calculated on the basis of 30 days’ pay up to a of maximum full TL 5,434 as at 31 December 2018 (31 December 2017: TL 4,732), per year of employment at the rate of pay applicable at the date of retirement or termination. Termination benefits paid to key executive officers are presented as other expenses. Reserve for employee termination benefits is computed and reflected in the consolidated financial statements on a current basis. Discount rate used for calculating employee termination benefit as of 31 December 2018 is 4.41% (31 December 2017: 3.33%).The reserve is calculated by estimating the present value of future probable obligation of the Company and its subsidiaries in Turkey arising from retirement of employees. Reserve for employee termination benefits is calculated annually by independent actuaries using the projected unit credit method.

F28

SECTORAL AND FINANCIAL INFORMATION

187 F29 ANNUAL REPORT 2018 REPORT ANNUAL TURKCELL TURKCELL İLETİŞİM HİZMETLERİ A.Ş. HİZMETLERİ İLETİŞİM TURKCELL AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018 DECEMBER 31 ENDED YEAR THE FOR AND AT AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL CONSOLIDATED THE TO NOTES THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.) STATED.) OTHERWISE UNLESS LIRAS TURKISH IN EXPRESSED ARE AND UNITS CURRENCY THOUSAND NEAREST THE 2. Basis of preparation and summary of significant accounting policies (continued) policies accounting significant and summary of preparation Basis of 2. (continued) benefits (r) Employee plans contribution (iii) Defined plans on a insurance pension administered privately publicly or to contributions pays the Group plans, contribution defined For The paid. been have the contributions obligations once payment has no further Group The basis. voluntary or contractual mandatory, the to as an asset recognized are contributions Prepaid due. are when they expense benefit as employee recognized are contributions is available. payments in the future a reduction or refund that a cash extent payments (iv) Share-based cash-settled For services. their for in return employees selected plan for payment share-based a cash-settled provides Group The liability. the of value at the fair and the liability incurred acquired services measures the Group transactions, payment share-based period. service the relevant over expense benefit as employee recognized plan are payment share-based cash-settled Liabilities for are value in fair changes Any date. the settlement and at date reporting at each the liability of is re-measured value fair The the period. for loss or in profit recognized bonus (v) Personnel obligation a constructive the bonus make would practice past is a legal or obligation, when the bonus provided is bonus for Provision the obligation. of estimate a reliable make is able to and the Group (s) Provisions estimated be obligation that can constructive legal or has a present the Group event, a past of as a result if, is recognized A provision the obligation. settle to required willbe resources of outflow that an is probable and it reliably, by is determined settlement in required willbe that an outflow the likelihood obligations, similar of a number are there Where one to any respect with an outflow of the likelihood if even is recognized A provision obligations as a whole. the class of considering obligations small. may be class of in the same included item the present settle to required the expenditure of estimate best management’s of value at the present measured are Provisions that reflects rate is a pre-tax value the present determine to used rate discount The period. the reporting obligation at the end of the due to in the provision increase The the liability. to specific and the risks money of the time value of assessments market current expense. as interest time is recognized of passage contracts Onerous to is considered contract An onerous as a provision. and measured is recognized contract an onerous obligation arising under Present the exceed the contract the obligations under meeting of costs which the unavoidable under has a contract Group the where exist it. under received be to expected benefits economic obligation sites and restoring removal Dismantling, on which the sites restore and to assets and remove a liability dismantle of to in respect certain costs incur to is required Group The at a discounted payments expected future of estimate best to according calculated are costs dismantling The located. were assets to the liability. specific and the risks valueof money of the time assessments market current that reflects rate discount pre-tax (ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO TO OFF ROUNDED BEEN HAVE NOTES AND STATEMENTS FINANCIAL CONSOLIDATED THE IN DISCLOSED AMOUNTS (ALL 188 TURKCELL ANNUAL REPORT 2018

TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018

(ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.)

2. Basis of preparation and summary of significant accounting policies (continued)

(t) Revenue

Revenue is recognized at the amount of the transaction price that is allocated to the performance obligation. The transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer. Revenue is recognized when control is transferred to the customer.

Revenue from telecommunication services includes postpaid and prepaid revenue from voice, data, messaging and value added services, interconnect revenue, monthly fixed fees, SIM card sales and roaming revenue. An entity transfers control of a service over time and, therefore, satisfies a performance obligation and recognizes revenue from telecommunication services over time.

With respect to prepaid revenue, the Group generally collects cash in advance by selling prepaid top up to distributors. In such cases, the Group does not recognize revenue until subscribers use the telecommunication services.

Services may be bundled with other products and services and these bundled elements involve consideration in the form of a fixed fee or a fixed fee coupled with a continuing payment stream. A good or service is distinct if both of the following criteria are met:

• the good or service is capable of being distinct • the promise to transfer the good or service is distinct within the context of the contract.

The arrangement consideration is allocated to each performance obligation identified in the contract on a relative stand-alone selling prices. If an element of a transaction is not a distinct, then it is accounted for as an integral part of the remaining elements of the transaction.

Revenue from device sales is recognized when control of the device has transferred, being when delivered to the end customer. For device sales made to intermediaries, revenue is recognized when control of the device has transferred, being when the products are delivered to the intermediary and the intermediary has no general right to return the device to receive a refund. If control is not transferred, revenue is deferred until sale of the device to an end customer by the intermediary or expiry of any right of return.

The Company, the distributors and dealers offer joint campaigns to the subscribers which may include the sale of device by the dealer and/or the distributor and the sale of communication service by the Company. In certain campaigns, dealers make the handset sale to the subscribers instalments of which will be collected by the Company based on the letters of undertaking signed by the subscribers. With the letter of undertaking, the dealer assigns its receivables from handset sale to the distributor and the distributor assigns its receivables to the Company.

The Company pays the distributor net present value of the instalments to be collected from the subscribers and recognizes contracted receivables in its statement of financial position. The undue portion of assigned receivables from the distributors which were paid upfront by the Company is classified as “undue assigned contracted receivables” in trade receivables (Note 19). When monthly installment is invoiced to the subscriber, related portion is presented as “receivables from subscribers”. The Company collects the contracted receivables in installments during the contract period and does not recognize any revenue for the handset in these transactions as the Company does not act as principal for the sale of handset.

Starting from 2014, the subscribers has an option to buy handsets using bank loans instalments of which are collected by the Company on behalf of the bank. The Company does not bear any credit risk in these transactions. Since the Company collects receivables during the contract period and acts as agent for the sale of handset, the Company does not recognize any revenue for the handset in these transactions.

F30 SECTORAL AND FINANCIAL INFORMATION F31 189 ANNUAL REPORT 2018 REPORT ANNUAL TURKCELL

tity has inventory risk before the specified good or service has been transferred to a customer or after transfer of control to to control of transfer after or a customer to transferred been has service or good the specified risk before has inventory tity service. or good the specified for the price in establishing has discretion tity tity is primarily responsible for fulfilling the promise to provide the specified good or service. or good the specified provide to the promise fulfilling for is primarily responsible tity

the customer the en the en the en

• •

• TURKCELL İLETİŞİM HİZMETLERİ A.Ş. HİZMETLERİ İLETİŞİM TURKCELL AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018 DECEMBER 31 ENDED YEAR THE FOR AND AT AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL CONSOLIDATED THE TO NOTES THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.) STATED.) OTHERWISE UNLESS LIRAS TURKISH IN EXPRESSED ARE AND UNITS CURRENCY THOUSAND NEAREST THE 2. Basis of preparation and summary of significant accounting policies (continued) policies accounting significant and summary of preparation Basis of 2. (continued) (t) Revenue which Financing loan, Turkcell through a device buy to the option offer to started and distributors the Company 2016 from Starting the Finansman collects Turkcell transactions. in these collection a risk of carries Group The Company. the by will collected be the is not it since the device to related revenue record not and does period, during the contract the subscriber from credit purchased financing consumer from generated income interest of comprise financial services from Revenue sale. in the device main contractor method. interest using the effective accrues, as it recognized is income Interest activities. usage. of the level to regard without basis on a monthly subscribers postpaid to charged amount a fixed represent fees fixed Monthly revenues. services telecommunication included are fees fixed Monthly when billed. basis on a monthly recognized are fees Fixed of agent takings as the head gross 1.4% of a maximum of to takings earned net of mainly comprise business betting from Revenues as the and gaming tax VAT deducting after turnover mobile agency of 7.25% of revenues and mobile agent games betting odds fixed the Under rendered. fully are the games to related at the time all services recognized are business betting from Revenues agent. head is Danışmanlık (“Inteltek”) A.Ş. ve Yatırım Teknoloji Internet Inteltek Toto”), (“Spor Müdürlüğü A.Ş. Teşkilat Toto Spor with signed agreement basis. on a net which is presented payout, excess any undertake obliged to and Sport of Youth of the Ministry under set Liability Company Limited Azeridmanservis from authorization received Azerinteltek Since business. betting sports and paramutual odds the fixed manage and develop operate, organize, to Azerbaijan of the Republic collected and amounts players) to (distribution payout less the player from received consideration total as principal, acts Azerinteltek rendered. fully are the games to related at the time all services is recognized Sports of Ministry of on behalf players from over revenue commission generating has been Azerinteltek Azerlotereya. by games the Lottery for authorized has been Azerinteltek and Azerinteltek between agreement to according rate applying 15% commission by agencies own its through turnover games Lottery rendered. fully are the games to related at the time all services recognized are revenues Commission Azerlotereya. period. during the contractual rendered are at the time services recognized are revenues center Call the Group When basis. on a gross recorded are costs and operating revenue as a principal, services or goods sells the Group When earned. margin net the representing basis, on a net recorded are costs and operating revenue as an agent, services or goods sells described analysis on management’s depends in the transaction agent as principal acting or be to is considered the Group Whether liabilities or assets, reported impact do not but costs and operating revenue reported of the amount impact such judgements below flows: cash is a principal: that an entity Indicators (ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO TO OFF ROUNDED BEEN HAVE NOTES AND STATEMENTS FINANCIAL CONSOLIDATED THE IN DISCLOSED AMOUNTS (ALL 190 TURKCELL ANNUAL REPORT 2018

TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018

(ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.)

2. Basis of preparation and summary of significant accounting policies (continued)

(t) Revenue (continued)

The Company and the Ministry of Transport and Infrastructure of Turkey, Directorate General of Communications signed a contract to continue the contract to establish and operate mobile communication infrastructure and operation in uncovered areas, until 31 December 2019 and to add mobile broadband services to the existing infrastructure providing GSM services under Universal Service Law and to operate the new and existing networks together. As of 31 December 2018, the Company has recognized TL 376,765 (31 December 2017: TL 257,866) revenue from its operations related to this contract. Since the Company acts as principal, revenue and operating costs are reported on a gross basis in these consolidated financial statements.

The revenue recognition policy for other revenues is to recognize revenue as services are provided.

Contract costs eligible for capitalization as incremental costs of obtaining a contract comprise commission on sale relating to postpaid contracts with acquired or retained subscribers. Contract costs are capitalized in the month of service activation if the Group expects to recover those costs. Contract costs comprise sales commissions to dealers and to own salesforce which can be directly attributed to an acquired or retained contract. Contract costs are classified as intangible assets in the consolidated financial statements. The asset is amortised on a straight line basis over the customer life time it relates to consistent with the pattern of recognition of the associated revenue.

Revenue - Accounting policies applied until 31 December 2017

The Group adopted the new standard on the required effective date using the modified retrospective method which requires the recognition of the cumulative effect of initially applying IFRS 15, as at 1 January, 2018, to retained earnings and not restate prior years. As a result, the comparative information provided continues to be accounted for in accordance with the Group’s previous accounting policy. Accounting policies that changed on adoption of IFRS 15 are as follows. The Group’s new accounting policies are explained above.

Contract cost

Contract costs were capitalized under prepaid expenses and amortised on a straight line basis over the contact term.

(u) Trade and other payables

These amounts represent liabilities for goods and services provided to the Group prior to the end of financial year which are unpaid. Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognized initially at their fair value and subsequently measured at amortized cost using the effective interest method.

(v) Borrowings

Borrowings are initially recognized at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortized cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognized in profit or loss over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognized as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalized as a prepayment for liquidity services and amortized over the period of the facility to which it relates.

Borrowings are removed from the statement of financial position when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss.

F32

SECTORAL AND FINANCIAL INFORMATION

191 F33 ANNUAL REPORT 2018 REPORT ANNUAL TURKCELL TURKCELL İLETİŞİM HİZMETLERİ A.Ş. HİZMETLERİ İLETİŞİM TURKCELL AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018 DECEMBER 31 ENDED YEAR THE FOR AND AT AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL CONSOLIDATED THE TO NOTES THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.) STATED.) OTHERWISE UNLESS LIRAS TURKISH IN EXPRESSED ARE AND UNITS CURRENCY THOUSAND NEAREST THE 2. Basis of preparation and summary of significant accounting policies (continued) policies accounting significant and summary of preparation Basis of 2. taxes (w) Income on the applicable based income taxable period’s on the current payable is the tax the period for credit or expense tax income The differences temporary and liabilities attributable to assets tax in deferred changes by adjusted jurisdiction each for rate tax income losses. tax unused and to in other recognized items to relates that it the extent to except loss, or profit of in the statement is recognized expense tax Income in equity, directly or income comprehensive in other is also recognized the tax In this case, in equity. directly or income comprehensive respectively. the reporting at the end of enacted substantively or enacted laws the tax of on the basis is calculated charge tax income current The Management income. taxable and generate operate and associates subsidiaries the Company’s where in the countries period to is subject regulation in which applicable tax situations to respect with returns in tax taken positions evaluates periodically Deferred authorities. the tax paid be to to expected amounts of on the basis appropriate where provisions It establishes interpretation. and liabilities assets of bases the tax arising between differences on temporary using the liability method, in full, is provided tax income arise they if recognised not liabilities are tax deferred However, financial statements. in the consolidated amounts carrying and their or an asset of initial recognition from arises it if for accounted is also not tax income Deferred goodwill. of the initial recognition from taxable nor accounting neither affects transaction the that at the time of combination than a business other liability in a transaction the end by enacted substantially or enacted been that have laws) (and rates using tax is determined tax income Deferred loss. or profit tax income the deferred or is realized asset tax income deferred apply when the related to expected and are period the reporting of those utilize to will available be amounts taxable that future is probable it only if recognized are assets tax Deferred liability is settled. and losses. differences temporary of bases and tax amount the carrying between differences temporary for recognized not are liabilities and assets tax Deferred is and it differences the temporary of the reversal the timing of control is able to the company where operations in foreign investments future. in the foreseeable reverse will not that the differences probable and liabilities and assets tax current offset to right is a legally enforceable when there offset and liabilities are assets tax Deferred the where offset liabilities are and tax assets tax Current authority. taxation the same to relate balances tax when the deferred liability the and settle the asset realize to or basis, on a net settle to either and intends offset to right has a legally enforceable entity simultaneously. to in relation or assets in qualifying investments for claim deductions to special tax entitled may be the Group within Companies Group The allowances). investment other or in Turkey regime Incentive Tax and Development the Research (e.g., expenditure qualifying A expense. tax and current payable tax income reduces that the allowance which means credits, as tax such allowances for accounts assets. tax as deferred forward carried that are credits unclaimed tax for is recognized asset tax deferred share (x) Earnings per Since equal. (“EPS”) are share per earnings and diluted basic therefore in issue, shares ordinary potential any have not does Group The EPS”. as “Basic and diluted EPS on one line and diluted described basic both presents the Group equal, EPS are and diluted basic number average the weighted by the Company of shareholders ordinary attributable to dividing the profit by Basic EPS is calculated by capital share their increase can entities In Turkey, shares. treasury excluding during the financial year, outstanding shares ordinary of are distributions such “Bonus share” share, per earnings In computing earnings. retained from shareholders to “Bonus share” distributing determining when consideration into is taken distributions such share for effect the retrospective Accordingly, shares. as issued tr (ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO TO OFF ROUNDED BEEN HAVE NOTES AND STATEMENTS FINANCIAL CONSOLIDATED THE IN DISCLOSED AMOUNTS (ALL 192 TURKCELL ANNUAL REPORT 2018

TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018

(ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.)

2. Basis of preparation and summary of significant accounting policies (continued)

(y) Government grants

Grants from the government are recognized at their fair value where there is a reasonable assurance that the grant will be received and the Group will comply with all attached conditions.

Government grants relating to costs are deferred and recognized in profit or loss over the period necessary to match them with the costs that they are intended to compensate.

Government grants relating to property, plant and equipment are included in non-current liabilities as deferred government grants and are credited to profit or loss on a straight-line basis over the expected useful lives of the related assets.

(z) Non-current asset held for sale and discontinued operations

Non-current assets are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use and a sale is considered highly probable. They are measured at the lower of their carrying amount and fair value less costs of disposal.

An impairment loss is recognized for any initial or subsequent write-down of the asset to fair value less costs of disposal. A gain is recognized for any subsequent increases in fair value less costs of disposal of an asset, but not in excess of any cumulative impairment loss previously recognized. A gain or loss not previously recognized by the date of the sale of the non-current asset is recognized at the date of derecognition.

An associate must meet the conditions to be classified as held for sale. It is first measured in accordance with applicable standards. Such standard is IAS 28, and so the share of profits and remeasurement of carrying amounts are done in accordance with normal associate rules up to the point of classification as held for sale.

The associate or joint venture is then measured in accordance with IFRS 5. It is measured at the lower of carrying amount and fair value less costs of disposal. Equity accounting is ceased from the date the held for sale criteria are met.

Non-current assets classified as held for sale are presented separately from the other assets in the statement of financial position.

A discontinued operation is a component of the entity that has been disposed of or is classified as held for sale and that represents a separate major line of business or geographical area of operations, is part of a single co-ordinated plan to dispose of such a line of business or area of operations, or is a subsidiary acquired exclusively with a view to resale. The results of discontinued operations are presented separately in the statement of profit or loss.

(aa) Equity

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from the proceeds.

Where any Group company purchases the Company’s equity instruments, for example as the result of a share buy-back plan, the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the owners of the Company as treasury shares until the shares are cancelled or reissued. Where such ordinary shares are subsequently reissued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the owners of the Company.

F34 SECTORAL AND FINANCIAL INFORMATION 193 F35 ANNUAL REPORT 2018 REPORT ANNUAL TURKCELL oup designed the asset in a way that predetermines how and for what purpose it is used. is used. it purpose what and for how that predetermines in a way the asset designed oup oup has the right to operate the asset or; or; the asset operate to has the right oup

et should be physically distinct or represent substantially all of the capacity of a physically of all the capacity of substantially represent or distinct physically be should et

oup has the right to obtain substantially all of the economic benefits from the use of an asset throughout the period of use; use; of the period throughout an asset of the use from benefits all the economic of substantially obtain to has the right oup most are that has the decision-making rights when it has the right Group The the asset. of use direct to has the right oup ontract involved the use of an identified asset – this may be specified explicitly or implicitly or explicitly specified – this may be asset an identified of use the involved ontract

the Gr the Gr unt of the initial measurement of the lease liability; the lease of measurement the initial of unt istinct asset. If the supplier has a substantive substitution right, the asset is not identified; is not asset the right, substitution has a substantive If the supplier asset. istinct

y lease payments made at or before the commencement date, less any lease incentives received; incentives lease any less date, the commencement before made at or payments y lease and the Group; by incurred costs y initial direct and and the Gr if asset of the use has the right the Group is predetermined, is used the asset what purpose and for changing to the how relevant either: - - the c the ass d the Gr

an amo an - -

- -

TURKCELL İLETİŞİM HİZMETLERİ A.Ş. HİZMETLERİ İLETİŞİM TURKCELL AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018 DECEMBER 31 ENDED YEAR THE FOR AND AT AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL CONSOLIDATED THE TO NOTES THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.) STATED.) OTHERWISE UNLESS LIRAS TURKISH IN EXPRESSED ARE AND UNITS CURRENCY THOUSAND NEAREST THE

- - the of the earlier to date the commencement from method using the straight-line depreciated is subsequently asset right-of-use The assets right-of-use of lives useful estimated The term. the lease of the end date of asset the right-of-use of life the useful of end date by reduced is periodically asset the right-of-use In addition, and equipment. property as those basis on the same determined are 28). liability the lease (Note of certain remeasurements for and adjusted any, if losses, impairment At inception or on reassessment of a contract that contains a lease component, the Group allocates the consideration in the contract in the contract consideration the allocates the Group component, a lease that contains a contract of on reassessment or inception At prices. stand-alone relative their of on the basis component lease each to asset use of Right date. liability commencement and a lease at the lease asset use a right-of recognizes Group The of: comprising at cost is initiallyrecognized asset use of right The - 2. Basis of preparation and summary of significant accounting policies (continued) policies accounting significant and summary of preparation Basis of 2. Dividends (ab) the of at the discretion and no longer authorised appropriately being dividend declared, any of the amount is made for Provision period. the reporting at the end of distributed not but period the reporting the end of before on or Company, events Subsequent (ac) are on which the financial and the date statements date the reporting between all Includes events date; the reporting after Events made publicly disclosed. has been financial information selected other or profit of announcement any if even issue, for authorized required not that are Events accordingly. situation this new corrects date, the reporting after correction requiring events of In case financial in the consolidated the financial to statements in the notes disclosed are date the reporting to subsequent adjusted be to statements. Leases (ad) the if a lease contains, or is, A contract a lease. contains or is, a contract whether assesses the Group a contract, of inception At assess To consideration. for time in exchange of a period for asset an identified of the use control to the right conveys contract whether: assess Group The asset, an identified of the use control to the right conveys a contract whether (ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO TO OFF ROUNDED BEEN HAVE NOTES AND STATEMENTS FINANCIAL CONSOLIDATED THE IN DISCLOSED AMOUNTS (ALL 194 TURKCELL ANNUAL REPORT 2018

TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018

(ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.)

2. Basis of preparation and summary of significant accounting policies (continued)

(ad) Leases

Lease Liability

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group’ incremental borrowing rate. Group uses its incremental borrowing rate as the discount rate.

Lease payments included in the measurement of the lease liability comprise the following: - fixed payments, including in-substance fixed payments; - variable lease payments that depend on an index or a rate, initially measured using the index or rate as the commencement date; - amounts expected to be payable under a residual value guarantee; and - the exercise price under a purchase option that the Group is reasonably certain to exercise, lease payments in an optional renewable period if the Group is reasonably certain to exercise an extension option, and penalties for early termination of a lease unless the Group is reasonably certain to terminate early.

After initial recognition, the lease liability is measured (a) increasing the carrying amount to reflect interest on lease liability; (b) reducing the carrying amount to reflect the lease payments made; and (c) remeasuring the carrying amount to reflect any reassessment or lease modifications or to reflect revised in-substance fixed lease payments.

Where, (a) there is a change in the lease term as a result of reassessment of certainty to exercise an exercise option, or not to exercise a termination option as discussed above; or (b) there is a change in the assessment of an option to purchase the underlying asset, assessed considering the events and circumstances in the context of a purchase option, the Group remeasures the lease liabilities to reflect changes to lease payments by discounting the revised lease payments using a revised discount rate. The Group determines the revised discount rate as the interest rate implicit in the lease for the remainder of the lease term, if that rate can be readily determined, or the its incremental borrowing rate at the date of reassessment, if the interest rate implicit in the lease cannot be readily determined.

Where, (a) there is a change in the amounts expected to be payable under a residual value guarantee; or (b) there is a change in the future lease payments resulting from a change in an index or a rate used to determine those payments, including change to reflect changes in market rental rates following a market rent review, the Group remeasures the lease liabilities by discounting the revised lease payments using an unchanged discount rate, unless the change in lease payments results from a change in floating interest rates. In such case, the Group use revised discount rate that reflects changes in the interest rate.

The Group recognises the amount of the remeasurement of lease liability as an adjustment to the right of use asset. Where the carrying amount of the right of use asset is reduced zero and there is further reduction in the measurement of the lease liability, the Group recognises any remaining amount of the remeasurement in profit or loss.

The Group accounts for a lease modification as a separate lease if both: - the modification increases the scope of the lease by adding the right to use one or more underlying assets; and - the consideration for the lease increases by an amount commensurate with the stand-alone price for the increase in scope and any appropriate adjustments to that stand-alone price to reflect the circumstances of the particular contract.

F36

SECTORAL AND FINANCIAL INFORMATION

195 F37 ANNUAL REPORT 2018 REPORT ANNUAL TURKCELL TURKCELL İLETİŞİM HİZMETLERİ A.Ş. HİZMETLERİ İLETİŞİM TURKCELL AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018 DECEMBER 31 ENDED YEAR THE FOR AND AT AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL CONSOLIDATED THE TO NOTES THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.) STATED.) OTHERWISE UNLESS LIRAS TURKISH IN EXPRESSED ARE AND UNITS CURRENCY THOUSAND NEAREST THE

2. Basis of preparation and summary of significant accounting policies (continued) policies accounting significant and summary of preparation Basis of 2. (continued) Leases (ad) as a Lessor Group The It assesses separately. the sub-lease and lease in the head interests its for accounts it lessor, an intermediate acts the Group When the to reference with not lease, the head arising from the right-of-use-asset to reference with a sub-lease of classification the lease underlying asset. in the contract. the consideration allocate 15 to IFRS applies the Group components, and non-lease lease contains If an arrangement 2017 31 December until applied policies - Accounting Leases initially of effect which the cumulative under 2 application - option approach retrospective 16 using modified IFRS adopted Group The provided information the comparative a result, As at 1 January 2018. application initial of at the date recognised applying the Standard on that changed policies Accounting policy. accounting previous the Group’s with in accordance for accounted be to continues above. explained are policies accounting new Group’s The as follows. 16 are IFRS of adoption were ownership of all rewards and the risks had substantially as lessee, the group, where and equipment plant property, of Leases lower, if or, property the leased of value at the fair inception at the lease’s capitalised were leases Finance leases. as finance classified in other included were charges, finance of net obligations, rental corresponding The payments. the minimum lease of value the present was cost finance The the liability cost. and finance between allocated was payment Each lease payables. short-term and long-term of balance on the remaining interest of rate periodic a constant produce as to so period the lease over loss or the profit to charged or life useful the asset’s over depreciated was leases finance under acquired and equipment property The period. each the liability for ownership will obtain that the Group certainty no reasonable was there if term the lease and life useful the asset’s of the shorter over term. the lease at the end of classified were as lessee the Group to transferred not were ownership of and rewards the risks portion of in which a significant Leases or profit to charged were the lessor) from received incentives any of (net leases operating made under Payments leases. as operating the lease. of the period over basis on a straight-line loss and interpretations standards New (ae) financial statements in the consolidated disclosures and/or reported amounts affecting IFRSs to i) Amendments and IFRS Customers with Contracts from 15 Revenue IFRS 9 Financial Instruments, IFRS of the adoption of the impact explains note This financial statements. consolidated on the Group’s 16 Leases as stated are 2018 as at 31 December financial statements 16 on the consolidated 15 and IFRS IFRS 9, IFRS of adoption of impacts The and (OCI) income comprehensive other on the consolidated impact a significant have do not standards these of adoptions The below. flows. cash of statement consolidated the changes by affected not that were Line items individual each line item. for recognised the adjustments show tables following The The provided. the numbers from recalculated be cannot disclosed and totals the sub-totals a result, As included. been not have below. standard by detail in more explained are adjustments (ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO TO OFF ROUNDED BEEN HAVE NOTES AND STATEMENTS FINANCIAL CONSOLIDATED THE IN DISCLOSED AMOUNTS (ALL 196 TURKCELL ANNUAL REPORT 2018

TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018

(ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.)

Effect Of Effect Of Effect Of 31 December Change Change Change 31 December 2018 As Due to Due to Due to 2018 without reported IFRS 9 IFRS 15 IFRS 16 Adoptions Assets Property, plant and equipment 11,116,316 - - - 11,116,316 Right-of-use assets 1,649,602 - - 1,649,602 - Intangible assets 10,050,172 - 1,059,866 - 8,990,306 Investment properties 15,425 - - - 15425 Trade receivables 115,001 (608) (3,513) - 119,122 Contract assets 3,513 - 3,513 - - Receivables from financial services 884,686 - - - 884,686 Deferred tax assets 152,732 - - 14,696 138,036 Investments in equity accounted investees 19,413 - - - 19,413 Other non-current assets 421,306 (228) (10,849) (161,426) 593,809 Total non-current assets 24,428,166 (836) 1,049,017 1,502,872 21,877,113

Inventories 180,434 - - - 180,434 Trade receivables 2,505,990 49,567 (703,742) 6,926 3,153,239 Due from related parties 13,533 67 - - 13,466 Receivables from financial services 3,286,243 (40,463) - - 3,326,706 Derivative financial instruments 1,356,062 - - - 1,356,062 Held to maturity investments - (51,863) - - 51,863 Financial asset at fair value through profit or loss 9,409 9,409 - - - Financial asset at fair value through other comprehensive income 42,454 42,454 - - - Contract assets 711,928 - 711,928 - - Cash and cash equivalents 7,419,239 (2,364) - - 7,421,603 Other current assets 1,091,512 87 (137,997) (312,872) 1,542,294 Subtotal 16,616,804 6,894 (129,811) (305,946) 17,045,667 Assets classified as held for sale 1,720,305 - - - 1,720,305

Total current assets 18,337,109 6,894 (129,811) (305,946) 18,765,972

Total assets 42,765,275 6,058 919,206 1,196,926 40,643,085

Equity Share capital 2,200,000 - - - 2,200,000 Share premium 269 - - - 269 Treasury shares (-) (141,534) - - - (141,534) Additional paid in capital 35,026 - - - 35,026 Reserves 2,503,537 (154) 8,958 (740) 2,495,473 Remeasurements of employee termination benefit (34,871) - - - (34,871) Retained earnings 11,359,317 4,989 667,946 (71,464) 10,757,846 Total equity attributable to equity holders of Turkcell Iletisim Hizmetleri AS (“the Company”) 15,921,744 4,835 676,904 (72,204) 15,312,209 Non-controlling interests 131,810 - - - 131,810 Total equity 16,053,554 4,835 676,904 (72,204) 15,444,019

F38 SECTORAL AND FINANCIAL INFORMATION - - 197 F39 27,380 133,597 165,265 224,747 667,283 467,497 268,722 264,704 307,068 3,786,388 Adoptions 31 December 31 December 2018 without without 2018 ------Due to Due to IFRS 16 IFRS 366,845 6,669,064 902,285 12,217,351 Change Change Effect Of Of Effect ANNUAL REPORT 2018 REPORT ANNUAL ------1,786 17,951 19,737 366,845 11,353,466 131,598 Due to Due to IFRS 15 IFRS 255,756 Change Change (102,887) (255,756) Effect Of Of Effect TURKCELL ------1,223 193,854 1,223 222,565 902,285 13,845,600 1,223 242,302 1,269,130 25,199,066 6,058 919,206 1,196,926 40,643,085 IFRS 9 IFRS Due to Due to Change Change Effect Of Of Effect 8,948 45,331 131,598 133,597 165,265 364,610 224,747 268,722 255,756 862,360 2018 As As 2018 307,068 3,788,174 13,119,636 reported 26,711,721 7,035,909 14,971,673 11,740,048 42,765,275 31 December 31 December

Borrowings Employee benefit obligations benefit Employee Provisions Deferred tax liabilities tax Deferred Contract liabilities Contract liabilities non-current Other Borrowings Current tax liabilities tax Current Trade and other payables and other Trade liabilities Contract Due to related parties related Due to revenue Deferred Provisions

Derivative financial instruments Derivative TURKCELL İLETİŞİM HİZMETLERİ A.Ş. HİZMETLERİ İLETİŞİM TURKCELL AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018 DECEMBER 31 ENDED YEAR THE FOR AND AT AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL CONSOLIDATED THE TO NOTES THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.) STATED.) OTHERWISE UNLESS LIRAS TURKISH IN EXPRESSED ARE AND UNITS CURRENCY THOUSAND NEAREST THE (ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO TO OFF ROUNDED BEEN HAVE NOTES AND STATEMENTS FINANCIAL CONSOLIDATED THE IN DISCLOSED AMOUNTS (ALL Liabilities Total non-current liabilities non-current Total Total current liabilities current Total liabilities Total and liabilities equity Total 198 TURKCELL ANNUAL REPORT 2018

TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018

(ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.)

Effect Of Effect Of Effect Of 31 December Change Change Change 31 December 2018 As Due to Due to Due to 2018 without reported IFRS 9 IFRS 15 IFRS 16 Adoptions Revenue 20,350,557 - (18,132) - 20,368,689 Revenue from financial services 941,918 - 308 - 941,610 Total revenue 21,292,475 - (17,824) - 21,310,299

Cost of revenue (13,785,448) - (329,447) 51,098 (13,507,099) Cost of revenue from financial services (360,545) - - - (360,545) Total cost of revenue (14,145,993) - (329,447) 51,098 (13,867,644)

Gross profit 6,565,109 - (347,579) 51,098 6,861,590 Gross profit from financial services 581,373 - 308 - 581,065 Total gross profit 7,146,482 - (347,271) 51,098 7,442,655

Other income 241,435 - - 35,012 206,423 Selling and marketing expenses (1,626,714) 141,527 523,210 51,208 (2,342,659) Administrative expenses (673,370) 225,778 - 50,724 (949,872) Net impairment losses on financial and contract assets (346,390) (346,390) - - - Other expenses (381,582) - - (44,431) (337,151) Operating profit 4,359,861 20,915 175,939 143,611 4,019,396

Finance income 1,932,133 - - 892 1,931,241 Finance costs (3,619,091) (14) - (230,663) (3,388,414) Net finance costs (1,686,958) (14) - (229,771) (1,457,173)

Share of profit of equity accounted investees (87) - - - (87) Profit before income tax 2,672,816 20,901 175,939 (86,160) 2,562,136

Income tax expense (495,481) (4,764) (38,015) 14,696 (467,398) Profit for the period 2,177,335 16,137 137,924 (71,464) 2,094,738

Profit for the year is attributable to: Owners of the Company 2,021,065 16,137 137,924 (71,464) 1,938,468 Non-controlling interests (*) 156,270 - - - 156,270 Total 2,177,335 16,137 137,924 (71,464) 2,094,738

Basic and diluted earnings per share for profit attributable to owners of the Company (in full TL) 0.93 0.01 0.06 (0.03) 0.89

F40 SECTORAL AND FINANCIAL INFORMATION - - - - (6) F41 199 223 (881) 3,419 (1,242) 38,384 40,290 (52,951) (52,951) (52,951) (11,148) 11,301,128 11,312,276 11,312,276 Difference 1 January 2018 654 New 5,522 11,332 110,108 981,396 ANNUAL REPORT 2018 REPORT ANNUAL TURKCELL 654 5,299 11,338 110,108 981,396 155,634 154,392 Original 4,712,333 4,711,452 1,297,597 1,297,597 2,950,523 2,897,572 2,848,572 2,888,862

FVPL FVPL

FVPL FVPL Amortized costAmortized cost Amortized Amortized costAmortized cost Amortized Amortized costAmortized cost Amortized costAmortized cost Amortized Held to maturityHeld to cost Amortized Held to maturityHeld to cost Amortized Original (IAS 39)Original (IAS 9) (IFRS New TURKCELL İLETİŞİM HİZMETLERİ A.Ş. HİZMETLERİ İLETİŞİM TURKCELL AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018 DECEMBER 31 ENDED YEAR THE FOR AND AT AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL CONSOLIDATED THE TO NOTES THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.) STATED.) OTHERWISE UNLESS LIRAS TURKISH IN EXPRESSED ARE AND UNITS CURRENCY THOUSAND NEAREST THE Retained Earnings Opening – 1 January 2018 (Including IFRS 9- excluding IFRS 15) IFRS 9- excluding (Including IFRS – 1 January 2018 Earnings Opening Retained reclassifications any with follows, as were the Company of the financial instruments 1 January 2018, application, initial of On the date noted; Deferred tax effect tax Deferred 9 IFRS with in accordance adoption of impact Total Retained Earnings Opening – 31 December 2017 – 31 December Earnings Opening Retained financial assets other for in provision Decrease Increase in provision for receivables from financial services from receivables for in provision Increase Non-current financial assets Non-current 2. Basis of preparation and summary of significant accounting policies (continued) policies accounting significant and summary of preparation Basis of 2. (continued) interpretations and standards New (ae) (continued) financial statements in the consolidated disclosures and/or reported amounts affecting IFRSs to i) Amendments adoption of – Impact 9 Financial Instruments IFRS and financial financial of assets and measurement classification the recognition, to relate 39 that IAS of the provisions 9 replaces IFRS accounting. and hedge financial of assets impairment financial of instruments, derecognition liabilities, to respect with periods prior for information comparative restate to not it allowing the exemption of advantage has taken Group The and financial financial of assets amounts in the carrying Differences changes. (including impairment) and measurement classification as at 1 January 2018. reserves and earnings in retained recognized 9 are IFRS of the adoption from liabilities resulting the to and adjustments policies in accounting in changes resulted 2018 1 January from 9 Financial Instruments IFRS of adoption The below: as stated financial statements in the consolidated recognised amounts is as follows: January 2018 as at 1 earnings retained on the Group’s impact total The (ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO TO OFF ROUNDED BEEN HAVE NOTES AND STATEMENTS FINANCIAL CONSOLIDATED THE IN DISCLOSED AMOUNTS (ALL Trade receivables Trade Receivables from financial services from Receivables cost Amortized cost Amortized Held to maturity investments maturity Held to Due from related parties related Due from Current financial assets Current receivables Trade financial services from Receivables Derivatives equivalents and cash Cash cost Amortized investments maturity Held to cost Amortized Current financial liabilities Current Derivatives 200 TURKCELL ANNUAL REPORT 2018

TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018

(ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.)

2. Basis of preparation and summary of significant accounting policies (continued)

(ae) New standards and interpretations (continued) i) Amendments to IFRSs affecting amounts reported and/or disclosures in the consolidated financial statements (continued)

IFRS 9 Financial Instruments – Impact of adoption (continued)

Impairment of financial assets

The group recognizes impairment charges for financial assets that are subject to the expected credit loss model in accordance with IFRS 9 as below:

• Trade receivables resulting from operations • Financial services receivables • Cash and cash equivalents • Financial investments • Other receivables • Other assets

Financial services receivables

On 1 January 2018, credit risks were assessed for these loans in accordance with the impairment methodology and TL (52,951) has been recognized under retained earnings.

The reconciliation of impairment provision and opening balances for financial services receivables as of 1 January 2018 is stated as below:

1 January 2018 At 1 January 2018 (calculated under IAS 39) 72,992 Amounts restated through opening retained earnings 52,951 At 1 January 2018 (calculated under IFRS 9) 125,943 Current year provision at profit or loss statement – IFRS 9 190,509 Current year provision at profit or loss statement if IAS 39 was applied 202,998

Other financial assets

The group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for its financial assets comprising of trade receivables and contract assets.

The reconciliation of impairment provision and opening balances for other financial assets as of 1 January 2018 is stated as below:

1 January 2018 At 1 January 2018 (calculated under IAS 39) 705,440 Amounts restated through opening retained earnings (38,384) At 1 January 2018 (calculated under IFRS 9) 667,056 Current year provision at profit or loss statement-IFRS 9 418,799 Current year provision at profit or loss statement if IAS 39 was applied 427,211

F42

SECTORAL AND FINANCIAL INFORMATION

201 F43 830,011 (22,437) 530,022 (144,632) (144,632) (132,920) 11,301,128 11,831,150 1 January 2018 ANNUAL REPORT 2018 REPORT ANNUAL TURKCELL TURKCELL İLETİŞİM HİZMETLERİ A.Ş. HİZMETLERİ İLETİŞİM TURKCELL AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018 DECEMBER 31 ENDED YEAR THE FOR AND AT AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL CONSOLIDATED THE TO NOTES THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.) STATED.) OTHERWISE UNLESS LIRAS TURKISH IN EXPRESSED ARE AND UNITS CURRENCY THOUSAND NEAREST THE 2. Basis of preparation and summary of significant accounting policies (continued) policies accounting significant and summary of preparation Basis of 2. (continued) interpretations and standards New (ae) (continued) financial statements in the consolidated disclosures and/or reported amounts affecting IFRSs to i) Amendments adoption of – Impact Customers with Contracts from 15 Revenue IFRS the which requires method retrospective modified using the date effective on the required standard the new adopted Group The years. prior restate and not earnings retained to 15 as at 1 January 2018 initially applying IFRS of effect the cumulative of recognition as is stated 1 January 2018 as of earnings on retained customers” with contracts from “Revenue 15, IFRS of adoption of impact The below: (ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO TO OFF ROUNDED BEEN HAVE NOTES AND STATEMENTS FINANCIAL CONSOLIDATED THE IN DISCLOSED AMOUNTS (ALL Recognition of asset for subscriber acquisition cost acquisition subscriber for asset of Recognition assets and non-current assets in current Decrease effect tax Deferred 15 IFRS of adoption from earnings retained to Adjustment 15 effects) 9 and IFRS - (including IFRS 2018 1 January earnings retained Opening excluding costs contract 2018, 1 January of As expenses. prepaid under classified been have 15 IFRS to prior capitalized costs Contract assets. intangible to expenses prepaid from classified TL has been 156,879 to amounting costs incremental the new under disclosed has been 2018 1 January - 31 December the period for depreciation accumulated and related costs contract of Details 12. Note adoption of – Impact 16 Leases IFRS 15. Note under disclosed has been 2018 1 January - 31 December the period for on IFRS16 adoption of Details 1 January 2018. of initial application of a date 16 with IFRS adopted early Group The initially of effect which the cumulative under 2 application - option approach retrospective 16 using modified IFRS adopted Group The at 1 January 2018. application initial of at the date recognised applying the Standard accounted expenses lease prepaid the of the classification is attributable to the asset of use to the right TL 542,179 of of amount The 16. IFRS of the application before expenses prepaid under for Retained earnings 1 January 2018 - (including IFRS 9 effects-excluding IFRS 15 effects) 15 IFRS 9 effects-excluding - (including IFRS 1 January 2018 earnings Retained Other 202 TURKCELL ANNUAL REPORT 2018

TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018

(ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.)

2. Basis of preparation and summary of significant accounting policies (continued)

(ae) New standards and interpretations (continued) i) Amendments to IFRSs affecting amounts reported and/or disclosures in the consolidated financial statements (continued)

IFRS 16 Leases – Impact of adoption (continued)

On transition to IFRS 16, the Group elected to apply practical expedient to grandfather the assessment of which transitions are leases. It applied IFRS 16 only to contracts that were previously identified as leases. Contracts that were not identified as leases under IAS 17 and IFRIC 4 were not reassessed for whether there is a lease. Therefore, the definition of a lease under IFRS 16 was applied only to contracts entered into or changed on or after 1 January 2018.

On transition the Group did not elect to apply recognition exemption for short-term leases by class of underlying assets and leases for low-value items which shall be applied lease-by-lease basis on both transition and subsequently.

As a lessee, the Group previously classified leases as operating and finance leases based on its assessment of whether the lease transferred significantly all of the risks and rewards incidental to ownership of the underlying asset to the Group. At transition lease liabilities were measured at the present value of the remaining lease payments, discounted at the Group’s incremental borrowing rate at 1 January 2018. The Group measured right-of-use assets at an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments under IFRS 16 modified retrospective approach option 2 application and used the following practical expedients;

- Group applied a single discount rate to a portfolio of leases with similar characteristics

- Adjusted the right-of-use assets by the amount of IAS 37 onerous contract provision immediately before the date of initial application

- Excluded initial direct costs from measuring the right-of-use asset at the date of initial application

Used hindsight when determining the lease term when the contract contains options to renew or terminate the lease.

F44 SECTORAL AND FINANCIAL INFORMATION F45 203 ANNUAL REPORT 2018 REPORT ANNUAL TURKCELL relating to transfers of investment property; effective from annual periods beginning on annual beginning on periods from effective property; investment of transfers to relating property’ ‘Investment 40, IAS t to payment share-based of certain types for account to how on clarifying payments’ based ‘Share 2, IFRS to ts regarding the implementation of IFRS 9, ‘Financial Instruments’; effective from annual annual from effective ‘Financial Instruments’; 9, IFRS of the implementation regarding contracts’ ‘Insurance 4, IFRS to ts

effective from annual periods beginning on or after 1 January 2018. These amendments impact 2 2 impact amendments These 1 January 2018. after annual beginning on or periods from effective 2014-2016; l improvements S 1, ‘First time adoption of IFRS’, regarding the deletion of short-term exemptions for first-time adopters regarding IFRS 7, IAS 19 19 IAS 7, IFRS regarding adopters first-time for short-term exemptions of the deletion regarding IFRS’, of time adoption ‘First S 1, S 9 is applied before the new insurance contracts standard is issued; and and is issued; standard contracts insurance the new S 9 is applied before ive all companies that issue insurance contracts the option to recognise in other comprehensive income, rather than profit or loss, loss, or than profit rather income, comprehensive in other recognise to the option contracts that issue insurance all companies ive applying from exemption an optional temporary insurance with connected predominantly are activities whose companies ive

AS 28, ‘Investments in associates and joint venture’ regarding measuring an associate or joint venture at fair value. value. at fair venture joint or an associate measuring regarding venture’ and joint in associates ‘Investments 28, AS I IFR 10, and IFRS g when arise that could the volatility IFR g standard financial instruments the existing apply to 9 will continue IFRS of the application that defer entities The 2021. 9 until IFRS 39. IAS

standards: • Annua • or after 1 January 2018. These amendments clarify that to transfer to, or from, investment properties there must be a change in use. a change in use. be must there properties investment from, or to, transfer that to clarify amendments These January 2018. 1 after or change This the definition. meets the property whether of an assessment be should there use has changed a property if conclude To evidence. by supported be must Amendmen basis the measurement clarifies amendment This 2018. 1 January after on or beginning annual periods from effective transactions; equity- to cash-settled from that change an award modifications for and the accounting payments share-based cash-settled, for wholly equity- was it as if treated be to an award 2 that will require in IFRS the principles to an exception It also introduces settled. a share-based with obligation associated tax the employee’s for an amount withhold is obliged to an employer where settled, authority. the tax to that amount and pay payment Amendmen - Amendmen and a deferral approach an overlay approaches: two introduce amendments These 1 January 2018. after on or beginning periods will: standard amended The approach. -

TURKCELL İLETİŞİM HİZMETLERİ A.Ş. HİZMETLERİ İLETİŞİM TURKCELL AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018 DECEMBER 31 ENDED YEAR THE FOR AND AT AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL CONSOLIDATED THE TO NOTES THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.) STATED.) OTHERWISE UNLESS LIRAS TURKISH IN EXPRESSED ARE AND UNITS CURRENCY THOUSAND NEAREST THE effective from annual periods beginning on or after 1 January 1 January after on or annual beginning periods from effective consideration’; and advance transactions currency ‘Foreign IFRIC 22, or that is denominated is consideration there where transactions of parts or transactions currency foreign IFRIC addresses This 2018. situations as for is made as well when a single payment/receipt for guidance provides interpretation The currency. in a foreign priced in practice. diversity aims reduce guidance to The made. are payments/receipts multiple where - - - 2. Basis of preparation and summary of significant accounting policies (continued) policies accounting significant and summary of preparation Basis of 2. (continued) interpretations and standards New (ae) 2018 as at 31 December applicable and interpretations amendments ii) Standards, - (ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO TO OFF ROUNDED BEEN HAVE NOTES AND STATEMENTS FINANCIAL CONSOLIDATED THE IN DISCLOSED AMOUNTS (ALL 204 TURKCELL ANNUAL REPORT 2018

TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018

(ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.)

2. Basis of preparation and summary of significant accounting policies (continued)

(ae) New standards and interpretations (continued) iii) Standards, amendments and interpretations that are issued but not effective as at 31 December 2018

- Amendment to IFRS 9, ‘Financial instruments’; effective from annual periods beginning on or after 1 January 2019. This amendment confirm that when a financial liability measured at amortised cost is modified without this resulting in de-recognition, a gain or loss should be recognised immediately in profit or loss. The gain or loss is calculated as the difference between the original contractual cash flows and the modified cash flows discounted at the original effective interest rate. This means that the difference cannot be spread over the remaining life of the instrument which may be a change in practice from IAS 39.

- Amendment to IAS 28, ‘Investments in associates and joint venture’; effective from annual periods beginning on or after 1 January 2019. These amendments clarify that companies account for long-term interests in associate or joint venture to which the equity method is not applied using IFRS 9.

- IFRIC 23, ‘Uncertainty over income tax treatments’; effective from annual periods beginning on or after 1 January 2019. This IFRIC clarifies how the recognition and measurement requirements of IAS 12 ‘Income taxes’, are applied where there is uncertainty over income tax treatments. The IFRS IC had clarified previously that IAS 12, not IAS 37 ‘Provisions, contingent liabilities and contingent assets’, applies to accounting for uncertain income tax treatments. IFRIC 23 explains how to recognise and measure deferred and current income tax assets and liabilities where there is uncertainty over a tax treatment. An uncertain tax treatment is any tax treatment applied by an entity where there is uncertainty over whether that treatment will be accepted by the tax authority. For example, a decision to claim a deduction for a specific expense or not to include a specific item of income in a tax return is an uncertain tax treatment if its acceptability is uncertain under tax law. IFRIC 23 applies to all aspects of income tax accounting where there is an uncertainty regarding the treatment of an item, including taxable profit or loss, the tax bases of assets and liabilities, tax losses and credits and tax rates.

- IFRS 17, ‘Insurance contracts’; effective from annual periods beginning on or after 1 January 2021. This standard replaces IFRS 4, which currently permits a wide variety of practices in accounting for insurance contracts. IFRS 17 will fundamentally change the accounting by all entities that issue insurance contracts and investment contracts with discretionary participation features.

F46 SECTORAL AND FINANCIAL INFORMATION F47 205 ANNUAL REPORT 2018 REPORT ANNUAL TURKCELL effective from Annual periods beginning on or after 1 January 2020. This This 1 January 2020. after Annual beginning on or periods from effective a business; of 3 - definition IFRS to ts effective from annual periods beginning beginning annual periods from effective settlement’; or curtailment on plan amendment, benefits’ ‘Employee 19, IAS to ts 1 January 2020. after beginning on or Annual periods from material; effective of 8 on the definition 1 and IAS IAS to ts

e a consistent definition of materiality throughout IFRSs and the Conceptual Framework for Financial Reporting; Financial Reporting; for Framework and the Conceptual IFRSs throughout materiality of definition e a consistent effective from annual periods beginning on or after 1 January 2019. These amendments include include amendments These 2019. 1 January after annual beginning on or periods from effective 2015-2017; l improvements S 3, ‘Business combinations’, – a company remeasures its previously held interest in a joint operation when it obtains control of of control obtains when it operation in a joint held interest previously its remeasures – a company combinations’, ‘Business S 3, joint obtains when it operation in a joint held interest previously its remeasure not does – a company arrangements’, S 11, ‘Joint e updated assumptions to determine current service cost and net interest for the reminder of the period after a plan a plan after the period of the reminder for interest and net cost service current determine to assumptions e updated

ecognise in profit or loss as part of past service cost, or a gain or loss on settlement, any reduction in a surplus, even if that that if even in a surplus, reduction any on settlement, loss a gain or or cost, service past as part of loss or in profit ecognise AS 12, ‘Income taxes’ – a company accounts for all income tax consequences of dividend payments in the same way. in the same dividend payments of consequences tax all income for accounts – a company taxes’ ‘Income 12, AS an asset originally develop made to borrowing any borrowings general as part of treats – a company costs’ ‘Borrowing 23, AS i) clarify the explanation of the definition of material; and material; and of the definition of the explanation i) clarify information. 1 about immaterial in IAS the guidance of some ii) incorporate amendment, curtailment or settlement; and settlement; or curtailment amendment, i) us i i when the asset is ready for its intended use or sale. or use intended its for is ready when the asset us r ceiling. the asset of impact the of because recognised previously not surplus was the business. IFR the business. of control I I IFR

- is guidance the current of application the IASB, by received feedback to According a business. of the definition revises amendment combinations. as business qualifying transactions many in too results and it complex, too be to thought commonly Amendmen • - Amendmen on or after 1 January 2019. These amendments require an entity to: an entity require amendments These 1 January 2019. after on or • estimates in accounting changes policies, ‘Accounting 8, and IAS financial of statements’, ‘Presentation 1, IAS to amendments These IFRSs: other to amendments and consequential and errors’, - • Amendmen • • minor changes to: changes minor • Annua

TURKCELL İLETİŞİM HİZMETLERİ A.Ş. HİZMETLERİ İLETİŞİM TURKCELL AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018 DECEMBER 31 ENDED YEAR THE FOR AND AT AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL CONSOLIDATED THE TO NOTES THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.) STATED.) OTHERWISE UNLESS LIRAS TURKISH IN EXPRESSED ARE AND UNITS CURRENCY THOUSAND NEAREST THE - policies. accounting on Company’s and interpretations standards new of material impact expected not does Company The - - 2. Basis of preparation and summary of significant accounting policies (continued) policies accounting significant and summary of preparation Basis of 2. (continued) interpretations and standards New (ae) (continued) 2018 as at 31 December effective not but issued that are and interpretations amendments iii) Standards, - (ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO TO OFF ROUNDED BEEN HAVE NOTES AND STATEMENTS FINANCIAL CONSOLIDATED THE IN DISCLOSED AMOUNTS (ALL 206 TURKCELL ANNUAL REPORT 2018

TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018

(ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.)

3. Financial risk management

This note explains the Group’s exposure to financial risks and how these risks could affect the Group’s future financial performance. Current year profit and loss information has been included where relevant to add further context.

The Group’s risk management is carried out by a central treasury department (“Group Treasury) under policies approved by the Audit Committee. Group Treasury identifies, evaluates and manages financial risks in close co-operation with the Group’s operating units. The Audit Committee provides written principles for overall risk management, as well as policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments, and investment of excess liquidity. In addition, Risk Early Detection Committee was established in accordance with the New Turkish Commercial Code effective from 1 July 2012.

Credit risk

At the reporting date, there were no significant concentrations of credit risk. The maximum exposure to credit risk is represented by the carrying amount of cash and cash equivalents, financial asset at fair value through profit or loss , derivative financial instruments, trade receivables, receivables from financial services, due from related parties and other assets (Note 35).

Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. The Group may require collateral in respect of financial assets. Also, the Group may demand letters of guarantee from third parties related to certain projects or contracts. The Group may also demand certain pledges from counterparties if necessary in return for the credit support it gives related to certain financings (Note 19).

In monitoring customer credit risk, customers are grouped according to whether they are subscribers, financial services customers, other corporate customers, aging profile, maturity and existence of previous financial difficulties. Trade receivables and accrued income are mainly related to the Group’s subscribers. The Group’s exposure to credit risk on trade receivables is influenced mainly by the individual payment characteristics of postpaid subscribers. The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and other receivables.

This allowance comprise of the general provision which is determined based on a loss event. Investments are preferred to be in liquid securities. The counterparty limits are set monthly depending on their ratings from the most credible rating agencies and the amount of their paid-in capital and/or shareholders equity. Policies are in place to review the paid-in capital and rating of counterparties periodically to ensure credit worthiness.

Transactions involving derivatives are executed with local and international counterparties with whom the Group has signed international agreements and which have sound credit ratings.

The Group’s policy is to provide financial guarantees only to subsidiaries and distributors. At 31 December 2018, guarantees of TL 4,988,580 were outstanding (31 December 2017: TL 3,720,954).

F48

SECTORAL AND FINANCIAL INFORMATION

F49 207 ANNUAL REPORT 2018 REPORT ANNUAL TURKCELL TURKCELL İLETİŞİM HİZMETLERİ A.Ş. HİZMETLERİ İLETİŞİM TURKCELL AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018 DECEMBER 31 ENDED YEAR THE FOR AND AT AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL CONSOLIDATED THE TO NOTES THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.) STATED.) OTHERWISE UNLESS LIRAS TURKISH IN EXPRESSED ARE AND UNITS CURRENCY THOUSAND NEAREST THE 3. Financial risk management (continued) Financial 3. risk management risk Liquidity of amount an adequate through funding of and the availability cash sufficient maintaining implies liquidity risk management Prudent the period the reporting the end of At positions. market out close obligations when due and to meet to facilities credit committed managingfor liquidity inflows cash generate readily to expected that are TL 603,553) (2017: TL 587,007 of at call held deposits Group availability by maintaining funding in flexibility maintains Treasury Group the underlying businesses, of nature the dynamic Due to risk. lines. credit committed under 24) on the basis (Note equivalents and cash 35) and cash (Note liquidity reserve the Group’s of forecasts rolling monitors Management and currencies major in flows cash projecting involves policy management liquidity the Group’s In addition, flows. cash expected of and external internal against liquidity ratios sheet balance monitoring these, meet to necessary liquid assets of the level considering financing plans. debt and maintaining requirements regulatory risk Market the Group’s affect prices and equity rates interest rates, exchange such as foreign prices, in market risk is the risk that changes Market market and control manage is to risk management market of objective The financial holdings of instruments. its of the value or income on risk. the return while optimizing parameters, acceptable within risk exposures the Group by set the guidelines at within carried are All such transactions risks. manage market to in order derivatives uses Group The Treasury. risk exchange (i) Foreign primarily with transactions, currency foreign arising from risk exchange foreign to and is exposed internationally operates Group The that is in a currency and liabilities denominated assets recognized from risk arises exchange Foreign EUR and RMB. the USD, to respect in foreign equivalent and cash cash its portion of holds a significant Group The entity. Group the relevant of currency the functional not to manage exposure to used are financial instruments derivative In additional, risk. exchange manage foreign to in order currency accounting. hedge applies Company the of 1 July 2018 and as rates exchange foreign in fluctuations the Group. by managed is not Fintur the subsidiary of assets the net risk arising from exchange Foreign 35. in Note risk is disclosed exchange foreign Company’s of Details risk rate (ii) Interest financial liabilities by manage its Group The and liabilities. financial assets its to risk is related rate interest to exposure Group’s The rate to fixed be changed can exposures rate Floating loans. rate and floating fixed between distribution an appropriate providing is governed financial of derivatives use The via financial derivatives. expectations market on short and long term term based exposures derivatives. of on the use principles written which provide Committee, the Audit by approved policies Treasury’s the Group by 35) (Note repriced contractually periodically are borrowings The cost. at amortized carried are and receivables borrowings Group’s The rates. interest in market changes future risk of the to also exposed are that extent and to (ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO TO OFF ROUNDED BEEN HAVE NOTES AND STATEMENTS FINANCIAL CONSOLIDATED THE IN DISCLOSED AMOUNTS (ALL 208 TURKCELL ANNUAL REPORT 2018

TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018

(ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.)

4. Segment information

The Group has two reportable segments in accordance with its integrated communication and technology services strategy - Turkcell Turkey and Turkcell International. While some of these strategic segments offer the same types of services, they are managed separately because they operate in different geographical locations and are affected by different economic conditions.

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker function is carried out by the Board of Directors, however Board of Directors may transfer the authorities, other than recognized by the law, to the General Manager and other directors.

Turkcell Turkey reportable segment includes the operations of Turkcell, Turkcell Superonline Iletisim Hizmetleri A.S. (“Turkcell Superonline”), Turkcell Satis ve Dijital Is Servisleri Hizmetleri A.S. (“Turkcell Satis”), group call center operations of Global Bilgi Pazarlama Danismanlık ve Cagri Servisi Hizmetleri A.S. (“Turkcell Global Bilgi”), Turktell Bilisim Servisleri A.S. (“Turktell”), Turkcell Teknoloji Arastirma ve Gelistirme A.S. (“Turkcell Teknoloji”), Kule Hizmet ve Isletmecilik A.S. (“Global Tower”), Rehberlik Hizmetleri Servisi A.S. (“Rehberlik”), Turkcell Odeme Hizmetleri A.S. (“Turkcell Odeme”) and Turkcell Gayrimenkul Hizmetleri A.S. (“Turkcell Gayrimenkul”). Turkcell International reportable segment includes the operations of Kibris Mobile Telekomunikasyon Limited Sirketi (“Kibris Telekom”), East Asian Consortium B.V. (“Eastasia”), Lifecell LLC (“lifecell”), Lifecell Ventures Coöperatief U.A (“Lifecell Ventures”), Beltel Telekomunikasyon Hizmetleri A.S. (“Beltel”), CJSC Belarusian Telecommunications Network (“Belarusian Telecom”), LLC UkrTower (“UkrTower”), LLC Global Bilgi (“Global LLC”), Turkcell Europe GmbH (“Turkcell Europe”), Lifetech LLC (“Lifetech”), Beltower LLC (“Beltower”) and Lifecell Digital Limited (“Lificell Digital”). The operations of these legal entities aggregated into one reportable segment as the nature of services are similar and most of them share similar economic characteristics. Other reportable segment mainly comprises the information and entertainment services in Turkey and Azerbaijan, non-group call center operations of Turkcell Global Bilgi, Turkcell Finansman A.Ş.(“ Turkcell Finansman”), Turkcell Özel Finansman A.Ş. (“TÖFAŞ”), Turkcell Enerji Cozumleri ve Elektrik Satıs Ticaret A.S (“Turkcell Enerji”) Paycell LLC (“Paycell”), Turkcell Sigorta Aracılık Hizmetleri A.Ş (“Turkcell Sigorta”), Türkiye’nin Otomobili Girişim Grubu Sanayi ve Ticaret A.Ş.(“Türkiye’nin Otomobili”) and Sofra Kurumsal ve Ödüllendirme Hizmetleri A.Ş.(“Sofra”).

The Board primarily uses adjusted EBITDA to assess the performance of the operating segments. Adjusted EBITDA definition includes revenue, cost of revenue excluding depreciation and amortization, selling and marketing expenses and administrative expenses.

Adjusted EBITDA is not a financial measure defined by IFRS as a measurement of financial performance and may not be comparable to other similarly-titled indicators used by other companies. Reconciliation of Adjusted EBITDA to the consolidated profit for the year is included in the accompanying notes.

F50 SECTORAL AND FINANCIAL INFORMATION F51 209

ANNUAL REPORT 2018 REPORT ANNUAL

Bad debt expense debt Bad 948(9,7)(,7)(,5)(966 (9,956) (79,676) (5,956) (6,070) (195,472) 49,468 3,7)(211,384) (36,278) - -

TURKCELL

Adjusted EBITDA Adjusted ,9,3 ,6,6 23922538 7,1 2,4 (3,859) 222,849 374,314 235,348 263,962 4,160,861 5,593,837 6,228,254 4,619,509 4,619,509 6,228,254 451

Revenues from external customers external from Revenues 548461,6,1 1,026,181 12,767,912 15,418,446 7620414,285,561 17,632,064 - - 661,921 1,187,437 855,728

Inter-segment revenue Inter-segment 3,9)(960 4,9)(894 (17) (18,964) (40,897) (19,680) (31,690) 2 26438,646 72,604 (2) - -

Total segment revenue segment Total 540161,8,9 1,067,078 12,787,592 15,450,136 ,8,5 6,2 7,0)(866 7620414,285,561 17,632,064 (38,646) (72,604) 661,923 1,187,454 874,692

0721 0721 0721 0721 072016 2017 2016 2017 2016 2017 2016 2017 2016 2017

Consolidated eliminations segments International Turkey

Intersegment Intersegment other All Turkcell Turkcell

Bad debt expense debt Bad 2811 948(,8)(,7)(411 (79,676) (94,131) (6,070) (4,088) 49,468 (248,171) 3630 (36,278) (346,390) - -

Adjusted EBITDA Adjusted ,3,9 ,9,3 1,9 6,6 6,7 7,1 2,7)(,5)877926,228,254 8,787,982 (3,859) (24,476) 374,314 665,470 263,962 612,697 5,593,837 7,534,291

Revenues from external customers external from Revenues 823431,1,4 ,8,2 ,2,8 ,8,1 1,187,437 1,681,719 1,026,181 1,387,323 15,418,446 18,223,433 1224517,632,064 21,292,475 - -

4,4)(160 6,5)(087 2212 1)341372,604 364,113 (17) (252,112) (40,897) (69,657) (31,690) (42,344) revenue Inter-segment - -

Total segment revenue segment Total 825771,5,3 ,5,8 ,6,7 ,3,3 ,8,5 3413 7,0)2,9,7 17,632,064 21,292,475 (72,604) (364,113) 1,187,454 1,933,831 1,067,078 1,456,980 15,450,136 18,265,777

0821 0821 0821 0821 082017 2018 2017 2018 2017 2018 2017 2018 2017 2018

Turkey International segments eliminations Consolidated

Turkcell Turkcell Turkcell Turkcell All other other All Intersegment Intersegment

4. Segment information (continued) information Segment 4.

THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.) STATED.) OTHERWISE UNLESS LIRAS TURKISH IN EXPRESSED ARE AND UNITS CURRENCY THOUSAND NEAREST THE

(ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO TO OFF ROUNDED BEEN HAVE NOTES AND STATEMENTS FINANCIAL CONSOLIDATED THE IN DISCLOSED AMOUNTS (ALL

AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018 DECEMBER 31 ENDED YEAR THE FOR AND AT AS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL CONSOLIDATED THE TO NOTES TURKCELL İLETİŞİM HİZMETLERİ A.Ş. HİZMETLERİ İLETİŞİM TURKCELL 210 TURKCELL ANNUAL REPORT 2018

TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018

(ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.)

4. Segment information (continued)

2018 2017 2016 Profit for the period 2,177,335 2,037,759 1,543,803

Add(Less):

Profit/(loss) from discontinued operations - - 42,164

Profit from continuing operations 2,177,335 2,037,759 1,585,967 Income tax expense 495,481 571,758 423,160 Finance income (1,932,133) (818,436) (961,642) Finance costs 3,619,091 1,141,302 1,134,441 Other income (241,435) (74,438) (78,569) Other expenses 381,582 773,329 312,801 Depreciation and amortization 4,287,974 2,596,980 2,203,351 Share of loss of equity accounted investees 87 - - Consolidated adjusted EBITDA 8,787,982 6,228,254 4,619,509

Geographical information

In presenting the information on the basis of geographical segments, segment revenue is based on the geographical location of operations and segment assets are based on the geographical location of the assets.

2018 2017 2016 Revenues Turkey 19,636,682 16,431,863 13,321,503 Ukraine 923,181 664,643 573,951 Belarus 293,181 209,884 149,005 Azerbaijan 268,471 174,021 108,329 Turkish Republic of Northern Cyprus 169,014 148,637 129,785 Germany 1,580 3,016 2,988 Netherlands 366 - - 21,292,475 17,632,064 14,285,561

31 December 31 December Non-current assets 2018 2017 Turkey 21,037,351 18,098,228 Ukraine 2,751,277 1,408,783 Belarus 293,622 141,802 Turkish Republic of Northern Cyprus 177,380 138,371 Azerbaijan - 13,663 Unallocated non-current assets 168,536 112,516 24,428,166 19,913,363

F52 SECTORAL AND FINANCIAL INFORMATION

211 F53

Total 540161,8,9 ,6,7 7,9 ,8,5 6,2 2643,4 7620414,285,561 17,632,064 38,646 72,604 661,923 1,187,454 874,692 1,067,078 12,787,592 15,450,136

ANNUAL REPORT 2018 REPORT ANNUAL

Other 2,6 1373,2 26,851 37,325 81,377 124,263 6,9 109,477 162,499 - - 1,249 911

Revenue from betting business betting from Revenue 7,2 108,329 174,021 - - 108,329 174,021 - - - -

Commission fees on betting business betting on fees Commission 8,8 176,167 181,886 - - 176,167 181,886 - - - -

TURKCELL Call center revenues center Call ,0 ,8 2,7 191,480 224,973 7,084 7,706 - - 3,7 198,564 232,679 - -

Revenue from financial services financial from Revenue 0,6 184,698 605,663 - - 184,698 605,663 - - - -

Equipment revenues Equipment ,8,9 7,2 98144,532 69,801 579,820 1,089,699 ,5,0 624,352 1,159,500 - - - -

Telecommunication services Telecommunication 426141,2,9 5,4 796,225 952,246 12,126,395 14,236,174 2643,4 5158612,883,974 15,115,816 38,646 72,604 - -

2016 2017 2016 2017 2016 2017 2016 2017 2016 2017

Turkcell Turkey Turkcell Other International Consolidated eliminations

Turkcell Turkcell Intersegment Intersegment

Total 825771,5,3 ,5,8 ,6,7 ,3,3 ,8,5 6,1 2642,9,7 17,632,064 21,292,475 72,604 364,113 1,187,454 1,933,831 1,067,078 1,456,980 15,450,136 18,265,777

Other 7,9 2,6 4223,2 311,933 37,325 64,272 124,263 175,695 6,5 162,499 262,058 - 289,842 911

Revenue from betting business betting from Revenue 6,7 174,021 268,470 - - 174,021 268,470 - - - -

Commission fees on betting business betting on fees Commission 0,1 181,886 200,315 - - 181,886 200,315 - - - -

Call center revenues center Call ,6 ,0 1,9 2,7 17,786 224,973 211,195 7,706 9,763 - - 0,7 232,679 203,172 -

Revenue from financial services financial from Revenue 4,1 605,663 941,918 - - - - 4,1 605,663 941,918 - -

Equipment revenues Equipment ,3,9 ,8,9 0,5 69,801 101,350 1,089,699 1,337,495 ,3,4 1,159,500 1,438,845 - - - -

Telecommunication services Telecommunication 672571,3,7 ,8,9 952,246 1,281,595 14,236,174 16,752,587 6457,0 7976715,115,816 17,977,697 72,604 56,485 - -

2017 2018 2017 2018 2017 2018 2017 2018 2017 2018

Turkcell Turkey Turkcell International eliminations Other Consolidated

Turkcell Turkcell Intersegment Intersegment

5. Revenue 5.

THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.) STATED.) OTHERWISE UNLESS LIRAS TURKISH IN EXPRESSED ARE AND UNITS CURRENCY THOUSAND NEAREST THE

(ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO TO OFF ROUNDED BEEN HAVE NOTES AND STATEMENTS FINANCIAL CONSOLIDATED THE IN DISCLOSED AMOUNTS (ALL

AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018 DECEMBER 31 ENDED YEAR THE FOR AND AT AS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL CONSOLIDATED THE TO NOTES TURKCELL İLETİŞİM HİZMETLERİ A.Ş. HİZMETLERİ İLETİŞİM TURKCELL 212 TURKCELL ANNUAL REPORT 2018

TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018

(ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.)

5. Revenue (continued)

2018 Turkcell Intersegment Turkcell Turkey International Other eliminations Consolidated Telecommunication Services 16,752,587 1,281,595 - 56,485 17,977,697 At a point in time 267,329 - - 7,493 259,836 Over time 16,485,258 1,281,595 - 48,992 17,717,861 Equipment Related 1,337,495 101,350 - - 1,438,845 At a point in time 1,330,808 101,350 - - 1,432,158 Over time 6,687 - - - 6,687 Call Center - 9,763 211,195 17,786 203,172 At a point in time - - - - - Over time - 9,763 211,195 17,786 203,172 Commision fees on betting business - - 200,315 - 200,315 At a point in time - - - - - Over time - - 200,315 - 200,315 Revenue from betting business - - 268,470 - 268,470 At a point in time - - - - - Over time - - 268,470 - 268,470 Revenue from financial operations - - 941,918 - 941,918 At a point in time - - 38,955 - 38,955 Over time - - 902,963 - 902,963 All other segments 175,695 64,272 311,933 289,842 262,058 At a point in time 12,211 8,556 7,576 - 28,343 Over time 163,484 55,716 304,357 289,842 233,715 Total 18,265,777 1,456,980 1,933,831 364,113 21,292,475 At a point in time 1,610,348 109,906 46,531 7,493 1,759,292 Over time 16,655,429 1,347,074 1,887,300 356,620 19,533,183

6. Other income and expense

Other income amounted to TL 241,435, TL 74,438 and TL 78,569 for the years ended 31 December 2018, 2017 and 2016, respectively.

Other expenses amounted to TL 381,582, TL 773,329 and TL 312,801 for years ended 31 December 2018, 2017 and 2016, respectively.

Other income for the years ended 31 December 2018 mainly consist of reversal of legal provisions, gain on sale of investments and fixed assets and gain on modification of lease contract .

Other income for the years ended 31 December 2017 and 2016 mainly consist of gain on sale of fixed assets and reversal of legal provisions (Note 37).

Other expenses for the year ended 31 December 2018 mainly consist of donations and litigation expenses, loss on modification of lease contract.

Other income for the year ended 31 December 2017 and 2016 mainly consist of donations and litigation expenses (Note 37).

F54 SECTORAL AND FINANCIAL INFORMATION - - 213 F55 563 2016 2016 7,722 74,522 32,977 (8,688) 158,206 961,642 445,943 282,408 - 1,105 2017 2017 8,107 36,186 32,862 (29,115) (8,300) 317,542 278,599 185,004 818,436 (718,501) (782,463) 1,746,147 1,450,262 1,787,116 1,490,961 ANNUAL REPORT 2018 REPORT ANNUAL - TURKCELL 9,361 2018 2018 29,140 58,766 50,828 204,191 654,933 568,370 395,045 (116,926) 1,932,133 (807,120) (385,386) (343,290) 2,030,641 2,069,142 (3,619,091) (1,141,302) (1,134,441) (2,695,045) (1,686,958) (322,866) (172,799) (**) (*)

Remeasurements of employee termination benefits for the years ended 31 December 2018, 2017 and 2016 amounting to TL (12,699), TL (12,699), to amounting and 2016 2017 2018, 31 December ended the years for benefits termination employee of Remeasurements

Wages and salaries include compulsory social security contributions, bonuses and share based payments. based and share bonuses contributions, social security include compulsory and salaries Wages TURKCELL İLETİŞİM HİZMETLERİ A.Ş. HİZMETLERİ İLETİŞİM TURKCELL AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018 DECEMBER 31 ENDED YEAR THE FOR AND AT AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL CONSOLIDATED THE TO NOTES THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.) STATED.) OTHERWISE UNLESS LIRAS TURKISH IN EXPRESSED ARE AND UNITS CURRENCY THOUSAND NEAREST THE (*) (**) 7. Employee benefit expenses benefit Employee 7. (ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO TO OFF ROUNDED BEEN HAVE NOTES AND STATEMENTS FINANCIAL CONSOLIDATED THE IN DISCLOSED AMOUNTS (ALL Employee termination benefits benefits termination Employee Defined contribution plans contribution Defined Wages and salaries and salaries Wages TL 3,738 and TL 34,532 respectively are reflected in other comprehensive income. comprehensive other in reflected are respectively and TL 34,532 TL 3,738 expenses. and administrative expenses selling and marketing revenue, of cost in recognized are expenses benefit Employee and costs income Finance 8. loss: or profit of the statement in Recognized Fair value gains on derivative financial instruments and interest financial instruments gains on derivative value Fair Cash flow hedges – reclassified to profit or loss or profit to reclassified – hedges flow Cash Interest income on bank deposits on bank income Interest Interest income on financial assets measured at amortized cost at amortized measured on financial assets income Interest Credit finance income finance Credit Other Other Finance income Finance Net foreign exchange losses exchange foreign Net Interest expenses for financial liabilities measured at amortized cost at amortized financial liabilities measured for expenses Interest Late payment interest expense interest payment Late Other Finance costs Finance Net finance costs finance Net Finance incomes for the years ended 31 December 2018, 2017 and 2016 are mainly attributable to interest income on contracted on contracted income mainly interest attributable to are and 2016 2017 2018, 31 December ended the years for incomes Finance hedge. flow and cash deposits on bank income interest financial instruments, derivative of value in fair changes sales, handset TL and TL 2,378,910 to amounting issued and bonds on borrowings losses exchange mainly include foreign losses exchange Foreign 2018. 31 December as of 1,335,308 exchange foreign borrowings, of mainly the financing costs attributable to and 2017 2018 31 December ended year for costs Finance activities. and financing operating from losses foreign payable, fees 4.5G license borrowings, of is mainly the financing costs attributable to 2016 ended year for costs Finance in Ukraine. operating lifecell of losses exchange in Belarus and foreign operating Belarusian Telecom of losses exchange operations’ in the foreign incurred losses exchange foreign exclude and lifecell Belarusian Telecom from losses exchange Foreign in the reserve translation currency foreign under in equity directly recognized been which have individual financial statements in as disclosed operations in foreign investment net for policy the accounting with in accordance financial statements consolidated 2c. Note 214 TURKCELL ANNUAL REPORT 2018

TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018

(ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.)

9. Income tax expense

2018 2017 2016 Current income tax expense (654,953) (437,967) (200,663) Deferred income tax (expense)/credit 159,472 (133,791) (222,497) Total income tax expense (495,481) (571,758) (423,160)

Income tax expense is attributable to profit from continuing operations.

Income tax relating to each component of other comprehensive income

Tax (expense)/ 2018 Before tax credit Net of tax Foreign currency translation differences 850,188 (226,667) 623,521 Change in cash flow hedge reserve 19,156 (4,214) 14,942 Change in cost of hedging reserve (347,602) 76,472 (271,130) Remeasurements of employee termination benefits 12,699 (2,794) 9,905 534,441 (157,203) 377,238

2017 Foreign currency translation differences 100,149 (107,299) (7,150) Remeasurements of employee termination benefits (3,738) 748 (2,990) 96,411 (106,551) (10,140)

2016 Foreign currency translation differences 218,472 (87,381) 131,091 Remeasurements of employee termination benefits (34,532) 7,066 (27,466) 183,940 (80,315) 103,625

F56 SECTORAL AND FINANCIAL INFORMATION - - 215 F57 2016 1,253 (1,966) (8,176) (78,571) (15,935) (30,616) (42,164) 104,244 1,966,963 - - - - 2017 4,133 4,258 11,280 73,916 (41,340) (102,102) ANNUAL REPORT 2018 REPORT ANNUAL - - - TURKCELL 7,617 2018 2,313 2,510 24,268 198,160 (91,778) (50,551) 2,672,816 2,609,517 2,009,127 2,672,816 2,609,517 (495,481) (571,758) (423,160) (588,020) (521,903) (393,393) (***) (**) (*)

Mainly comprises of tax losses for which no deferred tax asset has been recognized. has been asset tax which no deferred for losses tax of Mainly comprises The Group’s transfer of its total shareholding in Azerinteltek controlled by Inteltek to one of other shareholder of Azerinteltek, Baltech Investment LLC (Not 39) (Not LLC Investment Baltech Azerinteltek, of shareholder other one of to Inteltek by controlled in Azerinteltek shareholding total its of transfer Group’s The

Mainly comprises of research and development tax credit and the exemption effect of Fintur amounted to TL 76,164. to amounted Fintur of effect and the exemption credit tax and development research of Mainly comprises TURKCELL İLETİŞİM HİZMETLERİ A.Ş. HİZMETLERİ İLETİŞİM TURKCELL AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018 DECEMBER 31 ENDED YEAR THE FOR AND AT AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL CONSOLIDATED THE TO NOTES THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.) STATED.) OTHERWISE UNLESS LIRAS TURKISH IN EXPRESSED ARE AND UNITS CURRENCY THOUSAND NEAREST THE 9. Income tax expense (continued) expense tax Income 9. expense tax income of Reconciliation (ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO TO OFF ROUNDED BEEN HAVE NOTES AND STATEMENTS FINANCIAL CONSOLIDATED THE IN DISCLOSED AMOUNTS (ALL The Turkish entities within the Group are subject to corporate tax at the rate of 20%. Corporate tax is applied on taxable corporate corporate is applied on taxable tax Corporate 20%. of at the rate tax corporate to subject are the Group within entities Turkish The tax deducting and by expenses, adding non-deductible back by profit accounting the statutory from which is calculated income, which was Laws, and Some Other Laws Some Tax of on the Amendment 7061 No. Law Turkey’s 2017, 5, On December income. exempt the Corporate under rate tax the corporate increases Law The Gazette. in the Official published was 2017, 28, on November adopted of date on the Law’s effect and 2020; the change took 2019, 2018, years tax 22% for to 20% rate the current from 5520, No. Law, Tax publication. at the end returns tax file their Companies assessments. on tax agreement a final and definitive for is no procedure there In Turkey, is payment tax Corporate relate. which they to year the accounting of the close following month the forth the 25th day of until of and the underlying such returns examine however, may, authorities Tax is filed. return in which the tax the month the end of made until on a quarterly basis. filed are returns tax Advance years. five within assessments and may revise records accounting “disguised the heading of with Law Tax the Article Corporate under 13 of stated been have pricing provisions the transfer In Turkey, 18 November dated Pricing, via Transfer distribution profit on disguised Communiqué General The pricing”. via transfer distribution profit implementation. about details sets 2007 (*) (**) (***) Adjustments for current tax of prior years prior of tax current for Adjustments Effect of amounts which are not deductible deductible not which are amounts of Effect Utilization of previously unrecognized tax losses tax unrecognized previously of Utilization Profit from continuing operations before income tax expense expense tax income before operations continuing from Profit Tax effect of investment in associate investment of effect Tax Tax exemption from subsidiary sale subsidiary from exemption Tax Change in unrecognized deferred tax assets assets tax deferred Change in unrecognized (Loss) from discontinued operations before income tax expense expense tax income before operations discontinued from (Loss) Other Profit before income tax expense tax income before Profit Total income tax expense tax income Total Tax at the Turkey’s tax rate rate tax at the Turkey’s Tax Difference in overseas tax rates tax in overseas Difference Effect of exemptions exemptions of Effect 216 TURKCELL ANNUAL REPORT 2018

TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018

(ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.)

9. Income tax expense (continued)

If a taxpayer enters into transactions regarding sale or purchase of goods and services with related parties, where the prices are not set in accordance with arm’s length principle, then related profits are considered to be distributed in a disguised manner through transfer pricing. Such disguised profit distributions through transfer pricing are not accepted as tax deductible for corporate income tax purposes.

The deduction of 100% of the research and development expenses is allowed when the taxpayers are made these expenditures exclusively for new technology and information researches.

Dividend payments of Turkish resident corporations to Turkish real persons, foreign corporations and foreign real persons are subject to 15% withholding tax. It is possible to apply reduced withholding tax rate for dividend payments made to abroad, under the scope of provisions of an applicable double taxation treaty. On the other hand, dividend payments made to Turkish resident companies are not subject to withholding tax.

Dividend income of Turkish taxpayers received from other Turkish taxpayers is exempted from corporate tax. However, dividends received from participation shares and stocks of fund and investment partnerships cannot utilize from this exemption.

75% of the profits arising from sale of affiliate shares, founders’ shares, redeemed shares and preemptive rights that are held by the corporations for at least two years are exempted from corporate tax. However, as of 5 December 2017, the date of the publication of the Law No. 7061, 50% part of the profits arising from the sale of the immovable properties that are included in assets of the corporations for two years are exempted from corporate tax. The exemption rate is 75% before this date. In order to benefit from these exemptions, profits must be recorded under a passive fund account in balance sheet and not withdrawn for 5 years. Also, the sale amounts must be received until the end of the second calendar year following the sale.

Pursuant to Article 10/13-h of Law No.7143 which was published in the Official Gazette dated 18 May 2018 and numbered 30425;

• for the resident real persons and institutions, - Income from the sale of non-resident subsidiary shares, - Participation income from non-resident subsidiaries, - Commercial income through permanent establishment and permanent representatives abroad, including those obtained until the date 31 October 2018, are exempted from income tax or corporation tax under condition that incomes are transferred from the effective date of Article until 31December 2018. In accordance with the President Decision dated 29 August 2018 and numbered 48, the terms of the Article has been extended for 6 months. In this way, including those obtained until the date 30 April 2019, income from the sale of non-resident subsidiary’s shares are exempted from corporation tax under condition that incomes are transferred until 30 June 2019.

• for the resident real persons and institutions, income from the liquidation of non-resident institutions are exempt from income tax or corporation tax under condition that incomes are transferred to Turkey until the date 31 December 2018. In accordance with the President Decision dated 29 August 2018 and numbered 48, the terms of the Article has been extended for 6 months. In this way, income from the liquidation of non-resident institutions are exempted from corporation tax under condition that incomes are transferred until 30 June 2019.

F58 SECTORAL AND FINANCIAL INFORMATION 217 F59 2016 2016 (61,647) (139,185) (93,786) (68,546) (859,143) (128,429) (518,382) 2017 2017 (55,185) (218,221) (82,994) (186,530) (221,431) (192,045) (96,080) (177,258) ANNUAL REPORT 2018 REPORT ANNUAL - TURKCELL 2018 2018 (79,453) (50,929) (551,127) (532,989) (555,158) (898,936) (757,869) (348,492) (270,366) (256,454) (440,976) (394,421) (354,380) (622,390) (278,727) (229,396) (226,806) (508,884) (844,941) (828,222) (326,080) (1,763,414) (1,607,079) (1,420,233) (1,108,734) (870,226) (551,656) (1,558,795) (1,493,409) (1,063,251) (1,884,556) (1,669,807) (1,491,503) (1,202,485) (1,046,544) (4,287,974) (2,596,980) (2,203,351) (1,626,714) (2,005,420) (1,910,947) (14,145,993) (11,350,174) (9,236,607) (**) (*)

ling and marketing expenses: ling and marketing As of 31 December 2018, Frequency usage fees related to prepaid subscribers are shown under net impairment losses on financial and contract assets according to IFRS 9. IFRS to according assets on financial and contract losses impairment net under shown are subscribers prepaid to related fees usage Frequency 2018, 31 December of As

As at 31 December 2018, depreciation and amortization expenses includes depreciation and amortization expenses related to the financial services amounting to TL 12,053 (31 TL 12,053 (31 to amounting the financial to services related expenses and amortization depreciation includes expenses and amortization depreciation 2018, at 31 December As TURKCELL İLETİŞİM HİZMETLERİ A.Ş. HİZMETLERİ İLETİŞİM TURKCELL AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018 DECEMBER 31 ENDED YEAR THE FOR AND AT AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL CONSOLIDATED THE TO NOTES THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.) STATED.) OTHERWISE UNLESS LIRAS TURKISH IN EXPRESSED ARE AND UNITS CURRENCY THOUSAND NEAREST THE

10. Expenses by nature by Expenses 10. is as follows: and 2016 2017 2018, 31 December ended the years for nature by expenses of Breakdown revenue: of Cost (ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO TO OFF ROUNDED BEEN HAVE NOTES AND STATEMENTS FINANCIAL CONSOLIDATED THE IN DISCLOSED AMOUNTS (ALL Sel (*)

(**) Selling expenses Selling expenses expenses Marketing Employee benefit expenses benefit Employee subscribers prepaid to related fees usage Frequency Others Others December 2017: TL 6,343; 31 December 2016: TL 1,677). 2016: TL 6,343; 31 December 2017: December Transmission expenses Transmission Depreciation and amortization and amortization Depreciation Universal service fund service Universal Treasury share Treasury Roaming expenses Roaming Interconnection and termination expenses and termination Interconnection Billing and archiving expenses Billing archiving and Employee benefit expenses expenses benefit Employee Others Cost of goods sold goods of Cost Frequency expenses Frequency Radio expenses Radio Cost of revenue from financial services financial services from revenue of Cost 218 TURKCELL ANNUAL REPORT 2018

TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018

(ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.)

10. Expenses by nature (continued)

Administrative expenses:

2018 2017 2016 Employee benefit expenses (425,681) (346,151) (277,438) Travel and entertainment expenses (38,406) (30,957) (18,913) Consultancy expenses (38,252) (50,247) (54,315) Collection expenses (37,525) (20,415) (20,827) Maintenance and repair expenses (26,867) (24,342) (20,315) Rent expenses - (36,280) (30,314) Net impairment expense recognized on receivables - (36,278) (211,384) Other (106,639) (100,526) (88,343) (673,370) (645,196) (721,849)

Net impairment losses on financial and contract assets:

2018 2017 Net impairment losses on financial and contract assets (346,390) - (346,390) -

F60 SECTORAL AND FINANCIAL INFORMATION

F61 219

The network infrastructure mainly consists of mobile and fixed network infrastructure investments. infrastructure network fixed and mobile of consists mainly infrastructure network The

Impaired network infrastructure mainly consists of damaged or technologically inadequate mobile and fixed network infrastructure investments. infrastructure network fixed and mobile inadequate technologically or damaged of consists mainly infrastructure network Impaired

76,899 for the years ended 31 December 2018, 2017 and 2016 respectively. 2016 and 2017 2018, December 31 ended years the for 76,899

Capitalization rates and amounts other than borrowings made specifically for the purpose of acquiring a qualifying asset are 6.8%, 10.0% and 9.9%, TL 75,054 and TL 66,513 and TL TL and 66,513 TL and 75,054 TL 9.9%, and 10.0% 6.8%, are asset qualifying a acquiring of purpose the for specifically made borrowings than other amounts and rates Capitalization

depreciation expenses. expenses. depreciation Impairment losses on property, plant and equipment for the years ended 31 December 2018, 2017 and 2016 are TL 34,382, TL 39,721 and TL 43,198, respectively and are recognized in in recognized are and respectively 43,198, TL and 39,721 TL 34,382, TL are 2016 and 2017 2018, December 31 ended years the for equipment and plant property, on losses Impairment

ANNUAL REPORT 2018 REPORT ANNUAL recognized in cost of revenue. of cost in recognized

Depreciation expenses for the years ended 31 December 2018, 2017 and 2016 amounting to TL 1,888,834, TL 1,499,242 and TL 1,278,009, respectively include impairment losses and are are and losses impairment include respectively 1,278,009, TL and 1,499,242 TL 1,888,834, TL to amounting 2016 and 2017 2018, December 31 ended years the for expenses Depreciation

Net book amount book Net ,6,0 ,5,7 (21,976) 1,153,776 9,665,408 781 3,8)(003 9,8 2,5)11,116,316 (20,056) 391,380 (10,023) (34,382) (7,811)

TURKCELL

Total ,5,5 ,5,5 (231,266) 1,854,452 8,353,357 368(218 6,7 2,6)10,629,048 (25,765) 666,770 (12,138) 23,638 -

Leasehold improvements Leasehold 276,006 - 2,200 (1,639) 12 - (547) 30,233 245,747

Motor vehicles Motor 34,230 - 1,917 (918) - - (712) 2,637 31,306

Equipment, fixtures and fittings and fixtures Equipment, 633,507 - 29,470 (2,694) 49 - (10,839) 77,694 539,827

Land and buildings and Land ,8 2,6)239,088 (25,765) 4,686 - 9 - (274) 50,514 209,918

Network infrastructure (All operational) (All infrastructure Network ,2,5 ,9,7 (218,894) 1,693,374 7,326,559 9,446,217 - 628,497 (6,887) 23,568 -

Accumulated depreciation depreciation Accumulated

Total 8087530828(253,242) 3,008,228 18,018,765 781 1,4)(211 ,5,5 4,2)21,745,364 (45,821) 1,058,150 (22,161) (10,744) (7,811)

Construction in progress in Construction 60 24848 (10,744) (2,448,448) (670) 2,260,360 672,294 512,087 - 39,295 -

Leasehold improvements Leasehold 327,492 - 5,690 (1,639) - 3,123 (547) 5,998 314,867

Motor vehicles Motor 40,106 - 1,944 (1,400) - - (775) 3,121 37,216

Equipment, fixtures and fittings and fixtures Equipment, 931(15,827) 59,311 728,202 803,500 - 25,143 (4,041) - 10,712

Land and buildings and Land 255 156,540 (2,535) 28,828 786,058 ,3 4,2)929,901 (45,821) 6,831 - -

Network infrastructure (All operational) (All infrastructure Network 540186060(3,8)2,270,262 (232,888) 650,610 15,480,128 1,8)979,247 (15,081) - 19,132,278 -

Cost Cost diin ipsl Transfers Disposals Additions 2018 January 1 2018 property rates exchange subsidiary (reversals)

Balance as at at as Balance 31 December December 31 investment in movements of Disposal expenses/

Balance as at at as Balance to Transfer of Effects Impairment

11. Property, plant and equipment and plant Property, 11.

THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.) STATED.) OTHERWISE UNLESS LIRAS TURKISH IN EXPRESSED ARE AND UNITS CURRENCY THOUSAND NEAREST THE

(ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO TO OFF ROUNDED BEEN HAVE NOTES AND STATEMENTS FINANCIAL CONSOLIDATED THE IN DISCLOSED AMOUNTS (ALL

AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018 DECEMBER 31 ENDED YEAR THE FOR AND AT AS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL CONSOLIDATED THE TO NOTES TURKCELL İLETİŞİM HİZMETLERİ A.Ş. HİZMETLERİ İLETİŞİM TURKCELL 220 TURKCELL ANNUAL REPORT 2018 2017 37,216 31,306 314,867 539,827 245,747 672,294 728,202 7,326,559 15,480,128 31 December 31 December Balance as at as at Balance ------22,366 209,918 64,594 786,058 22,366 8,353,357 42,228 9,665,408 property investment investment Transfer from from Transfer 261 358 384 645 420 1,915 1,766 5,977 2,028 111,419 21,807 96,690 Effects of movements in in movements exchange rates exchange ------115 1,482 25,186 100,028 23,589 expenses/ expenses/ (reversals) Impairment Impairment ------486 (153) (14,535) 121,835 64,594 18,018,765 (153) (39,721) 2,209 39,130 (1,949,000) (14,535) - (221) (1,719) (1,642) (4,417) (1,340) (5,041) (8,202) 4,415 2,276 7,400 29,138 26,295 48,393 117,087 (10,854) Additions Disposals Transfers 34,136 311,761 159,351 30,252 617,732 519,702 162,206 566,523 2,063,329 220,668 497,606 7,751,457 1,459,521 (1,005,201) 8,195,705 1,469,217 (23,675) 6,843,580 1,353,419 (990,719) 15,947,162 2,928,738 (1,028,876) 13,897,308 574,301 (1,009,922) 1,907,022 Balance as at as at Balance 1 January 2017 TURKCELL İLETİŞİM HİZMETLERİ A.Ş. HİZMETLERİ İLETİŞİM TURKCELL NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL CONSOLIDATED THE TO NOTES 2018 DECEMBER 31 ENDED YEAR THE FOR AND AT AS THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.) STATED.) OTHERWISE UNLESS LIRAS TURKISH IN EXPRESSED ARE AND UNITS CURRENCY THOUSAND NEAREST THE (ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO TO OFF ROUNDED BEEN HAVE NOTES AND STATEMENTS FINANCIAL CONSOLIDATED THE IN DISCLOSED AMOUNTS (ALL (continued) and equipment plant Property, 11. Motor vehicles Motor improvements Leasehold in progress Construction and fittings fixtures Equipment, vehicles Motor Network infrastructure (All operational) infrastructure Network and buildings Land and fittings fixtures Equipment, Total depreciation Accumulated (All operational) infrastructure Network and buildings Land improvements Leasehold Total Net book amount book Net Cost

F62

SECTORAL AND FINANCIAL INFORMATION

221 F63 ANNUAL REPORT 2018 REPORT ANNUAL TURKCELL TURKCELL İLETİŞİM HİZMETLERİ A.Ş. HİZMETLERİ İLETİŞİM TURKCELL AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018 DECEMBER 31 ENDED YEAR THE FOR AND AT AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL CONSOLIDATED THE TO NOTES THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.) STATED.) OTHERWISE UNLESS LIRAS TURKISH IN EXPRESSED ARE AND UNITS CURRENCY THOUSAND NEAREST THE 12. Intangible assets Intangible 12. - 2G License Turkcell the carrying USD 500,000, of a consideration for License”) (the “2G license GSM a 25-year granted was Company the On 27 April 1998, 25 years. over is amortized and it TL 241,407) 2017: (31 December 2018 at 31 December is TL 195,425 the 2G license of amount - 3G License Turkcell providing for authorization which provides the ICTA with (the “3G License”) agreement a license signed the Company On 30 April 2009, a for band frequency widest the providing license the A-type acquired Company The and infrastructure. services IMT 2000/UMTS of amount carrying The 30 April 2009. from starting years 20 for is effective license The VAT). EUR 358,000 (excluding of consideration 25 years. over is amortized and it TL 436,014) 2017: (31 December 2018 at 31 December 397,543 is TL the 3G License - 4.5G License Turkcell the held by was tender, as 4.5G license publicly known and Infrastructure” on IMT Services Tender “Authorization 2015, On 26 August 13 172.4M Hz for of band frequency a total granted was and the Company Authority and Communication Technologies Information VAT). (excluding EUR 1,623,460 of a consideration for years 2x1.4 MHz 1 April 2016. 4.5G from for delivery service commenced on 30 April 2029 and operators expires period IMT authorization on 1 December commenced were in 2100 MHz spectrum band frequency 2x5 MHz of 2 units and in 900MHz spectrum band frequency on 1 April 2016. commenced were packages while remaining 2015, TL 4,528,254). 2017: (31 December 2018 at 31 December is TL 4,125,743 the 4.5G License of amount carrying The (ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO TO OFF ROUNDED BEEN HAVE NOTES AND STATEMENTS FINANCIAL CONSOLIDATED THE IN DISCLOSED AMOUNTS (ALL 222 TURKCELL ANNUAL REPORT 2018 2018 12,211 15,512 7,040 7,040 73,139 12,074 31,855 67,017 117,618 37,526 32,834 50,005 Balance at at Balance 31 December 31 December ------11,981 - rates rates 12,078 974,200 18,343 2,034,053 22,587 18,007 180,276 2,948,235 331,583 8,722,998 Effects of movements movements in exchange in exchange ------(191) (176) (18,370) 110,621 8,539,038 (18,561) 483,134 19,622,225 subsidiary Disposal of of Disposal ------3,232 (12,793) 59,680 5,481,895 3,232 (12,969) 252,034 9,572,053 ------11 (618,032) (618,032) ------(31) (37) - - - - 437 528 583 1,319 1,319 8,581 7,473 7,473 4,899 4,549 6,394 6,394 (220,986) 466,379 5,062 5,062 533,311 (184,582) 485,815 485,815 663,967 (3,071) 1,175,040 1,175,040 (4,822) 159,453 ------Impact Impact 601,890 360,232 1,431,901 583,809 adaption Additions Disposals Transfers Impairment of IFRS 15 15 IFRS of - - 6,512 11,981 11,491 11,774 15,512 7,040 71,820 23,274 42,749 32,834 62,468 32,834 112,556 127,637 7,117,116 8,139,628 2,419,230 4,770,880 7,338,463 601,890 1,577,087 (187,684) 8,340,410 830,011 687,825 (38,161) 7,811 (3,232) (5,592) 231,100 10,050,172 15,678,873 1,431,901 2,264,912 (225,845) 7,811 Balance at 1 at 1 Balance January 2018 Net book amount book Net Total Other Subscriber acquisition cost acquisition Subscriber Customer base Customer Brand name Brand Indefeasible right of usage of right Indefeasible Central betting system operating right operating system betting Central Transmission line software Transmission Computer software Computer Accumulated amortization Accumulated licenses Telecommunication Total Construction in progress Construction Other Subscriber acquisition cost acquisition Subscriber Goodwill Customer base Customer Brand name Brand TURKCELL İLETİŞİM HİZMETLERİ A.Ş. HİZMETLERİ İLETİŞİM TURKCELL Indefeasible right of usage of right Indefeasible Central betting system operating right operating system betting Central NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL CONSOLIDATED THE TO NOTES 2018 DECEMBER 31 ENDED YEAR THE FOR AND AT AS Transmission line software Transmission THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.) STATED.) OTHERWISE UNLESS LIRAS TURKISH IN EXPRESSED ARE AND UNITS CURRENCY THOUSAND NEAREST THE Computer software Computer Telecommunication licenses Telecommunication (ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO TO OFF ROUNDED BEEN HAVE NOTES AND STATEMENTS FINANCIAL CONSOLIDATED THE IN DISCLOSED AMOUNTS (ALL (continued) assets Intangible 12. Cost and are losses include impairment respectively TL 921,812, TL 1,095,401and TL 1,580,319, to amounting and 2016 2017 2018, 31 December ended the years for expenses Amortization revenue. of in cost recognized expenses. in amortization recognized and are respectively and TL 3,181 TL 1,986 TL 3,232, are and 2016 2017 2018, 31 December ended the years for assets on intangible losses Impairment the is TL 171,442 for costs development capitalized of amount The asset. an intangible of the definition that meet costs development software capitalized includes software Computer 2017 2018, 31 December ended the years for costs development software capitalized to related expenses amortization The TL 124,504). 2017: (31 December 2018 31 December ended year revenue. of in cost recognized are respectively TL 37,532 and 30,148, TL 40,934, to amounting and 2016

F64 SECTORAL AND FINANCIAL INFORMATION

F65 223

Net book amount book Net 7368,340,410 27,326 (1,986) 153 (504) 79,432 8,235,989

Total ,4,2 ,9,1 (8,120) 1,093,415 6,246,029 ,5 7,338,463 5,153 1,986 -

Other 32,834 - - - - 8,366 24,468

Customer base Customer 11,774 - - - - 488 11,286

ANNUAL REPORT 2018 REPORT ANNUAL

Brand name Brand 6,512 - - - - 704 5,808

Indefeasible right of usage of right Indefeasible 23,274 - - - - 4,489 18,785

Central betting system operating right operating system betting Central 11,491 - - - - 903 10,588

TURKCELL Transmission line software line Transmission 62,468 - 767 - - 3,498 58,203

Computer software Computer ,8 4,770,880 1,980 1,219 - (8,120) 537,805 4,237,996

Telecommunication licenses Telecommunication ,7 2,419,230 3,173 - - - 537,162 1,878,895

Accumulated amortization Accumulated

Total 4420811287 (8,624) 1,172,847 14,482,018 24915,678,873 32,479 - 153

Construction in progress in Construction ,5 127,637 2,656 - (638,357) - 620,463 142,875

Other 42,749 - - (588) - 5,016 38,321

Goodwill 32,834 - - - - - 32,834

Customer base Customer 15,512 - - - - - 15,512

Brand name Brand 7,040 - - - - - 7,040

Indefeasible right of usage of right Indefeasible 112,556 - - - - 66,539 46,017

Central betting system operating right operating system betting Central 11,981 - - - - - 11,981

Transmission line software line Transmission 71,820 - - - - 218 71,602

Computer software Computer ,7,0 7,5 (,2)569,153 (8,624) 470,457 6,076,405 ,2 7,117,116 9,725 -

Telecommunication licenses Telecommunication 0088,139,628 20,098 - 69,945 - 10,154 8,039,431

Cost diin ipsl rnfr Impairment Transfers Disposals Additions 2017 January 1 2017 rates exchange

Balance at at Balance 31 December December 31 in movements

Balance at at Balance of Effects

12. Intangible assets (continued) assets Intangible 12.

THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.) STATED.) OTHERWISE UNLESS LIRAS TURKISH IN EXPRESSED ARE AND UNITS CURRENCY THOUSAND NEAREST THE

(ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO TO OFF ROUNDED BEEN HAVE NOTES AND STATEMENTS FINANCIAL CONSOLIDATED THE IN DISCLOSED AMOUNTS (ALL

AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018 DECEMBER 31 ENDED YEAR THE FOR AND AT AS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL CONSOLIDATED THE TO NOTES TURKCELL İLETİŞİM HİZMETLERİ A.Ş. HİZMETLERİ İLETİŞİM TURKCELL 224 TURKCELL ANNUAL REPORT 2018

TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018

(ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.)

13. Impairment of assets

The Group’s cash-generating units (CGUs) are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the recoverable amount of the CGU is estimated. The recoverable amount of the CGU is its fair value less cost of disposal. Ukraine and Belarus CGUs were tested for impairment at 31 December 2018. None of these CGUs contains goodwill or an intangible asset with an indefinite useful life. lifecell

At 31 December 2018, impairment of Ukraine CGU was tested using the assumption that lifecell was the CGU.

The recoverable amount of lifecell is determined based on fair value less cost of disposal calculations which require the use of assumptions. The calculations use cash flow projections based on financial budgets approved by management covering a six-year period. Cash flows beyond the six-year period are extrapolated using the estimated growth rate.

Sensitivity analysis was performed on the change in WACC by +0.5%/-0.5% (31 December 2017: +0.5%/-0.5%).

The assumptions used in recoverable amount calculations of lifecell for the year 2018 and 2017 were respectively:

A post-tax WACC rate of 27.0% for the period from 2019 to 2024, a post-tax WACC rate of 26.3% for the period after 2024 and a terminal growth rate of 5.3% were used to extrapolate cash flows beyond the 6-year forecasts period based on the business plans.

A post-tax WACC rate of 26.5% for the period from 2018 to 2022, a post-tax WACC rate of 25.9% for the period after 2022 and a terminal growth rate of 6.0% were used to extrapolate cash flows beyond the 6-year forecasts period based on the business plans.

As the recoverable amount of lifecell was higher than its carrying amount, no impairment charge was recognized.

Belarusian Telecom

The aggregate carrying amount of goodwill arising from the acquisition of Belarusian Telecom was impaired at 31 December 2011. The cumulative impairment loss recognized in the statement of profit or loss is TL 228,774.

At 31 December 2018, impairment of Belarus CGU was tested using the assumption that Belarusian Telecom was the CGU.

The recoverable amount of Belarusian Telecom is determined based on fair value less cost of disposal calculations which require the use of assumptions. The calculations use cash flow projections based on financial budgets approved by management covering a five- year period. Cash flows beyond the five-year period are extrapolated using the estimated growth rate.

Sensitivity analysis was performed on the change in WACC by +0.5%/-0.5% (31 December 2017: +0.5%/-0.5%).

F66 SECTORAL AND FINANCIAL INFORMATION - 67 F 225 215 980 (940) 99,938 22,366 (2,337) 165,472 (98,958) (64,594) (119,202)

- - - (5,611) 45,821 99,938 15,425 ANNUAL REPORT 2018 REPORT ANNUAL 145,759 (25,765) (98,958) (130,334) TURKCELL 31 December 201831 December 2017 31 December (*)

During the year ended 31 December 2017, the Group transferred its building located in Istanbul, Tepebası from investment properties to property, plant and equipment due to the the due to and equipment plant property, to properties investment from Tepebası in Istanbul, building located its transferred the Group 2017, 31 December ended During the year TURKCELL İLETİŞİM HİZMETLERİ A.Ş. HİZMETLERİ İLETİŞİM TURKCELL AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018 DECEMBER 31 ENDED YEAR THE FOR AND AT AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL CONSOLIDATED THE TO NOTES THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.) STATED.) OTHERWISE UNLESS LIRAS TURKISH IN EXPRESSED ARE AND UNITS CURRENCY THOUSAND NEAREST THE Cost balance Opening depreciation Accumulated balance Opening and equipment plant property, to Transfer during the year charges and impairment Depreciation Disposal balance Closing Disposal Transfer to property, plant and equipment and equipment plant property, to Transfer Other amount book Net Closing balance balance Closing

Determination of the fair values of the Group’s investment properties properties investment the Group’s of values the fair of Determination of the valuation perform to Turkey, of Board Markets the Capital by authorized experts, qualified external engages Group The techniques valuation the appropriate establish to experts the qualified external with closely works Management properties. investment direct methods: valuation of using a variety determined were properties investment these of values fair The the model. to and inputs the fair In estimating . approach and market approach cost replacement approach, capitalization and income approach capitalization use. current is its the property of use and best the highest the properties, of values (*)

Turkcell Superonline Turkcell 2017: (31 December is TL 32,834 Superonline Turkcell to allocated goodwill of amount carrying the aggregate 2018, at 31 December As materiality. of on the grounds Superonline Turkcell to allocated goodwill for performed was test No impairment TL 32,834). properties Investment 14. 13. Impairment of assets (continued) assets of Impairment 13. respectively: were and 2017 2018 the year for Belarusian Telecom of calculations amount in recoverable used assumptions The and a 2024, after the period 22.4% for of rate WACC a post-tax 2024, to 2019 from the period 22.8% for of rate WACC A post-tax plan. business on the based period forecast the 6-year beyond flows cash extrapolate to used 5.0% were of rate terminal growth and a 2022, after the period for 24.9% of rate WACC a post-tax 2022, to 2018 from the period 25.4% for of rate WACC A post-tax plan. business on the based period forecast the 5-year beyond flows cash extrapolate to used 8.0% were of rate terminal growth recognized. was charge impairment no amount, carrying higher than its was Belarusian Telecom of amount the recoverable As (ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO TO OFF ROUNDED BEEN HAVE NOTES AND STATEMENTS FINANCIAL CONSOLIDATED THE IN DISCLOSED AMOUNTS (ALL change in purpose of use. use. of change in purpose 226 TURKCELL ANNUAL REPORT 2018

TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018

(ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.)

14. Investment properties (continued)

Rent income from investment properties during the year ended 31 December 2018 is TL 3,092 (31 December 2017: TL 2,821 and 31 December 2016: TL 2,317). There is no direct operating expense for investment properties during the year ended 31 December 2018 (31 December 2017: TL 22 and 31 December 2016: TL 22).

The Group’s investment properties and their fair values at 31 December 2018 and 2017 are as follows:

31 December 2018 Level 1 Level 2 Level 3 Valuation Method Investment properties in Gebze - - 17,960 Income capitalization approach

Investment properties in Ankara - - 15,915 Market approach

Investment properties in Istanbul - - 13,800 Market approach

Investment properties in Aydın - - 2,110 Market approach - - 49,785

31 December 2017 Level 1 Level 2 Level 3 Valuation Method Investment properties in Izmir - - 52,110 Replacement cost approach

Investment properties in Gebze - - 16,690 Income capitalization approach

Investment properties in Ankara - - 15,160 Market approach

Investment properties in Istanbul - - 13,000 Market approach

Investment properties in Adana - - 3,150 Replacement cost approach

Investment properties in Balıkesir - - 3,112 Replacement cost approach

Other investment properties - - 3,970 Replacement cost approach

Other investment properties - - 2,146 Market approach - - 109,338

F68

SECTORAL AND FINANCIAL INFORMATION

227 F69 ANNUAL REPORT 2018 REPORT ANNUAL TURKCELL TURKCELL İLETİŞİM HİZMETLERİ A.Ş. HİZMETLERİ İLETİŞİM TURKCELL AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018 DECEMBER 31 ENDED YEAR THE FOR AND AT AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL CONSOLIDATED THE TO NOTES THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.) STATED.) OTHERWISE UNLESS LIRAS TURKISH IN EXPRESSED ARE AND UNITS CURRENCY THOUSAND NEAREST THE 14. Investment properties (continued) properties Investment 14. as follows: are properties investment respective of values fair of and sensitivity inputs unobservable Significant significantly, will increase/(decrease) approach capitalization” on the “direct based determined properties the investment of values Fair rentals. market in current increase/(decrease) and a significant rate in capitalization (increase) decrease/ is a significant when there the respective of the selling price by income annual operating net properties’ dividing comparable by is calculated rate Capitalization properties. in the increase/(decrease) a significant will cause in rentals increase/(decrease) a significant approach, capitalization” In the “income the current considering by calculated which are rate and discount in risk premium decrease/(increase) a slight In addition, value. fair value. in the fair increase/(decrease) a significant will cause conditions market similar any of costs and miscellaneous costs construction of increase/(decrease) a significant approach”, cost In the “replacement value. in the fair increase/(decrease) a significant will cause in the market properties areas in the similar located which are properties any of value in the market increase/(decrease) a significant approach”, In the “market value. in the fair increase/(decrease) a significant will cause conditions similar with (ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO TO OFF ROUNDED BEEN HAVE NOTES AND STATEMENTS FINANCIAL CONSOLIDATED THE IN DISCLOSED AMOUNTS (ALL 228 TURKCELL ANNUAL REPORT 2018 Total Total 12,321 1,578,559 - Intangible License way Right of of Right Total (81,325) (758,479) (6,458) (48,273) (54,731) (813,210) Network Network equipment Other Tangible Building (43,563) (181,741) 1,077,517 146,826 226,243 115,652 1,566,238 12,321 (451,850) Site Rent Site 1,021,638 135,158 50,538 109,883 1,317,217 8,643 323,742 332,385 1,649,602 TURKCELL İLETİŞİM HİZMETLERİ A.Ş. HİZMETLERİ İLETİŞİM TURKCELL NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL CONSOLIDATED THE TO NOTES 2018 DECEMBER 31 ENDED YEAR THE FOR AND AT AS THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.) STATED.) OTHERWISE UNLESS LIRAS TURKISH IN EXPRESSED ARE AND UNITS CURRENCY THOUSAND NEAREST THE (ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO TO OFF ROUNDED BEEN HAVE NOTES AND STATEMENTS FINANCIAL CONSOLIDATED THE IN DISCLOSED AMOUNTS (ALL assets use of Right 15. this methodology, with In accordance payments. rent accrued or prepaid for liability the lease equal adjusted to asset use of a right provided Company The 1 January 2018, of As 1 January 2018. as of earnings retained on the Group’s an impact have not 16 does IFRS of application as below: is stated 2018 31 December ended the years for expenses and amortization and depreciation 2018 1 January and 31 December as of assets use of right of balances Closing Balance at 1 January Depreciation and amortization charge for the year for charge and amortization Depreciation Balance at 31 December Balance As at 31 December 2018, additions to right of use assets amount to TL 1,156,973 and interest expense on lease liabilities is TL 210,200. on lease expense and interest TL 1,156,973 to amount assets use of right to additions 2018, at 31 December As

F70 SECTORAL AND FINANCIAL INFORMATION F71 229 ANNUAL REPORT 2018 REPORT ANNUAL TURKCELL

TURKCELL İLETİŞİM HİZMETLERİ A.Ş. HİZMETLERİ İLETİŞİM TURKCELL AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018 DECEMBER 31 ENDED YEAR THE FOR AND AT AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL CONSOLIDATED THE TO NOTES THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.) STATED.) OTHERWISE UNLESS LIRAS TURKISH IN EXPRESSED ARE AND UNITS CURRENCY THOUSAND NEAREST THE

16. Asset held for sale and discontinued operations sale discontinued and held for Asset 16. Fintur of Disposal to program an active and initiated jurisdictions in relevant operations Fintur from exit plan to to has committed the Group In 2016, operation as discontinued saleand reported as held for classified has been Fintur In this regard, associate. its for a buyer locate 2016. 1 October from starting at the lower measured has been Fintur 5, IFRS with and in accordance 2016, 1 October from starting ceased Fintur for accounting Equity sell. to costs less value and fair amount carrying of control. the Company’s beyond and circumstances events by caused was process in the sales delay during 2018 The International Azerbaijan to A.Ş (“Azertel”) Dış Ticaret Yatırım Telekomunikasyon in Azertel shareholding total its has transferred Fintur, to shares of the transfer agreement, definitive signing of The 2018. on 5 March EUR 221,687 of at the price (“Azintelecom”) LLC Telecom on consolidated has no impact transaction The simultaneously. completed were Fintur to proceeds of and the transfer Azintelecom financial position. of in the statement sale” held for as “assets is classified Fintur since financial statements organized company stock a joint 2018, Silknet JSC on 20 March to LLC in Geocell shares all of its the transfer has completed Fintur transaction The approvals. regulatory the necessary receiving USD 153,000 upon of consideration a total for Georgia, of the laws under financial of in the statement sale” held for as “assets is classified Fintur since financial statements on consolidated has no impact position. a fixed in Kazakhstan, established JSC (“Kazakhtelecom”), Kazakhtelecom JSC to in Kcell shareholding total its has transferred Fintur, a total for Samruk-Kazyna fund wealth sovereign through Kazakhstan of the Republic of the government by controlled line operator Kazakhtelecom to shares of transfer The 2018. on 12 December signed has been agreement definitive The USD 302,571. of consideration on impact has no transaction The 2018. on 21 December simultaneously completed were Fintur to proceeds of and the transfer financial position. of in the statement sale” held for as “assets is classified Fintur since financial statements consolidated shareholder other to in Fintur shareholding total its transfer to 2018 on 12 December agreement the definitive has signed Company The regulatory of obtainment to subsequent Holding will completed be Sonera to Transfer Holding”). (“Sonera Holding B.V. Sonera Fintur, of in 2019. is expected Closing transaction. the of date on closing will finalized be transaction of value the approvals, (ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO TO OFF ROUNDED BEEN HAVE NOTES AND STATEMENTS FINANCIAL CONSOLIDATED THE IN DISCLOSED AMOUNTS (ALL 230 TURKCELL ANNUAL REPORT 2018

TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018

(ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.)

16. Asset held for sale and discontinued operations (continued)

The reconciliation of statement of profit or loss statement of Fintur is listed below (The financial statements are presented in USD);

1 January - 30 September 2016 Revenue 617,214 Cost of sales (369,104) Gross profit 248,110

Selling and marketing expenses (69,983) General and administrative expenses (69,818) Other operating (expenses), net (31,258) Operating profit 77,051

Finance (expense)/income, net (61,203) Profit before income tax 15,848

Total income tax (30,947) (Loss)/profit for period (15,099)

Attributable to: -owners of the parent (28,695) -non-controlling interests 13,596 (Loss)/profit for period (15,099)

17. Other non-current assets

2018 2017 Advances given for property, plant and equipment 216,894 12,078 Prepaid expenses 89,603 197,431 Receivables from the Public Administration 72,848 72,848 Deposits and guarantees given 27,071 23,999 VAT receivable 2,318 4,429 Others 12,572 45,835 421,306 356,620

F72 SECTORAL AND FINANCIAL INFORMATION - - - 231 F73 2017 (5,188) (2,729) (6,449) (92,327) (133,791) Net - - 32,926 32,926 20,554 10,775 224,179 2018 (7,014) (8,608) 159,472 (141,213) (157,203) (709,628) (555,062) (555,062) (406,905) ANNUAL REPORT 2018 REPORT ANNUAL - - - (64) 109,551 202,048 (92,327) TURKCELL Liabilities ------Assets - 2018 2017 2018 2017 2018 2017 15,380 1,492 (429,162) (182,806) (413,782) (181,314) 32,926 32,926 20,554 10,775 155,132 202,112 (45,581) 106,128 41,903 (936,167) (680,134) (830,039) (638,231) 224,179 248,251 545,968 (101,268) (434,907) 146,983 111,061 152,732 96,060 (862,360) (651,122) (709,628) (555,062) (649,818) (739,116) 649,818 739,116 802,550 835,176 (1,512,178) (1,390,238) (709,628) (555,062) (**) (*)

Mainly comprises of loans and bonds’ deferred tax assets. tax deferred and bonds’ loans of Mainly comprises The impact of adoption of IFRS 15, “Revenue from contracts with customers” is accounted under Property, plant and equipment and intangible assets (Not 2) (Not assets and intangible and equipment plant Property, under is accounted customers” with contracts from “Revenue 15, IFRS of adoption of impact The

Other assets and liabilities assets Other TURKCELL İLETİŞİM HİZMETLERİ A.Ş. HİZMETLERİ İLETİŞİM TURKCELL Tax allowances Tax Tax losses carried forward forward carried losses Tax AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018 DECEMBER 31 ENDED YEAR THE FOR AND AT AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL CONSOLIDATED THE TO NOTES Asset classified as held for sale as held for classified Asset Reserve for employee termination benefits benefits termination employee for Reserve and provisions Net deferred tax assets/(liabilities) tax deferred Net THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.) STATED.) OTHERWISE UNLESS LIRAS TURKISH IN EXPRESSED ARE AND UNITS CURRENCY THOUSAND NEAREST THE Derivative instruments Derivative Offsetting Investment Deferred tax assets/(liabilities) tax Deferred Property, plant and equipment and and and equipment plant Property, assets intangible Prior year corporate tax base differences base tax corporate year Prior net balance, Closing Opening balance Opening 9 and 15 effects IFRS charge statement Income income comprehensive other of components to relating charge Tax differences Exchange Movement in deferred tax assets/ (liabilities) for the years ended 31 December 2018 and 2017 were as follows: as were and 2017 2018 31 December ended the years (liabilities) for assets/ tax in deferred Movement (*) (**) 18. Deferred tax assets and liabilities assets tax Deferred 18. and liabilities assets tax deferred Recognized the following: attributable to are and 2017 2018 and liabilities at 31 December assets tax Deferred (ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO TO OFF ROUNDED BEEN HAVE NOTES AND STATEMENTS FINANCIAL CONSOLIDATED THE IN DISCLOSED AMOUNTS (ALL 232 TURKCELL ANNUAL REPORT 2018

TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018

(ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.)

18. Deferred tax assets and liabilities (continued)

The Group did not recognise deferred income tax assets of TL 5,310,000 in respect of tax losses amounting to TL 972,730 that can be carried forward against future taxable income. The unused tax losses were mainly incurred by lifecell and Belarusian Telecom that are not likely to generate taxable income in the foreseeable future.

Unused tax losses will expire at the following dates:

Expiration Date Amount 2019 808 2020 581 2021 646 2022 368,109 2023 172,264 2024 303,045 2025 1,023,650 2026 47,466 2027 488,572 2028 308,541 Indefinite 2,596,318 Total 5,310,000

19. Trade receivables and accrued revenue

31 December 2018 31 December 2017 Receivables from subscribers 1,634,427 1,369,948 Accounts and notes receivable 560,665 498,397 Undue assigned contracted receivables 271,306 347,596 Accrued revenue - 632,631 Other 39,592 - 2,505,990 2,848,572

Trade receivables are shown net of provision for impairment amounting to TL 738,181, at 31 December 2018 (31 December 2017: TL 705,213). Movements in provision for impairment of trade receivables and due from related parties are disclosed in Note 35. The accounts and notes receivable represent receivables from distributors and roaming receivables. The Group’s exposure to currency risk and credit risk arising from trade receivables are disclosed in Note 35.

Letters of guarantee received with respect to the accounts and notes receivable amounted to TL 174,975 and TL 339,543 at 31 December 2018 and 2017, respectively.

The undue assigned contracted receivables are the remaining portion of the assigned receivables from the distributors related to the handset campaigns which will be collected from subscribers in instalments by the Company. When monthly instalment is billed to the subscriber, that portion is transferred to “Receivables from subscribers”. The Company measures the undue assigned contracted receivables at amortized cost, bears the credit risk and recognizes interest income throughout the contract period.

The accrued revenue represents accrued revenue from subscribers. Due to the high volume of subscribers, there are different billing cycles. Accordingly, an accrual is made at the end of each reporting period to accrue revenue for services rendered but not billed. The undue assigned contracted receivables related to handset campaigns, which will be billed after one year is presented under non- current trade receivable amounting to TL 115,001.

F74 SECTORAL AND FINANCIAL INFORMATION - - - - F75 233 1,297,597 2,950,523 4,248,120 3,513 3,513 711,928 ANNUAL REPORT 2018 REPORT ANNUAL 711,928 884,686 4,170,929 3,286,243 TURKCELL 31 December 201831 December 2017 31 December 31 December 201831 December 2017 31 December 31 December 2018 31 December 2017 December 31

vements in provision for impairment of receivables from financial services are disclosed in Note 35. in Note disclosed are financial services from receivables of impairment for in provision vements Contract assets Contract

Contract assets Contract TURKCELL İLETİŞİM HİZMETLERİ A.Ş. HİZMETLERİ İLETİŞİM TURKCELL AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018 DECEMBER 31 ENDED YEAR THE FOR AND AT AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL CONSOLIDATED THE TO NOTES THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.) STATED.) OTHERWISE UNLESS LIRAS TURKISH IN EXPRESSED ARE AND UNITS CURRENCY THOUSAND NEAREST THE The contract assets represents contract assets from subscribers. Due to the high volume of subscribers, there are different billing billing different are there subscribers, of the high Due to volume subscribers. from assets contract represents assets contract The billed. not but rendered services for revenue accrue to period reporting each is made at the end of an accrual Accordingly, cycles. assets. contract long term under is presented one year which will billed after be campaigns, handset to related receivables Contracted Inventory 22. and tower sim card tablet, modem, mainly of mobile phone, which consist TL 180,434 to amounting inventories 2018 31 December of As TL 104,102). 2017: materials (31 December construction Non-current receivables from financial services from receivables Non-current Mo

Starting from 2016 the Group and its distributors have offered handset campaigns where subscribers can buy handsets using loans using loans handsets buy can subscribers where campaigns handset offered have distributors and its the Group 2016 from Starting the from the loan Finansman collects Turkcell transactions. in these risk credit assumes Group The Finansman. Turkcell by placed sale. as principal acting in the handset is not it since revenue handset recognize not and does period during the contract subscriber assets Contract 21. assets: contract Current Current receivables from financialservices from receivables Current Non-current contract assets: contract Non-current 20. Receivables from financial services from Receivables 20. (ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO TO OFF ROUNDED BEEN HAVE NOTES AND STATEMENTS FINANCIAL CONSOLIDATED THE IN DISCLOSED AMOUNTS (ALL 234 TURKCELL ANNUAL REPORT 2018

TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018

(ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.)

23. Other current assets

31 December 2018 31 December 2017 Receivables from the Ministry of Transport and Infrastructure of Turkey 415,524 143,669 Restricted cash 204,077 183,806 Advances given to suppliers 92,715 55,754 Receivables from tax office 83,392 93,917 Prepaid expenses 79,149 322,388 VAT receivable 65,123 38,934 Subscriber acquisition costs - 138,177 Special communication tax to be collected from subscribers - 38,318 Other 151,532 145,642 1,091,512 1,160,605

As at 31 December 2018, restricted cash amounting to TL 204,077 represents the deposits as guarantees in connection with the foreign currency loans utilized by Turkcell Finansman.

24. Cash and cash equivalents

31 December 2018 31 December 2017 Cash in hand 144 192

Banks 7,413,113 4,712,141 - Demand deposits 587,007 603,553 - Time deposits 6,826,106 4,108,588 Other cash and cash equivalents 5,982 - Cash and cash equivalents 7,419,239 4,712,333

As at 31 December 2018, the average effective interest rates of TL, USD and EUR time deposits are 22.5%, 5.9% and 3.3% (31 December 2017: 14.3%, 5.8% and 2.2%) respectively.

As at 31 December 2018, average maturity of time deposits is 35 days (31 December 2017: 32 days).

F76 SECTORAL AND FINANCIAL INFORMATION TL F77 235 996

(52,352) 2,147,648 31 December 2017 31 December (%) 0.05 51.00 1,122,000 48.95 1,077,004 100.00 2,200,000 ANNUAL REPORT 2018 REPORT ANNUAL

TURKCELL TL 996 (52,352) 2,147,648 31 December 2018 31 December (%) 0.05 51.00 1,122,000 48.95 1,077,004 100.00 2,200,000 TURKCELL İLETİŞİM HİZMETLERİ A.Ş. HİZMETLERİ İLETİŞİM TURKCELL AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018 DECEMBER 31 ENDED YEAR THE FOR AND AT AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL CONSOLIDATED THE TO NOTES THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.) STATED.) OTHERWISE UNLESS LIRAS TURKISH IN EXPRESSED ARE AND UNITS CURRENCY THOUSAND NEAREST THE 25. Equity 25. capital Share paid and fully issued authorized, 2,200,000,000) 2017: (31 December 2,200,000,000 represents capital share 2018, at 31 December As nominal to refers financial statements in the consolidated presented capital share In this respect, TL 1 each. of value a par with shares capital. share registered of amount proxy. by or in person at a meeting one vote to and is entitled dividends as declared receive to entitled are shares of holder Every as follows: are percentage shareholding their with Companies (ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO TO OFF ROUNDED BEEN HAVE NOTES AND STATEMENTS FINANCIAL CONSOLIDATED THE IN DISCLOSED AMOUNTS (ALL Turkcell Holding A.Ş. (“Turkcell Holding”) (“Turkcell Holding A.Ş. Turkcell Public Share Other Total

Inflation adjusted capital adjusted Inflation Inflation adjustment to share capital to share adjustment Inflation 995,509). is 995,509 (2017: security as pledged shares of number total 2018, at 31 December As reserves Legal TCC The (“TCC”). Code Commercial the Turkish with in accordance appropriated reserves, second and first of consist legal reserves The reaches reserve the total until annum, per 5% of at the rate profits statutory of out is appropriated legal reserve first that the stipulates dividends all annum of cash 10% per of rate at the is appropriated legal reserve second The capital. paid-in share a company’s 20% of available not and are losses offset to used only be can the legal reserves TCC, the Under capital. the paid-in share 5% of of in excess capital. paid-in share 50% of exceed they unless usage other any for shares Treasury buy- The TL 12.33. full to TL 10.01 full from ranging prices with on-market shares its of 8,434,204 purchased the Company During 2018, equity from deducted was TL 94,620 of cost Total and 30 January 2017. on 27 July 2016 Directors of the Board by approved was back None). (2017: Dividends Turkcell: to (equivalent TL 3,000,000 to a dividend amounting of payment approved has Assembly General the Company’s On 25 May 2017, 1 January 2010 from the period for profits of out Meeting) Assembly General the Ordinary of the date 25 May 2017, as of USD 841,633 25 May 2017, as of USD 0.3825604 full to TL 1.3636364 (equivalent full dividend of cash a gross represents This 2016. 31 December to in including taxes withholding in total paid TL 3,000,000 Company The share. per Meeting) Assembly General the Ordinary of the date the shareholders. to 2017 and 15 December 15 September on 15 June, instalments three 236 TURKCELL ANNUAL REPORT 2018

TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018

(ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.)

25. Equity (continued)

Dividends (continued)

Turkcell (continued):

On 29 March 2018, the Company’s General Assembly has approved a dividend distribution for the year ended 31 December 2017 amounting to TL 1,900,000; this represents a gross cash dividend of full TL 0.86364 per share. The Company paid TL 1,900,000 in total including withholding taxes in three instalments on 18 June, 17 September and 17 December 2018 to the shareholders.

Inteltek:

According to the resolution of the General Assembly Meeting of Inteltek dated 31 March 2017, the shareholders decided to pay a dividend amounting to TL 63,528 out of profits for the year ended 31 December 2016 (remaining amount after deducting interim dividends for the six-month period ended 30 June 2016 amounting to TL 20,455) and a dividend out legal reserves amounting to TL 11,585. The aggregate amount of dividends were paid as of 31 December 2017. According to the the resolution of General Assembly Meeting of Inteltek dated 25 December 2017, shareholders decided to pay dividend amounting to TL 28,402 for the first 9 months of 2017 profit. The related dividend payment was made in January 2018.

According to Board of Directors Resolution of Inteltek dated 18 December 2017 the advanced dividend payment has been made in January 2018 amounting to TL 28,402 for the first nine months of 2017 profit. According to the resolution of the Ordinary General Assembly Meeting of Inteltek dated 30 March 2018, the shareholders resolved to pay a dividend amount equal to TL 60,011 out of profits for the year ended 31 December 2017 (remaining amount after deducting interim dividends for the nine-month period ended 30 September 2017 amounting to TL 28,402) and a dividend out legal reserves amount equal to TL 9,507. The aggregate amount of dividends has been paid on May 2018.

Azerinteltek:

According to the resolution of the General Assembly Meeting of Azerinteltek dated 10 April 2017 and 30 April 2018, Board of Directors have decided to pay dividend amounting to AZN 34,797 (31 December 2018: TL 56,111) from the profit realized for the last quarter of 2017, first and second quarter of 2018. Dividend payment was made in 2018.

F78 SECTORAL AND FINANCIAL INFORMATION F79 237 0.68 0.70 2016 2016 2017 2017 0.90 0.90 1,979,129 1,492,088 1,979,129 1,534,252 ANNUAL REPORT 2018 REPORT ANNUAL TURKCELL 0.93 0.93 0.93 0.93 2018 2018 2,021,065 2,021,065 2,184,750,233 2,193,184,437 2,193,184,437 2,184,750,233 2,193,184,437 2,193,184,437 (*) (*)

Refer to Note 25 - Treasury shares 25 - Treasury Note to Refer

Refer to Note 25 - Treasury shares 25 - Treasury Note to Refer TURKCELL İLETİŞİM HİZMETLERİ A.Ş. HİZMETLERİ İLETİŞİM TURKCELL AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018 DECEMBER 31 ENDED YEAR THE FOR AND AT AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL CONSOLIDATED THE TO NOTES THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.) STATED.) OTHERWISE UNLESS LIRAS TURKISH IN EXPRESSED ARE AND UNITS CURRENCY THOUSAND NEAREST THE 26. Earnings per share Earnings per 26. (ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO TO OFF ROUNDED BEEN HAVE NOTES AND STATEMENTS FINANCIAL CONSOLIDATED THE IN DISCLOSED AMOUNTS (ALL (*) (*) Basic and diluted earnings per share for profit attributable to owners of of owners to attributable profit for share per earnings Basic and diluted TL) (in full the Company Basic and diluted earnings per share for profit from continuing operations operations continuing from profit for share per earnings Basic and diluted TL) (in full the Company of owners to attributable Numerator: the Company of owners attributable to Profit Numerator: the Company of owners attributable to operations continuing from Profit Denominator: shares of number average Weighted Denominator: shares of number average Weighted 238 TURKCELL ANNUAL REPORT 2018

TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018

(ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.)

27. Other non-current liabilities

2018 2017 Consideration payable in relation to the acquisition of Belarusian Telecom 358,304 323,691 Deferred revenue 2,497 85,646 Deposits and guarantees received from dealers 3,809 - 364,610 409,337

Consideration payable in relation to the acquisition of Belarusian Telecom represents present value of the long-term contingent consideration payables to the seller. Payment of USD 100,000 (equivalent to TL 526,090 as of 31 December 2018) is contingent on the financial performance of Belarusian Telecom, and based on management’s estimations, the amount is expected to be paid during the first quarter of 2023 (31 December 2017: the first quarter of 2021). Discount rate used for calculating present value of the consideration payable in relation to the acquisition of Belarusian Telecom as of 31 December 2018 is 9.5% (31 December 2017: 4.8%).

28. Loans and borrowings

31 December 2018 31 December 2017 Non-current liabilities Unsecured bank loans 7,244,992 6,376,981 Secured bank loans 1,862 2,368 Finance lease liabilities - 108,164 Lease liabilities 1,026,955 - Debt securities issued 4,845,827 1,770,482 13,119,636 8,257,995 Current liabilities Unsecured bank loans 3,737,393 2,643,112 Current portion of unsecured bank loans 2,544,462 1,513,425 Current portion of secured bank loans 2,318 2,022 Current portion of finance lease liabilities - 14,556 Current portion of lease liabilities 20,156 - Current portion of long-term debt securities issued 289,738 105,039 Debt securities issued 74,997 - Lease liabilities 366,845 - 7,035,909 4,278,154

The sale process of the bond issuance of the Company with an aggregate principal amount of USD 500,000, 10 year maturity, a redemption date of 11 April 2028 and a re-offer price of 97.8 % with a fixed coupon rate of 5.80% per annum to qualified investors abroad was completed on 11 April 2018 and the notes are listed on the official list of Euronext Dublin (Irish Stock Exchange).

F80

SECTORAL AND FINANCIAL INFORMATION

F81 239 ANNUAL REPORT 2018 REPORT ANNUAL TURKCELL TURKCELL İLETİŞİM HİZMETLERİ A.Ş. HİZMETLERİ İLETİŞİM TURKCELL AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018 DECEMBER 31 ENDED YEAR THE FOR AND AT AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL CONSOLIDATED THE TO NOTES THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.) STATED.) OTHERWISE UNLESS LIRAS TURKISH IN EXPRESSED ARE AND UNITS CURRENCY THOUSAND NEAREST THE 28. Loans and borrowings (continued) and borrowings Loans 28. has (CDB) Bank China Development with signed agreement loan the EUR 750,000 portion of unutilized the EUR 690,000 of scope The Finansman and lifecell Turkcell Superonline, Turkcell subsidiaries the Company’s Turkcell, to in addition In this respect, expanded. been may loan relevant in EUR terms, utilize to the right to in addition Furthermore, loan. the corresponding will utilize also able be to LLC no changes been have There 5.5%. LIBOR + 2.2% and of rates annual interest respective (RMB) with in USD and Renminbi also utilized be to (equivalent RMB 251,089 has utilized the Company 2018, at 31 December As the loan. of schedule and the repayment maturity to TL to (equivalent and EUR 100,000 2018) as at 31 December TL 736,526 to (equivalent USD 140,000 2018), as at 31 December TL 191,337 this agreement. under comparatively, 2018) 602,800 as at 31 December its to loans provide to Finansman in order Turkcell by received funds from arises in borrowings increase of the mainOne of reason issuance. and bond customers with issued securities debt their purchased the Company and 30 January 2017, on 27 July 2016 decisions buy-back of the scope Within 2018. USD 15,500 as at 31 December of nominal value a total with in accordance certificates lease based agreement management of issuance has approved the Company 2018, In the year up to of an amount at terms, Lira in Turkish market, in the domestic A.S. Kiralama Varlık Sukuk KT legislation through markets capital institutional to sold be to and/or placement as private public offering, without amounts and at various dates on various TL 300,000, TL 125,000 (not to amounting certificates lease based agreement management has issued the Company 2018, at 31 March As investors. at 31 December As redeemed. was certificates lease based agreement management issued 2018, as at 30 September discounted), TL to A.S amounting Kiralama Varlık Sukuk KT through certificates lease based agreement management has issued the Company 2018, discounted). 75,000 (not capital with in accordance certificates lease based agreement management of issuance has approved the Company 2019, In the year and at various dates on various TL 500,000, up to of at an amount terms, Lira in Turkish market, legislation in the domestic markets investors. institutional to sold be to and/or placement as private public offering, without amounts (ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO TO OFF ROUNDED BEEN HAVE NOTES AND STATEMENTS FINANCIAL CONSOLIDATED THE IN DISCLOSED AMOUNTS (ALL 240 TURKCELL ANNUAL REPORT 2018 ------41 5,882 4,390 116,797 520,933 1,875,521 1,620,391 5,511,579 2,880,615 12,536,149 amount Carrying Carrying ------2018 2018 period Payment Payment 2018-2025 2018-2024 2018-2020 31 December 2017 31 December ------3.4% 22.5% Nominal Nominal 11.1%-15.5% 2018-2019 Libor+3,3% 2018-2020 Libor+2,0%- 27.5%-27.7% 2018-2020 Euribor+2.2% 2018-2026 Euribor+1.2%- interest Rate interest - - - 4,180 4,180 12%-16% 40,351 40,351 74,997 74,997 719,718 719,718 40,852 40,852 894,511 894,511 11%-14.5% 873,914 193,375 193,375 194,645 194,645 418,390 418,390 4,589,157 4,589,157 5,135,565 5,135,565 5.8% 6,975,890 6,975,890 20,155,545 amount Carrying Carrying - - - 2019 2019 2019 period Payment Payment 2019-2031 2019-2026 2019-2028 2019-2020 31 December 2018 31 December - - - 5.5% 5.8% 24.5% 12-16% Nominal Nominal 1.0%-7.9% Libor+4.1% 2019-2026 3.9%-10.8% 2019-2027 16.1%-45.0% 2019-2048 Libor+2.0%- 12.0%-15.0% 2019-2028 21.5%-22.5% 16.6%-24.0% 2019-2067 12.6%-25.0% Euribor+3.4% 2019-2026 interest rate interest Euribor+1.2%- Fixed Fixed Fixed Fixed Fixed Fixed Fixed Fixed Fixed Fixed Fixed Fixed Fixed Fixed Interest Floating Floating rate type rate TL TL TL TL EUR EUR EUR BYN BYN USD USD USD USD UAH UAH RMB Currency (*) (*) (**) elecom pledged its certain property, plant and equipment to secure these bank loans. Also, these bank loans are secured by the Government of the Republic of Belarus. (Note 36) (Note Belarus. of the Republic of the Government by secured are loans bank these Also, loans. bank these secure to and equipment plant certain property, its pledged elecom Belarusian T T assets. current in other is accounted TL 204,077 to amounting Turkey of outside banks Finansman from Turkcell by utilized loans currency

the foreign with in connection deposit blocked 2018, at 31 December As (CBRT). Turkey of the Republic Bank of Central as obliged by requirements certain reserve to subject are abroad banks liabilities from originated Finansman’s urkcell TURKCELL İLETİŞİM HİZMETLERİ A.Ş. HİZMETLERİ İLETİŞİM TURKCELL NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL CONSOLIDATED THE TO NOTES 2018 DECEMBER 31 ENDED YEAR THE FOR AND AT AS Lease liabilities Lease Lease liabilities Lease Lease liabilities Lease Lease liabilities Lease THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.) STATED.) OTHERWISE UNLESS LIRAS TURKISH IN EXPRESSED ARE AND UNITS CURRENCY THOUSAND NEAREST THE Lease liabilities Lease Secured bank loans loans bank Secured Finance lease liabilities lease Finance Unsecured bank loans bank Unsecured Finance lease liabilities lease Finance Unsecured bank loans bank Unsecured Finance lease liabilities lease Finance Unsecured bank loans bank Unsecured Debt securities issued securities Debt Unsecured bank loans loans bank Unsecured (*) (**) Debt securities issued securities Debt (ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO TO OFF ROUNDED BEEN HAVE NOTES AND STATEMENTS FINANCIAL CONSOLIDATED THE IN DISCLOSED AMOUNTS (ALL (continued) and borrowings Loans 28. as follows: are loans outstanding of and conditions Terms Unsecured bank loans loans bank Unsecured

F82 SECTORAL AND FINANCIAL INFORMATION 241 F83 2017 3,738 3,738 13,877 13,877 48,217 48,217 32,696 32,696 (13.7%) (21,617) (21,617) 120,755 120,755 149,449 149,449 149,449 197,666 197,666 (22,004)

Inflation Rate Inflation 16.5% 26,501 2018 26,971 26,971 16,957 16,957 64,134 64,134 ANNUAL REPORT 2018 REPORT ANNUAL 160,613 149,449 149,449 160,613 160,613 (12,699) (12,699) 224,747 224,747 (20,065) (20,065)

TURKCELL 31 December 201831 December 2017 31 December 15.7% 25,216 Discount Rate Discount (13.0%) (20,880) 1% increase 1% decrease 1% increase 1% decrease TURKCELL İLETİŞİM HİZMETLERİ A.Ş. HİZMETLERİ İLETİŞİM TURKCELL AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018 DECEMBER 31 ENDED YEAR THE FOR AND AT AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL CONSOLIDATED THE TO NOTES THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.) STATED.) OTHERWISE UNLESS LIRAS TURKISH IN EXPRESSED ARE AND UNITS CURRENCY THOUSAND NEAREST THE Sensivity Level Sensivity Retirement pay liability pay provision Retirement provision vacation Unused annual leave for Provision respectively. TL 64,134 and TL 48,217, to amounted annual leave for provision and 2017, 2018 31 December As benefits termination employee for Provision as follows: are benefits termination employee for in provision Movements 31 December 2018 31 December Change in assumption 28. Loans and borrowings (continued) and borrowings Loans 28. on payable the interest since amounts, carrying their to materially different not are values the fair the borrowings, of the majority For nature. a short-term of are borrowings the or rates market current to close is either borrowings those 35. in Note out set are borrowings and non-current current arising from risks to exposure the Group’s of Details benefits Employee 29. (ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO TO OFF ROUNDED BEEN HAVE NOTES AND STATEMENTS FINANCIAL CONSOLIDATED THE IN DISCLOSED AMOUNTS (ALL 1 January cost Service is: actuarial assumptions in the significant changes to benefits termination employee for provision of sensitivity The Remeasurements payments Benefit 31 December Interest expense Interest Impact on provision for employee termination benefits termination employee for on provision Impact 242 TURKCELL ANNUAL REPORT 2018

TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018

(ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.)

29. Employee benefits (continued)

31 December 2017 Discount Rate Inflation Rate Sensivity Level 1% increase 1% decrease 1% increase 1% decrease Change in assumption (14.6%) 18.1% 18.3% (14.3%) Impact on provision for employee termination benefits (21,820) 27,050 27,349 (21,371)

The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated.

Defined contribution plans

Obligations for contribution to defined contribution plans are recognized as an expense in the consolidated statement of profit or loss as incurred. The Group incurred TL 9,361, TL 8,107 and TL 7,722 in relation to defined contribution retirement plan for the years ended 31 December 2018, 2017 and 2016, respectively.

Share based payments

The Group has a share performance based payment plan (cash settled incentive plan) in order to build a common interest with its shareholders, support sustainable success, and ensure loyalty of key employees. The KPIs of the plan are; the total shareholder return in excess of weighted average cost of capital (WACC), and ranking of total shareholder return in comparison with BIST-30 and peer group. Bonus amount is determined according to these evaluations, and it is distributed over a three-year payment plan.

As of 31 December 2018, the Group recognized expenses of TL 26,224 regarding this plan (31 December 2017: TL 29,413).

30. Deferred revenue

Deferred revenue primarily consists of loan application fee and it is classified as current at 31 December 2018 and 2017. The amount of deferred revenue is TL 8,948 and TL 193,381 as at 31 December 2018 and 2017, respectively.

31. Contract liabilities

Current contract liabilities:

31 December 2018 31 December 2017 Contract liabilities 255,756 - 255,756 -

Non-current contract liabilities:

31 December 2018 31 December 2017 Contract liabilities 131,598 - 131,598 -

F84 SECTORAL AND FINANCIAL INFORMATION F85 243 1,012 Total Total 9,760 13,487 15,328 53,439 (2,258) (5,382) (4,205) 187,541 197,418 197,418 101,006 429,889 530,895 31 December 2018 31 December - - 1,012 9,760 13,487 15,328 (8,461) 47,580 188,531 188,531 180,652 259,358 268,722 ANNUAL REPORT 2018 REPORT ANNUAL Obligations for Obligations for Obligations for Obligations for and site restoration and site and site restoration and site TURKCELL dismantling, removing removing dismantling, dismantling, removing removing dismantling, - - - - 4,256 4,256 5,859 5,859 9,364 9,364 8,887 8,887 8,887 6,889 6,889 (2,258) (5,382) (5,382) Legal claims Legal Legal claims Legal

(*) ovision for legal claims are recognized for the probable cash outflows related to legal disputes. Refer to Note 37. to Note Refer to legal disputes. related outflows cash the probable for recognized legal claims are for ovision

In consist of Hospital Revenue Hospital of In consist TURKCELL İLETİŞİM HİZMETLERİ A.Ş. HİZMETLERİ İLETİŞİM TURKCELL AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018 DECEMBER 31 ENDED YEAR THE FOR AND AT AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL CONSOLIDATED THE TO NOTES THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.) STATED.) OTHERWISE UNLESS LIRAS TURKISH IN EXPRESSED ARE AND UNITS CURRENCY THOUSAND NEAREST THE Other Other Mobile telecommunications service Mobile telecommunications Total Pr

Balance at 1 January 2018 at 1 January Balance 2018 at 31 December Balance at 1 January 2017 Balance rates in exchange changes of Effect 2017 at 31 December Balance Transfer to current provisions current to Transfer rates in exchange changes of Effect recognized/(reversed) Provisions discount of Unwinding provisions current to Transfer Provisions recognized Provisions discount of Unwinding Management expects that 75% of the transaction price allocated to the unsatisfied contracts at of 31 December 2018 will be will be 2018 31 December at of contracts the unsatisfied to allocated price the transaction that 75% of expects Management financial year. in the 2019 25% will recognized be remaining The period. reporting next during the as revenue recognized liabilities is TL181,710. contract forward carried to relates period reporting in the current recognized Revenue Provisions 32. provisions: Non-current (*) 31. Contract liabilities (continued) liabilities Contract 31. unrealized table shows following The subscribers. prepaid by used not but sold use of right of liabilities primarily consists Contract 2018; 31 December, as of obligation result performance (ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO TO OFF ROUNDED BEEN HAVE NOTES AND STATEMENTS FINANCIAL CONSOLIDATED THE IN DISCLOSED AMOUNTS (ALL 244 TURKCELL ANNUAL REPORT 2018

TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018

(ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.)

32. Provisions (continued)

The Group is required to incur certain costs in respect of a liability to dismantle and remove assets and to restore sites on which the assets were located. The dismantling costs are calculated according to best estimate of future expected payments discounted at a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the liability.

It is expected that the obligations for dismantling, removing and site restoration will be realized in accordance with the useful life of GSM services materials.

Additions to obligations for dismantling, removing and site restoration during the period are non-cash transactions and are recorded against property, plant and equipment.

Obligations for dismantling, removing and site restoration are discounted using a discount rate of 5.1% at 31 December 2018 (31 December 2017: 5.6%).

Current provisions:

Legal claims Bonus Total Balance at 1 January 2018 605,679 229,520 835,199 Provisions recognized/(reversed) (3,520) 408,740 405,220 Payments (626,214) (338,650) (964,864) Transfers from non-current provisions 5,381 - 5,381 Unwinding of discount 26,185 - 26,185 Disposal of subsidiaries - (2,070) (2,070) Effect of changes in exchange rates 1,082 935 2,017 Balance at 31 December 2018 8,593 298,475 307,068

Legal claims Bonus(*) Other Total Balance at 1 January 2017 18,266 173,391 785 192,442 Provisions recognized/(reversed)(**) 583,788 318,603 (785) 901,606 Payments (1,188) (263,080) - (264,268) Transfer from non-current provisions 2,258 - - 2,258 Unwinding of discount 2,531 - - 2,531 Effect of changes in exchange rates 24 606 - 630 Balance at 31 December 2017 605,679 229,520 - 835,199

(*) Includes share-based payment (Note 29). (**) Refer to Note 37.1 and 37.3 for legal claim.

33. Trade and other payables

2018 2017 Payable to suppliers 2,372,512 2,527,152 Taxes payable 465,966 415,650 Accrued treasury share, universal service fund contribution and contributions to the ICTA’s expenses 455,496 305,208 Accrued selling and marketing expenses 91,747 79,011 Other 402,453 369,445 3,788,174 3,696,466

Payable to suppliers arises in the ordinary course of business.

Taxes payables include VAT payables, special communications taxes payable, frequency usage fees payable to the ICTA and personnel income taxes payable.

F86 SECTORAL AND FINANCIAL INFORMATION - F87 245 17,724 17,724 Maturity Liabilities 22 April 2026 22 April 2026 22 April 2026 23 October 2025 23 October 16 September 2020 16 September 2020 16 September 16 September 2020 16 September 16 September 2020 16 September - 31 December 2017 31 December Assets 961,665 961,665 9,234 ANNUAL REPORT 2018 REPORT ANNUAL 167,116 79,688 39,394 53,583 64,670 108,777 208,462 730,924 Fair Value Fair - TURKCELL 131,097 131,097 Liabilities 20,000 60,000 50,000 150,000 100,000 100,000 202,600 500,000 31 December 2018 31 December Notional amount Assets 709,617 730,924 1,440,541 Sell EUR EUR USD USD USD USD USD RMB Currency 123,878 113,400 194,000 275,850 293,500 386,500 435,000 1,650,000 Notional amount Buy

TL TL TL TL TL TL TL TL Currency

t 31 December 2018, total held for trading derivative financial assets of TL 1,356,062 also include net accrued interest expense of TL TL of expense interest accrued also include net TL 1,356,062 of financial assets derivative trading held for total 2018, t 31 December TURKCELL İLETİŞİM HİZMETLERİ A.Ş. HİZMETLERİ İLETİŞİM TURKCELL AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018 DECEMBER 31 ENDED YEAR THE FOR AND AT AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL CONSOLIDATED THE TO NOTES THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.) STATED.) OTHERWISE UNLESS LIRAS TURKISH IN EXPRESSED ARE AND UNITS CURRENCY THOUSAND NEAREST THE 33. Trade and other payables (continued) payables and other Trade 33. the of activities the marketing to related parties third from received services from mainly result expenses selling and marketing Accrued invoiced. yet not but Group financial instruments Derivative 34. the following: attributable to are and 2017 2018 at 31 December financial instruments derivative of value Fair (ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO TO OFF ROUNDED BEEN HAVE NOTES AND STATEMENTS FINANCIAL CONSOLIDATED THE IN DISCLOSED AMOUNTS (ALL Held for trading Held for Derivatives used for hedge accounting financialassets accounting hedge for used Derivatives agreement. CSA after guarantees TL 690,146 includes contracts swap currency participating cross EUR 500,000 Cross currency swap contracts swap currency Cross Participating cross currency swap contracts swap currency cross Participating Derivatives used for hedging for used Derivatives Total A

84,479 and total held for trading derivative financial liabilities of TL 131,097 also include net accrued interest expense of TL 34,168. of expense interest accrued also financial net include TL 131,097 liabilities of derivative trading held for 84,479 and total hedging for used Derivatives contracts and FX swap swap currency cross Participating at 31 hedging purposes for contracts and FX swap swap currency participating cross of value and the fair amount notional The as follows: are 2018 December 246 TURKCELL ANNUAL REPORT 2018

TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018

(ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.)

34. Derivative financial instruments (continued)

Held for trading

Currency swap, cross currency swap and participating cross currency swap contracts

The notional amount and the fair value of currency swap, participating cross currency swap and FX swap contracts for hedging purposes at 31 December 2018 are as follows:

Buy Sell Currency Notional amount Currency Notional amount Fair Value Maturity Currency Swap TL 266,760 USD 50,000 (3,715) 2 January 2019 TL 266,510 USD 50,000 (3,465) 2 January 2019 TL 719,996 USD 135,000 (9,774) 2 January 2019 TL 212,736 USD 40,000 (2,300) 2 January 2019 TL 265,925 USD 50,000 (2,880) 2 January 2019 TL 1,366 USD 253 (48) 19 March 2019 TL 4,199 USD 680 (939) 16 January 2019 TL 5,681 USD 920 (1,277) 22 January 2019 TL 6,040 EUR 1,000 (41) 2 January 2019 USD 68,654 EUR 60,000 (861) 15 January 2019 USD 11,462 EUR 10,000 (4) 8 January 2019 Cross currency swap contracts TL 6,159 USD 1,000 (912) 28 January 2019 TL 6,159 USD 1,000 (910) 24 January 2019 TL 130,488 USD 24,000 (9,365) 20 March 2023 TL 268,200 USD 50,000 (5,791) 14 June 2019 TL 128,436 USD 24,000 (2,652) 19 June 2019 TL 169,368 EUR 24,000 (24,895) 8 January 2019 TL 118,800 EUR 18,000 (22,051) 23 September 2021 TL 111,732 EUR 18,867 1,920 14 February 2019 TL 185,100 EUR 30,000 (8,296) 22 April 2026 TL 183,300 EUR 30,000 (8,642) 22 April 2026 Participating cross currency swap contracts TL 193,800 EUR 30,000 (7,148) 16 September 2020 TL 91,700 USD 20,000 (17,051) 22 April 2026 Total Held for trading derivative financial liabilities (131,097)

F88 SECTORAL AND FINANCIAL INFORMATION F89 247 Maturity Maturity 16 July 2019 16 July 2019 22 July 2019 23 July 2019 22 July 2019 23 July 2019 13 June 2019 13 June 2019 22 April 2026 27 August 2018 27 August 28 January 2019 28 January 2019 24 January 2019 24 January 2019 02 January 2018 13 February 2019 13 February 25 October 2025 25 October 19 December 2019 19 December 14 December 2018 14 December 23 September 2021 23 September 22 December 2020 22 December 16 September 2020 16 September 16 September 2020 16 September 16 September 2020 16 September 16 September 2020 16 September 16 September 2020 16 September 16 September 2020 16 September 72 ANNUAL REPORT 2018 REPORT ANNUAL 7,710 1,078 1,498 9,965 6,996 1,005 57,161 6,554 4,465 36,751 27,198 (2,951) 17,354 90,071 27,928 37,825 38,636 27,870 74,095 33,535 131,437 109,610 (4,645) 160,594 709,617 142,085 961,665 627,385 TURKCELL 19,780 19,780 14,620 14,620 39,835 21,500 18,800 18,000 18,000 70,500 70,500 70,500 25,000 25,000 25,000 25,000 60,000 20,000 20,000 50,000 50,000 50,000 50,000 150,000 100,000 100,000 500,000 Notional amount value Fair Notional amount Value Fair Sell Sell EUR EUR EUR EUR EUR EUR EUR EUR EUR EUR USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD Currency Currency 52,164 52,164 67,410 67,410 69,744 69,744 81,480 97,997 98,625 98,625 69,680 47,304 95,550 95,550 269,451 191,300 242,873 242,873 105,280 194,000 275,850 293,500 386,500 203,600 203,600 435,000 1,650,000 at 31 December 2017 at 31 December Notional amount Notional amount Buy Buy Participating cross currency swap and FX swap contracts contracts and FX swap swap currency cross Participating

TL TL TL TL TL TL TL TL TL TL TL TL TL TL TL TL TL TL TL TL TL TL TL TL TL TL USD Currency

Total derivative financial assets derivative Total TURKCELL İLETİŞİM HİZMETLERİ A.Ş. HİZMETLERİ İLETİŞİM TURKCELL AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018 DECEMBER 31 ENDED YEAR THE FOR AND AT AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL CONSOLIDATED THE TO NOTES THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.) STATED.) OTHERWISE UNLESS LIRAS TURKISH IN EXPRESSED ARE AND UNITS CURRENCY THOUSAND NEAREST THE 34. Derivative financial instruments (continued) financial instruments Derivative 34. trading Held for (ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO TO OFF ROUNDED BEEN HAVE NOTES AND STATEMENTS FINANCIAL CONSOLIDATED THE IN DISCLOSED AMOUNTS (ALL Currency Total held for trading derivative financial assets derivative trading held for Total Cross currency swap contracts swap currency Cross 248 TURKCELL ANNUAL REPORT 2018

TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018

(ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.)

34. Derivative financial instruments (continued)

Held for trading

At 31 December 2017, total derivative financial assets of TL 981,396 also include net accrued interest income of TL 19,731.

Participating cross currency swap and FX swap contracts at 31 December 2017 Buy Sell Currency Notional amount Currency Notional amount Fair value Maturity TL 470,232 USD 122,680 (2,465) 2 January 2018 TL 180,023 USD 47,250 (545) 2 January 2018 TL 141,001 USD 36,786 (726) 3 January 2018 TL 219,162 USD 57,245 (1,043) 4 January 2018 TL 115,022 USD 30,150 (435) 5 January 2018 TL 17,204 USD 4,500 (284) 10 January 2018 TL 15,916 EUR 3,500 (157) 10 January 2018 TL 91,556 EUR 20,140 (620) 22 January 2018 TL 137,834 EUR 30,400 (601) 05 February 2018 TL 82,013 EUR 17,860 (1,413) 19 February 2018 TL 1,143 EUR 250 (25) 5 Mart 2018 TL 97,997 EUR 21,500 (2,154) 19 December 2019 TL 269,451 USD 70,500 (5,010) 22 December 2020 Total derivative financial liabilities (15,478)

Currency forward contracts at 31 December 2017 Buy Currency Notional amount Fair value Maturity

USD 50,000 (2,246) 30 January 2018 Total derivative financial liabilities (2,246)

At 31 December 2017, total derivative financial liabilities of TL 110,108 also include net accrued interest expense of TL 92,384.

F90 SECTORAL AND FINANCIAL INFORMATION F91 249 period FX rates period balance sheet date sheet balance Valuation Techniques Valuation Pricing models based on on based Pricing models future cash flows based on on based flows cash future based on unobservable yield yield on unobservable based ANNUAL REPORT 2018 REPORT ANNUAL Present value of the estimated the estimated of value Present Forward exchange rates at the at the rates exchange Forward curves and end period FX rates FX and end period curves the estimated future cash flows flows cash future the estimated observable yield curves and end and end curves yield observable discounted cash Present value of of value Present cash discounted TURKCELL Level 2 Level 2 Level 3 hierarchy Fair Value Value Fair Fair values Fair - - 2017 (4,675) (2,246) (4,675) (2,246) 31 December 31 December

- - 2018 53,583 677,341 602,719 (24,199) 950,862 653,142 950,862 656,302 31 December 31 December

(*)

TL 118,647 accrual of net interest expense has been reflected to consolidated financial statements as at 31 December 2018 (31 December 2017: TL 72,653). Since bid-ask spread bid-ask spread Since TL 72,653). 2017: (31 December 2018 as at 31 December statements financial consolidated to reflected has been expense interest TL 118,647 net of accrual TURKCELL İLETİŞİM HİZMETLERİ A.Ş. HİZMETLERİ İLETİŞİM TURKCELL AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018 DECEMBER 31 ENDED YEAR THE FOR AND AT AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL CONSOLIDATED THE TO NOTES THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.) STATED.) OTHERWISE UNLESS LIRAS TURKISH IN EXPRESSED ARE AND UNITS CURRENCY THOUSAND NEAREST THE There were no transfers between fair value hierarchy levels during the year. during the year. levels hierarchy value fair between no transfers were There (*) a)Participating cross currency swap swap currency cross a)Participating contracts 34. Derivative financial instruments (continued) financial instruments Derivative 34. and risk management instruments derivative of value Fair recognized that are the financial of instruments values the fair made in determining estimates and the judgements explains section This in determining used the inputs of about the reliability an indication provide To the financial in statements. value at fair and measured An standards. the accounting under prescribed levels the three into financial instruments its has classified the Group value, fair is as follows: level each of explanation at the access can liabilities that the entity or assets identical for markets in active (unadjusted) prices quoted are 1 inputs • Level date; measurement or directly either liability, or the asset for observable that are 1, Level within included prices than quoted other inputs, are 2 inputs • Level and indirectly; liability. or the asset for inputs unobservable are 3 inputs • Level (ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO TO OFF ROUNDED BEEN HAVE NOTES AND STATEMENTS FINANCIAL CONSOLIDATED THE IN DISCLOSED AMOUNTS (ALL -Held for trading -Held for -Held for trading -Held for hedging for used -Derivatives contracts forward c)Currency -Held for trading -Held for hedging for used -Derivatives contracts swap b)FX is unobservable input; in valuation of participating cross currency swap contracts, prices in bid- ask price range which were considered the most appropriate were used instead instead used were appropriate the most considered which were range in bid- ask price prices contracts, swap currency participating cross of valuation in input; is unobservable (31 2018 as at 31 December lower TL 123,995 been have would contracts swap currency participating cross of value the fair in the valuation used were If mid prices prices. mid of TL 129,870). 2017: December 250 TURKCELL ANNUAL REPORT 2018 - hedge hedge hedge hedge hedging hedging hedging hedging value of of value value of of value Change in Change in Change in Change in determine determine determine determine item used to to used item item used to to used item effectiveness effectiveness 13,519 (13,519) hedging hedging hedging hedging Change in Change in Change in Change in since 1 July since since 1 July since instruments instruments instruments instruments intrinsic value value intrinsic intrinsic value value intrinsic of outstanding outstanding of of outstanding outstanding of 1:1 15,600 (15,600) 1:1 1:1 179,388 (179,388) 1:1 43,128 (43,128) 1:1 359,400 (359,400) Hedge Ratio Hedge Hedge Ratio Hedge Level 2 Level 3 Level 3 Level 3 Level 3 hierarchy hierarchy Fair Value Value Fair Fair Value Value Fair - - 2017 2017 1,078 Fair values Fair Fair values Fair 224,560 31 December 31 December 31 December 31 December 2018 2018 9,234 53,583 64,670 31 December 31 December 31 December 31 December Date Date 2025 208,462 627,385 2020 394,975 Maturity Maturity Maturity Maturity 23 October 23 October 10 April 2026 22 April 2026 22 April 2026 16 September 16 September Value Value Value Value 20,000 60,000 202,600 Nominal Nominal Nominal Nominal 500,000 400,000

CNY Contracts Cross currency swap contracts swap currency Cross TURKCELL İLETİŞİM HİZMETLERİ A.Ş. HİZMETLERİ İLETİŞİM TURKCELL USD Contracts NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL CONSOLIDATED THE TO NOTES 2018 DECEMBER 31 ENDED YEAR THE FOR AND AT AS USD Contracts THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.) STATED.) OTHERWISE UNLESS LIRAS TURKISH IN EXPRESSED ARE AND UNITS CURRENCY THOUSAND NEAREST THE EUR Contracts EUR Contracts (ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO TO OFF ROUNDED BEEN HAVE NOTES AND STATEMENTS FINANCIAL CONSOLIDATED THE IN DISCLOSED AMOUNTS (ALL (continued) financial instruments Derivative 34. (continued) and risk management instruments derivative of value Fair basis: accounting on a hedge and 2017 2018 at 31 December value at fair and recognised and financial liabilities measured financial assets the Group’s table presents following The Participating cross currency swap contracts swap currency cross Participating

F92 SECTORAL AND FINANCIAL INFORMATION - 251 F93 382,054 568,808 950,862 ANNUAL REPORT 2018 REPORT ANNUAL 314,746 653,142

950,862 (612,466)

TURKCELL 31 December 201831 December 2017 31 December

Gains recognized in profit or loss or in profit Gains recognized TURKCELL İLETİŞİM HİZMETLERİ A.Ş. HİZMETLERİ İLETİŞİM TURKCELL AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018 DECEMBER 31 ENDED YEAR THE FOR AND AT AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL CONSOLIDATED THE TO NOTES THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.) STATED.) OTHERWISE UNLESS LIRAS TURKISH IN EXPRESSED ARE AND UNITS CURRENCY THOUSAND NEAREST THE Cash flow effect flow Cash balance Closing Opening balance Opening gain/loss: Total / Offset off Net participating cross a EUR 500,000 of in respect the parties risk of default against (CSA) Annex Support a Credit signed Company The the CSA, per As 2018. and 9 August on 26 May 2017 respectively and restructured on 15 July 2016 executed transaction swap currency the and if month calendar each day of on the 10th and 24th calendar will determined be value (mark-to-market) current the swap’s which will the Company to collateral cash will posting the bank be a certain threshold, and exceeds is positive value mark-to-market post to required be would the Company is negative, value the mark-to-market if (i.e. the threshold exceeding an amount equalbe to the threshold). exceeding an amount by the bank to collateral value the mark-to-market only if the parties between place will take a transfer basis, on a bi-weekly the valuations to respect With (31 the Company to EUR 153,540 as collateral transferred the bank CSA, of the execution Following EUR 1,000. at least by changes EUR 39,050 transferred and the Company 10,000) (EUR the threshold exceeding the amount TL 925,539) which was 2018: December Company The (EUR 10,000). the threshold exceeding the amount TL 235,393) which was 2018: (31 December the bank to as collateral the offset to has the legal right it because financial of position in the statement included assets the derivative this with clarified amount This value. fair the net to according pay to and intends the borrowings under recognizes that it TL 690,146 amount collateral If this 2018, 31 December of As sheet. in the balance instruments the derivative from and deducted the borrowings from netted was would borrowings and current TL 2,046,208 been have would assets financial instruments derivative conducted, not was transaction TL 7,726,055. been have risk Market by set the guidelines within out carried are All such transactions risks. manage market to derivatives of types various uses Group The or in profit manage volatility to accounting apply hedge to seeks the Group Generally, department. and risk management the treasury loss. 34. Derivative financial instruments (continued) financial instruments Derivative 34. (continued) and risk management instruments derivative of value Fair agreement. CSA after guarantees TL 690,146 includes contracts swap currency participating cross EUR 500,000 stated are 2017 31 December and 2018 31 December ended the years for contracts swap currency cross participating in the Movements below: (ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO TO OFF ROUNDED BEEN HAVE NOTES AND STATEMENTS FINANCIAL CONSOLIDATED THE IN DISCLOSED AMOUNTS (ALL 252 TURKCELL ANNUAL REPORT 2018

TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018

(ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.)

34. Derivative financial instruments (continued)

Fair value of derivative instruments and risk management (continued)

Currency risk

The Group’s risk management policy is to hedge its estimated foreign currency exposure in respect of borrowing payments with various maturities at any point in time. The Group uses participating cross currency contracts to hedge its currency risk, most with a maturity of more than one year from the reporting date. These contracts are generally designated as cash flow hedges.

The Group designates the hedge ratio, between the amount of hedged item and the hedging instrument is 1:1 to hedge its currency risk.

The time value of options in participating cross currency swap contracts are included in the designation of the hedging instrument and are separately accounted for as a cost of hedging, which is recognised in equity in a cost of hedging reserve. The Group’s policy is for the critical terms of the participating cross currency contracts to align with the hedged item.

The Group determines the existence of an economic relationship between the hedging instruments and hedged item based on the currency, amount and timing of their respective cash flows. The Group assesses whether the derivative designated in each hedging relationship is expected to be and has been effective in offsetting changes in cash flows of the hedged item using the hypothetical derivative method.

In these hedge relationships, the main sources of ineffectiveness are; – the effect of the counterparties’ credit risk on the fair value of the swap contracts, which is not part of the hedged risk and associated credit risk considered to be very low at inception in the fair value of the hedged cash flows attributable to the change in exchange rates;

– the entire fair value of the derivative contracts including currency basis was designated as the hedging instrument in cash flow hedge. The hypothetical derivative is modelled to exclude the impact of currency basis.

Interest rate risk

The Group adopts a policy of ensuring that its interest rate risk exposure is at a fixed rate. This is achieved partly by entering into fixed-rate instruments and partly by borrowing at a floating rate and using cross currency and interest rate swaps as hedges of the variability in cash flows attributable to movements in interest rates. The Group applies a hedge ratio of 1:1.

The Group determines the existence of an economic relationship between the hedging instrument and hedged item based on the reference interest rates, tenors, repricing dates and maturities and the notional or par amounts.

The Group assesses whether the derivative designated in each hedging relationship is expected to be effective in offsetting changes in cash flows of the hedged item using the hypothetical derivative method.

In these hedge relationships, the main sources of ineffectiveness are:

– the effect of the counterparties’ credit risk on the fair value of the swap contracts, which is not part of the hedged risk and associated credit risk considered to be very low at inception in the fair value of the hedged cash flows attributable to the change in interest rates;

F94 SECTORAL AND FINANCIAL INFORMATION - - - F95 253 101,231 4,765 4,765 101,231 76,472 Reserve (448,833) (259,066) (259,066) (254,301) (254,301) Cost of Hedging Hedging of Cost - 2018 70,973 (4,214) 612,733 (448,833) (53,515) 14,942 (271,130) (611,035) Reserve 683,706 683,706 Hedging Hedging 1,452 1,452 (664,550) ANNUAL REPORT 2018 REPORT ANNUAL Equity, net of tax of net Equity, (360,596) (360,596) (359,144) (359,144) TURKCELL 320 320 9,775 9,775 9,455 9,455

Profit or Loss or Profit 31,584 31,584 969,429 969,429 937,845 937,845

100 bp increase 100 bp decrease 100 bp increase 100 bp decrease

ash flow hedges ash flow TURKCELL İLETİŞİM HİZMETLERİ A.Ş. HİZMETLERİ İLETİŞİM TURKCELL AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018 DECEMBER 31 ENDED YEAR THE FOR AND AT AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL CONSOLIDATED THE TO NOTES THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.) STATED.) OTHERWISE UNLESS LIRAS TURKISH IN EXPRESSED ARE AND UNITS CURRENCY THOUSAND NEAREST THE The following table provides a reconciliation by risk category of components of equity and analysis of OCI items, net of tax, resulting resulting tax, of net OCI items, of and analysis equity of components of risk category by a reconciliation table provides following The accounting. hedge flow cash from C Cash Flow sensitivity (net) sensitivity Flow Cash Cross currency swap contracts swap currency Cross 31 December 2018 31 December contracts swap currency cross Participating

34. Derivative financial instruments (continued) financial instruments Derivative 34. (continued) and risk management instruments derivative of value Fair instruments variable-rate for analysis sensitivity flow Cash date at the reporting currency exchange and 10 % change in foreign rates in interest points 100 basis change of possible A reasonably variables, that all assumes other analysis This below. shown the amounts by loss or and profit equity (decreased) increased have would constant. remain (ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO TO OFF ROUNDED BEEN HAVE NOTES AND STATEMENTS FINANCIAL CONSOLIDATED THE IN DISCLOSED AMOUNTS (ALL Balance at 1 January 2018 at 1 January Balance Hedges Flow Cash value: in fair Changes Foreign currency risk currency Foreign Interest rate risk rate Interest loss: or profit into reclassified Amount Foreign currency risk currency Foreign Interest rate risk rate Interest during the year: on movements Tax Balance at 31 December 2018 at 31 December Balance 254 TURKCELL ANNUAL REPORT 2018

TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018

(ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.)

35. Financial instruments

Credit risk

Exposure to credit risk:

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date is:

2018 2017 Trade receivables 19 2,620,991 3,004,206 Contract assets 715,441 - Receivables from financial services 20 4,170,929 4,248,120 Cash and cash equivalents* 24 7,419,095 4,712,141 Participating cross currency swap and FX swap contracts 32 1,356,062 981,396 Other current assets** 22 287,469 316,042 Held to maturity investments - 11,992 Financial asset at fair value through profit or loss 9,409 - Financial asset at fair value through other comprehensive income 42,454 - Due from related parties 37 13,533 5,299 16,635,383 13,279,196

* Cash in hand is excluded from cash and cash equivalents. ** Prepaid expenses, receivable from personnel, receivable from the Ministry of Transport and Infrastructure of Turkey, other and advances given are excluded from other current assets and other non-current assets.

F96 SECTORAL AND FINANCIAL INFORMATION F97 255

ANNUAL REPORT 2018 REPORT ANNUAL

Loss Allowance Loss 7,370 7,370 ------7,370

Gross Carrying Amount Carrying Gross 715,441 715,441 ------TURKCELL 715,441

Total Due Past Past Due Past Past Due Past Past Due Past Past Due Past Past Due Past Past Due Past Past Due Past 2018 December 31 at Assets Contract Not Due Not

4 - 5 years years 5 - 4 3 - 4 years years 4 - 3 3 years 3 150 Days Days 150 120 Days Days 120 90 Days Days 90 60 Days Days 60 30 Days Days 30

More Than Than More More Than Than More 150 Days - - Days 150 More Than Than More More Than Than More More Than Than More More Than Than More More Than Than More

More Than Than More

Other Assets includes trade receivables, subscriber receivables, other assets, cash and cash equivalent and due from related parties. related from due and equivalent cash and cash assets, other receivables, subscriber receivables, trade includes Assets Other (*)

Loss Allowance Loss 24,864 4,567 5,238 4,900 6,368 6,028 214,893 182,431 281,522 281,522 182,431 214,893 6,028 6,368 4,900 5,238 4,567 24,864 730,811 730,811

Gross Carrying Amount Carrying Gross 57,761 43,038 25,543 755,982 272,547 319,298 10,426,236 10,426,236 319,298 272,547 755,982 25,543 43,038 57,761 80,762 214,351 8,656,954

Total Due Past Past Due Past Past Due Past Past Due Past Past Due Past Past Due Past Past Due Past Past Due Past 2018 December 31 at Assets Other Not Due Not

(*)

4 - 5 years years 5 - 4 3 - 4 years years 4 - 3 3 years years 3 150 Days Days 150 120 Days Days 120 90 Days Days 90 60 Days Days 60 30 Days Days 30

More Than Than More More Than Than More 150 Days - - Days 150 More Than Than More More Than Than More More Than Than More More Than Than More More Than Than More

More Than Than More

from related parties at the reporting date by type of customer is: customer of type by date reporting the at parties related from

The maximum exposure to credit risk for trade and subscriber receivables, other assets and cash and cash equivalent arising from sales transactions including those classified as due due as classified those including transactions sales from arising equivalent cash and cash and assets other receivables, subscriber and trade for risk credit to exposure maximum The

Credit quality: Credit

Credit risk (continued) risk Credit

35. Financial instruments Financial 35.

THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.) STATED.) OTHERWISE UNLESS LIRAS TURKISH IN EXPRESSED ARE AND UNITS CURRENCY THOUSAND NEAREST THE

(ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO TO OFF ROUNDED BEEN HAVE NOTES AND STATEMENTS FINANCIAL CONSOLIDATED THE IN DISCLOSED AMOUNTS (ALL

AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018 DECEMBER 31 ENDED YEAR THE FOR AND AT AS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL CONSOLIDATED THE TO NOTES TURKCELL İLETİŞİM HİZMETLERİ A.Ş. HİZMETLERİ İLETİŞİM TURKCELL 256 TURKCELL ANNUAL REPORT 2018 Total Total 5,128 5,128 514,223 514,223 - - Past Due Past Past Due Past 4 - 5 years 4 - 5 years 4 - 5 years 4 - 5 years More Than Than More More Than Than More - - Past Due Past Past Due Past 3 - 4 years 3 - 4 years 3 - 4 years 3 - 4 years More Than Than More More Than Than More - - 3 years 3 years 3 years 3 years Past Due Past Past Due Past 150 Days - 150 Days 150 Days - - 150 Days More Than Than More More Than Than More - - Past Due Past Past Due Past 150 Days 150 Days 150 Days 150 Days More Than Than More More Than Than More - - Past Due Past Past Due Past 120 Days 120 Days 120 Days 120 Days More Than Than More More Than Than More - - 90 Days 90 Days 90 Days 90 Days Past Due Past Past Due Past More Than Than More More Than Than More - - 60 Days 60 Days 60 Days 60 Days Past Due Past Past Due Past More Than Than More More Than Than More - - 30 Days 30 Days 30 Days 30 Days Past Due Past Past Due Past More Than Than More More Than Than More 5,128 24,936 24,936 6,136 5,662 4,279 9,766 7,076 323,124 158,198 122,751 661,928 514,223 Not Due Not Not Due Not 6,021,990 6,021,990 194,517 81,804 35,799 52,851 20,493 823,359 208,127 141,717 7,580,657 (*) Other Assets includes trade receivables, subscriber receivables and other assets. and other receivables subscriber receivables, trade includes Assets Other TURKCELL İLETİŞİM HİZMETLERİ A.Ş. HİZMETLERİ İLETİŞİM TURKCELL NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL CONSOLIDATED THE TO NOTES 2018 DECEMBER 31 ENDED YEAR THE FOR AND AT AS THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.) STATED.) OTHERWISE UNLESS LIRAS TURKISH IN EXPRESSED ARE AND UNITS CURRENCY THOUSAND NEAREST THE (ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO TO OFF ROUNDED BEEN HAVE NOTES AND STATEMENTS FINANCIAL CONSOLIDATED THE IN DISCLOSED AMOUNTS (ALL

Gross Carrying Amount Carrying Gross Allowance Loss Gross Carrying Amount Carrying Gross Allowance Loss (*) 35. Financial 35. instruments risk (continued) Credit quality: Credit as at 1 January 2018 Assets Other Contract Assets as at 1 January 2018 Assets Contract

F98 SECTORAL AND FINANCIAL INFORMATION 3 257 F99 3,128 10,540 10,540 964,311 730,811 416,557 416,557 180,948 (43,512) (43,512) (79,958) (73,023) (73,023) (166,641) (166,641) 705,440 705,440 (118,553) 705,440 (138,529) (224,460) Other Asset** Other Other Asset** Other 31 December 2017 2017 31 December 31 December 2018 2018 31 December ------ANNUAL REPORT 2018 REPORT ANNUAL 5,128 5,128 2,242 2,242 7,370 TURKCELL Contract Asset Contract Contract Asset Contract 31 December 2017 2017 31 December 31 December 2018 2018 31 December (*) (*)

ficant financial difficulties of the customer of financial difficulties ficant fault or delinquency in payments in payments delinquency or fault obability that the customer will enter bankruptcy or financial reorganisation, and financial reorganisation, or bankruptcy will enter obability that the customer

de signi pr

• • • Other Assets includes trade receivables, subscriber receivables and other assets. and other receivables subscriber receivables, trade includes Assets Other

The Company signed a transfer of claim agreement with a debt management company to transfer some of its doubtful receivables stemming from the years between 1998 to to 1998 between the years from stemming receivables doubtful its of some transfer to company management a debt with claim of agreement a transfer signed Company The TURKCELL İLETİŞİM HİZMETLERİ A.Ş. HİZMETLERİ İLETİŞİM TURKCELL AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018 DECEMBER 31 ENDED YEAR THE FOR AND AT AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL CONSOLIDATED THE TO NOTES THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.) STATED.) OTHERWISE UNLESS LIRAS TURKISH IN EXPRESSED ARE AND UNITS CURRENCY THOUSAND NEAREST THE IFRS 9 effect IFRS during the year recognized impairment for Provision collected Amounts reversed amount Unused Opening balance balance Opening Receivables written off during the year as uncollectible during the year off written Receivables balance Closing as uncollectible during the year off written Receivables Exchange differences Exchange subsidiaries of Disposal balance Opening differences Exchange balance Closing Provision for impairment recognized during the year recognized impairment for Provision collected Amounts Unused amount reversed reversed amount Unused Receivables for which an impairment provision was recognized are written off against the provision when there is no expectation of of is no expectation when there the provision against off written are recognized was provision which an impairment for Receivables additional cash. recovering Subsequent 10). (Note assets on financial and contract losses impairment net within loss or in profit recognized are losses Impairment 10). (Note assets on financial and contract losses impairment Net against credited are off written previously amounts of recoveries as follows: are parties related and due from receivables trade of impairment for in the provision Movements 35. Financial instruments (continued) Financial 35. instruments losses Impairment other The directly. amount the carrying reducing by off written are uncollectible be to known are which Individual receivables yet not but incurred been has that an impairment evidence objective there whether determine to collectively assessed are receivables present: are indicators the following of any if impairment of is evidence there that considers Group The identified. is been (ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO TO OFF ROUNDED BEEN HAVE NOTES AND STATEMENTS FINANCIAL CONSOLIDATED THE IN DISCLOSED AMOUNTS (ALL (**) (*) 2016, Transferred doubtful receivables comprise of balances that the Company started legal proceedings. legal proceedings. started that the Company balances of comprise receivables doubtful Transferred 2016, 258 TURKCELL ANNUAL REPORT 2018

TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018

(ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.)

35. Financial instruments (continued)

Impairment losses (continued)

Movements in the provision for impairment of receivables from financial services are as follows:

31 December 2018 31 December 2017 Opening balance 72,992 10,170 IFRS 9 effect 52,951 - Provision for impairment recognized during the year 190,509 117,293 Amounts collected (96,278) (37,503) Unused amount reversed (*) (19,901) (16,968) Closing balance 200,273 72,992

(*) The Company signed a transfer of claim agreement with a debt management company to transfer some of its doubtful receivables stemming from the year 2017. Transferred doubtful receivables comprise of balances that the Company started legal proceedings. .

F100 SECTORAL AND FINANCIAL INFORMATION

259 F101

* Advances received, license fee accruals, taxes and withholding taxes payable are excluded from trade and other payables. other and trade from excluded are payable taxes withholding and taxes accruals, fee license received, Advances *

30697(75400 73754 24940 42663 45924 (8,761,099) (4,579,244) (4,286,623) (2,489,470) (7,387,594) (27,504,030) 23,096,957 TOTAL 55400(68817 58808 10844 26867 37922 (3,523,786) (3,779,212) (2,698,637) (1,028,404) (5,868,078) (16,898,117) 15,504,080

Sell - - - - (192,431) (192,431)

Buy - - - - 190,185 190,185

- - - - (2,246) (2,246) 2,246 ------contracts forward Currency

1080 2476 (466,898) (234,766) (180,840) - (2,464,006) (3,346,510) Sell - - (363,002) - (1,452,124) (1,815,126)

ANNUAL REPORT 2018 REPORT ANNUAL

- - 367,448 - 1,471,106 1,838,554 481,800 249,288 193,800 - 2,519,383 3,444,271 Buy

- - 4,446 - 18,982 23,428 107,862 14,902 14,522 12,960 - 55,377 97,761 165,265 contracts swap FX and

Participating Cross Currency Swap Swap Currency Cross Participating Derivative financial liabilities financial Derivative

TURKCELL - (377,190) - - - (377,190) 323,691 - (526,090) - - - (526,090) 358,304 35) (Note Telecom

Belarusian

acquisition of acquisition

relation to relation

payable in payable

Consideration

- - - - (6,980) (6,980) 6,980 - - - - (45,331) (45,331) 45,331 parties related to Due

- - - - (2,548,365) (2,548,365) 2,527,152 - - - - (2,440,300) (2,440,300) 2,372,512 payables* other and Trade

,1,5 24746 3262 2323 4086 6670 (773,885) (666,760) (410,826) (273,273) (372,682) (2,497,426) 1,413,956 liabilities Lease ------

,1,6 77393 2888 1954 2918 8735 (6,159,028) (897,385) (299,128) (149,564) (228,838) (7,733,943) 5,210,562 issued securities Debt 5,2)(0,4)(2,2)(2,211,276) (325,326) (108,442) (54,221) (54,221) (2,753,486) 1,875,521

(60,401) (38,933) (16,789) (17,429) (18) (133,570) 122,720 ------liabilities lease Finance

35687(43399 43458 20544 35738 25351 (1,843,088) (2,503,531) (3,587,398) (2,065,424) (4,354,548) (14,353,989) 13,526,847 loans bank Unsecured 05358(10467 32520 9567 25587 30594 (1,252,109) (3,035,914) (2,575,807) (955,637) (3,275,230) (11,094,697) 10,533,518

- (1,849) (2,045) (1,117) - (5,011) 4,390 - - (2,231) (1,209) (1,272) (4,712) 4,180 loans bank Secured

Non-derivative financial liabilities financial Non-derivative

Years years years months less or flows cash Amount Years years years Months less or flows cash Amount

More than 5 5 than More 2-5 1-2 6-12 months 6 Contractual Carrying 5 than More 2-5 1-2 6-12 months 6 Contractual Carrying

31 December 2018 December 31 31 December 2017 December 31

oss settled derivative financial instruments for which the contractual maturities are essential for an understanding of the timing of the cash flows, cash the of timing the of understanding an for essential are maturities contractual the which for instruments financial derivative settled oss gr -

- ll non-derivative financial liabilities, and liabilities, financial non-derivative ll a

The table below analyses the Group’s financial liabilities into relevant maturity groupings based on their contractual maturities for: maturities contractual their on based groupings maturity relevant into liabilities financial Group’s the analyses below table The

Liquidity risk Liquidity

35. Financial instruments (continued) instruments Financial 35.

THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.) STATED.) OTHERWISE UNLESS LIRAS TURKISH IN EXPRESSED ARE AND UNITS CURRENCY THOUSAND NEAREST THE

(ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO TO OFF ROUNDED BEEN HAVE NOTES AND STATEMENTS FINANCIAL CONSOLIDATED THE IN DISCLOSED AMOUNTS (ALL

AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018 DECEMBER 31 ENDED YEAR THE FOR AND AT AS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL CONSOLIDATED THE TO NOTES TURKCELL İLETİŞİM HİZMETLERİ A.Ş. HİZMETLERİ İLETİŞİM TURKCELL 260 TURKCELL ANNUAL REPORT 2018

TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018

(ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.)

35. Financial instruments (continued)

Foreign exchange risk

The Group’s exposure to foreign exchange risk at the end of the reporting period, based on notional amounts, was as follows:

31 December 2018 USD EUR RMB Foreign currency denominated assets Other non-current assets 222 11 - Financial asset at fair value through other comprehensive income - 7,043 - Due from related parties-current 1,965 223 - Trade receivables and contract assets 15,786 52,140 - Other current assets 70,710 18,977 - Cash and cash equivalents 786,322 384,800 - 875,005 463,194 - Foreign currency denominated liabilities Loans and borrowings-non current (481,438) (748,142) (224,519) Debt securities issued-non- current (921,102) - - Lease obligations-non-current (4,719) (24,068) - Other non-current liabilities (68,107) - - Loans and borrowings-current (390,876) (523,595) (29,244) Debt securities issued-current (55,074) - - Rent lease obligations-current (2,951) (8,223) - Trade and other payables-current (233,805) (32,946) (70,553) Due to related parties (686) (52) - (2,158,758) (1,337,026) (324,316)

Exposure related to derivative instruments Participating cross currency swap and FX swap contracts 1,082,036 811,167 202,600 Net exposure (201,717) (62,665) (121,716)

31 December 2017 USD EUR Foreign currency denominated assets Other non-current assets 72 2,681 Due from related parties-current 571 407 Trade receivables and accrued income 18,890 57,283 Other current assets 43,039 35,049 Cash and cash equivalents 688,717 237,697 751,289 333,117 Foreign currency denominated liabilities Loans and borrowings-non current (557,180) (960,629) Debt securities issued-non- current (469,387) - Other non-current liabilities (85,816) - Loans and borrowings-current (206,535) (285,827) Debt securities issued-current (27,848) - Trade and other payables-current (328,323) (29,442) Due to related parties (1,172) (394) (1,676,261) (1,276,292) Exposure related to derivative instruments Participating cross currency swap and FX swap contracts 937,011 748,650 Currency forward contracts 50,000 - Net exposure 62,039 (194,525)

F102 SECTORAL AND FINANCIAL INFORMATION ------261 F103 (364) 9,596 9,596 (364) 23,613 23,613 32,845 Depreciation of of Depreciation Depreciation of of Depreciation foreign currency foreign foreign currency foreign ------Equity Equity 364 364 (9,596) (9,596) (23,613) (23,613) (32,845) ANNUAL REPORT 2018 REPORT ANNUAL Appreciation of of Appreciation Appreciation of of Appreciation foreign currency foreign foreign currency foreign ------TURKCELL 9,275 9,275 106,121 37,775 87,838 37,775 153,171 87,838 106,121 64,438 (23,400) Depreciation of of Depreciation Depreciation of of Depreciation foreign currency foreign foreign currency foreign ------Profit/(Loss) Profit/(Loss) (9,275) (9,275) 23,400 23,400 (23,400) (106,121) (37,775) (87,838) (37,775) (153,171) (87,838) (106,121) (64,438) Appreciation of of Appreciation Appreciation of of Appreciation foreign currency foreign foreign currency foreign 31 December 2017 31 December 31 December 2018 31 December Sensitivity analysis Sensitivity Sensitivity analysis Sensitivity

5- Hedged portion of EUR risk (-) portion of 5- Hedged risk (-) currency foreign other portion of 8- Hedged (RMB) 4- EUR net asset/liability 4- EUR net asset/liability (RMB) net currency foreign 7- Other 1- USD net asset/liability 1- USD net USD risk (-) portion of 2- Hedged 8- Hedged portion of other foreign currency risk (-) risk (-) currency foreign other portion of 8- Hedged (RMB) 7- Other foreign currency net asset/liability (RMB) net currency foreign 7- Other 5- Hedged portion of EUR risk (-) portion of 5- Hedged 4- EUR net asset/liability 4- EUR net

1- USD net asset/liability 1- USD net USD risk (-) portion of 2- Hedged TURKCELL İLETİŞİM HİZMETLERİ A.Ş. HİZMETLERİ İLETİŞİM TURKCELL AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018 DECEMBER 31 ENDED YEAR THE FOR AND AT AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL CONSOLIDATED THE TO NOTES THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.) STATED.) OTHERWISE UNLESS LIRAS TURKISH IN EXPRESSED ARE AND UNITS CURRENCY THOUSAND NEAREST THE 35. Financial instruments (continued) Financial 35. instruments risk (continued) currency to Exposure analysis Sensitivity The exposure. currency corporate-level risk is an aggregate exchange foreign measure to analysis the sensitivity for basis The excludes the analysis currencies, in foreign and liabilities denominated all of assets is composed exposure exchange foreign aggregate investments. currency foreign net would 2017 and 31 December 2018 at 31 December currencies the following against BYN UAH, the TL, of 10% strengthening/weakening in variables, that all assumes other analysis This below. shown the amounts by before loss or profit (decreased) increased/ have constant. remain rates, interest particular (ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO TO OFF ROUNDED BEEN HAVE NOTES AND STATEMENTS FINANCIAL CONSOLIDATED THE IN DISCLOSED AMOUNTS (ALL Total (3+6+9) Total 9- Other foreign currency net effect (7+8) effect net currency foreign 9- Other 3- USD net effect (1+2) effect 3- USD net (4+5) effect 6- EUR net

9- Other foreign currency net effect (7+8) effect net currency foreign 9- Other 6- EUR net effect (4+5) effect 6- EUR net 3- USD net effect (1+2) effect 3- USD net

Total (3+6+9) Total 262 TURKCELL ANNUAL REPORT 2018

TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018

(ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.)

35. Financial instruments (continued)

Interest rate risk

As at 31 December 2018 and 2017 the interest rate profile of the Group’s variable rate interest-bearing financial instruments was:

31 December 2018 31 December 2017 Effective Effective Interest Carrying interest Carrying Note Rate Amount rate Amount Variable rate instruments 28 USD floating rate loans 4.3% (4,589,157) 3.2% (2,880,615) EUR floating rate loans 2.1% (6,975,890) 2.1% (5,511,579)

Sensitivity analysis

Cash flow sensitivity analysis for variable rate instruments:

An increase/decrease of interest rates by 100 basis points would have (decreased)/increased equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular foreign exchange rates, remain constant. The analysis is performed on the same basis at 31 December 2018 and 2017:

Profit or loss Equity 100 bps 100 bps 100 bps 100 bps increase decrease increase decrease 31 December 2018 Variable rate instruments (financial liability) (234,196) 234,196 - - Cash flow sensitivity (net) (234,196) 234,196 - - 31 December 2017 Variable rate instruments (financial liability) (83,922) 83,922 - - Cash flow sensitivity (net) (83,922) 83,922 - -

Fair values

Fair value of the Group’s financial assets and financial liabilities that are measured at fair value on a recurring basis

This section explains the judgements and estimates made in determining the fair values of the financial instruments that are recognized and measured at fair value in the financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the Group has classified its financial instruments into the three levels prescribed under the accounting standards. An explanation of each level is as follows:

• Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date; • Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and • Level 3 inputs are unobservable inputs for the asset or liability.

F104 SECTORAL AND FINANCIAL INFORMATION 263 F105 2017

28,629 323,691 295,062 fair value fair respectively, respectively, Relationship of of Relationship decrease by TL TL by decrease FV would increase/ FV would (31,047) and TL 33,896 and TL 33,896 (31,047) rate by 100 bps would would 100 bps by rate If expected settlement settlement If expected unobservable inputs to to inputs unobservable date changes by 1 year 1 year by changes date TL (13,582) and TL 14,250 TL (13,582) and TL 14,250 A change in the discount A change in the discount increase/decrease FV by FV by increase/decrease 2018 34,613 ANNUAL REPORT 2018 REPORT ANNUAL 323,691 2021 4,8% 2017 358,304 alues due to their short-term nature. short-term their due to alues v

31 December 31 December TURKCELL first quarter of of quarter first Inputs 9,5% 2018 2023 31 December 31 December first quarter of of quarter first Inputs Expected Expected discount rate discount Risk-adjusted Risk-adjusted Unobservable Unobservable settlement date settlement 2017

323,691

31 December 31 December

2018 Fair value at value Fair 358,304 31 December 31 December TURKCELL İLETİŞİM HİZMETLERİ A.Ş. HİZMETLERİ İLETİŞİM TURKCELL AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018 DECEMBER 31 ENDED YEAR THE FOR AND AT AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL CONSOLIDATED THE TO NOTES THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.) STATED.) OTHERWISE UNLESS LIRAS TURKISH IN EXPRESSED ARE AND UNITS CURRENCY THOUSAND NEAREST THE Changes in the consideration payable in relation to acquisition of Belarusian Telecom for the years ended 31 December 2018 and and 2018 31 December ended the years for Telecom Belarusian of acquisition to relation in payable in the consideration Changes below: stated are 2017 31 December Contingent Contingent consideration 35. Financial instruments (continued) Financial 35. instruments (continued) values Fair value fair to and relationships inputs Valuation value 3 fair in level used inputs unobservable the significant about information the quantitative table summarizes following The consideration, contingent of measurement (ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO TO OFF ROUNDED BEEN HAVE NOTES AND STATEMENTS FINANCIAL CONSOLIDATED THE IN DISCLOSED AMOUNTS (ALL Opening balance Opening Gains recognized in profit or loss or in profit Gains recognized Financial liabilities: interest and floating short nature their term due to values carrying their approximate to assumed financial of liabilities are values Fair rates. and USD 500,000 of a nominal with value in 2015 the Company by issued securities debt of value the fair 2018, at 31 December As 2017:2,063,972). (31 December is TL 2,380,855 28), (Note rate interest fixed and USD 500,000 of a nominal with value in 2018 the Company by issued securities debt of value the fair 2018, at 31 December As 2017:None). (31 December is TL 2,329,011 28), (Note rate interest fixed and financial assets other of value 1 and fair as level classified are issued securities and debt equivalents and cash cash of value Fair 2. as level classified liabilities are Closing balance Closing Financial assets: fair their from significantly differ do not financial portion of assets significant of values Carrying 264 TURKCELL ANNUAL REPORT 2018

TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018

(ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.)

36. Guarantees and purchase obligations

At 31 December 2018, outstanding purchase commitments with respect to property, plant and equipment, inventory, advertising and sponsorship amount to TL 1,353,789 (31 December 2017: TL 592,956). Payments for these commitments will be made within 5 years.

The Group is contingently liable in respect of letters of guarantee obtained from banks and given to public institutions and private entities, and financial guarantees provided to subsidiaries amounting to TL 6,530,374 at 31 December 2018 (31 December 2017: TL 4,926,916).

At 31 December 2018, there is no commitments regarding lifecell’s 3G (31 December 2017: UAH 217,793).

37. Commitments and Contingencies

The following disclosures comprise of material legal lawsuits, investigations and in-depth investigations against the Company.

License Agreements

Turkcell:

On 27 April 1998, the Company signed the Agreement for grant of concession for the establishment and Operation of the Pan-European Mobile Telephone System, GSM (hereinafter referred to as the “License Agreement”) with the Turkish Ministry. In accordance with the License Agreement, the Company was granted a 25 year license for the provision of GSM services for a license fee of USD 500,000.

3G License

On 30 April 2009, the Company signed a separate License Agreement with ICTA which provides authorization for providing IMT 2000/ UMTS services and establishment and operation of the required infrastructure. Turkcell acquired the A license providing the widest frequency band for a consideration of EUR 358,000 (excluding VAT). The license is effective for duration of 20 years starting from 30 April 2009, According to the agreement, Turkcell has provided IMT 2000/UMTS services starting from 30 July 2009.

4.5G License

The 4,5 licensing process is finalized by signing of IMT License Commitments Document by Turkcell and therefore, ICTA granted Turkcell 4,5G License on 27 October 2015. The 4.5G License is effective for 13 years until 30 April 2029, According to the License, Turkcell started to provide 4.5G services on 1 April 2016.

Belarusian Telecom:

Belarusian Telecom owns a license issued on 28 August 2008 for a period of 10 years and was valid till 28 August 2018. According to the Sale and Purchase Agreement signed, the State Property Committee of the Republic of Belarus committed to grant the license from the acquisition date of 26 August 2008 for a period of 10 years. In accordance with the Edict of the President of the Republic of Belarus dated 26 November 2015, numbered 475, the license is now issued without limitation of the period of validity. Starting from 1 March 2016, the license is valid from the date of the licensing authority’s decision on its issue and for an unlimited period. Under the terms of its license, Belarusian Telecom is required to gradually increase its geographical coverage until the end of 2018. Belarusian Telecom has fulfilled all coverage requirements except covering all Belarusian settlements. The number of uncovered settlements is 646 out of a total of 22,552 settlements.

F106 SECTORAL AND FINANCIAL INFORMATION 265 F107

ANNUAL REPORT 2018 REPORT ANNUAL TURKCELL

ense Agreements (continued) Agreements ense TURKCELL İLETİŞİM HİZMETLERİ A.Ş. HİZMETLERİ İLETİŞİM TURKCELL AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018 DECEMBER 31 ENDED YEAR THE FOR AND AT AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL CONSOLIDATED THE TO NOTES THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.) STATED.) OTHERWISE UNLESS LIRAS TURKISH IN EXPRESSED ARE AND UNITS CURRENCY THOUSAND NEAREST THE TL 159,572 (31 December 2017: TL 159,752) provided to Spor Toto. Spor to provided TL 159,752) 2017: (31 December TL 159,572 2018 on 29 August expired 2008 has been 29 August dated and İnteltek Toto Spor between executed the agreement of the term As İnteltek between signed has been bargaining” through “procurement of an agreement yet, concluded been has not tender and the new on the Transfer the Law the article to 26 of as per 1 year up to of a term and for 2018 29 August from effective being and Spor-Toto numbered Entities Legal Private to Competitions on Sports Based Games Betting and Paramutual Odds Fixed Organize to Rights of and and the terms exists which currently the agreement of is a follow-up bargaining” through “procurement of agreement The 5738. 2018. 29 August as of expired been which has the agreement with same generally are this agreement of conditions odds the fixed operate to assign mobile sub agencies to the rights receiving Toto, Spor with agreement has a mobile agency Inteltek TL of guarantee of a letter has provided Inteltek 2018, at31 December As competitions. on sports based games betting and paramutual agreement. mobile agency for Toto Spor to TL 25,000) provided 2017: 25,000 (31 December Kibris Telekom: Mobile Cellular, a Digital, of and Operation Installation for Agreement the License signed Kibris Telekom On 27 April 2007, of and Public Works Communications of the Ministry with Agreement”) License (“Mobile Communication System Telecommunication System Telephony GSM-Mobile the previous replacing 2007, 1 August from which is effective Northern Cyprus of Republic the Turkish an granted was Kibris Telekom Agreement, License the Mobile Communication with In accordance 1999. 25 March dated Agreement IMT 2000/UMTS of while the usage 1800 frequencies GSM 900, GSM for license 1800 and IMT 2000/UMTS GSM 900, GSM 18 year certain conditions. of the fulfillment to is subject bands frequency lifecell: and long- international for one license 3G, for issued license, neutral a technology 900, GSM for licenses, activity eleven owns lifecell licenses use 29 frequency owned lifecell 2018, 31, December of As in Ukraine. regions eight for licenses PSTN and eight calls distance and Broadband Radiorelay and microwave Wi-fi CDMA-800. GSM-1800, GSM-900, (UMTS), IMT-2000 LTE-1800, IMT (LTE-2600, for held on 4G tenders, issued were and GSM-1800 LTE-1800) IMT (LTE-2600, for Licenses and national. regional which are Access, Radio on a permissions one twenty mobile networks, for NDC codes – three range number holds a specific lifecell Additionally, in Q1’2018. one and 4 international), (7 regional SS-7 codes for resource on a number permissions eleven short numbers, for resource number licenses, PSTN for ranges local for resource on a number nine permissions Code, Mobile Network for resource on a number permission and one telephony fixed and long-distance international for selection routing alternative for codes on a service permissions two “800”. service global telecommunication for on a code permission Inteltek: shares, its holds 55% of the Company on which (“Inteltek”), A.Ş. Danılşmanlık Ticaret ve Yatırım Teknoloji Internet Inteltek affiliate, Our platforms. electronic multi-access through chance of games for system central and operate establish to in order incorporated has been Toto”) (“Spor Directorate Toto Spor with executed on the agreement basing chance of games operated İnteltek 2009, 1 March Until chance of games organize to companies private which allowed tender at the new offer the best gave Inteltek 2008. 29 August dated 1.4% and the was rate the commission this agreement, Under years. ten of a term for Toto, Spor with contract a new and signed of guarantee of has a letter Inteltek 2018, at 31 December As including balance VAT. turnover the 50% of was payout targeted 37. Commitments and Contingencies (continued) and Contingencies Commitments 37. Lic (ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO TO OFF ROUNDED BEEN HAVE NOTES AND STATEMENTS FINANCIAL CONSOLIDATED THE IN DISCLOSED AMOUNTS (ALL 266 TURKCELL ANNUAL REPORT 2018

TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018

(ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.)

37. Commitments and Contingencies (continued)

License Agreements (continued)

Kibris Telekom (continued):

On 14 March 2008, Kibris Telekom was awarded a 3G infrastructure license at a cost of $10,000 including VAT, which was paid at the end of March 2008. Under the terms of the license, the system had to be operational by mid-October 2008. In 2010, Kibris Telekom has completed the radio transmission (air link) project providing direct international voice and data connection with mainland and started using it from the third quarter of 2010. The Project is the only direct connection in Turkish Republic of Northern Cyprus besides Telecommunication Authority.

37.1 Dispute on Treasury Share Amounts

The Undersecretariat of Treasury and ICTA alleged that Company made deficient treasury share and contribution to the authority expenses payments in the past, the Company objected to these claims.

The Company has resolved the following within the scope of Provisional Article 13 added to the Telegraph and Telephone Law No.406 dated 4 February 1924 of the Law on the Amendment of Certain Tax Laws and Other Laws No. 7061 published in the Official Gazette dated December 5th, 2017: to restructure relevant disputes and their interest fees and to choose the method of increasing for relevant years’ legal payment amounts from the options in order to restructure relevant disputes and their interest fees for the periods for which examination is ongoing or has not been yet initiated. The Company applied for restructure, and according to the Law the Company submitted waiver petition or accepted the cases related to the restructured amounts. In some of the cases, the Courts already granted decisions in line with the petitions submitted by the Company and in the other pending cases, it is expected that the Courts shall grant decisions in line with the statement of waiver/acceptance of the aforementioned cases.

Based on the Laws stated above, the total amount, including principal and interest, calculated is TL 206,365 and is TL 209,159, respectively. The total payment including interest on installments is TL 436,300 and the payments have been made in 6 equal installments in 2018.

No liabilities remain in the consolidated financial statements as at and for the period ended 31 December 2018 (31 December 2017: TL 417,668).

37.2 Disputes on Special Communication Tax and Value Added Tax

a) Disputes on SCT for the year 2011

Large Tax Payers Office levied Special Communication Tax (SCT) and tax penalty on the Company as a result of the Tax Investigation for the year 2011. The Company filed lawsuits for the cancellation of the notification regarding the aforementioned SCT assessment. The court partially accepted and partially rejected the cases and the parties appealed the decisions regarding the parts against them. The Large Tax Payers Office has collected TL 80,355 calculated for the parts against the Company for the assessment of the SCT for the year 2011 by offsetting the receivables of the Company from Public Administrations.

As per the Law no. 6736, the Company filed applications for the restructuring of penalties and interest on the SCT regarding the dispute on the tax, while the cases are pending before the court of appeal. Tax Office rejected the application for the year 2011. The Company also filed a case for the cancellation of aforementioned rejection act of the Tax Office for the year 2011. The case is pending as well as the cases regarding the cancellation of the SCT assessment for the year 2011.

F108 SECTORAL AND FINANCIAL INFORMATION 267 F109

ANNUAL REPORT 2018 REPORT ANNUAL

TURKCELL

c) Disputes on SCT and VAT for the years 2015 and 2016 and 2016 2015 the years for and VAT on SCT c) Disputes b) Disputes on SCT for the years 2013 and 2014 and effects of Law No. 7143 7143 No. Law of and effects and 2014 2013 the years for on SCT Disputes b) TURKCELL İLETİŞİM HİZMETLERİ A.Ş. HİZMETLERİ İLETİŞİM TURKCELL AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018 DECEMBER 31 ENDED YEAR THE FOR AND AT AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL CONSOLIDATED THE TO NOTES THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.) STATED.) OTHERWISE UNLESS LIRAS TURKISH IN EXPRESSED ARE AND UNITS CURRENCY THOUSAND NEAREST THE

Turkish telecom sector players including Turkcell has been subjected to a limited tax audit with respect from VAT and SCT for 2015 2015 for and SCT VAT from respect with audit tax a limited to subjected has been including Turkcell players sector telecom Turkish of some However, 2015. for identified were criticized be to no issues the Company for process audit the tax the end of At and 2016. 2018, 31 December of As 2016. for authority tax by criticism to subjected are the Company by offered services and some offers bundle TL 134,537 and TL 113,367 including to amounts the principal and penalty amounting and VAT SCT claims arising from tax respectively legislation while the relevant with in accordance initiated has been process Administrative the Company. to notified been have legal action. take to right reserving thus, than probable, be less to is deemed benefits economic embodying resources of an outflow opinion, on the management Based (31 December 2018 31 December ended the period at and for as financial statements in the consolidated is recognized no provision None). 2017: 7143 Serial No. Law due to Increase Base 37.3 Tax 7143 Serial No. Law due to 2017 for mechanism increase base tax and corporate VAT apply for to decided Management Company The as at and for financial statements in the consolidated No liabilities remain 2018. made on 1 October been has and TL 35,443 payment None). 2017: (31 December 2018 31 December ended the period fees and usage utilization and radio numbers on subscription ICTA by initiated 37.4 Investigation As and 2014. 2013 2012, 2010-2011, 2004-2009, the years, for operators the GSM against investigations, in-depth commenced ICTA warn to TL 11,240 and decided amounting in total the Company to fines administrative imposed ICTA the investigations, of a result 25% discount. with ICTA, of the decision of the notification following 1 month paid within were fines administrative The the Company. filed ICTA acts. administrative and ICTA’s fines administrative aforementioned of the cancellation for lawsuits filed Company The paid alleged that the Company which was amount fee and usage utilization the radio of the collection for Company against lawsuits deficiently. which fees radio restructure 37.1 to note in detailed as explained 7061 No. on the Laws based the following has resolved Company The and according restructure, applied for Company The disputes. these regarding interest default penalty, and respective in dispute are granted Courts The amounts. the restructured to related the cases accepted or petition waiver submitted the Company the Law to the Company. by submitted the petitions in linedecisions with including payment total The 2 is TL 158,340. clause of the scope within calculated including principal and interest, amount, total The in 2018. made in 6 equal instalments been have is TL 166,257 and the payments on instalments interest (31 2018 31 December ended the period as at and for financial statements in the consolidated remained been No liabilities have TL 157,446). 2017: December Tax assessments for prepaid card sales for 2013 and 2014 have been completed. The Company has been notified of the tax audit audit the tax of notified has been Company The completed. been have and 2014 2013 for sales card prepaid for assessments Tax which 7143, No. Law from benefit to has decided management Company The the said investigations. at the end of prepared reports has been and TL 39,362 reports audit in the tax issues the criticized regarding provisions, and discount payment advantageous provides TL 24,175). 2017: paid (31 December 37. Commitments and Contingencies (continued) and Contingencies Commitments 37. Tax Added and Value Tax Communication on Special 37.2 Disputes (ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO TO OFF ROUNDED BEEN HAVE NOTES AND STATEMENTS FINANCIAL CONSOLIDATED THE IN DISCLOSED AMOUNTS (ALL 268 TURKCELL ANNUAL REPORT 2018

TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018

(ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.)

37. Commitments and Contingencies (continued)

37.5 Disputes regarding the Law on the Protection of Competition

On the grounds of the investigation initiated by the Competition Board on the grounds that the Company violated the competitive environment through abusing its dominant position in the Turkish mobile market and it was decided to apply administrative fine amounting to TL 91,942 on the Company. A lawsuit was filed by the Company. The Court rejected the case. The Company appealed the decision with the request of the stay of the execution.

Three private companies filed a lawsuits against the Company in relation with this case claiming in total of TL 112,084 together with up to 3 times of the loss amount to be determined by the court for its material damages by reserving its rights for surpluses allegedly. The cases are still pending.

As a result of the abovementioned investigation, Competition Board concluded that the Company did not determine retail prices and there was no need to impose an administrative fines on this issue. After the lawsuit filed by a third party, this part of Competition Board’s judgement was reversed by the Council of State and Competition Board launched a new process. Consequently, the Board decided on January 2019 that the Company determined the retail prices of units and to apply administrative fine amounting to TL 91,942 on the Company. After the receiving of the reasoned decision, the Company will take legal action.

Based on the management opinion, the probability of an outflow of resources embodying economic benefits is uncertain, thus, no provision is recognized in the consolidated financial statements as at and for the period ended 31 December 2018 (31 December 2017: None).

37.6 Ministry of Trade Administrative Fine

Ministry of Trade prepared a report upon the investigation initiated against the Company on subscriber agreements, distance contracts, value added services and commitment campaigns including device procurement for the year 2015. The Company filed a lawsuit for the stay of execution and cancellation of the Notice of Administrative Fine imposed by Istanbul Governorship Directorate of Commerce based to the aforementioned report of the Ministry, amounting to TL 138,173 and the Decision of Administrative Fine of Istanbul Governorship Directorate of Commerce. Furthermore, the Company demanded the Court to recourse to the Constitutional Court for the cancellation of the related part of the 19th paragraph of the article 77 of the Law on the Protection of Consumers numbered 6502.

Based on the management opinion, the probability of an outflow of resources embodying economic benefits is uncertain, thus, no provision is recognized in the consolidated financial statements as at and for the period ended 31 December 2018 (31 December 2017: None).

F110 SECTORAL AND FINANCIAL INFORMATION - F111 269 Provision 31 December 2017 31 December - ANNUAL REPORT 2018 REPORT ANNUAL Provision TURKCELL 31 December 2018 31 December 13,367 interest) 31 December 2017 2017 31 December

Anticipated Maximum Maximum Anticipated Risk (excluding accrued accrued Risk (excluding 13,367

interest) 31 December 2018 2018 31 December Anticipated Maximum Maximum Anticipated Risk (excluding accrued accrued Risk (excluding TURKCELL İLETİŞİM HİZMETLERİ A.Ş. HİZMETLERİ İLETİŞİM TURKCELL AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018 DECEMBER 31 ENDED YEAR THE FOR AND AT AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL CONSOLIDATED THE TO NOTES THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.) STATED.) OTHERWISE UNLESS LIRAS TURKISH IN EXPRESSED ARE AND UNITS CURRENCY THOUSAND NEAREST THE Subject 37. Commitments and Contingencies (continued) and Contingencies Commitments 37. investigations and tax ongoing lawsuits 37.7 Other ongoing disputes following to related obligations which are 2018, 31 December as of prepared financial statements consolidated Within evaluated. been have (ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO TO OFF ROUNDED BEEN HAVE NOTES AND STATEMENTS FINANCIAL CONSOLIDATED THE IN DISCLOSED AMOUNTS (ALL Disputes related with ICTA with related Disputes The Company is under tax investigation with respect to application of the Turkish Special Communication Tax to prepaid TL/card sales sales TL/card prepaid to Tax Special Communication the Turkish of application to respect with investigation tax is under Company The 2018. on December started has been Investigation and 2017. 2016 2015, the years for channels sales made via its (ii) FY SCT, to regard with FY 2017 (i) for in the Company: started have investigations share and treasury tax following In addition October- 2018 to regard with investigation share (iii) treasury Tax, Added and Value Tax Income Corporate SCT, to regard with 2018 period. December thus, probable, than be less to is deemed benefits economic embodying resources of an outflow opinion, on the management Based (31 December 2018 31 December ended the period at and for as financial statements in the consolidated is recognized no provision None). 2017: 270 TURKCELL ANNUAL REPORT 2018

TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018

(ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.)

38. Related parties

Transactions with key management personnel

Key management personnel comprise of the Group’s members of the Board of Directors and chief officers.

There are no loans to key management personnel as of 31 December 2018 and 2017.

The Group provide additional benefits to key management personnel and contribution to retirement plans based on a pre-determined ratio of compensation.

31 December 2018 31 December 2017 31 December 2016 Short-term benefits (*) 92,341 74,696 50,001 Termination benefits 121 604 10,064 Long-term benefits 755 548 479 93,217 75,848 60,544

(*) Includes share-based payment,

The following balances are outstanding at the end of the reporting period in relation to transactions with related parties:

Due from related parties 31 December 2018 31 December 2017 Vimpelcom OJSC (“Vimpelcom”) 9,138 - Telia Sonera International Carrier AB (“Telia”) 1,741 1,256 Kyivstar GSM JSC (“Kyivstar”) 210 1,061 GSM Kazakhstan Ltd (“Kazakcell”) 2 830 Azercell Telekom MMC (“Azercell”) - 364 Other 2,442 1,788 13,533 5,299

There is no net of allowance for doubtful receivables of due from related parties at 31 December 2018 (31 December 2017: TL 227).

Due from Telia, Vimpelcom, Azercell and Kyivstar resulted from telecommunications services.

Due from Kazakcell, mainly resulted from software services and telecommunications services.

F112 SECTORAL AND FINANCIAL INFORMATION - - 271 F113 897 447 997 1,738 1,552 2016 2,346 3,422 15,761 2,585 6,980 14,922 30,964 20,775 89,426 2 3 - - 782 523 886 3,591 2017 1,583 1,583 7,230 7,230 11,324 45,331 39,544 10,020 10,020 61,032 61,032 30,875 30,875 ANNUAL REPORT 2018 REPORT ANNUAL TURKCELL 31 December 201831 December 2017 31 December - - 256 256 7,941 7,941 2018 5,418 5,418 7,920 7,920 74,481 74,481 52,946 52,946

(**) (****) (*) TURKCELL İLETİŞİM HİZMETLERİ A.Ş. HİZMETLERİ İLETİŞİM TURKCELL AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018 DECEMBER 31 ENDED YEAR THE FOR AND AT AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL CONSOLIDATED THE TO NOTES THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.) STATED.) OTHERWISE UNLESS LIRAS TURKISH IN EXPRESSED ARE AND UNITS CURRENCY THOUSAND NEAREST THE Sales to Azercell to Sales Sales to Kyivstar to Sales services Telecommunications Telia to Sales services Telecommunications Vimpelcom to Sales services Telecommunications Millenicom to Sales parties related other to Sales Telecommunication services Telecommunication Telecommunication services Telecommunication rent line services, fixed services, center Call charges and interest Revenue from related parties related from Revenue 38. Related parties (continued) parties Related 38. parties related Due to (ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO TO OFF ROUNDED BEEN HAVE NOTES AND STATEMENTS FINANCIAL CONSOLIDATED THE IN DISCLOSED AMOUNTS (ALL Turkcell Vakfı Turkcell Krea to Sales Kyivstar GSM JSC (“Kyivstar”) JSC (“Kyivstar”) GSM Kyivstar S,P,A, Telecomunicazioni Wind Ag Switzerland Carrier International Teliasonera Ltd, (Bvı) Vimpelcom (“Geocell”) LLC Geocell Other Due to Kyivstar, Geocell, Wind Telecomunicazioni S,P,A, and Vimpelcom (Bvı) Ltd, mainly resulted from telecommunications services services telecommunications from mainly resulted Ltd, (Bvı) and Vimpelcom S,P,A, Telecomunicazioni Wind Geocell, Kyivstar, Due to received. 35. in Note is disclosed parties related with balances outstanding to risk related currency to exposure Group’s The parties: related with occurred transactions following The 272 TURKCELL ANNUAL REPORT 2018

TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018

(ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.)

38. Related parties (continued)

Related party expenses 2018 2017 2016 Charges from Kyivstar Telecommunications services 77,174 49,178 47,595 Charges from Turkcell Vakfı Donation 44,247 - - Charges from Telia Telecommunications services 6,047 3,120 2,499 Charges from Wind Telecomunicazioni Telecommunications services 4,812 - - Charges from Vimpelcom Telecommunications services 2,751 10,853 2,721 Charges from Azercell (****) Telecommunications services 79 734 1,361 Charges from Hobim (***) Invoicing and archiving services - 16,993 31,832 Charges from Krea Digital television broadcasting services - - 5,975 Charges from other related parties 9,799 17,001 11,659 144,909 97,879 103,642

(*) Transactions with Krea include transactions until 26 August 2016, (**) Transactions with Millenicom include transactions until 21 January 2016, (***) Transactions with Hobim include transactions until 20 June 2017, (****) Transactions with Azercell include transactions until 5 March 2018,

Transactions with Kyivstar:

Kyivstar, an entity under common control with Alfa, is rendering and receiving telecommunications services such as interconnection and roaming.

Transactions with Hobim:

Hobim, one of the leading data processing and application service provider companies in Turkey, is owned by Cukurova Group, The Company has entered into invoice printing and archiving agreements with Hobim under which Hobim provides the Company with monthly invoice printing services, manages archiving of invoices and subscription documents, Prices of the agreements are determined through alternative proposals’ evaluation.

Transactions with Vimpelcom:

Vimpelcom, an entity under common control with Alfa, is rendering and receiving telecommunications services such as interconnection and roaming.

Transactions with Telia:

Telia, a subsidiary of Sonera, is rendering and receiving telecommunications services such as interconnection and roaming.

Transactions with Azercell:

Azercell, a subsidiary of Sonera, is rendering and receiving telecommunications services such as interconnection and roaming.

F114

SECTORAL AND FINANCIAL INFORMATION

273 F115 ANNUAL REPORT 2018 REPORT ANNUAL TURKCELL TURKCELL İLETİŞİM HİZMETLERİ A.Ş. HİZMETLERİ İLETİŞİM TURKCELL AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018 DECEMBER 31 ENDED YEAR THE FOR AND AT AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL CONSOLIDATED THE TO NOTES THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.) STATED.) OTHERWISE UNLESS LIRAS TURKISH IN EXPRESSED ARE AND UNITS CURRENCY THOUSAND NEAREST THE 38. Related parties (continued) parties Related 38. Krea: with Transactions Share in Krea, shares their the sale of to related LLC Media BeIN Group with agreement purchase Holding a share has signed Çukurova 2016. as at 26 August has finalized transfer name. the Digiturk brand under company service digital television a direct-to-home Krea, other as in every year, Every Digiturk name, under and digital channels branded Turkcell between agreements no specific are There Toto Spor to related content football instant provides Krea Also, basis, on a spot purchased are ad spaces standard media channel, and tablets. mobile phones to delivered be to the Company to League Super the Company’s by provided services center and data internet, corporate line, leased telephone, fixed for has agreements Company The Superonline. Turkcell subsidiary Vakfı: Turkcell with Transactions transaction. and donation responsibility social rendering for incorporated was Vakfı, Turkcell 2018, On 11 October Wind: with Transactions and such as interconnection services telecommunications and receiving is rendering Alfa, with control common under an entity Wind, roaming. (ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO TO OFF ROUNDED BEEN HAVE NOTES AND STATEMENTS FINANCIAL CONSOLIDATED THE IN DISCLOSED AMOUNTS (ALL 274 TURKCELL ANNUAL REPORT 2018

TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018

(ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.)

39. Subsidiaries

The Group’s ultimate parent company is Turkcell Holding, Subsidiaries, associates and a joint venture of the Company as at 31 December 2018 and 31 December 2017 are as follows:

Effective Ownership Interest Subsidiaries Name Country of Incorporation Business 31 December 2018 (%) 31 December 2017 (%) Kibris Telekom Turkish Republic of Northern Cyprus Telecommunications 100 100 Customer relations and human resources Turkcell Global Bilgi Turkey management 100 100 Information technology, value added GSM services Turktell Turkey and entertainment investments 100 100 Telecommunications, television services and Turkcell Superonline Turkey content services 100 100 Turkcell Satis Turkey Sales, delivery and digital sales services 100 100 Eastasia Netherlands Telecommunications investments 100 100 Turkcell Teknoloji Turkey Research and development 100 100 Global Tower Turkey Telecommunications infrastructure business 100 100 Rehberlik Turkey Directory Assistance 100 100 Financell(5) Netherlands Financing business - 100 Lifecell Ventures Netherlands Telecommunications investments 100 100 Beltel Turkey Telecommunications investments 100 100 Turkcell Gayrimenkul Turkey Property investments 100 100 Global LLC Ukraine Customer relations management 100 100 UkrTower Ukraine Telecommunications infrastructure business 100 100 Turkcell Europe Germany Telecommunications 100 100 Turkcell Odeme Turkey Payment services and e-money license 100 100 lifecell Ukraine Telecommunications 100 100 Turkcell Finansman Turkey Consumer financing services 100 100 Beltower Republic of Belarus Telecommunications Infrastructure business 100 100 Electricity energy trade and wholesale and retail Turkcell Enerji Turkey electricity sales 100 100 Paycell Ukraine Consumer financing services 100 100 Lifecell Digital Turkish Republic of Northern Cyprus Telecommunications 100 100 TÖFAŞ (1) Turkey Interest free consumer financing services 100 - Turkcell Sigorta(3) Turkey Insurance agency activities 100 - Belarusian Telecom Republic of Belarus Telecommunications 80 80 Information technology, programming and Lifetech Republic of Belarus technical support 80 80 Inteltek Turkey Information and Entertainment Services 55 55 Azerinteltek (6) Azerbaijan Information and Entertainment Services - 28

Effective Ownership Interest Associates Name Country of Incorporation Business 31 December 2018 (%) 31 December 2017 (%) Fintur Netherlands Telecommunications investments 41 41 Electric passenger car development, production Türkiye’nin Otomobili (2) Turkey and trading activities 19 -

Effective Ownership Interest Joint Venture Name Country of Incorporation Business 31 December 2018 (%) 31 December 2017 (%) Sofra (4) Turkey Meal coupons and cards 33 -

(1) On 16 February 2018, Turkcell Ozel Finansman A,S, which will grant loans within the framework of Islamic financing principles for purchases of goods and services, was incorporated under the laws of Republic of Turkey.

F116 SECTORAL AND FINANCIAL INFORMATION 275 F117 2017 9,855 31 December 31 December 304 2018 Accumulated Accumulated non-controlling interests non-controlling 31 December 31 December ANNUAL REPORT 2018 REPORT ANNUAL 2017 TURKCELL 31 December 31 December 2018 51,158 22,706 156,270 58,630 131,810 55,927 non-controlling interests non-controlling Profit/(loss) allocated to to allocated Profit/(loss) 31 December 31 December 2017 31 December 31 December interest 2018 held by non-controlling non-controlling held by Proportion of ownership ownership of Proportion interests and voting rights rights and voting interests 31 December 31 December Turkey 45,00% 45,00% 105,112 35,924 131,506 46,072 Place of of Place place of of place business and principal and principal incorporation incorporation

On 30 July 2018, Sofra, which will provide services via various means such as service coupons, meal coupons, meal card, electronic coupon and/or smart card, in vehicle payment, payment, vehicle in smart card, and/or coupon electronic meal card, meal coupons, coupons, service such as means via various services which willprovide Sofra, July 2018, On 30 The liquidation process of Financell B.V., which is a wholly owned subsidiary of the Company incorporated in the Netherlands and which is non-operational since December 2015, 2015, December since and which is non-operational in the Netherlands incorporated the Company of subsidiary which is a wholly owned B.V., Financell of liquidation process The The Group has transferred its total shareholding in Azerinteltek controlled by Inteltek to one of other shareholder of Azerinteltek, Baltech Investment LLC (“Baltech”), for a total a total for (“Baltech”), LLC Investment Baltech Azerinteltek, of shareholder other one of to Inteltek by controlled in Azerinteltek shareholding total its has transferred Group The On 25 June 2018, Turkcell Sigorta Aracılık Hizmetleri A,S,, which will engage in insurance agency activities, was incorporated. was activities, agency which will engage in insurance A,S,, Hizmetleri Sigorta Aracılık Turkcell On 25 June 2018,

On 28 June 2018, Türkiye’nin Otomobili, which will develop and produce mainly electric passenger car and to carry out trading activities, was incorporated and accounted under under and accounted incorporated was activities, trading out carry and to car mainly passenger electric and produce which will develop Otomobili, Türkiye’nin On 28 June 2018, TURKCELL İLETİŞİM HİZMETLERİ A.Ş. HİZMETLERİ İLETİŞİM TURKCELL AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018 DECEMBER 31 ENDED YEAR THE FOR AND AT AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL CONSOLIDATED THE TO NOTES THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.) STATED.) OTHERWISE UNLESS LIRAS TURKISH IN EXPRESSED ARE AND UNITS CURRENCY THOUSAND NEAREST THE Individually immaterial Individually immaterial non – with subsidiaries interest controlling Inteltek smart key, was incorporated and accounted under investments in equity accounted investees in the consolidated financial statements as at 31 December 2018, Turkcell Ödeme ve ve Ödeme Turkcell 2018, as at 31 December financial statements the consolidated in investees accounted in equity investments under accounted and incorporated was smart key, Sofra. of ratios holds equal shareholding (“PTT”) A,Ş, Teşkilatı Telgraf ve and Posta A,Ş, Hizmetleri Ödeme ve Para BELBİM Elektronik A,Ş, Hizmetleri Para Elektronik has been completed as of 14 August 2018. 14 August as of completed has been Name of subsidiary Name of Details of non-wholly owned subsidiaries that have material non-controlling interests to the Company are disclosed below: disclosed are the Company to interests non-controlling material that have subsidiaries non-wholly owned of Details (6) (4) (5) 39. Subsidiaries (continued) Subsidiaries 39. (2) (3) (ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO TO OFF ROUNDED BEEN HAVE NOTES AND STATEMENTS FINANCIAL CONSOLIDATED THE IN DISCLOSED AMOUNTS (ALL consideration of EUR 19,530. The share purchase agreement was signed on 15 November 2018 and the transfer of proceeds to Inteltek was completed on 27 December 2018. Group Group 2018. on 27 December completed was Inteltek to proceeds of and the transfer 2018 on 15 November signed was agreement purchase share The EUR 19,530. of consideration on 11 January subsequently completed was Baltech to shares of transfer The money. of transfer with 2018 on 27 December unconditionally the subsidiary over the control lost have 2018. 31 December ended the year for TL 110,308 to gain amounting subsidiary on sale of has recognized the Group holding in Azerinteltek, of the divestment Due to The 2019. investments in equity accounted investees in the consolidated financial statements as at 31 December 2018. as at 31 December financial statements in the consolidated investees accounted in equity investments 276 TURKCELL ANNUAL REPORT 2018

TURKCELL İLETİŞİM HİZMETLERİ A.Ş. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018

(ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.)

39. Subsidiaries (continued)

Summarized financial information in respect of Inteltek is set out below. The summarized financial information below represents amounts before intragroup eliminations.

Inteltek

31 December 2018 31 December 2017 Current assets 403,427 223,119 Non-current assets 9,043 9,290 Current liabilities 115,080 125,286 Non-current liabilities 5,154 4,742 Equity attributable to owners 292,236 102,381

2018 2017 Revenue 208,239 184,025 (Expenses) / Income (net) (93,133) (104,194) Gain on Sale of Investments 118,476 - Profit for the year 233,582 79,831

Other comprehensive income/(loss) for the year 179 172 Dividend paid to non-controlling interests 31,283 (46,582)

Net cash inflow from operating activities 31,380 73,575 Net cash inflow from investing activities 158,946 19,930 Net cash outflow from financing activities (69,518) (75,113) Effects of foreign exchange rate fluctuations on cash and cash equivalents 56,949 8,574 Net cash inflow 177,757 26,966

F118 SECTORAL AND FINANCIAL INFORMATION 277 F119 Total Total 1,715,906 9,781,162 7,419,239 4,712,333 45,916,917 (7,823,816) (12,736,306) -

3,253 48,114 Lease 72,421 24,312,451 (1,068) (23,273,370) 122,720 12,536,149 122,720 12,536,149 Leasings liabilities Financial Financial 1,036,380 1,036,380 ANNUAL REPORT 2018 REPORT ANNUAL - TURKCELL Loans Loans

- issued issued 246,448 1,466,205 209,808 24,030,222 1,875,521 10,537,908 2,188,313 43,728,604 (503,391) (22,768,911) 1,922,656 7,810,392 (432,140) (44,339,377) (1,180,831) (45,952,348) 1,578,868 3,603,892 1,435,687 6,618,447 1,875,521 10,537,908 5,210,562 13,531,027 1,413,956 20,155,545 Debt securities securities Debt Debt securities securities Debt TURKCELL İLETİŞİM HİZMETLERİ A.Ş. HİZMETLERİ İLETİŞİM TURKCELL AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018 DECEMBER 31 ENDED YEAR THE FOR AND AT AS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL CONSOLIDATED THE TO NOTES THE NEAREST THOUSAND CURRENCY UNITS AND ARE EXPRESSED IN TURKISH LIRAS UNLESS OTHERWISE STATED.) STATED.) OTHERWISE UNLESS LIRAS TURKISH IN EXPRESSED ARE AND UNITS CURRENCY THOUSAND NEAREST THE 40. Cash flow information flow Cash 40. reconciliation: debt Net (ALL AMOUNTS DISCLOSED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES HAVE BEEN ROUNDED OFF TO TO OFF ROUNDED BEEN HAVE NOTES AND STATEMENTS FINANCIAL CONSOLIDATED THE IN DISCLOSED AMOUNTS (ALL Balance at 31 December 2017 at 31 December Balance Cash inflows Cash movements non-cash Other equivalents and cash Cash Balance 2017 at 1 January outflows Cash debt Net Balance 2018 at 1 January 16) obligations (IFRS lease in rent Increase Cash inflows Cash outflows Cash 2018 at 31 December Balance equivalents and cash Cash Other non-cash movements non-cash Other Net debt Net events Subsequent 41. TL 12.24 and full TL 11.89 to full from ranging prices with on-market shares its 827,750 of purchased the Company On 2 January 2019, 2017. and 30 January on 27 July 2016 Directors of the Board by approved was buy-back The TL 9,997. was cost total that the “Tender notified has been (“İnteltek”) A.Ş. Danışmanlık Ticaret ve Yatırım Teknoloji İnternet İnteltek subsidiary 55% owned Our Private through Directorate Toto Spor Shall Be Made by Competitions on Sports Based Games Betting and Pari-Mutuel Odds on Fixed consolidated our 1% of comprise revenues respective The bidder. the other to awarded was tender The is concluded. Entities” Legal process. and the transfer ongoing contract our considering lower be to is expected contribution while 2019 revenues its since the sports of supporters the greatest one of has been 2004, İddaa game since operating which has been İnteltek, rights our process, the tender to respect With industry. the sports of the development to significantly and contributed establishment, agreement “procurement its under Inteltek, time frame. the respective within Inteltek by the law will exercised be from stemming in digital gaming sector. activities its with together activities its will continue bargaining” through 278 TURKCELL ANNUAL REPORT 2018

OUR OFFICES

CITY LOCATION ADDRESS

ISTANBUL KÜÇÜKYALI HEADQUARTERS Aydınevler Mah. İnönü Cad. No: 20 B Blok Maltepe-Istanbul

ISTANBUL KARTAL PLAZA Topselvi Mah. Dipçik Sok. No: 31 Kartal-Istanbul

ISTANBUL MALTEPE NDC Yeni Mah. Pamukkale Sok. No: 3 Soğanlık Mevkii Kartal-Istanbul

ISTANBUL MALTEPE TECHNOLOGY PLAZA Yenimahalle Pamukkale Sok. No: 11 Cevizli Kartal-Istanbul

ISTANBUL TEPEBAŞI PLAZA Meşrutiyet Cad. No: 71 Tepebaşı Beyoğlu-Istanbul

ISTANBUL MAHMUTBEY NDC Mahmutbey Mah. İnönü Cad. No: 89 Bağcılar-Istanbul

ISTANBUL DAVUTPAŞA NDC Maltepe Mah. Davutpaşa Cad. Serçekale Sok. No: 2 Zeytinburnu-Istanbul

ISTANBUL DUDULLU DC Dudullu OSB Nato Yolu 4. Cadde No: 1 Ümraniye-Istanbul

ADANA ADANA PLAZA Turhan Cemal Berikel Bulvarı No: 212 Seyhan-Adana

ADAPAZARI SAKARYA OFFICE Bahçelievler Mah. Cumhuriyet Cad. Kamelya Sok. No: 14 Sakarya-Adapazarı

ANKARA ANKARA PLAZA Eskişehir Yolu 9. Km No: 265 Söğütözü-Ankara

ANKARA BAŞKENT NDC Başkent İvedik Mah. 1323. Cad. No: 37 Yenimahalle-Ankara

ANTALYA ANTALYA PLAZA Kızıltoprak Mah. 915 Sok. No: 3 Muratpaşa-Antalya

BURSA BURSA PLAZA Organize Sanayi Bölge Müd. Kırmızı Cad. No: 4 Nilüfer-Bursa

DİYARBAKIR DİYARBAKIR PLAZA Urfa Bulvarı Bağcılar Mah. No: 184 Bağlar-Diyarbakir

EDİRNE EDİRNE NDC Şükrü Paşa Mah. Kıyık Cad. Hilly Otel Yanı No: 254 Edirne

ERZURUM ERZURUM NDC Ilıca Yolu Organize Sanayi Bölgesi 4. Sok No: 10 Erzurum

GAZİANTEP GAZİANTEP NDC Kocaoğlan Mah. Demokrasi Bulvarı No: 185/1 Şahinbey-Gaziantep

HATAY HATAY NDC Güzelbirlik Mah. Yunus Emre Cad. No: 11-B Güzelburç-Hatay

IZMIR BORNOVA NDC Ankara Asfaltı No: 64 Bornova-Izmir

IZMIR IZMIR PLAZA Kazım Dirik Mah. 367/7 Sokak No: 12 Bornova-Izmir

KAYSERİ KAYSERİ NDC Kayseri Organize Sanayi Bölgesi 13. Cadde No: 16 Melikgazi-Kayseri

KOCAELİ GEBZE DC Gebze OSB, Tembelova Mevkii Mah. 3300 Sok. No: 3314 Gebze-Kocaeli

KOCAELİ İZMİT NDC Yahya Kaptan Mah. Bahçeşehir Sok. No: 30 İzmit-Kocaeli

KONYA KONYA OFFICE Selçuker Center Parsana Mah. Zümrütova Sok. No: 18. Kat Selçuklu-Konya

MALATYA MALATYA NDC Hoca Ahmet Yesevi Mah. 7. Sok. Mahrukatçılar Sitesi No: 34 Merkez-Malatya

MERSİN MERSİN NDC Portakal Mah. 80050 Sok. No: 3 Toroslar-Mersin

MUĞLA MUĞLA NDC Musluhittin Mah. Atatürk Bulvarı No: 61 Muğla

MUĞLA BODRUM OFFICE Atatürk Bulvarı No: 213 Koçtaş Yanı Konacık Bodrum-Muğla

SAMSUN SAMSUN NDC Mimar Sinan Mah. 160. Sok. No: 18 Atakum-Samsun

TEKİRDAĞ ÇORLU NDC Yulaflı Mah. Hacı Şeremet Mevkii Çorlu-Tekirdağ

TRABZON TRABZON PLAZA Mısırlı Mah. Hasan Turfanda Yolu No: 1 Çukurçayır-Trabzon

VAN VAN NDC İpek Yolu 8 km Yeni Mah. Sahil Sok. No: 27 Edremit-Van SECTORAL AND FINANCIAL INFORMATION 279 ANNUAL REPORT 2018 REPORT ANNUAL TURKCELL

EXPLANATION time, the first for stream digital data which used system, telecommunication generation second The services. and data and voice communication data packet-based additionally providing IMT-2000/UMTS to according established system mobile telecommunication generation A third standards. on these based developed standards or standards, 4G technology. than standard features advanced more of technologies containing A generation Access Transport than MP3 Access ratio quality and compression sound better with code Audio high capacity providing type network and carrier Access Transport mobile subscriber. per generated revenue monthly Average enabling network a mobile communications of cell in each device transceiver A fixed the cell. signals within and radio mobile phones between communication and Telecommunications Technology and Communications on the Information focusing Cluster EUREKA Provider Service Digital countries. than forty more of governments by financed R&D organization It is an intergovernmental unit A frequency Communications the European by standardized system, is a digital mobileThis communication network and the cellular roaming with on digital transmission and based Institute Standards countries. other and various Japan in Europe, used being structure companies and telecom-related mobile operators of consisting is a community Association GSM The Sector. the Mobile Telecommunications and developing the aim standardizing with of Broadcast High Definition sensors through received the data of and communication/interaction interpretation mobilization, The and protecting, disseminating, recovering, processing, accumulating, collecting, generating, for Tools assisting in R&D projects pre-competitive industry-driven, supporting innovative, programme Cluster EUREKA & Services Systems Software-intensive of the area on a certain bodies regulatory related by mobile operators to allocated that has been A spectrum time. of period a limited/unlimited for use their to offered and which has been basis of the development examine company research market - American Corporation Data International technology providers service wireless wired, of generation a new provide to - platform subsystem IP multimedia A generation containing technologies that having more advanced features than standard 4G technology. than standard features advanced that having more technologies containing A generation GLOSSARY AAC (Advanced Audio Coding) Audio (Advanced AAC GSM 2G 3G 4.5G 5G ARPU Station Base CELTIC DSS (Exceptional EUREKA Research Unconventional Enabling Knowledge Acceleration) Hertz) GHz (Giga second) per bits (Giga Gbps unit speed transmission data A GSMA HD (High Definition) Things) of (Internet IoT (IT) Technologies Information ITEA IMT Network IDC IMS ABBREVIATION 280 TURKCELL ANNUAL REPORT 2018

GLOSSARY

ABBREVIATION EXPLANATION

The International Telecommunication Union An international standardization institution with ITU headquarters in Geneva that determines many standards in telecommunication.

IVR Interactive Voice Response

IVVR Interactive Voice & Video Response

Technology that ensures to achieve very high speeds by combining carriers in the same or LTE different frequency bands.

A mobile communications standard comprising advanced features such as carrier coupling, which LTE-Advanced enables mobile broadband speed of over 150 MBps in LTE.

Machine to Machine is the general name of the technology that allows devices to exchange M2M information and conduct transactions without human intervention.

MHz A unit of frequency.

NB-IoT (Narrow Band Internet of A technology defined by 3GPP for Internet of Things Things)

Powerful virtualization capability and one of the key capabilities as it allows multiple logical Network Slicing networks to be created on top of a common shared physical infrastructure

It is an organization, which has world’s leading operators as members including Turkcell, suppliers NGMN (The Next Generation and universities around the world and that guides the technology standards and companies Mobile Networks) producing technology in accordance with operator needs.

(Net Promoter Score) – The score that measures whether or not customers recommend the NPS products they use to others

A mobile communications feature enabling the subscribers of a network to use their own mobile Roaming phones and numbers within the coverage area of another operator.

RTM Real Time Monitoring - 24/7 monitoring and reporting system on the system

SON (Self Organizing Networks) Networks that can organize/optimize themselves

A mobile communication system allowing users to receive and send messages that can be SMS constituted of both alphabetic and numerical characters of up to 160 characters, to and from mobile phones through a short message service.

UNESCO United Nations Educational, Scientific and Cultural Organization

UNICEF United Nations International Children’s Emergency Fund

USAID United States Agengy for International Development

VoLTE IP based high quality audio technology through a 4.5G network. Proudly produced by FİNAR. www.finarkurumsal.com 158 TURKCELL ANNUAL REPORT 2018

Turkcell İletişim Hizmetleri A.Ş. Turkcell Küçükyalı Plaza, Aydınevler Mahallesi İnönü Caddesi No: 20 Küçükyalı Ofispark B Blok - Maltepe/Istanbul Tel: +90 (212) 313 1000 Fax: +90 (216) 504 4058 Customer Services Tel: 532 or +90 (532) 532 0000 www.turkcell.com.tr Trade Register Number: 304844