**Exhibit 14.1**

**ConsolidatedFinancial Statements of Turkcell Iletisim Hizmetleri A.S.**

The consolidated financial statements ofTurkcell Iletisim Hizmetleri Anonim Sirketi and its subsidiaries as of December 31,2004 and 2005, and for each of the years in the three-year period ended December 31,2005, with the Independent Registered Public Accounting Firm’s Report thereon,are included as Exhibit 14.1 to this Form 20-F/A as follows:

 
|                                                                                                                                                      | ** ** | **Page** | ** ** |
|------------------------------------------------------------------------------------------------------------------------------------------------------|------------|----------|------------|
| **Consolidated  Financial Statements of Turkcell Iletisim Hizmetleri A.S.**                                                                          |       |     |       |
| Report of Independent Registered Public Accounting Firm                                                                                              |       | F-2      |       |
| Consolidated Balance Sheets at December 31, 2004 and 2005                                                                                       |       | F-4      |       |
| Consolidated Statements of Income for the years ended December 31,  2003, 2004 and 2005                                                         |       | F-5      |       |
| Consolidated Statements of Cash Flows for the years ended  December 31, 2003, 2004 and 2005                                                     |       | F-6      |       |
| Consolidated Statements of Changes in Shareholders’ Equity and  Comprehensive Income for the years ended December 31, 2003, 2004 and  2005 |       | F-7      |       |
| Notes to Consolidated Financial Statements                                                                                                           |       | F-8      |       |

 

 

----

***Report of Independent RegisteredPublic Accounting Firm***

To the Board of Directors ofTurkcell Iletisim Hizmetleri Anonim Sirketi

We have audited the accompanying consolidated balancesheets of Turkcell Iletisim Hizmetleri Anonim Sirketi and its subsidiaries (the“Company”) as of December 31, 2004 and 2005, and the related consolidatedstatements of income, changes in shareholders’ equity and comprehensive income,and cash flows for each of the years in the three-year period ended December 31,2005. These consolidated financial statements are the responsibility of theCompany’s management. Our responsibility is to express an opinion on theseconsolidated financial statements based on our audits. We did not audit theconsolidated financial statements of Fintur Holdings B.V. (“Fintur”), a 41.45percent owned investee company. The Company’s investment in Fintur at December 31,2004 and 2005 was $175,141 thousand and $243,579 thousand, respectively, andits equity in the net income of Fintur was $18,927 thousand, $43,646 thousandand $67,599 thousand for the years ended December 31, 2003, 2004 and 2005,respectively. The consolidated financial statements of Fintur were audited byother auditors whose report has been furnished to us, and our opinion, insofaras it relates to the amounts included for Fintur, is based solely on the reportof the other auditors.

We conducted our audits in accordance with thestandards of the Public Company Accounting Oversight Board (United States).Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of materialmisstatement. The Company is not required to have, nor were we engaged toperform, an audit of its internal control over financial reporting. An auditincludes consideration of internal control over financial reporting as a basisfor designing audit procedures that are appropriate in the circumstances, butnot for the purpose of expressing an opinion on the effectiveness of theCompany’s internal control over financial reporting. Accordingly, we express nosuch opinion. An audit includes examining, on a test basis, evidence supportingthe amounts and disclosures in the financial statements. An audit also includesassessing the accounting principles used and significant estimates made bymanagement, as well as evaluating the overall financial statement presentation.We believe that our audits provide a reasonable basis for our opinion.

In our opinion,based on our audits and the report of the other auditors, the consolidatedfinancial statements referred to above present fairly, in all materialrespects, the financial position of Turkcell Iletisim Hizmetleri Anonim Sirketiand its subsidiaries as of December 31, 2004 and 2005, and the results oftheir operations and their cash flows for each of the years in the three-yearperiod ended December 31, 2005 in conformity with accounting principlesgenerally accepted in the United States of America.
| /s/ KPMG Cevdet Suner Denetim ve Yeminli Mali  Musavirlik A.S. |   |
|----------------------------------------------------------------|--------|

 

KPMG Cevdet Suner Denetim veYeminli Mali Musavirlik A.S.

April 5, 2006Istanbul, Turkey

F-2

----

***Report of Independent RegisteredPublic Accounting Firm***

To the Shareholders and Board of Directors ofFintur Holdings B.V.

We have audited the accompanying consolidated balancesheets of Fintur Holdings B.V. (“Fintur” or the “Company”) and its subsidiariesas at 31 December 2005 and 2004 and the related consolidated statements ofincome and comprehensive income, of changes in shareholders’ equity and of cashflows for the years then ended. These consolidated financial statements are theresponsibility of the Company’s management. Our responsibility is to express anopinion based on our audits.

We conducted our audits of these consolidatedfinancial statements in accordance with the standards of the Public CompanyAccounting Oversight Board (United States). Those standards require that weplan and perform the audit to obtain reasonable assurance about whether the consolidatedfinancial statements are free of material misstatement. An audit includesexamining, on a test basis, evidence supporting the amounts and disclosures inthe financial statements. An audit also includes assessing the accountingprinciples used and significant estimates made by management, as well asevaluating the overall financial statement presentation. We believe that ouraudits provide a reasonable basis for our opinion.

In our opinion,the consolidated financial statements referred to above present fairly, in allmaterial respects, the financial position of Fintur and its subsidiaries as at31 December 2005 and 2004 and the results of their operations and theircash flows for the years then ended in conformity with accounting principlesgenerally accepted in the United States of America.

6 February 2006
| /s/ PRICEWATERHOUSECOOPERS  ACCOUNTANTS N.V. |   |
|----------------------------------------------|--------|

 

PricewaterhouseCoopers Accountants N.V.

Rotterdam The Netherlands

F-3

----

**TURKCELLILETISIM HIZMETLERI ANONIM SIRKETIAND ITS SUBSIDIARIES**

**CONSOLIDATED BALANCE SHEETSAT DECEMBER 31, 2004 AND 2005(In thousands, except share data)**
| ** **                                                                                                                                                       | ** ** | **2004**   | ** ** | **2005**   | ** ** |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|------------|------------|------------|------------|
| **ASSETS**                                                                                                                                                       | ** ** | ** ** | ** ** | ** ** | ** ** |
| CURRENT ASSETS                                                                                                                                                   |       |       |       | ** ** | ** ** |
| Cash and cash equivalents (Note 6)                                                                                                                               |       | $          | 763,821    |       | 795,091    |   |
| Available for sale securities (Notes 3 and 7)                                                                                                                    |       | —     |       | 12,948     |       |
| Held to maturity securities (Notes 3 and 7)                                                                                                                      |       | 45,329     |       | 10,191     |       |
| Trade receivables and accrued income, net (Note 8)                                                                                                               |       | 271,792    |       | 324,611    |       |
| Due from related parties (Notes 3 and 9)                                                                                                                         |       | 103,948    |       | 67,327     |       |
| Inventories (Note 3)                                                                                                                                             |       | 13,007     |       | 9,198      |       |
| Prepaid expenses                                                                                                                                                 |       | 23,685     |       | 38,029     |       |
| Other current assets, includes $110,166 and $34,105  of restricted cash as of December 31, 2004 and 2005, respectively (Note  10)                           |       | 325,741    |       | 106,453    |       |
| Deferred tax assets (Notes 3 and 20)                                                                                                                             |       | 277,589    |       | 192,731    |       |
| Total current assets                                                                                                                                             |       | 1,824,912  |       | 1,556,579  |       |
| DUE FROM RELATED PARTIES (Notes 3 and 11)                                                                                                                        |       | 65,971     |       | 80,906     |       |
| PREPAID EXPENSES                                                                                                                                                 |       | 6,482      |       | 13,879     |       |
| INVESTMENTS (Note 12)                                                                                                                                            |       | 197,760    |       | 266,198    |       |
| HELD TO MATURITY SECURITIES (Notes 3 and 7)                                                                                                                      |       | 10,266     |       | —     |       |
| FIXED ASSETS, net (Notes 3 and 13)                                                                                                                               |       | 1,061,268  |       | 1,224,543  |       |
| CONSTRUCTION IN PROGRESS (Note 14)                                                                                                                               |       | 230,191    |       | 389,375    |       |
| INTANGIBLES, net (Notes 3 and 15)                                                                                                                                |       | 881,511    |       | 871,362    |       |
| GOODWILL (Note 3)                                                                                                                                                |       | 1,349      |       | —     |       |
| OTHER LONG TERM ASSETS (Note 3)                                                                                                                                  |       | 1,624      |       | 2,440      |       |
| DEFERRED TAX ASSETS (Notes 3 and 20)                                                                                                                             |       | 80,163     |       | 306        |       |
|                                                                                                                                                             |       | $          | 4,361,497  |       | 4,405,588  |   |
| **LIABILITIES AND SHAREHOLDERS’  EQUITY**                                                                                                                   |       |       |       |       |       |
| CURRENT LIABILITIES                                                                                                                                              |       |       |       |       |       |
| Short term borrowings (Note 16)                                                                                                                                  |       | $          | 549,079    |       | 564,503    |   |
| Trade payables (Note 17)                                                                                                                                         |       | 616,816    |       | 137,775    |       |
| Due to related parties (Notes 3 and 18)                                                                                                                          |       | 6,711      |       | 5,774      |       |
| Taxes payable (Note 20)                                                                                                                                          |       | 99,939     |       | 60,864     |       |
| Other current liabilities and accrued expenses,  includes $111,718 and 123,613 of deferred income as of December 31, 2004  and 2005, respectively (Note 19) |       | 523,475    |       | 564,188    |       |
| Total current liabilities                                                                                                                                        |       | 1,796,020  |       | 1,333,104  |       |
| LONG TERM BORROWINGS (Note 21)                                                                                                                                   |       | 266,447    |       | 82,848     |       |
| TRADE PAYABLES (Note 17)                                                                                                                                         |       | 213,740    |       | —     |       |
| LONG TERM LEASE OBLIGATIONS                                                                                                                                      |       | 3,284      |       | 9          |       |
| RETIREMENT PAY LIABILITY (Note 3)                                                                                                                                |       | 12,875     |       | 16,707     |       |
| DEFERRED TAX LIABILITIES (Notes 3 and 20)                                                                                                                        |       | 11,757     |       | 185,297    |       |
| MINORITY INTEREST (Note 3)                                                                                                                                       |       | 64,044     |       | 62,427     |       |
| OTHER LONG TERM LIABILITIES                                                                                                                                      |       | 7,813      |       | 7,623      |       |
| SHAREHOLDERS’ EQUITY                                                                                                                                        |       |       |       |       |       |
| Common  stock                                                                                                                                                    |       |       |       |       |       |
| Par value TRY 1; authorized, issued and outstanding  1,854,887,341 shares in 2004 and 2005  (Note 22)                                                            |       | 636,116    |       | 636,116    |       |
| Additional paid in capital                                                                                                                                       |       | 178        |       | 178        |       |
| Legal reserves                                                                                                                                                   |       | 42,501     |       | 92,414     |       |
| Accumulated other comprehensive income (Note 3)                                                                                                                  |       | 2,244      |       | 5,549      |       |
| Retained earnings                                                                                                                                                |       | 1,304,478  |       | 1,983,316  |       |
| Total shareholders’ equity                                                                                                                                  |       | 1,985,517  |       | 2,717,573  |       |
| COMMITMENTS AND CONTINGENCIES (Note 27)                                                                                                                          |       | $          | 4,361,497  |       | 4,405,588  |   |

 

The accompanying notes are an integral part of theseconsolidated financial statements.

 

F-4

----

**TURKCELLILETISIM HIZMETLERI ANONIM SIRKETIAND ITS SUBSIDIARIES**

**CONSOLIDATEDSTATEMENTS OF INCOMEFOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005(In thousands, except share data)**
| ** **                                                                  | ** ** | **2003**      | ** ** | **2004**      | ** ** | **2005**      | ** ** |
|-----------------------------------------------------------------------------|------------|---------------|------------|---------------|------------|---------------|------------|
| Revenues (Notes  3 and 23)                                                  |       | $             | 2,219,237  |          | 3,200,765  |          | 4,268,492  |   |
| Direct cost of  revenues (Note 3)                                           |       | (1,613,150    | )          | (2,001,223    | )          | (2,390,977    | )          |
| Gross profit                                                                |       | 606,087       |       | 1,199,542     |       | 1,877,515     |       |
| General and administrative expenses (Note 24)                               |       | (137,222      | )          | (137,315      | )          | (152,025      | )          |
| Selling and  marketing expenses (Note 25)                                   |       | (294,611      | )          | (349,249      | )          | (488,659      | )          |
| Operating income                                                            |       | 174,254       |       | 712,978       |       | 1,236,831     |       |
| Income from  related parties, net (Note 26)                                 |       | 3,738         |       | 1,919         |       | 1,145         |       |
| Interest income                                                             |       | 117,240       |       | 152,751       |       | 138,918       |       |
| Interest expense  (Note 3)                                                  |       | (483,622      | )          | (121,500      | )          | (147,367      | )          |
| Other income,  net                                                          |       | 6,190         |       | 7,113         |       | 5,183         |       |
| Equity in net  income of unconsolidated investees (Notes 3 and 12)          |       | 18,927        |       | 43,646        |       | 67,599        |       |
| Minority  interest in income of consolidated subsidiaries (Note 3)          |       | 3,558         |       | 7,466         |       | 24,335        |       |
| Translation loss  (Note 3)                                                  |       | (102,403      | )          | (11,192       | )          | (8,320        | )          |
| Income (loss) before taxes                                                  |       | (262,118      | )          | 793,181       |       | 1,318,324     |       |
| Income tax  benefit (expense) (Notes 3 and 20)                              |       | 477,285       |       | (281,360      | )          | (407,397      | )          |
| Net income                                                                  |       | $             | 215,167    |          | 511,821    |          | 910,927    |   |
| Basic and diluted earnings per common share (Notes 3  and 22)               |       | $             | 0.116000   |          | 0.275931   |          | 0. 491096  |   |
| Weighted average  number of common shares outstanding (Notes 3 and 22) |       | 1,854,887,341 |       | 1,854,887,341 |       | 1,854,887,341 |       |

 

The accompanying notes are an integral part of theseconsolidated financial statements.

 

F-5

----

**TURKCELLILETISIM HIZMETLERI ANONIM SIRKETIAND ITS SUBSIDIARIES**

**CONSOLIDATED STATEMENTS OF CASH FLOWSFOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005(In thousands)**
| ** **                                                                         | ** ** | **2003**   | ** ** | **2004**   | ** ** | **2005**  | ** ** |
|------------------------------------------------------------------------------------|------------|------------|------------|------------|------------|-----------|------------|
| **Operating Activities:**                                                          | ** ** | ** ** | ** ** | ** ** |       |      |       |
| Net income                                                                         |       | $          | 215,167    |       | 511,821    |      | 910,927    |   |
| Adjustments to reconcile net income to net cash  provided by operating activities: |       |       |       |       |       |      |       |
| Depreciation and  amortization                                                     |       | 421,474    |       | 424,153    |       | 467,699   |       |
| Provision for retirement  pay liability                                            |       | 4,177      |       | 2,041      |       | 3,832     |       |
| Provision for  inventories                                                         |       | (595       | )          | 36         |       | (605      | )          |
| Provision for doubtful  receivables                                                |       | 9,243      |       | (2,004     | )          | 15,294    |       |
| Accrued income                                                                     |       | 4,903      |       | (34,093    | )          | 26,848    |       |
| Accrued expense                                                                    |       | 865,177    |       | (993,082   | )          | (181,223  | )          |
| Equity in net income of  unconsolidated investees                                  |       | (18,927    | )          | (43,646    | )          | (67,599   | )          |
| Translation Adjustment                                                             |       | —     |       | —     |       | 1,666     |       |
| Minority interest in  income of consolidated subsidiaries                          |       | 687        |       | 62,789     |       | (1,605    | )          |
| Deferred taxes                                                                     |       | (539,063   | )          | 193,068    |       | 338,286   |       |
| Changes in assets and liabilities:                                                 |       |       |       |       |       |      |       |
| Trade receivables                                                                  |       | (51,692    | )          | (20,580    | )          | (55,059   | )          |
| Due from related parties                                                           |       | (38,794    | )          | (42,683    | )          | 21,686    |       |
| Inventories                                                                        |       | (2,414     | )          | (3,821     | )          | 4,414     |       |
| Prepaid expenses                                                                   |       | (12,059    | )          | (1,791     | )          | (21,741   | )          |
| Other current assets                                                               |       | (37,178    | )          | (222,182   | )          | 181,471   |       |
| Taxes payable                                                                      |       | 68,734     |       | 31,205     |       | (39,075   | )          |
| Other long term assets                                                             |       | (3,646     | )          | 3,845      |       | (1,029    | )          |
| Due to related parties                                                             |       | 2,037      |       | 2,126      |       | (937      | )          |
| Trade payables                                                                     |       | 21,782     |       | 783,037    |       | (692,780  | )          |
| Other current  liabilities                                                         |       | 134,439    |       | (50,897    | )          | 232,800   |       |
| Other long term  liabilities                                                       |       | (2,144     | )          | 4,581      |       | (193      | )          |
| Net cash provided by  operating activities                                         |       | 1,041,308  |       | 603,923    |       | 1,143,077 |       |
| **Investing Activities:**                                                          |       |       |       |       |       |      |       |
| Additions to fixed  assets                                                         |       | (93,248    | )          | (309,225   | )          | (641,978  | )          |
| Additions to intangibles                                                           |       | (79,653    | )          | (177,463   | )          | (136,634  | )          |
| Purchases of investment  securities held to maturity                               |       | (1,993     | )          | (55,595    | )          | —    |       |
| Proceeds from sale of  investment securities held to maturity                      |       | —     |       | —     |       | 45,404    |       |
| Purchases of investment  securities available for sale                             |       | —     |       | —     |       | (12,148   | )          |
| Investments in investees                                                           |       | (23,970    | )          | —     |       | —    |       |
| Net cash used for  investing activities                                            |       | (198,864   | )          | (542,283   | )          | (745,356  | )          |
| **Financing Activities:**                                                          |       |       |       |       |       |      |       |
| Proceeds from issuance  of long and short term debt                                |       | 4,929      |       | 382,023    |       | 354,849   |       |
| Payment on long and  short term debt                                               |       | (677,101   | )          | (172,035   | )          | (523,024  | )          |
| Net increase/(decrease)  in debt issuance expenses                                 |       | 24,158     |       | 802        |       | (1,872    | )          |
| Dividends paid                                                                     |       | —     |       | (78,072    | )          | (182,176  | )          |
| Payment on lease  obligations                                                      |       | (11,334    | )          | (13,217    | )          | (14,228   | )          |
| Increase in lease  obligations                                                     |       | 5,513      |       | —     |       | —    |       |
| Net cash provided by  (used for) financing activities                              |       | (653,835   | )          | 119,501    |       | (366,451  | )          |
| Net increase in  cash and cash equivalents                                         |       | 188,609    |       | 181,141    |       | 31,270    |       |
| Cash and cash  equivalents at the beginning of period                              |       | 394,071    |       | 582,680    |       | 763,821   |       |
| Cash and cash  equivalents at the end of period                                    |       | $          | 582,680    |       | 763,821    |      | 795,091    |   |
| Supplemental cash flow information:                                                |       |       |       |       |       |      |       |
| Interest paid                                                                      |       | $          | 132,691    |       | 67,124     |      | 82,587     |   |
| Interest received                                                                  |       | 77,453     |       | 120,972    |       | 80,236    |       |
| Income taxes paid                                                                  |       | —     |       | 66,620     |       | 99,921    |       |
| Non-cash investing activities                                                      |       |       |       |       |       |      |       |
| Lease obligations                                                                  |       | 5,513      |       | 8,706      |       | 1,003     |       |

 

Theaccompanying notes are an integral part of these consolidated financialstatements.

 

F-6

----

**TURKCELLILETISIM HIZMETLERI ANONIM SIRKETIAND ITS SUBSIDIARIES**

**CONSOLIDATEDSTATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY AND COMPREHENSIVE INCOMEFOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005 (In thousands, except share data)**

 
| ** **                                                    | ** ** | **Common stock**         | ** ** | **Additional  paid in** | ** **  | **Advances for** | ** ** | **Legal**             | ** ** | **Comprehensive** | ** ** | **Retained** | ** ** | **Accumulated  other  Comprehensive** | ** **    | **Total  shareholders’** | ** ** |
|---------------------------------------------------------------|------------|-------------------------------|------------|------------------------------|-------------|-----------------------|------------|-----------------------|------------|-------------------|------------|--------------|------------|---------------------------------------|---------------|-------------------------------|------------|
| ** **                                                    | ** ** | **Shares (Note 2)** | ** ** | **Amount**                   | ** **  | **capital**           | ** ** | **common stock** | ** ** | **reserves**      | ** ** | **Income**   | ** ** | **Earnings**                          | ** **    | **income/(loss)**             | ** ** | **equity** | ** ** |
| **Balances at January 1, 2003**                          |       | 1,854,887,341                 |       | $                            | 636,116     |                  | 178        |                  | 119        |              | 5          |         |       |                                  | 698,058       |                          | (4,017     | ) | 1,330,459 |   |
| Comprehensive income:                                         |       |                          |       |                         |        |                  |       |                  |       |              |       |         |       |                                  |          |                          |       |   |   |
| Net income                                                    |       |                          |       |                         |        |                  |       |                  |       |              |       | 215,167      |       | 215,167                               |          |                          |       | 215,167 |   |
| Other comprehensive  income:                                  |       |                          |       |                         |        |                  |       |                  |       |              |       |         |       |                                  |          |                          |       |   |   |
| Translation adjustment                                        |       |                          |       |                         |        |                  |       |                  |       |              |       | 1,771        |       |                                  |          | 1,771                         |       | 1,771 |   |
| Comprehensive income                                          |       |                          |       |                         |        |                  |       |                  |       |              |       | 216,938      |       |                                  |          |                          |       |   |   |
| Other                                                         |       |                          |       |                         |        |                  |       | (119                  | )          |              |       |         |       |                                  |          |                          |       | (119 | ) |
| **Balances at December 31, 2003**                        |       | 1,854,887,341                 |       | $                            | 636,116     |                  | 178        |                  | —     |              | 5          |         |       |                                  | 913,225       |                          | (2,246     | ) | 1,547,278 |   |
| Comprehensive income:                                         |       |                          |       |                         |        |                  |       |                  |       |              |       |         |       |                                  |          |                          |       |   |   |
| Net income                                                    |       |                          |       |                         |        |                  |       |                  |       |              |       | 511,821      |       | 511,821                               |          |                          |       | 511,821 |   |
| Other comprehensive  income:                                  |       |                          |       |                         |        |                  |       |                  |       |              |       |         |       |                                  |          |                          |       |   |   |
| Translation adjustment                                        |       |                          |       |                         |        |                  |       |                  |       |              |       | 4,490        |       |                                  |          | 4,490                         |       | 4,490 |   |
| Comprehensive income                                          |       |                          |       |                         |        |                  |       |                  |       |              |       | 516,311      |       |                                  |          |                          |       |   |   |
| Transfer to legal reserves                                    |       |                          |       |                         |        |                  |       |                  |       | 42,496            |       |         |       | (42,496                               | )             |                          |       | — |   |
| Dividend paid                                                 |       |                          |       |                         |        |                  |       |                  |       |              |       |         |       | (78,072                               | )             |                          |       | (78,072 | ) |
| **Balances at December 31, 2004**                        |       | 1,854,887,341                 |       | $                            | 636,116     |                  | 178        |                  | —     |              | 42,501     |         |       |                                  | 1,304,478     |                          | 2,244      |   | 1,985,517 |   |
| Comprehensive income:                                         |       |                          |       |                         |        |                  |       |                  |       |              |       |         |       |                                  |          |                          |       |   |   |
| Net income                                                    |       |                          |       |                         |        |                  |       |                  |       |              |       | 910,927      |       | 910,927                               |          |                          |       | 910,927 |   |
| Other comprehensive  income:                                  |       |                          |       |                         |        |                  |       |                  |       |              |       |         |       |                                  |          |                          |       |   |   |
| Translation adjustment                                        |       |                          |       |                         |        |                  |       |                  |       |              |       | 2,505        |       |                                  |          | 2,505                         |       | 2,505 |   |
| Net unrealized capital gain on available-for-sale  securities |       |                          |       |                         |        |                  |       |                  |       |              |       | 800          |       |                                  |          | 800                           |       | 800 |   |
| Comprehensive income                                          |       |                          |       |                         |        |                  |       |                  |       |              |       | 914,232      |       |                                  |          |                          |       |   |   |
| Transfer to legal reserves                                    |       |                          |       |                         |        |                  |       |                  |       | 49,913            |       |         |       | (49,913                               | )             |                          |       | — |   |
| Dividend paid                                                 |       |                          |       |                         |        |                  |       |                  |       |              |       |         |       | (182,176                              | )             |                          |       | (182,176 | ) |
| **Balances  at December 31, 2005**                       | ** ** | **1,854,887,341**             | ** ** | **$**                        | **636,116** | ** **            | **178**    | ** **            | **—** | ** **        | **92,414** | ** **   | ** ** | ** **                            | **1,983,316** | ** **                    | **5,549**  | ** ** | **2,717,573** |   |

 

The accompanyingnotes are an integral part of these consolidated financial statements.

F-7

 

----

**Turkcell Iletisim Hizmetleri Anonim Sirketi and Its Subsidiaries**

**Notes to Consolidated Financial Statements As of December 31, 2004 and 2005 and for the years ended December 31, 2003, 2004 and 2005 (Amounts in thousands of US Dollar unless otherwise stated except share amounts)**

**(1)   Business**

Turkcell Iletisim Hizmetleri Anonim Sirketi(“Turkcell”) was incorporated on October 5, 1993 and commenced operations in1994. It is engaged in establishing and operating a Global System for MobileCommunications (“GSM”) network in Turkey and neighboring states.

In April 1998, Turkcell signed a licenseagreement (the “License”) with the Ministry of Transportation andCommunications of Turkey (the “Turkish Ministry”), under which it was granted a25 year GSM license in exchange for a license fee of $500,000. The Licensepermits Turkcell to operate as a stand-alone GSM operator and frees it fromsome of the operating constraints in the Revenue Sharing Agreement, which wasin effect prior to the License. Under the License, Turkcell collects all of therevenue generated from the operations of its GSM network and pays theUndersecretariat of Treasury (the “Turkish Treasury”) an ongoing license feeequal to 15% of its gross revenue from Turkish GSM operations. Turkcellcontinues to build and operate its GSM network and is authorized to, amongother things, set its own tariffs within certain limits, charge peak andoff-peak rates, offer a variety of service and pricing packages, issue invoicesdirectly to subscribers, collect payments and deal directly with subscribers.

On June 25, 2005, the Turkish government declaredthat GSM operators are required to pay 10% of their existing monthly ongoinglicense fee to the Ministry of Transportation as a universal service fundcontribution in accordance with law no 5369. As a result, starting from June 30,2005, Turkcell pays the 90% of the ongoing license fee to the Turkish Treasuryand 10% to the Ministry of Transportation as universal service fund.

In July 2000, Turkcell completed an initialpublic offering with the listing of its ordinary shares on the Istanbul StockExchange and American Depositary Shares, or ADSs, on the New York StockExchange.

Two significant founding shareholders, TeliaSonera ABand the Cukurova Group own approximately 37.1% and 27.1% as of December 31,2005, respectively, of the Company’s share capital, and are ultimatecounterparties to a number of transactions that are discussed in the relatedparty footnote. On November 28, 2005, upon completion of a series oftransactions, Alfa Telecom Turkey Limited (“Alfa”), an affiliate of AlfaTelecom, one of Russia’s leading private telecommunications investors, acquired13.2% indirect ownership in Turkcell.

Turkcell owns a 41.45% interest in Fintur HoldingsB.V. (“Fintur”), which holds the majority of the Company’s international GSMinvestments, with majority ownership in GSM operations in Azerbaijan, Georgia,Kazakhstan and Moldova. Fintur is accounted for under the equity method.

The Company also owns 100% of Kibris MobileTelekomunikasyon Limited Sirketi (“KibrisTelekom”), a company that operates GSM network in Northern Cyprus.

In December 2003, the Company invested $50,000 inDigital Cellular Communications (“DCC”), a Ukrainian telecommunications companywith several telecommunications licenses including a GSM 1800 license. In orderto facilitate the investment in DCC, the Company created a new wholly-ownedcompany named Euroasia Telecommunications Holding B.V. (“Euroasia”) in theNetherlands in February 2004, and capitalized it with cash contributionsof $50,000. The owners of DCC contributed 99% of the shares of DCC to Euroasiain exchange for a 49% interest in Euroasia in May 2004. DCC held anationwide 

F-8

----

GSM1800 license throughits then 99% owned subsidiary, LLC Astelit (“Astelit”). On February 1,2005, Astelit commenced its operations with its GSM 1800 technology. Inaddition, Astelit acquired the GSM 900 license on November 10, 2005 andAstelit has the right to use this license starting from January 1, 2006.The Company has a 54% interest in consolidated subsidiaries, Euroasia, DCC andAstelit as of December 31, 2005.

On April 4, 2006, Astelit announced the merger ofDCC with Astelit in order to optimize the internal business processes of bothcompanies. The decision for the merger of DCC with Astelit was approved duringthe Shareholders’ Meeting which took place on April 3, 2006 in Kiev.

Turkcell and Ericsson Telekomunikasyon AS (“EricssonTurkey”) have established a company named East Asian Consortium BV (“Eastasia”),with a share capital of EUR 91,000, to invest in the Iranian GSM business.However, as of December 31, 2005, the Company has no operations in Iran.On February 22, 2006, Turkcell purchased Eastasia shares held by EricssonTurkey and Turkcell ownership in Eastasia has increased to 100%.

In addition, as of December 31, 2005, the Companywas involved in various activities, including call centers and databasemanagement, directory assistance, operating a central betting system, fixedline long distance call services and internet services through variousconsolidated subsidiaries: Global Bilgi Pazarlama Danisma ve Cagri ServisiHizmetleri AS (“Global”), Corbuss Kurumsal Telekom Servis Hizmetleri AS (“Corbuss”),Turktell Bilisim Servisleri AS (“Turktell”), Hayat Boyu Egitim AS (“Hayat”), IyiEglenceler Eglence ve Turizm AS (“Iyi Eglenceler”), Interaktif CocukProgramlari Yapimciligi ve Yayinciligi AS (“Digikids”), Mapco Internet veIletisim Hizmetleri Pazarlama AS (“Mapco”), Inteltek Internet Teknoloji Yatirimve Danismanlik Ticaret AS (“Inteltek”), Libero Interaktif Hizmetler AS (“Libero”),Tellcom Iletisim Hizmetleri AS (“Tellcom”) (December 31, 2004: “BilisimTelekomunikasyon Hizmetleri AS”) and Turktell Uluslararasi Yatirim Holding AS (“TurktellUluslararasi”). The subsidiaries are owned 100%, 99%, 100%, 100%, 100%, 60%,100%, 55%, 55%, 100% and 100%, respectively, by Turkcell or its subsidiaries.

**(2)   FinancialPosition and Basis of Preparation of Financial Statements**

The Company maintains books of account and preparesstatutory financial statements in local currencies and in accordance with localcommercial practice and tax regulations applicable in each subsidiary’srespective country of residence. The accompanying consolidated financialstatements are based on these statutory records, with adjustments andreclassifications for the purpose of fair presentation in accordance withaccounting principles generally accepted in the United States of America (“USGAAP”).

F-9

----

**(3)   Summary ofSignificant Accounting Policies:**

Significantaccounting policies followed in the preparation of the consolidated financialstatements referred to above are set out below:

**(a)**             Revenue and expenserecognition

***Revenues:***

Communication fees include all types of postpaidrevenues from incoming and outgoing calls, additional services and prepaidrevenues. Communication fees are recognized at the time the services arerendered.

With respect to prepaid revenues, Turkcell generallycollects cash in advance by selling scratch cards to distributors. In suchcases, Turkcell does not recognize revenue until the subscribers use thetelecommunications services.

Commission fees mainly comprised of net takings earnedto a maximum of 12% of gross takings, as a head agent of fixed odds bettinggames and 4.3% commission recognized based on the para-mutual and fixed oddsbetting games operated on Central Betting System. Commission revenues arerecognized at the time all the services related with the games are fully rendered.Under the head agency agreement, Inteltek is obliged to undertake any excesspayout, which is presented on net basis with the commission fees.

Monthly fixed fees represent a fixed amount charged topostpaid subscribers on a monthly basis without regard to the level of usage.Fixed fees are recognized on a monthly basis when billed.

Subsequent to the acquisition of the License, simcardand prepaid simcard sales are recognized upon initial entry of a new subscriberinto the GSM system only to the extent of direct costs. Excess simcard andprepaid simcard sales, if any, are deferred and amortized over the estimatedeffective subscriber life.

Call center revenues are recognized at the time theservices are rendered.

***Expenses:***

Direct costs of revenues mainly include ongoinglicense fee and universal service fund, interconnection expenses, transmissionfees, base station rents, billing costs, depreciation and amortization chargesand technical, repair and maintenance expenses directly related to services rendered.

Direct cost ofsimcard and prepaid simcard sales include activation fees paid to dealers,certain subscriber acquisition costs, cost of simcard sales and simcardsubsidies. Selling and marketing and general and administrative costs arecharged to expenses as they are incurred.

**(b)**             Principles ofconsolidation

As of December 31, 2005, the consolidatedfinancial statements include the financial statements of Turkcell and sixteenmajority owned subsidiaries (2004: seventeen) and of Cellco Finance N.V. (“Cellco”),consolidated under the guidance of FASB Interpretation No. 46 “Consolidationof Variable Interest Entities, an Interpretation of ARB No. 51”, asrevised in December 2003 (“FIN 46 (R)”). The Company’s 

F-10

----

investment in Fintur isaccounted for under the equity method of accounting (Note 12). All significantintracompany balances and transactions have been eliminated in consolidation.Minority interest in net assets and net income of the consolidated subsidiariesare separately classified in the consolidated balance sheets and consolidatedstatements of income.

**(c)**             Principles oftranslation of the financial statements into US Dollar

Turkcell and its subsidiaries record transactions intheir local currencies, which represent their functional currency. Transactionsdenominated in foreign currencies are recorded at the exchange rates prevailingat the date of the transactions. Monetary assets and liabilities denominated inforeign currencies are converted into New Turkish Lira at the exchange ratesruling at balance sheet date, with the resulting exchange differencesrecognized in the determination of net income.

Financial statements of Turkcell, Kibris Telekom,Global, Corbuss, Turktell, Hayat, Iyi Eglenceler, Digikids, Mapco, Inteltek,Libero, Tellcom and Turktell Uluslararasi have been translated into the USDollar, the reporting currency, in accordance with the relevant provisions ofSFAS No. 52, ‘‘Foreign Currency Translation’’ as applied to entities inhighly inflationary economies (2004: Turkcell, Kibris Telekom, Kibrisonline, Global, Corbuss,Turktell, Hayat, Iyi Eglenceler, Digikids, Mapco, Inteltek, Libero, Tellcom andTurktell Uluslararasi). Accordingly, revenues, costs, capital and non-monetaryassets and liabilities are translated at historical exchange rates whilemonetary assets and liabilities are translated at the exchange rates prevailingat balance sheet dates. All foreign exchange adjustments resulting fromtranslation of the financial statements into US Dollar are included in thedetermination of net income, as ‘‘translation loss’’.

On November 22, 2005, the American Institute ofCertified Public Accountants (“AICPA”) US Securities and Exchange Commission (“SEC”)Regulations Committee’s International Practices Task Force (“IPTF”) concluded thatTurkey ceased to be a highly inflationary country starting from January 1,2006. TRY will be treated as a more stable currency and the financialstatements of Turkcell and those of its subsidiaries located in Turkey andNorthern Cyprus to be prepared in accordance with US GAAP will be translatedinto the US Dollars in accordance with SFAS No.52 and the resulting cumulativetranslation adjustment will be recognized in the shareholder’s equity. Thischange in hyperinflationary status of Turkey will have effects on non-monetaryassets and liabilities and income statement accounts. At this point, it ispremature to its estimate its potential outcome.

The financialstatements of majority owned subsidiaries DCC, Euroasia, Astelit and Eastasia,and equity investee, Fintur, have been translated into US Dollars in accordancewith the relevant provisions of SFAS No. 52. All foreign exchangeadjustments resulting from translation of the financial statements of DCC,Euroasia, Astelit, Eastasia and Fintur into US Dollar are included in aseparate section of shareholders’ equity titled “Accumulated othercomprehensive income”.

**(d)**             Held to maturity andavailable for sale securities

Held to maturity and available for sale securities at December 31,2005, consist of government bonds and foreign investment equity funds. TheCompany classifies its marketable securities in one of the three 

F-11

----

categories: trading,available for sale, or held to maturity. Trading securities are bought and heldprincipally for the purpose of selling them in the near term. Held-to-maturitysecurities are debt securities in which the Company has the positive intent andability to hold the security until maturity. All securities not classified aseither trading securities or held to maturity securities are classified asavailable for sale securities.

Trading and available-for-sale securities are recordedat their fair values. Held-to-maturity debt securities are recorded atamortized cost, adjusted for the amortization or accretion of premiums or discounts.Unrealized holding gains and losses on trading securities are included in thedetermination of net income. Unrealized holding gains and losses, net of therelated tax effect, on available-for-sale securities are excluded from earningsand are reported as a separate component of other comprehensive income untilrealized. Realized gains and losses from the sale of available-for-salesecurities are determined on a specific-identification basis.

Premiums and discounts are amortized or accreted overthe life of the related held-to-maturity security as an adjustment to yieldusing the effective-interest method. Dividend and interest income arerecognized when earned.

**(e)**             Fixed assets andintangibles

Fixed assets and intangibles are stated at historicalcost less accumulated depreciation and amortization. Leases of plant andequipment under which the Company assumes substantially all the risks and therewards incidental to ownership are classified as finance leases. Other leasesare classified as operating leases.

Finance leases arerecognized in the balance sheet by recording an asset and liability equal tothe present value of minimum lease payments at the inception of the lease.Capitalized finance leases are depreciated over the estimated useful life ofthe asset or the lease term where appropriate. Lease liabilities are reduced byrepayments of principal, while the interest charge component of the leasepayment is charged to statement of income. Depreciation and amortization isprovided using straight-line method at rates established based on the estimatedeconomic lives of the related assets. The annual rates used approximate theestimated economic lives of the related assets and are as follows:

| Building                          |   | 2.0% -   4.0% |   |
|-----------------------------------|--------|-------------------------|--------|
| Machinery and  equipment          |   | 12.0% - 20.0%           |   |
| Furniture,  fixture and equipment |   | 20.0% - 25.0%           |   |
| Motor vehicles                    |   | 20.0% - 25.0%           |   |
| Leasehold  improvements           |   | 20.0% - 36.0%           |   |
| Intangibles                       |   | 4.0% - 50.0%            |   |

 

Major renewals and betterments are capitalized anddepreciated/amortized over the remaining useful lives of the related assets.Maintenance, repairs and minor renewals are expensed as incurred.

F-12

----

When assets are otherwise disposed of, the costs andthe related accumulated depreciation or amortization is removed from theaccounts and resulting gain or loss is reflected in net income.

**(f)**               Inventories

Inventories are stated at the lower of cost or market.Cost is determined using the weighted average method and includes expenditureincurred in acquiring the inventories and bringing them to their existinglocation and condition. At December 31, 2004 and 2005, inventoriesconsisted of simcards and scratch cards (finished goods) totaling to $13,007and $9,198, respectively.

**(g)**            Income taxes

Income taxes areaccounted for under the asset and liability method. Deferred tax assets andliabilities are recognized for the future tax consequences attributable todifferences between the financial statement carrying amounts of existing assetsand liabilities and their respective tax bases and operating loss and taxcredit carryforwards. Deferred tax assets and liabilities are measured usingenacted tax rates expected to apply to taxable income in the years in whichthose temporary differences are expected to be recovered or settled. The effecton deferred tax assets and liabilities of a change in tax rates is recognizedin income in the period that includes the enactment date. The Company’sdeferred tax assets and liabilities have been remeasured into US Dollar inaccordance with the provisions of SFAS No. 109, “Accounting for IncomeTaxes”, and the transaction gains and losses that result from suchremeasurement have been included within the translation loss in theconsolidated financial statements.

**(h)**            Use of estimates

Management of theCompany has made a number of estimates and assumptions relating to thereporting of assets and liabilities and the disclosure of contingent assets andliabilities to prepare these consolidated financial statements in conformitywith US GAAP. Actual amounts could differ from those estimates. Significantestimates and assumptions include the depreciable/amortizable lives of fixedassets and intangibles, amounts reflected as allowances for doubtfulreceivables, valuation allowances on deferred tax assets and amounts reflectedas accruals for liabilities arising from legal proceedings.

**(i)**               Transactions withrelated parties

For reportingpurposes, investee companies and their shareholders, significant shareholdersof Turkcell and subsidiaries and the companies that such shareholders haverelationships with are considered to be related parties.

**(j)**               Impairment oflong-lived assets

In accordance with SFAS No. 144, ‘‘Accounting forthe Impairment or Disposal of Long-Lived Assets’’, long-lived assets,such as property, plant, and equipment, and purchased intangibles subject toamortization and cost method investments, are reviewed for impairment wheneverevents or changes in circumstances indicate that the carrying amount of anasset may not be recoverable. Recoverability of assets to be held and used ismeasured by a comparison of the carrying amount of an asset to estimatedundiscounted future cash flows expected to be generated by the asset. If thecarrying amount of an asset 

F-13

----

exceeds its estimatedfuture cash flows, an impairment charge is recognized by the amount by whichthe carrying amount of the asset exceeds the fair value of the asset. Assets tobe disposed of are separately presented in the balance sheet and reported atthe lower of the carrying amount or fair value less costs to sell, and are nolonger depreciated. The assets and liabilities of a disposed group classifiedas held for sale are presented separately in the appropriate asset andliability sections of the balance sheet.

**(k)**           Earnings per share

In accordance with SFAS No. 128, “Earnings perShare”, basic earnings per share are computed by dividing net earnings by theweighted average number of common shares outstanding. Diluted earnings pershare do not differ from basic earnings per share for all periods presented, asthe Company has no common stock equivalents.

**(l)**               Comprehensiveincome

Comprehensiveincome generally encompasses all changes in shareholders’ equity (except thosearising from transactions with owners) and includes net income, net unrealizedcapital gains or losses on available for sale securities and foreign currencytranslation adjustments. The Company’s comprehensive income differs from netincome applicable to common shareholders by the amount of the foreign currencytranslation adjustment and net unrealized capital gain on available for salesecurities charged to comprehensive income for the period. Comprehensive incomefor the years ended December 31, 2003, 2004 and 2005 was $216,938,$516,311 and $914,232, respectively.

**(m)**         Derivative instrumentsand hedging activities

The Company accounts for derivatives and hedgingactivities in accordance with FASB Statement No. 133, “Accounting forDerivative Instruments and Certain Hedging Activities”, which requires that allderivative instruments be recorded on the balance sheet at their respectivefair values.

The Company holdsderivative financial instruments for both hedging and trading purposes andrecognizes these derivative instruments as either assets or liabilities in theconsolidated balance sheet and measures these instruments at fair value. As of December 31,2005, the Company did not have any freestanding or embedded derivates inmaterial amounts. As of December 31, 2005, the Company entered intoforward contracts amounting to $56,000 to minimize currency risk.

**(n)**            Accounting forcomputer software

The Companycapitalizes only external costs incurred to obtain internal-use computersoftware from third parties, and external costs of specified upgrades andenhancements to internal-use computer software if it is probable that thoseexpenditures will result in additional functionality.

**(o)**             Business combinationsand goodwill and other intangible assets

Goodwill represents the excess of costs over fairvalue of assets of businesses acquired. The Company adopted the provisions ofSFAS No. 142, “Goodwill and Other Intangible Assets”*,*as of January 1, 2002. Pursuant toSFAS No. 142, goodwill and intangible assets acquired in a purchasebusiness combination and 

F-14

----

determined to have anindefinite useful life are not amortized, but instead tested for impairment atleast annually in accordance with the provisions of this statement. Animpairment loss is recognized to the extent that the carrying amount exceedsthe asset’s fair value. The impairment determination of goodwill is made at thereporting unit level and consists of two steps. First, the Company determinesthe fair value of the reporting unit and compares it to its carrying amount. Ifthe carrying amount of the reporting unit exceeds its fair value, the secondstep of the goodwill impairment test is performed to measure the amount ofimpairment loss. An impairment loss is recognized for any excess of thecarrying amount of the reporting unit’s goodwill over the implied fair value ofthat goodwill. SFAS No. 142 also requires that intangible assets withestimable useful lives be amortized over their respective estimated usefullives to their estimated residual values, and reviewed for impairment inaccordance with SFAS No. 144 (Note 15). As of December 31, 2005, theCompany provided impairment for its goodwill amounting to $1,349 with respectto acquisition of the remaining 30% shares of Mapco in June 2003.

**(p)**             Retirement payliability

Under the terms of the existing labor law in Turkey,the Company is required to make lump-sum payments to employees who havecompleted one year of service and whose employment is terminated without cause,or who retire, are called up for military service or die. Such payments arecalculated on the basis of 30 days’ pay at the rate of pay applicable at thedate of retirement or termination with a maximum payout of approximately $1,300per year of employment. The liability for this retirement pay obligation isrecorded in the accompanying consolidated financial statements at its presentvalue using an annual discount rate of 5.5%.

Turkcell initiateda defined contribution retirement plan for all eligible employees during 2005.The assets of the plan are held separately from the financials of Turkcell.Turkcell is required to contribute a specified percentage of payroll costs tothe retirement benefit scheme to fund the benefits. The only obligation of theTurkcell with respect to the retirement plan is to make the specifiedcontributions. The cost of this program is being funded currently. Obligationsfor contributions to defined contribution plans are recognized as an expense inthe statement of income as incurred. Turkcell incurred $829 in relation todefined contribution retirement plan for the year ending December 31,2005.

**(q)**             Deferred financingcost

Certain financing costs associated with the borrowingsof funds are deferred. $5,289 of deferred financing costs are recorded in othercurrent assets and $3 in long-term assets at December 31, 2005 (2004:$3,204 and $217, respectively). These assets are amortized over the terms ofthe related borrowings as an adjustment to interest expense in the accompanyingconsolidated statements of income (Note 10).

F-15

----

**(4)   New AccountingStandards Issued**

In March 2005, the FASB issued FIN 47,“Accounting for Conditional Asset Retirement Obligations an interpretation ofSFAS No. 143” (“FIN 47”). FIN 47 clarifies the term conditional assetretirement obligation as used in SFAS No. 143, “Accounting for AssetRetirement Obligations”. An entity is required to recognize a liability for thefair value of a conditional asset retirement obligation if the fair value ofthe liability can be reasonably estimated. The fair value of a liability forthe conditional asset retirement obligation should be recognized when incurred—generallyupon acquisition, construction, or development and/or through the normaloperation of the asset. FIN 47 also clarifies when an entity would havesufficient information to reasonably estimate the fair value of an assetretirement obligation. FIN 47 is effective no later than the end of fiscalyears ending after December 15, 2005. Retrospective application forinterim financial information is permitted but is not required. The adoption ofFIN 47 is not expected to have a material effect on the Company’s consolidatedfinancial statements.

In May 2005, the FASB issued SFAS No. 154, “AccountingChanges and Error Corrections, a replacement of APB Opinion No. 20 andSFAS No. 3”. SFAS No. 154 provides guidance on the accounting for andreporting of accounting changes and error corrections. It establishes, unlessimpracticable, retrospective application as the required method for reporting achange in accounting principle in the absence of explicit transitionrequirements specific to the newly adopted accounting principle. SFAS No. 154also provides guidance for determining whether retrospective application of achange in accounting principle is impracticable and for reporting a change whenretrospective application is impracticable. The correction of an error inpreviously issued financial statements is not an accounting change. However,the reporting of an error correction involves adjustments to previously issued financialstatements similar to those generally applicable to reporting an accountingchange retrospectively. Therefore, the reporting of a correction of an error byrestating previously issued financial statements is also addressed by SFAS No. 154.SFAS No. 154 shall be effective for accounting changes and corrections oferrors made in fiscal years beginning after December 15, 2005. Earlyadoption is permitted for accounting changes and corrections of errors made infiscal years beginning after SFAS 154 is issued. The adoption of SFAS No. 154is not expected to have a material effect on the Company’s consolidatedfinancial statements.

On July 12, 2005, FASB staff issued FSP No. AccountingPrinciples Board Opinions (“APB”) 18-1 “Accounting by an Investor for ItsProportionate Share of Accumulated Other Comprehensive Income of an InvesteeAccounted for under the Equity Method in Accordance with APB Opinion No. 18upon a Loss of Significant Influence” The Board directed the FASB staff toissue this FSP to provide guidance on how an investor should account for itsproportionate share of an investee’s equity adjustments for other comprehensiveincome (OCI) upon a loss of significant influence. The Board believes that aninvestor’s proportionate share of an investee’s equity adjustments for OCIshould be offset against the carrying value of the investment at the timesignificant influence is lost. To the extent that the offset results in acarrying value of the investment that is less than zero, an investor should (a) reducethe carrying value of the investment to zero and (b) record the remainingbalance in income. The guidance in this FSP is effective as of the firstreporting period beginning after July 12, 2005. The adoption of this FSPis not expected to have a material effect on the Company’s financialstatements.

F-16

----

**(5)   Fair Value ofFinancial**Instruments:

The Company’s financial instruments consist of cashand cash equivalents, available for sale securities, held to maturitysecurities, trade receivables and accrued income, due from related parties,other current assets, other long term assets, investments, short and long termborrowings, trade payables, due to related parties, other current liabilitiesand accrued expenses and other long term liabilities.

The following methods and assumptions were used toestimate the fair value of each class of financial instruments for which it ispracticable to estimate that value:

***(a)****            Cash and cashequivalents*

The carrying amounts approximate fair value because ofthe short maturity of those instruments.

***(b)****            Available for salesecurities*

The fair values of foreign investment equity funds andgovernment bonds classified as available for sale securities are based on bothquoted market and over the counter market prices at December 31, 2005.

***(c)****             Held to maturitysecurities*

The fair values of government bonds classified asheld-to-maturity investments are based on quoted market prices at December 31,2005.

***(d)****            Trade receivable,accrued income and due from related parties*

The carrying amount approximates fair value because ofthe short maturity of those financial assets.

***(e)****             Other current assets*

The carrying amount approximates fair value because ofthe short maturity of those financial assets. Forward contracts are presentedunder other current assets and current market pricing models are used toestimate their fair values.

***(f)****               Trade payables anddue to related parties*

The carrying amount approximates fair value because ofthe short maturity of those financial liabilities.

***(g)****            Short and long termborrowings*

(i)     Cellco:As of December 31, 2004, the estimation of fair value is based on quotedmarket prices. This facility was fully repaid on August 1, 2005.

(ii)    Borrowingsfrom Akbank, Garanti, Murabaha Syndicated facility, West LB, ABN Amro NV andEricsson Credit AB: The carrying amount approximates fair value because theinterest rate varies based on the London, Euro or TRY interbank offered rates.

F-17

----

(iii)   Othershort term bank loans and overdrafts: The carrying amount approximates fair valuebecause of the short term maturity of those instruments.

The estimated fair values of the Company’s financialinstruments at December 31, 2004 and 2005 are as follows: 
| ** **                                       | ** ** | **December 31, 2004** | ** ** | **December 31, 2005** | ** ** |
|--------------------------------------------------|------------|---------------------------------|------------|---------------------------------|------------|
| ** **                                       | ** ** | **Carrying**                    | ** ** | **Fair**                        | ** ** | **Carrying** | ** ** | **Fair** | ** ** |
| ** **                                       | ** ** | **Amount**                      | ** ** | **Value**                       | ** ** | **Amount** | ** ** | **Value** | ** ** |
| **Financial  assets**                            | ** ** | ** **                      | ** ** | ** **                      | ** ** | ** ** | ** ** | ** ** | ** ** |
| Cash and cash  equivalents                       |       | $                               | 763,821    |                            | 763,821    |   | 795,091 |   | 795,091 |   |
| Available for  sale securities                   |       | —                          |       | —                          |       | 12,948 |   | 12,948 |   |
| Held to maturity  securities                     |       | 45,329                          |       | 46,129                          |       | 10,191 |   | 10,763 |   |
| Trade  receivables and accrued income            |       | 271,792                         |       | 271,792                         |       | 324,611 |   | 324,611 |   |
| Due from related  parties                        |       | 103,948                         |       | 103,948                         |       | 67,327 |   | 67,327 |   |
| Other current  assets                            |       | 164,750                         |       | 164,750                         |       | 70,942 |   | 70,942 |   |
| Due from related  parties-long term              |       | 65,971                          |       | 65,971                          |       | 80,906 |   | 80,906 |   |
| Held to maturity  securities-long term           |       | 10,266                          |       | 10,696                          |       | — |   | — |   |
| Other long term  assets                          |       | 1,172                           |       | 1,172                           |       | 2,440 |   | 2,440 |   |
| **Financial  liabilities**                       |       |                            |       |                            |       |   |   |   |   |
| Short term  borrowings                           |       |                            |       |                            |       |   |   |   |   |
| —Current portion of long term borrowings    |       | 548,356                         |       | 562,593                         |       | 457,355 |   | 457,355 |   |
| —Other short term bank loans and overdrafts |       | 723                             |       | 723                             |       | 107,148 |   | 107,148 |   |
| Trade payables                                   |       | 616,816                         |       | 616,816                         |       | 137,775 |   | 137,775 |   |
| Due to related  parties                          |       | 6,711                           |       | 6,711                           |       | 5,774 |   | 5,774 |   |
| Long term  borrowings                            |       | 266,447                         |       | 266,447                         |       | 82,848 |   | 82,848 |   |
| Long term trade  payables                        |       | 213,740                         |       | 213,740                         |       | — |   | — |   |
|                                                  |            |                                 |            |                                 |            |  |  |  |  |  |

 

**(6)   Cash and CashEquivalents**

Cash and cash equivalents of $763,821 and $795,091 at December 31,2004 and 2005, respectively, consist of cash on hand, overnight repurchaseagreements, demand deposits at banks and time deposits at banks.

At December 31, 2005, cash and cash equivalentsamounting to $23,662 (2004: $408,984 of which $361,348 from Yapi Kredi BankasiAS (“Yapi Kredi”)) were deposited in the banks, which are owned and/orcontrolled by Cukurova Group, a significant shareholder of the Company. Since Cukurova Group transferred its shares inYapi Kredi to Koc Group on October 28, 2005, Yapi Kredi is not a relatedparty as of December 31, 2005.

F-18

----

**(7)   Available forSale and Held to Maturity Securities**

The amortizedcost, gross unrealized holding gains and fair value of available for sale andheld to maturity debt securities by major security type and class of securityat December 31, 2005 and 2004 were as follows:

|                                 | ** ** | **Amortized  Cost** | ** ** | **Gross  Unrealized  Holding Gains** | ** ** | **Fair Value** | ** ** |
|---------------------------------|------------|---------------------|------------|-------------------------------------------|------------|---------------------|------------|
| At  December 31, 2005      |       |                |       |                                      |       |                |       |
| **Debt  securities**            |       |                |       |                                      |       |                |       |
| Available for sale securities:  |       |                |       |                                      |       |                |       |
| Government bonds                |       | $                   | 1,306      |                                      | 28         |                | 1,261      |   |
|                            |       | 1,306               |       | 28                                        |       | 1,261               |       |
| Held to maturity securities:    |       |                |       |                                      |       |                |       |
| Government bonds                |       | $                   | 10,191     |                                      | 572        |                | 10,763     |   |
|                            |       | 10,191              |       | 572                                       |       | 10,763              |       |
| **Equity  securities**          |       |                |       |                                      |       |                |       |
| Available for sale securities:  |       |                |       |                                      |       |                |       |
| Foreign investment equity funds |       | $                   | —     | *                                         | 772        |                | 11,687     |   |
|                            |       | —              |       | 772                                       |       | 11,687              |       |
| At  December 31, 2004      |       |                |       |                                      |       |                |       |
| **Debt  securities**            |       |                |       |                                      |       |                |       |
| Held to maturity:               |       |                |       |                                      |       |                |       |
| Government bonds                |       | $                   | 55,595     |                                      | 1,230      |                | 56,825     |   |
|                            |       | 55,595              |       | 1,230                                     |       | 56,825              |       |

----

*                    Amortizedcost is not available for foreign investment equity funds as of December 31,2005. This equity security is recorded at fair value and unrealized capitalgains amounting to $772 with respect to this security is recorded at othercomprehensive income for the period.

The Company have not realized any gains or losses onavailable for sale securities for the years ended December 31, 2003, 2004and 2005.

Maturities of debt securities classified asavailable-for-sale and held-to-maturity are due after one year through fiveyears as of December 31, 2005.

F-19

----

**(8)   TradeReceivables and Accrued Income, net**

At December 31,2004 and 2005, the breakdown of trade receivables and accrued income is asfollows:

|                                     | ** ** | **December 31,** | ** ** | **December 31,** | ** ** |
|-------------------------------------|------------|-----------------------|------------|-----------------------|------------|
| ** **                          | ** ** | **2004**              | ** ** | **2005**              | ** ** |
| Receivables from  subscribers       |       | $                     | 258,560    |                  | 294,418    |   |
| Accounts and  checks receivable     |       | 77,027                |       | 79,709                |       |
| Receivables from  Turk Telekom      |       | —                |       | 16,518                |       |
|                                |       | 335,587               |       | 390,645               |       |
| Accrued service  income             |       | 70,120                |       | 83,175                |       |
| Allowance for  doubtful receivables |       | (133,915              | )          | (149,209              | )          |
|                                |       | $                     | 271,792    |                  | 324,611    |   |
|                                     |            |                       |            |                       |            |  |  |

 

Receivables from Turk Telekom as of December 31,2005 represent net amounts that are due from Turk Telekom under theInterconnection Agreement (Note 27). The Interconnection Agreement providesthat Turk Telekom will pay Turkcell for Turk Telekom’s fixed-line subscribers’calls to GSM subscribers. As of December 31, 2004, Turkcell has netpayables to Turk Telekom due to the settlement agreement signed betweenTurkcell and Turk Telekom with respect to interconnection and infrastructureusage dispute.

The accrued service income represents revenues accruedfor subscriber calls (air-time), which have not been billed. Due to the volumeof subscribers, there are different billing cycles; accordingly, an accrual ismade at each period end to accrue revenues for services rendered but not yetbilled.

Letter of guarantees received with respect to theaccounts and cheques receivable are amounting to $46,838 and $48,066 as of December 31,2004 and 2005, respectively.

Movements in theallowance for doubtful receivables are as follows: 

|                                     | ** ** | **December 31,** | ** ** | **December 31,** | ** ** |
|-------------------------------------|------------|-----------------------|------------|-----------------------|------------|
| ** **                          | ** ** | **2004**              | ** ** | **2005**              | ** ** |
| Beginning  balance                  |       | $                     | 135,920    |                  | 133,915    |   |
| Provision for  doubtful receivables |       | 14,572                |       | 24,379                |       |
| Write offs                          |       | (22,890               | )          | (9,122                | )          |
| Effect of change  in exchange rate  |       | 6,313                 |       | 37                    |       |
| Ending balance                      |       | $                     | 133,915    |                  | 149,209    |   |

 

F-20

----

**(9)   Due from RelatedParties**

As of December 31,2004 and 2005, the balance comprised: 

|                                                                         | ** ** | **December 31,** | ** ** | **December 31,** | ** ** |
|-------------------------------------------------------------------------|------------|-----------------------|------------|-----------------------|------------|
| ** **                                                              | ** ** | **2004**              | ** ** | **2005**              | ** ** |
| KVK Teknoloji  Urunleri AS (“KVK Teknoloji”)                  |       | $                     | 37,019     |                  | 31,128     |   |
| Digital Platform Iletisim Hizmetleri AS (“Digital  Platform”) |       | 8,995                 |       | 10,316                |       |
| ADD Production  Medya AS (“ADD”)                              |       | 5,724                 |       | 7,066                 |       |
| A-Tel Pazarlama  ve Servis Hizmetleri AS (“A-Tel”)            |       | 24,549                |       | 7,055                 |       |
| Baytur Insaat  Taahhut AS (“Baytur”)                          |       | —                |       | 5,892                 |       |
| Parman Ertabat                                                          |       | 20,982                |       | —                |       |
| Other                                                                   |       | 6,679                 |       | 5,870                 |       |
|                                                                    |       | $                     | 103,948    |                  | 67,327     |   |

 

Substantially all of the significant due from relatedparty balances are from Cukurova Group companies.

Due from KVK Teknoloji, a company whose majorityshares are owned by Cukurova Group, mainly resulted from simcard and prepaidcard sales to this company (Note 26).

Due from Digital Platform, a company whose majorityshares are owned by Cukurova Group, mainly resulted from receivables from callcenter revenues, financial support for borrowing repayments and advances givenfor current and planned sponsorships (Notes 11 and 26).

Due from ADD, a company whose majority shares areowned by Cukurova Group, mainly resulted from balances paid in advance in orderto benefit from the expertise and bargaining power of ADD with third parties inmedia purchasing (Note 26).

Due from A-Tel, a 50-50 joint venture of YapiKredi and Savings Deposit Insurance Fund (“SDIF”), mainly resulted from simcardand prepaid card sales to this company. On September 28, 2005, CukurovaGroup transferred its Yapi Kredi shares to Koc Group following which A-Telceased to be considered a related party (Note 26).

Due from Baytur, a company whose majority shares areowned by Cukurova Group, mainly resulted from advances given to Baytur for theconstruction of a residence project (Note 26).

Due from Parman Ertabat, a co-investor in Irancell,resulted from the payment of capital contribution by Turkcell to Irancell’sshare capital on behalf of Parman Ertabat. This receivable was collected in March 2005.

F-21

----

**(10)   Other CurrentAssets**

At December 31,2004 and 2005, the balance comprised: 

|                                                        | ** ** | **December 31,** | ** ** | **December 31,** | ** ** |
|--------------------------------------------------------|------------|-----------------------|------------|-----------------------|------------|
| ** **                                             | ** ** | **2004**              | ** ** | **2005**              | ** ** |
| Restricted cash                                        |       | $                     | 110,166    |                  | 34,105     |   |
| Value added tax  (“VAT”) receivable          |       | 149,777               |       | 28,165                |       |
| Interest income accrual                                |       | 1,142                 |       | 13,392                |       |
| Advances to  suppliers                                 |       | 3,381                 |       | 7,571                 |       |
| Deferred  financing costs                              |       | 3,204                 |       | 5,289                 |       |
| Prepaid taxes                                          |       | 273                   |       | 3,562                 |       |
| Promotional  materials                                 |       | 2,932                 |       | 2,465                 |       |
| Receivable from  personnel                             |       | 2,295                 |       | 1,930                 |       |
| Expenses to be  invoiced for Iran GSM tender           |       | 6,578                 |       | —                |       |
| Telecommunications  Authority income accrual (Note 19) |       | 39,903                |       | —                |       |
| Other                                                  |       | 6,090                 |       | 9,974                 |       |
|                                                   |       | $                     | 325,741    |                  | 106,453    |   |

 

As of December 31, 2004, restricted cashrepresented the capital contribution for Irancell deposited in an escrowaccount in Iran. This cash was released to Turkcell and paid back in March 2005.As of December 31, 2005 restricted cash represents amounts deposited atbanks as guarantees in connection with Euroasia Shareholders Loan and MurabahaSyndicated Facility. $30,605 of the total amount was released on January 5,2006 and the remaining restricted cash will be released on August 29,2006.

As of December 31, 2004, in accordance with thesettlement agreements signed with Turk Telekom regarding infrastructure andinterconnection disputes, Turk Telekom issued invoices amounting to TRY1,946,601 (equivalent to $1,450,739 at December 31, 2005). Turkcell hadthe right to deduct VAT charged to Turkcell on Turk Telekom invoices from itsVAT payable amount. VAT receivable represents the net balance of VAT on suchinvoices and VAT receivables and payables arising in the ordinary course ofbusiness. As of December 31, 2005, the amount represents the VATreceivable of consolidated subsidiaries, mainly Astelit.

F-22

----

**(11)   Duefrom Related Parties—Long Term**

|                  | ** ** | **December 31,  2004** | ** ** | **December 31,  2005** | ** ** |
|------------------|------------|-----------------------------|------------|-----------------------------|------------|
| Digital Platform |       | $                           | 64,199     |                        | 78,275     |   |
| Other            |       | 1,772                       |       | 2,631                       |       |
|             |       | $                           | 65,971     |                        | 80,906     |   |

 

On December 23, 2005, a “Restructuring FrameworkAgreement” was signed between Digital Platform and Turkcell. The agreementincludes the restructuring of Turkcell’s receivables from Digital Platformamounting to $88,591 as of December 31, 2005 in exchange for sponsorshipand the advertisement services that Turkcell will receive on Digital Platform’sinfrastructure. Under the agreement, Digital Platform commits to pay amountsdue to Turkcell through July 15, 2011 along with the interest in cash andadvertisement services. $88,591 represents present value of future cash flowsand services discounted using imputed interest rate. As of December 31,2005, $78,275 of the balance is classified as long term due from relatedparties in accordance with the revised repayment schedule.

**(12)**   Investments

At December 31,2004 and 2005, investments in associated companies were as follows: 

|                                                                                         | ** ** | **December 31,  2004** | ** ** | **December 31,  2005** | ** ** |   |
|-----------------------------------------------------------------------------------------|------------|-----------------------------|------------|-----------------------------|------------|--------|
| Fintur                                                                                  |       | $                           | 175,141    |                        | 243,579    |   |
| Aks Televizyon  Reklamcilik ve Filmcilik Sanayi ve Ticaret AS (“Aks TV”) |       | 15,750                      |       | 15,750                      |       |
| T Medya Yatirim  Sanayi ve Ticaret AS (“T Medya”)                             |       | 6,869                       |       | 6,869                       |       |
|                                                                                    |       | $                           | 197,760    |                        | 266,198    |   |
|                                                                                         |            |                             |            |                             |            |        |  |  |  |  |

 

At December 31, 2004 and 2005, the Company’sownership interest in Fintur is 41.45%. Fintur is accounted for under theequity method.

In 2003, the Company acquired a 6.24% interest in AksTV and a 8.23% interest in T-Medya (2004: Basin Yatirim Sanayi ve Ticaret AS (“BasinYatirim”)), media companies owned by the Cukurova Group. On June 24, 2005,at T Medya’s General Assembly Meeting, it has been decided to increase theshare capital of T Medya. However, the Company did not participate in thecapital contribution; accordingly the ownership of the Company in T Medyadecreased to 5.91%. Subsequent to the first share capital increase, the Companydecided to participate in the second share capital increase and on January 2,2006, the Company paid TRY 2,700 (equivalent to $2,012 at December 31,2005) in cash as capital contribution to T Medya and the Company’sownership interest in T Medya increased to 8.23%.

F-23

----

Aggregate summarized information of Fintur as of December 31,2004 and December 31, 2005 and for the years ended December 31, 2003,2004 and 2005 is as follows:

|                            | ** ** | **December 31,  2004** | ** ** | **December 31,  2005** | ** ** |
|----------------------------|------------|-----------------------------|------------|-----------------------------|------------|
| Current assets             |       | $                           | 146,258    |                        | 250,718    |   |
| Non-current  assets        |       | 652,447                     |       | 858,209                     |       |
|                       |       | $                           | 798,705    |                        | 1,108,927  |   |
| Current liabilities        |       | $                           | 237,064    |                        | 261,384    |   |
| Non-current  liabilities   |       | 256,029                     |       | 376,799                     |       |
| Shareholders’  equity |       | 305,612                     |       | 470,744                     |       |
|                       |       | $                           | 798,705    |                        | 1,108,927  |   |

 

|                          | ** ** | **Year ended  December 31, 2003** | ** ** | **Year ended  December 31, 2004** | ** ** | **Year ended  December 31, 2005** | ** ** |
|--------------------------|------------|--------------------------------------------------|------------|--------------------------------------------------|------------|--------------------------------------------------|------------|
| Revenues                 |       | $                                                | 339,150    |                                             | 556,902    |                                             | 853,571    |   |
| Direct cost of  revenues |       | (163,834                                         | )          | (234,401                                         | )          | (352,628                                         | )          |
| Income before  taxes     |       | 58,738                                           |       | 138,276                                          |       | 213,439                                          |       |
| Net income               |       | 45,662                                           |       | 105,297                                          |       | 163,085                                          |       |
|                          |            |                                                  |            |                                                  |            |                                                  |            |  |  |  |  |  |

 

F-24

----

**(13)   Fixed Assets,net**

As of December 31,2004 and 2005, the analysis of fixed assets is as follows: 

|                                                  | ** ** | **Useful  Lives** | ** ** | **December 31  2004** | ** ** | **December 31,  2005** | ** ** |
|--------------------------------------------------|------------|-------------------|------------|----------------------------|------------|-----------------------------|------------|
| Operational  fixed assets:                       |       |              |       |                       |       |                        |       |   |
| Base terminal  stations                          |       | 8 years           |       | $                          | 1,014,085  |                        | 1,197,797  |   |   |
| Mobile switching  center/Base station controller |       | 8 years           |       | 869,981                    |       | 906,119                     |       |   |
| Minilinks                                        |       | 8 years           |       | 219,739                    |       | 365,665                     |       |   |
| Supplementary  system                            |       | 8 years           |       | 37,440                     |       | 42,610                      |       |   |
| GSM services  equipment                          |       | 8 years           |       | 91,575                     |       | 97,583                      |       |   |
| Betting  equipment                               |       | 7-8 years         |       | 14,458                     |       | 14,636                      |       |   |
| Call center  equipment                           |       | 5 years           |       | 12,110                     |       | 22,677                      |       |   |
| Other                                            |       | 5-8 years         |       | —                     |       | 4,147                       |       |   |
|                                             |       |              |       | 2,259,388                  |       | 2,651,234                   |       |   |
| Accumulated  depreciation                        |       |              |       | (1,361,927                 | )          | (1,598,146                  | )          |   |
| Operational  fixed assets, net                   |       |              |       | 897,461                    |       | 1,053,088                   |       |   |
| Non-operational fixed assets:                    |       |              |       |                       |       |                        |       |   |
| Land                                             |       |              |       | 899                        |       | 677                         |       |   |
| Buildings                                        |       | 25-50 years       |       | 179,226                    |       | 182,736                     |       |   |
| Furniture,  fixture and equipment                |       | 4-5 years         |       | 165,301                    |       | 180,483                     |       |   |
| Motor vehicles                                   |       | 4-5 years         |       | 8,710                      |       | 9,905                       |       |   |
| Leasehold  improvements                          |       | 3-5 years         |       | 52,448                     |       | 58,428                      |       |   |
|                                             |       |              |       | 406,584                    |       | 432,229                     |       |   |
| Accumulated  depreciation                        |       |              |       | (242,777                   | )          | (260,774                    | )          |   |
| Non-operational  fixed assets, net               |       |              |       | 163,807                    |       | 171,455                     |       |   |
|                                             |       |              |       | $                          | 1,061,268  |                        | 1,224,543  |   |   |

 

At December 31, 2004 and 2005, total fixed assetsacquired under finance leases amounted to $81,497 and $82,465, respectively.Depreciation of these assets under finance leases amounted to $3,678, $4,167and $4,570 for the years ended December 31, 2003, 2004 and 2005,respectively, and is included in depreciation expense.

Depreciation expenses for the years ended December 31,2003, 2004 and 2005 are $309,425, $304,233 and $324,478, respectively.

As of December 31, 2005, fixed assets of theCompany amounting to $18,744 are pledged as collateral to the banks that haveloans to the Company.

F-25

----

**(14)**   Constructionin Progress

At December 31,2004 and 2005, construction in progress consisted of expenditures in GSM andnon-operational items and is as follows: 

|                             | ** ** | **December 31,  2004** | ** ** | **December 31,  2005** | ** ** |
|-----------------------------|------------|-----------------------------|------------|-----------------------------|------------|
| Turkcell-GSM  network       |       | $                           | 138,303    |                        | 319,802    |   |
| Astelit-GSM  network        |       | 67,077                      |       | 43,589                      |       |
| Turkcell-Other  projects    |       | 6,915                       |       | 13,821                      |       |
| Non-operational  items      |       | 9,239                       |       | 10,070                      |       |
| Kibris  Telekom-GSM network |       | 451                         |       | 2,093                       |       |
| Other                       |       | 8,206                       |       | —                      |       |
|                        |       | $                           | 230,191    |                        | 389,375    |   |

 

**(15)**   Intangibles,net

As of December 31,2004 and 2005, intangibles consisted of the following:

|                                            | ** ** | **Useful  Lives** | ** ** | **December 31,  2004** | ** ** | **December 31,  2005** | ** ** |
|--------------------------------------------|------------|-------------------|------------|-----------------------------|------------|-----------------------------|------------|
| Computer  software                         |       | 3-8 years         |       | $                           | 860,253    |                        | 980,864    |   |
| GSM and other  telecommunications licenses |       | 4-25 years        |       | 572,181                     |       | 582,483                     |       |
| Transmission  lines                        |       | 10 years          |       | 19,531                      |       | 19,891                      |       |
| Central betting  system operating right    |       | 4-5 years         |       | 2,641                       |       | 2,912                       |       |
| Customer base                              |       | 2 years           |       | 1,132                       |       | 1,193                       |       |
|                                       |       |              |       | 1,455,738                   |       | 1,587,343                   |       |
| Accumulated  amortization                  |       |              |       | (574,227                    | )          | (715,981                    | )          |
|                                       |       |              |       | $                           | 881,511    |                        | 871,362    |   |

 

As of December 31,2004 and 2005, amortized intangible assets and related amortization are asfollows:

|                                            | ** ** | **December 31, 2005** | ** ** |
|--------------------------------------------|------------|---------------------------------|------------|
| ** **                                 | ** ** | **Gross carrying  Amount** | ** ** | **Accumulated  Amortization** | ** ** |
| Computer  software                         |       | $                               | 980,864    |   | 535,492 |   |
| GSM and other  telecommunications licenses |       | 582,483                         |       | 167,523 |   |
| Transmission  lines                        |       | 19,891                          |       | 10,735 |   |
| Central betting  system operating rights   |       | 2,912                           |       | 1,229 |   |
| Customer base                              |       | 1,193                           |       | 1,002 |   |
|                                       |       | $                               | 1,587,343  |   | 715,981 |   |

 

F-26

----

** **

|                                            | ** ** | **December 31, 2004** | ** ** |
|--------------------------------------------|------------|---------------------------------|------------|
| ** **                                 | ** ** | **Gross carrying  Amount** | ** ** | **Accumulated  Amortization** | ** ** |   |
| Computer  software                         |       | $                               | 860,253    |   | 431,242 |   |   |
| GSM and other  telecommunications licenses |       | 572,181                         |       | 133,879 |   |   |
| Transmission  lines                        |       | 19,531                          |       | 8,291 |   |   |
| Central betting  system operating rights   |       | 2,641                           |       | 463 |   |   |
| Customer base                              |       | 1,132                           |       | 352 |   |   |
|                                       |       | $                               | 1,455,738  |   | 574,227 |   |   |

 

**Aggregateamortization expense**

Aggregateamortization expense for the years ended December 31, 2003, 2004 and 2005are $112,049, $119,920 and $143,221, respectively. 

| Estimated amortization expense  | ** ** | ** ** | ** ** |
|-------------------------------------------|------------|------------|------------|
| For the year ended December 31, 2006 |       | $          | 150,730    |   |
| For the year ended December 31, 2007 |       | 140,874    |       |
| For the year ended December 31, 2008 |       | 100,206    |       |
| For the year ended December 31, 2009 |       | 63,087     |       |
| For the year ended December 31, 2010 |       | $          | 47,278     |   |

 

**(16)**   ShortTerm Borrowings

At December 31,2004 and 2005, short-term borrowings comprised the following: 

|                                                    | ** ** | **December 31,  2004** | ** ** | **December 31,  2005** | ** ** |
|----------------------------------------------------|------------|-----------------------------|------------|-----------------------------|------------|
| Current portion  of long term borrowings (Note 21) |       | $                           | 548,356    |                        | 457,355    |   |
| Other short term  bank loans and overdrafts        |       | 723                         |       | 107,148                     |       |
|                                               |       | $                           | 549,079    |                        | 564,503    |   |
|                                                    |            |                             |            |                             |            |  |  |

 

Short term bank loans of Euroasia amounting to$103,638 as of December 31, 2005 have been fully repaid as of January 24,2006.

**(17)   Trade Payables**

As of December 31, 2004, trade payable balancemainly consists of payables to Turk Telekom regarding the settlements signed onDecember 24, 2004 with respect to the disputes on Turk Telekominterconnection fee and Turk Telekom infrastructure usage totaling to $490,256and $32,649, respectively. As per the settlement agreement signed with respectto the dispute on Turk Telekom interconnection fee, Turkcell has used the earlypayment option at the settlement agreement and fully repaid the outstandingbalance amounting to $213,787 on December 30, 2005, which would mature in2006. As a result of this 

F-27

----

payment, as of December 31,2005, Turkcell does not have any payable to Turk Telekom related to settlementagreements.

The Company has payables to Ericsson Turkey, EricssonRadio Systems AB (“Ericsson Sweden”) and Ericsson AB arising from fixed assetpurchases, site preparation and other services amounting to $37,142 (December 31,2004: $15,138). Balances due to other suppliers arising in the ordinary courseof business are amounting to $100,633 (December 31, 2004: $78,773).

Turkcell is party to a series of supply agreementswith Ericsson Turkey (collectively the “Supply Agreements”) under whichEricsson Turkey supplies Turkcell with an installed and operating GSM network,spare parts, training and documentation. The Supply Agreements also provideTurkcell a non-exclusive restricted software license for GSM software. Underthe Supply Agreements, Ericsson Sweden guarantees all of Ericsson Turkey’sobligations to Turkcell.

Turkcell also entered into a GSM service agreementwith Ericsson Sweden under which Ericsson Sweden supplies Turkcell with thefollowing system services: trouble report handling service, hardware service,consultation service and emergency service. This agreement expired on December 31,1998 but contains successive one-year automatic renewals up until December 31,2005 unless terminated by either party in writing no later than nine monthsprior to the expiration of the then current term. This clause of the agreementis valid until December 31, 2005. Turkcell and Ericsson Sweden have signeda supplementary agreement which came into effect on January 1, 2005 andextended the agreement until December 31, 2006.

**(18)   Due to RelatedParties**

As ofDecember 31, 2004 and 2005, due to related parties comprised: 

|                                                                                   | ** ** | **December 31,** | ** ** | **December 31,** | ** ** |
|-----------------------------------------------------------------------------------|------------|-----------------------|------------|-----------------------|------------|
| ** **                                                                        | ** ** | **2004**              | ** ** | **2005**              | ** ** |
| Hobim Bilgi  Islem Hizmetleri AS (“Hobim”)                              |       | $                     | 1,908      |                  | 2,127      |   |
| Telia Sonera  International Carrier AB (“Telia Sonera”)                 |       | —                |       | 1,326                 |       |
| Betting  Organization Operation and Promotion Company SA (“Betting SA”) |       | 413                   |       | 1,266                 |       |
| Baytur Insaat Taahhut A.S  (“Baytur”)                                   |       | 2,629                 |       | —                |       |
| Other                                                                             |       | 1,761                 |       | 1,055                 |       |
|                                                                              |       | $                     | 6,711      |                  | 5,774      |   |

 

Due to Hobim, a company whose majority shares areowned by Cukurova Group, resulted from the invoice printing services renderedby this company (Note 26).

Due to Telia Sonera which is one of the shareholdersof the Company resulted from services terminated in the network of TeliaSonera.

Due to Betting SAwhose majority shares are owned by one of the shareholders of Inteltek resultedfrom the consultancy services received for the operations of Inteltek (Note26).

F-28

----

** (19)   Other Current Liabilities andAccrued Expenses**

At December 31,2004 and 2005, the balance comprised:

|                                                                                                | ** ** | **December 31,** | ** ** | **December 31,** | ** ** |
|------------------------------------------------------------------------------------------------|------------|-----------------------|------------|-----------------------|------------|
| ** **                                                                                     | ** ** | **2004**              | ** ** | **2005**              | ** ** |
| Taxes and  withholdings                                                                        |       | $                     | 26,246     |                  | 170,613    |   |
| Deferred income                                                                                |       | 111,718               |       | 123,613               |       |
| License fee  accrual—the Turkish Treasury and Ministry of Transportation (Notes 1 and 27) |       | 246,857               |       | 109,764               |       |
| Selling and  marketing expense accruals                                                        |       | 26,941                |       | 31,078                |       |
| Personnel bonus  accrual                                                                       |       | 15,752                |       | 18,458                |       |
| Transmission fee  accrual                                                                      |       | 10,037                |       | 16,729                |       |
| Interconnection  accrual                                                                       |       | 564                   |       | 14,886                |       |
| Telecommunications  Authority share accrual                                                    |       | 11,242                |       | 12,968                |       |
| Roaming expense  accrual                                                                       |       | 5,908                 |       | 12,580                |       |
| Accrued interest  on borrowings                                                                |       | 25,043                |       | 8,352                 |       |
| Payout payables  to fixed odds betting players                                                 |       | 1,745                 |       | 7,596                 |       |
| Lease obligations—short  term portion                                                     |       | 13,797                |       | 2,896                 |       |
| Other expense  accruals                                                                        |       | 27,625                |       | 34,655                |       |
|                                                                                           |       | $                     | 523,475    |                  | 564,188    |   |

 

Taxes and withholdings include VAT payable, specialcommunications tax, frequency usage fees payable to TelecommunicationsAuthority and personnel income taxes.

Deferred income mainly results from the counters soldbut not used by prepaid subscribers as of December 31, 2004 and 2005.

In accordance withthe license agreement, Turkcell pays  90%of the ongoing license fee, which equals to the 15% of its gross revenue, tothe Turkish Treasury and 10% as universal service fund to the Ministry ofTransportation (Note 1 and 27).

**(20)   Taxes on Income**

The income taxbenefit (expense) is attributable to income from continuing operations andconsists of:

|                                 | ** ** | **Year Ended December 31,** | ** ** |
|---------------------------------|------------|--------------------------------------------|------------|
| ** **                      | ** ** | **2003**                                   | ** ** | **2004** | ** ** | **2005** | ** ** |
| Current tax  charge             |       | $                                          | (61,045    | ) | (94,296 | ) | (69,707 | ) |
| Deferred tax  benefit (expense) |       | 538,330                                    |       | (187,064 | ) | (337,690 | ) |
| Income tax benefit  (expense)   |       | $                                          | 477,285    |   | (281,360 | ) | (407,397 | ) |

 

Income tax benefit (expense) attributable to incomefrom continuing operations was $477,285, $(281,360) and $(407,397) for theyears ended December 31, 2003, 2004 and 2005, respectively. These 

F-29

----

amounts are differentfrom the amount computed by applying the Turkish income tax rate of 30% (2004:33% and 2003: 30%) to pretax income from continuing operations as a result ofthe following: 

|                                                      | ** ** | **Year Ended December 31,** | ** ** |
|------------------------------------------------------|------------|--------------------------------------------|------------|
| ** **                                           | ** ** | **2003**                                   | ** ** | **2004** | ** ** | **2005** | ** ** |
| Computed  “expected” tax benefit (expense) |       | 77,387                                     |       | (263,398 | ) | (400,332 | ) |
| Non taxable  translation loss                        |       | (147,542                                   | )          | (75,214 | ) | (58,570 | ) |
| Investment tax  credit                               |       | 62,949                                     |       | 42,532 |   | 61,560 |   |
| Change in  valuation allowance                       |       | 441,159                                    |       | (6,338 | ) | 217 |   |
| Effect of change  in tax laws                        |       | 22,782                                     |       | 5,207 |   | — |   |
| Disallowed  financial expenses                       |       | (8,577                                     | )          | — |   | — |   |
| Nondeductible  items                                 |       | (18,693                                    | )          | (8,066 | ) | (12,788 | ) |
| Nontaxable items                                     |       | 38,477                                     |       | 21,898 |   | — |   |
| Other                                                |       | 9,343                                      |       | 2,019 |   | 2,516 |   |
| Income tax benefit  (expense)                        |       | 477,285                                    |       | (281,360 | ) | (407,397 | ) |

 

For the years ended December 31, 2003 and 2004substantially all income from continuing operations and related tax benefit(expense) was domestic. For the year ended December 31, 2005,substantially all income other than Euroasia’s income (loss) from continuingoperations and related tax benefit (expense) was domestic. For the year ended December 31,2005, Euroasia (established in Netherlands and has operations in Ukraine) hasloss from continuing operations amounting to $108,827 and related tax benefitof $8,395.

F-30

----

The tax effects of temporary differences that giverise to significant portions of the deferred tax assets and liabilities at December 31,2004 and December 31, 2005 are presented below:

|                                                                                                                                                                                              | ** ** | **December 31,** | ** ** | **December 31,** | ** ** |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-----------------------|------------|-----------------------|------------|
| ** **                                                                                                                                                                                   | ** ** | **2004**              | ** ** | **2005**              | ** ** |
| Deferred tax  assets:                                                                                                                                                                        |       |                  |       |                  |       |
| Accrued expenses                                                                                                                                                                             |       | $                     | 336,491    |                  | 76,418     |   |
| Other, principally accounts and other receivables  (principally due to allowance for doubtful accounts)                                                                                      |       | 20,562                |       | 17,805                |       |
| Net operating loss carry forwards                                                                                                                                                            |       | 21,086                |       | 29,368                |       |
| Tax credit carry forwards (Investment tax credit)                                                                                                                                            |       | 313,120               |       | 294,301               |       |
| Gross deferred tax assets                                                                                                                                                                    |       | 691,259               |       | 417,892               |       |
| Less: Valuation allowances                                                                                                                                                                   |       | (17,177               | )          | (16,960               | )          |
| Deferred tax assets                                                                                                                                                                          |       | 674,082               |       | 400,932               |       |
| Deferred tax  liabilities:                                                                                                                                                                   |       |                  |       |                  |       |
| Fixed assets and intangibles, principally due to  financial leases, differences in depreciation and amortization, and  capitalization of interest and foreign exchange loss for tax purposes |       | (325,884              | )          | (366,231              | )          |
| Investment                                                                                                                                                                                   |       | (2,203                | )          | (26,961               | )          |
| Total deferred tax liabilities                                                                                                                                                               |       | (328,087              | )          | (393,192              | )          |
| Net deferred tax  assets                                                                                                                                                                     |       | $                     | 345,995    |                  | 7,740      |   |

 

At December 31,2005, net operating loss carry forwards are as follows: 

| Year | ** ** | **Amount** | ** ** | **Expiration Date** | ** ** |
|------|------------|------------|------------|--------------------------|------------|
| 2001 |       | $          | 1,711      |                     | 2006       |   |
| 2002 |       | 1,435      |       | 2007                     |       |
| 2003 |       | 9,677      |       | 2008                     |       |
| 2004 |       | 35,287     |       | 2009                     |       |
| 2005 |       | 64,102     |       | 2010 thereafter          |       |
|      |            |            |            |                          |            |  |

 

Non taxable translation gain (loss) results fromtranslation of TRY denominated non-monetary assets and liabilities to the USDollar, the functional and reporting currency, in accordance with the relevantprovisions of SFAS No. 52 as applied to entities in highly inflationaryeconomies. Under SFAS No. 109, such translation gains and losses betweenthe tax and book basis of related assets and liabilities do not give rise totemporary differences. Such amounts are primarily attributable to translationof TRY denominated fixed assets and intangibles into the US Dollar.

The Turkish Treasury approved investment incentivecertificates for a program of capital expenditures by Turkcell and itssubsidiaries in GSM and call center operations. Such incentives entitle theCompany to a 100% exemption from customs duty on imported machinery andequipment and an investment tax 

F-31

----

benefit of 100% onqualifying expenditures. The investment tax benefit takes the form ofdeductions for corporation tax purposes, but such deductions are subject towithholding tax at the rate of 19.8% (for expenditures made after April 24,2003, the investment tax benefit equals 40% of qualifying expenditures but itis not subject to any withholding tax). As of December 31, 2005,investment incentive certificates provide for tax benefits on cumulativepurchases of up to approximately $4,460,633 (December 31, 2004:$4,459,855) in qualifying expenditures, as defined in the certificates. As of December 31,2005, the Company had incurred cumulative qualifying expenditures ofapproximately $2,874,780 (December 31, 2004: $3,064,469), resulting in taxcredit carryforwards under the certificates of approximately $294,301 (December 31,2004: $313,120) which can be carried forward indefinitely. Approximately$505,203 of qualifying expenditures through December 31, 2005 (December 31,2004: $677,433) under such certificates are indexed against future inflation.

The Company establishes valuation allowances inaccordance with the provisions of SFAS No. 109. The Company continuallyreviews the adequacy of the valuation allowance based on changing conditions inthe market place in which the Company operates and its projections of futuretaxable income, among other factors. The Company forecasts taxable income in2006 and onwards and has generated taxable income for several years. Currently,economic and political situation in Turkey became more stable and there arepositive expectations about the near term future. Further, there are positivedevelopments regarding the Turkey’s membership to the European Union. On October 3,2005, the member states of European Union decided to start membershipdiscussions with Turkey, a decision that is expected to have certain politicaland economic benefits for Turkey in near future. Furthermore, the settlementagreements with Turk Telekom and the Turkish Treasury were signed in the fourthquarter of 2004. Management believes that these developments provide managementa better visibility about the near term future. As a result, as of December 31,2005, management concluded that it was more likely than not that the deferredtax assets of $7,740 were realizable. Turkish tax legislation does not allowcompanies to file tax returns on a consolidated basis. Therefore, managementbelieves a valuation allowance should continue to be provided on a portion ofthe deferred tax assets, resulting from certain consolidated subsidiaries wherethe likelihood of realizing these deferred tax assets is not more likely thannot. Accordingly, a valuation allowance of approximately $16,960 is recorded asof December 31, 2005 (December 31, 2004: $17,177) for such amounts.For balance sheet presentation purposes, the valuation allowance at December 31,2004 and December 31, 2005 has been allocated between current andnon-current deferred tax assets on a pro-rata basis in accordance with theprovisions of SFAS No. 109. Management believes that it is more likelythan not the net deferred tax asset of approximately $7,740 as of December 31,2005, will be realized through reversal of taxable temporary differences aswell as future taxable income exclusive of reversing taxable temporarydifferences. The Company will continue to evaluate the realizability of itsdeferred tax assets including net operating loss and tax credit carryforwardsand the related impact on the valuation allowance.

F-32

----

In accordance with the Law No. 4842, which madechanges in certain laws announced on April 24, 2003, the surcharge of 10%applied on the corporation tax is abolished effective for all tax returns filedon or after January 1, 2004. Accordingly, substantially all taxable incomeearned from January 1, 2003 is taxed at a rate of 30%. However, inaccordance with the Law No. 5035, which was enacted during December 2003and announced on January 2, 2004, the corporation tax rate will be appliedas 33% for taxable income earned in 2004 only.

Further, in accordance with the Law No. 5024,effective from January 1, 2004, taxable income is determined based on thefinancial statements restated for the effects of inflation if the cumulativethree-year inflation rate exceeds 100% and annual inflation rate in the currentperiod exceeds 10%. Accordingly, taxable income for the period ended December 31,2004 has been determined based on such restated financial statements. However,on April 19, 2005, the Ministry of Finance declared that since thecumulative three-year inflation rate does not exceed 100% and the annualinflation rate in the current period does not exceed 10%, financial statementsas of and for the three month period ended March 31, 2005 would not besubject to the restatement for the determination of taxable income. Financialstatements as of December 31, 2005 are not subject to the restatement forthe determination of taxable income. It is not certain yet that whetherfinancial statements for the year 2006 will be restated for the determinationof taxable income or not. The change in tax law is not expected to have amaterial impact on future taxable income.

The corporation tax rate is 30% for the fiscal yearended December 31, 2005. However, the Prime Minister of Turkey hasannounced in December 2005 that the corporation tax rate will be reducedto 20% starting from January 1, 2006. The issue is still being debated bythe government as of April 13, 2006****and as nochange in tax rate has been enacted by December 31, 2005, the current taxrate of 30% has been consistently used.

F-33

----

**(21)**   Long Term Borrowings

At December 31,2004 and 2005, long-term borrowings comprised: 
| ** **                                               | ** ** | **Interest  rate (%)** | ** ** | **Contractual  maturity** | ** ** | **December 31,   2004** | ** ** | **December 31,  2005** | ** ** |
|----------------------------------------------------------|------------|-----------------------------|------------|---------------------------|------------|-----------------------------------|------------|-----------------------------|------------|
| ABN Amro NV-1                                            |       | Euribor + 2.80% -  7.00%    |       | January 2006         |       | $                                 | 26,712     |                        | 147,889    |   |
| Ericsson Credit  AB                                      |       | Libor + 5.00%               |       | January 2006         |       | 37,170                            |       | 121,931                     |       |
| Turkiye Garanti Bankasi  AS                              |       |                        |       |                      |       |                              |       |                        |       |
| (“Garanti  Bankasi”)-2                         |       | Libor + 3.40%               |       | March 2007           |       | 100,000                           |       | 75,000                      |       |
| Akbank TAS  (“Akbank”)-2                       |       | Libor + 3.50%               |       | February 2007        |       | 100,000                           |       | 66,500                      |       |
| Garanti Bankasi-1                                        |       | Libor + 3.75%               |       | April 2006           |       | 50,000                            |       | 50,000                      |       |
| West LB                                                  |       | Tryibor - 0.15%             |       | August 2008          |       | —                            |       | 37,263                      |       |
| Murabaha  syndicated facility                            |       | Libor + 4.50%               |       | June 2006            |       | 100,000                           |       | 34,375                      |       |
| ABN Amro NV-2                                            |       | Libor + 3.00%               |       | May 2006             |       | 3,372                             |       | 7,214                       |       |
| Cellco 12.75%  senior notes, due 2005                    |       | 12.75%                      |       | August 2005          |       | 335,000                           |       | —                      |       |
| Akbank-1                                                 |       | Libor + 5.25%               |       | June 2005            |       | 62,500                            |       | —                      |       |
| Other                                                    |       |                        |       |                      |       | 49                                |       | 31                          |       |
|                                                     |       |                        |       |                      |       | 814,803                           |       | 540,203                     |       |
| Less: Current  portion of long term borrowings (Note 16) |       |                        |       |                      |       | (548,356                          | )          | (457,355                    | )          |
|                                                     |       |                        |       |                      |       | $                                 | 266,447    |                        | 82,848     |   |

 

For the years ended December 31, 2004 and 2005,the average borrowings outstanding were $801,385 and $687,130, respectively.

**ABN Amro NV 1**

Astelit signed a vendor financing agreement with NokiaCorporation (“Nokia”) on July 12, 2004 at the amount of EUR 125,000(equivalent to $147,889 as of December 31, 2005) for the purpose ofestablishing a GSM infrastructure in Ukraine, which in turn assigned theguaranteed portion of the loan to ABN Amro NV in August 2004. Under thisagreement, Nokia committed to provide equipments and services and ABN Amro NVand Nokia committed to provide credit facilities available to Astelit inrespect of equipment and service purchases from Nokia. On January 30,2006, the outstanding balance amounting to $147,889 was fully repaid.

As of December 31, 2005, the vendor financingagreement contained certain customary covenants that limit the ability ofAstelit to, among other things, pledge equipment acquired under this vendorfinancing agreement, change its business from telecommunications or invest inother businesses, sell certain fixed assets, merge with other companies exceptDCC, declare or pay dividends, and repurchase or repay any of its sharecapital.

F-34

----

**Ericsson Credit AB**

For the purpose of establishing a GSM network inUkraine, Astelit entered vendor financing agreement with Ericsson Credit AB (“Ericsson”)in June 2004 at the amount of $89,042.

In August 2005, the facility with Ericsson wasincreased to approximately $134,000 of which $121,931 had been borrowed byAstelit. On January 30, 2006, the outstanding balance amounting to$121,931 has been fully repaid.

The vendor financing agreement contains certaincustomary covenants that limit the ability of Astelit to, among other things,pledge equipments acquired under this vendor financing agreement, change itsbusiness from telecommunications or invest in other businesses, sell certainfixed assets, merge with other companies except DCC, declare or pay dividends,and repurchase or repay any of its share capital.

**Garanti Bankasi 2**

On March 8, 2004, Turkcell opened a new workingcapital facility of $100,000 with Garanti Bank which will be repaid in threeequal installments on June 8, 2006, December 8, 2006 and March 8,2007.

**Akbank 2**

On February 11, 2004, Turkcell opened a newworking capital facility of $100,000 from Akbank. The outstanding amount of theborrowing is payable in two equal installments on February 13, 2006 and February 12,2007.

**Garanti Bankasi 1**

On November 22, 2000, Turkcell signed a loanagreement with Garanti Bankasi amounting to $150,000 for expenditures on theGSM network in Turkey. The outstanding balance as of December 31, 2005 is$50,000. $25,000 has been paid on January 23, 2006 and the remainingportion will be paid on April 21, 2006.

**West LB AG**

On August 26, 2005, Turkcell signed a newTRY-denominated loan agreement with West LB AG, London, in order to decreaseborrowing costs and foreign exchange risk. As a result of this agreement,Turkcell obtained unsecured loan of TRY 50,000 (equivalent to 37,263 as of December 31,2005), repayable semiannually in six equal installments starting from February 27,2006, with an interest rate of six month TRYibor (TRY Libor) minus 0.15 basispoints.

**Murabahasyndicated facility**

Turkcell signed a Murabaha syndicated facility, withHSBC Bank AS and the Islamic Development Bank, amounting to $100,000 on January 16,2004. Initial drawdown was made on March 3, 2004 and the last drawdown wasmade on June 16, 2004. The facility has a maturity of two years from eachdrawdown. 

F-35

----

Each withdrawal will berepaid in five equal installments starting from one year after the initialwithdrawal. The availability period was 180 days from the date of agreement andthe grace period was one year from each drawdown. The facility is unsecured andused for certain qualified equipment purchases.

**ABN Amro NV 2**

For the purpose of establishing the GSM network inUkraine, on November 2, 2004, Astelit entered into a vendor financingagreement with Sysdate and ABN Amro NV, under which ABN Amro NV financesAstelit’s purchases of GSM 1800 billing equipment, software and services fromSysdate. $7,214 has been paid on January 24, 2006.

The vendor financing agreement contains certaincustomary covenants that limit the ability of Astelit to, among other things,pledge equipment acquired under this vendor financing agreement, change itsbusiness from telecommunications or invest in other businesses, sell certainfixed assets, merge with other companies except DCC, declare or pay dividends,and repurchase or repay any of its share capital.

As of December 31, 2005, the Company is notsubject any financial covenants or ratios with respect to its borrowings. Thereare no unused commitments under the above mentioned facilities.

On December 30, 2005, Astelit, together with INGBank N.V. (“ING Bank”) and Standard Bank London Ltd. (“Standard Bank”),finalized a syndicated long term project financing of $390,000. Agreementamounts, interest rate per annum and contractual maturity applicable to eachfacility is as follows:

| Facility Name   | ** ** | **Interest  Rate (%)** | ** ** | **Contractual  Maturity** | ** ** | **Amount** | ** ** |
|----------------------|------------|-----------------------------|------------|---------------------------|------------|------------|------------|
| EKN Facility         |       | Libor + 1.50%               |       | December 2011        |       | $          | 152,500    |   |
| Finnvera  Facility   |       | Libor + 1.50%               |       | December 2011        |       | 117,500    |       |
| Commercial  Facility |       | Libor + 4.50%               |       | December 2011        |       | 90,000     |       |
| Standby Facility     |       | Libor + 4.50%               |       | December 2011        |       | 30,000     |       |
|                 |       |                        |       |                      |       | 390,000    |       |
|                      |            |                             |            |                           |            |            |            |  |

 

Under these agreements, subsequent to December 31,2005, $278,205 has been utilized by Astelit.

These financingagreements contain a number of restrictive debt covenants applicable to Astelitand Euroasia, which may be summarized as follows:

·        Astelit has to comply withcertain financial ratios during the period of financing;

·        Astelit may not pledge anyof its assets (including its rights under the supply contracts and its rightsunder the material insurance contracts);

·        Euroasia may not pledgeshares owned in Astelit to other parties;

·        Euroasia may not pledgeany loans issued to Astelit;

F-36

----

·        The are restrictions ondisposal of assets by Astelit;

·        Astelit can not attractfinancing from parties other than Euroasia and Lenders, without the consent ofthe Lenders;

·        There are restrictions onfinance leasing and supplier financing arrangements;

·        Astelit may not conductany other business apart from the operation of telecommunications services, andbusiness ancillary thereto;

·        Astelit may not merge withother companies;

·        There are restrictions onacquisitions of subsidiaries;

·        There are restrictions onissuance of guarantees by Astelit;

·        Astelit can not issue anyshares for purposes other than receiving financial support from currentshareholders;

·        Payment of dividends mayonly occur once Astelit complies with certain financial ratios.

As part of the project financing package, a long-termjunior facility of up to $150,000 was also finalized. The interest rate perannum applicable to the junior facility is LIBOR + 2.25%. The junior facilityis fully guaranteed by Turkcell as the existing guarantees on the vendor loanshave been released with the proceeds of the project financing and the guaranteeis started to be effective on February 8, 2006. The drawdown of the firsttranche of the junior facility was executed by Euroasia amounting to $126,000on January 23, 2006.

The proceeds from these facilities will be used torefinance Astelit’s existing vendor loans and local bank loans, additionalcapital expenditures and working capital requirements. There are unusedcommitments related to the syndicated long term project financing amounting to$390,000 and junior facility loan amounting to $150,000 as of December 31,2005.

The future maturities of long-term borrowings as of December 31,2005 are as follows:

| Years  | ** ** | ** ** | ** ** |
|--------|------------|------------|------------|
| 2006   |       | $          | 457,355    |   |
| 2007   |       | 70,428     |       |
| 2008   |       | 12,420     |       |
|   |       | $          | 540,203    |   |

 

**(22)   Common Stock**

At December 31, 2005, common stock represented1,854,887,341 (December 31, 2004: 1,854,887,341) authorized, issued andfully paid shares with a par value of TRY 1 each. In accordance with the Law No 5083with respect to the TRY, on May 9, 2005, par value of each share isregistered to be one TRY.

F-37

----

In connection with the redenomination of the TurkishLira and as per the related amendments of Turkish Commercial Code, in order toincrease the nominal value of the shares to TRY 1, 1,000 units of shares, eachhaving a nominal value of TRY 0.001 shall be merged and each unit of sharehaving a nominal value of TRY 1 shall be issued to represent such shares.Turkcell is currently in the process of merging 1,000 existing ordinary shares,each having a nominal value of TRY 0.001 to one ordinary share having a nominalvalue of TRY 1 each. After the share merger which appears as a provisionalarticle in the Articles of Association to convert the value of each share witha nominal value of TRY 0.001 to TRY 1, all shares will have a value of TRY 1.Although the merger process has not been finalized the practical application isto state each share having a nominal value of TRY 1 which is consented byCapital Markets Board of Turkey (“CMB”). Basic and diluted weighted averagenumber of shares and net income per share as of December 31, 2003 and 2004are retrospectively changed to reflect each share having a nominal value of TRY1.

The followingtable sets forth the computation of basic and diluted earnings per share:

|                                            | ** ** | **December 31,** | ** ** |
|--------------------------------------------|------------|-----------------------|------------|
| ** **                                 | ** ** | **2003**              | ** ** | **2004** | ** ** | **2005** | ** ** |
| Numerator:                                 |       |                  |       |   |   |   |   |
| Net income                                 |       | $                     | 215,167    |   | 511,821 |   | 910,927 |   |
| Denominator:                               |       |                  |       |   |   |   |   |
| Basic and  diluted weighted average shares |       | 1,854,887,341         |       | 1,854,887,341 |   | 1,854,887,341 |   |
| Basic and  diluted net income per share    |       | $                     | 0.116000   |   | 0.275931 |   | 0.491096 |   |

 

On April 5, 2005, the board of directors decidedthat Turkcell’s statutory capital would be increased from TRY 1,474,639 to TRY1,854,887 by adding TRY 234,092 out of the total dividend for 2004 and thestatutory capital inflation adjustment (included in the financial statementsprepared in accordance with the accounting standards promulgated by thestatutory tax laws) amounting to TRY 146,156 for 2004. The increase of TRY380,248 has been distributed to the Company’s shareholders in the form of astock split. The capital increase was accounted for as a stock split in theCompany’s accompanying consolidated financial statements. As a result of theaforesaid transactions, the Company issued new shares with a total nominalvalue of TRY 380,248. On July 6, 2005, the Capital Market Board (the “CMB”)approved the capital increase.

On May 23, 2005, thebonus share certificates have been registered by Turkish Capital Market Boardand the Istanbul Stock Exchange and started to be distributed to theshareholders of Turkcell.

The increase instatutory capital had no impact on the account balances in the consolidatedstatements of shareholders’ equity. All share amounts and per share figuresreflected in the Company’s historical financial statements have been retroactivelyrestated for the stock splits discussed above.

F-38

----

The total effects of restatements in number of sharesare as follows:

|                                                                                       | ** ** | **December 31,  2004** | ** ** | **December 31,  2005** | ** ** |
|---------------------------------------------------------------------------------------|------------|-----------------------------|------------|-----------------------------|------------|
| Historical  number of shares                                                          |       | 500,000,000                 |       | 500,000,000                 |       |
| After bonus share distribution—statutory capital inflation  adjustment 2003-2004 |       | 1,502,637,135               |       | 1,502,637,135               |       |
| After bonus share  distribution—dividend for the year 2003-2004                  |       | 1,854,887,341               |       | 1,854,887,341               |       |

 

On November 28, 2005, Alfa Telecom announced thatAlfa Telecom Turkey Limited (“Alfa”), an affiliate of Alfa Telecom, one ofRussia’s leading private telecommunications investors, completed a series oftransactions resulting in Alfa’s acquisition of a 49% interest in CukurovaTelecom Holdings Limited, which has a 27% beneficial interest in Turkcell. Thistransaction leads to 13.2% indirect ownership of Alfa in Turkcell.

As a result of these share transfers, as of December 31,2005, direct and indirect ownership of Cukurova Group decreased to 27.05%.

On March 22,2006, the Board of Directors of Turkcell decided to make a proposal to theGeneral Assembly for distribution of a total net cash dividend of TRY509,075 (which constitutes 50% of distributable income per statutory accounts)and dividend in the form of bonus shares amounting of TRY 345,113 for the yearended December 31, 2005. The distribution of dividends is subject toapproval at the General Assembly Meeting, which will be held on April 28,2006.

The net distributable income, after deducting legalreserves, amounts to TRY 1,018,150 (equivalent to $758,794 at December 31,2005). Accordingly, the recommended dividend distribution will be as follows:

|                       | ** ** | **Amount  per **share  (TRY in full) | ** ** | **Total  (TRY)** | ** ** | **$ equivalent**December 31, 2005 | ** ** |
|-----------------------|------------|-----------------------------------------------------|------------|------------------|------------|--------------------------------------------------|------------|
| Dividend cash         |       | 0.274450                                            |       | 509,075          |       | 379,397                                          |       |
| Dividend bonus shares |       | —                                              |       | 345,113          |       | 257,202                                          |       |

 

Accordingly,the rate of bonus share certificate to be issued for each share having anominal value of TRY 1 is recommended as 18.610559%.

F-39

----

On February 21, 2005, the Board of Directorsdecided to increase the statutory capital ceiling of Turkcell from TRY1,500,000 to TRY 2,200,000. Turkcell’s application for the statutory ceiling asTRY 2,200,000 has been approved by the Capital Markets Board of Turkey and theMinistry of Trade of Turkey.

**(23)   Revenues:**

For the yearsended December 31, 2003, 2004 and 2005, revenues consisted of thefollowing:

|                                      | ** ** | **2003** | ** ** | **2004** | ** ** | **2005** | ** ** |
|--------------------------------------|------------|----------|------------|----------|------------|----------|------------|
| Communication  fees                  |       | $        | 2,143,640  |     | 3,088,079  |     | 4,056,496  |   |
| Commission fees  on betting business |       | 36       |       | 20,301   |       | 108,034  |       |
| Monthly fixed  fees                  |       | 41,062   |       | 51,929   |       | 54,258   |       |
| Simcard sales                        |       | 24,402   |       | 28,308   |       | 32,579   |       |
| Call center  revenues                |       | 7,447    |       | 8,196    |       | 10,109   |       |
| Other                                |       | 2,650    |       | 3,952    |       | 7,016    |       |
|                                 |       | $        | 2,219,237  |     | 3,200,765  |     | 4,268,492  |   |

 

**(24)   General andAdministrative Expenses:**

General and administrative expenses mainly consistedof payroll, legal and bad debt provision, consulting, insurance, travel,project, rent, training, repair and maintenance expenses.

**(25)   Selling andMarketing Expenses:**

Selling and marketing expenses mainly consisted ofadvertising expenses, promotional expenses, personnel expenses, subscriberacquisition expenses and frequency usage fees.

F-40

----

**(26)   Related PartyTransactions:**

For the yearsended December 31, 2003, 2004 and 2005, significant transactions with therelated parties were as follows:
| ** **                                                                                               | ** ** | **2003**   | ** ** | **2004** | ** ** | **2005** | ** ** |
|----------------------------------------------------------------------------------------------------------|------------|------------|------------|----------|------------|----------|------------|
| ***Sales to KVK Teknoloji***                                                                             |       |       |       |     |       |     |       |
| Simcard and prepaid  card sales                                                                          |       | 173,519    |       | 292,468  |       | 462,011  |       |
| ***Sales to A-Tel***                                                                                     |       |       |       |     |       |     |       |
| Simcard and prepaid  card sales                                                                          |       | 160,907    |       | 215,342  |       | 201,006  |       |
| ***Sales to Digital Platform***                                                                          |       |       |       |     |       |     |       |
| Call center revenues  and interest charges                                                               |       | 5,300      |       | 6,688    |       | 11,105   |       |
| ***Income from Yapi Kredi*(*)**                                                                          |       |       |       |     |       |     |       |
| Interest                                                                                                 |       | 32,032     |       | 46,022   |       | 6,982    |       |
| ***Sales to Millenicom  Telekomunikasyon AS***                                                           |       |       |       |     |       |     |       |
| Telecommunication  services                                                                              |       | —     |       | —   |       | 2,926    |       |
| ***Sales to Superonline***                                                                               |       |       |       |     |       |     |       |
| Call center revenues                                                                                     |       | 1,216      |       | 1,459    |       | 1,613    |       |
| ***Sales to Geocell***                                                                                   |       |       |       |     |       |     |       |
| GSM equipment                                                                                            |       | 2,361      |       | 350      |       | 113      |       |
| ***Sales to Milleni.com***                                                                               |       |       |       |     |       |     |       |
| Telecommunications  Services                                                                             |       | 10,070     |       | 4,493    |       | —   |       |
| ***Charges from ADD***                                                                                   |       |       |       |     |       |     |       |
| Advertisement services                                                                                   |       | 83,419     |       | 93,081   |       | 124,415  |       |
| ***Charges from Hobim***                                                                                 |       |       |       |     |       |     |       |
| Invoicing service                                                                                        |       | 7,436      |       | 9,491    |       | 10,041   |       |
| ***Charges from Baytur***                                                                                | ** ** | ** ** |       |     |       |     |       |
| Residence project                                                                                        |       | —     |       | 4,406    |       | 9,610    |       |
| ***Charges from Betting SA***                                                                            |       |       |       |     |       |     |       |
| Consultancy services                                                                                     |       | —     |       | 1,431    |       | 9,179    |       |
| ***Charges from Milleni.com***                                                                           |       |       |       |     |       |     |       |
| Telecommunications  services                                                                             |       | 9,646      |       | 6,115    |       | 9,120    |       |
| ***Charges from KVK Teknoloji***                                                                         | ** ** | ** ** |       |     |       |     |       |
| Dealer activation fees  and others                                                                       |       | 7,567      |       | 1,386    |       | 1,418    |       |
| ***Charges from Millenicom  Telekomunikasyon AS***                                                       |       |       |       |     |       |     |       |
| Telecommunication  services                                                                              |       | —     |       | —   |       | 1,147    |       |
| ***Charges from A-Tel***                                                                                 |       |       |       |     |       |     |       |
| Dealer activation fees  and others                                                                       |       | 682        |       | 581      |       | 601      |       |
| ***Charges from Asli Gazetecilik***                                                                      |       |       |       |     |       |     |       |
| Advertisement services                                                                                   |       | 6,191      |       | —   |       | —   |       |
| ***Charges from Digital Platform***                                                                      |       |       |       |     |       |     |       |
| Reimbursement of the costs of its free subscriptions  to Turkcell subscribers and advertisement services |       | 788        |       | —   |       | —   |       |

----

*                    Since Cukurova Group transferred its shares inYapi Kredi to Koc Group on October 28, 2005, Yapi Kredi is not a relatedparty as of December 31, 2005.

F-41

----

Turkcell has agreements or protocols with several ofits shareholders, unconsolidated subsidiaries and affiliates of theshareholders. The Company’s management believes that all such agreements orprotocols are on terms that are at least as advantageous to the Company aswould be available in transactions with third parties and the transactions areconsummated at their fair values.

Substantially all of the significant related partytransactions are with the Cukurova Group companies. Sales to Cukurova Groupcompanies by considering major transactions for the year ended December 31,2003, 2004 and 2005 amounting to $385,405, $566,822 and, $685,756 respectively.Aggregate charges from Cukurova Group companies by considering majortransactions for the year ended December 31, 2003, 2004 and 2005 amount to$115,729, $115,060 and $156,352 respectively.

The significant agreements are as follows:

***Agreements with KVK Teknoloji:***

KVK Teknoloji incorporated on October 23, 2002,one of Turkcell’s principal SIM card distributors, is a Turkish company, whichis affiliated with some of the Turkcell’s shareholders. In addition to sales ofSIM cards and scratch cards, Turkcell has entered into several agreements withKVK Teknoloji, in the form of advertisement support protocols, each lasting fordifferent periods pursuant to which KVK Teknoloji must place advertisements forTurkcell’s services in newspapers. The objective of these agreements is topromote and increase handset sales with Turkcell’s prepaid and postpaid brandSIM cards, thereby supporting the protection of Turkcell’s market share in theprevailing market conditions. The prices of the contracts were determinedaccording to the cost of advertising for KVK Teknoloji and the total advertisementbenefit received, reflected in Turkcell’s market share in new subscriberacquisitions. Distributors’ campaign projects and market share also contributedto the budget allocation.

***Agreements with A-Tel:***

A-Tel is involved in the marketing, selling anddistributing Turkcell’s prepaid systems. A-Tel is a 50-50 joint ventureof Yapi Kredi and SDIF. A-Tel acts as the only dealer of Turkcell for MuhabbetKart (a prepaid card), and receives dealer activation fees and simcardsubsidies for the sale of Muhabbet Kart. In addition to the sales of simcardsand scratch cards through an extensive network of newspaper kiosks locatedthroughout Turkey, Turkcell has entered into several agreements with A-Tel forsales campaigns and for subscriber activations.

***Agreements with Digital Platform:***

Digital Platform, a direct-to-home digitalbroadcasting company under the Digiturk brand name, is a subsidiary of one ofTurkcell’s principal shareholders, the Cukurova Group. Digital Platformreacquired the broadcasting rights for Turkish Super Football League by thetender held on July 15, 2004, until May 31, 2008. On December 23,2005, “Restructuring Framework Agreement” was signed between Digital Platformand Turkcell. The agreement includes the restructuring of Turkcell’sreceivables from Digital Platform amounting to $88,591 as of December 31,2005 in exchange for sponsorship and advertisement 

F-42

----

services that Turkcellwill receive on Digital Platform’s infrastructure. Under the agreement, DigitalPlatform commits to pay amounts due to Turkcell through July 15, 2011along with the interest in cash and advertisement services. According to the “RestructuringFramework Agreement” and in the context and as an integral part of theagreement, Turkcell committed to purchase sponsorship and advertisement fromDigital Platform amounting to $99,785 excluding VAT through July 15, 2011.Turkcell also has an agreement related to the corporate group SMS services thatTurkcell offers to Digital Platform, and an agreement for call center servicesprovided by Turkcell’s subsidiary Global.

***Agreements with Yapi Kredi:***

Yapi Kredi, one of the largest commercial banks in Turkey, was one of thesignificant Turkcell’s shareholders. Since Cukurova Group transferredits Yapi Kredi shares to Koc Group on September 28, 2005, Yapi Kredi isnot a related party as of December 31, 2005. Following this transaction,ownership relationship of the Company with Yapi Kredi has been terminated. Turkcellhad an agreement with Yapi Kredi providing for Yapi Kredi to issue a co-brandTurkcell credit card, which expired in 2003. Turkcell also receives servicesfrom Yapi Kredi as one of its major collection channels for its postpaidsubscribers. Apart from the collection accounts, Turkcell also invests cashinto time deposits and repo transactions at Yapi Kredi, from which it earnsinterest income.

***Agreements with Millenicom Telekomunikasyon HizmetleriAS:***

European Telecommunications Holding AG (“ETH”), asubsidiary of Cukurova Group, holds the majority shares of MillenicomTelekomunikasyon Hizmetleri AS (“Millenicom Telekomunikasyon”). MillenicomTelekomunikasyon is rendering and receiving call termination and internationaltraffic carriage services to the and from the Company.

***Agreements with Superonline:***

Superonline was a subsidiary of one of Turkcell’sprincipal shareholders, the Cukurova Group, through Yapi Kredi and otherCukurova Group companies. Following the transfer of Yapi Kredi shares to KocGroup on September 28, 2005 by Cukurova Group, interest of Cukurova Groupin Superonline decreased to 3.3%. However, Cukurova Group has an option rightto buy the shares of Superonline from Yapi Kredi. Turkcell and Superonline haveentered into an agreement to provide mutual services to each other. Accordingto the agreement, Superonline provides dealer automation services, web hostingservices, internet access services, high speed circuit switched data services,wireless application protocol services and unified messaging services. Againstthe services provided by Superonline, Turkcell provides space to Superonline onbase station sites to install servers and equipments to increase theperformance of the system infrastructure of Superonline.

Global has also agreed to provide call center servicesto Superonline to provide technical assistance to Superonline subscribers andto facilitate the subscription of new users. The price charged for this service

F-43

----

has been determined byservice level, and computed by commission rates within one percent to eightpercent.

***Agreements with Geocell:***

Geocell, one of the cellular phone operators inGeorgia, is a subsidiary of Fintur. On December 12, 2001, Turkcell signedan agreement for the sale of a set of renovated but usable GSM equipment toGeocell. The objective of the agreement is to make use of certain GSM equipmentthat are no longer used in Turkcell’s network. The prices were determinedfollowing the examination of fair values of the equipment in consideration.

***Agreements with Milleni.com:***

Milleni.com, one of the active players in the internationalcarrier market, was a Fintur subsidiary in Germany prior to the Finturrestructuring in 2002. Currently, the Cukurova Group, one of Turkcell’sprincipal shareholders, owns Milleni.com. On February 21, 2005, Tellcomand Milleni.com has signed an agreement to provide telecommunications servicesto each other whereby Milleni.com may convey calls to Tellcom’s switch andTellcom may convey calls to Milleni.com’s switch, in both cases, for onwardtransmission to their destinations. The prices vary according to thedestinations.

***Agreements with ADD:***

ADD, a media planning and marketing company, is aTurkish company owned by one of the Company’s principal shareholders, theCukurova Group. The Company entered into a media purchasing agreement with ADDon January 23, 2002, which expired on December 31, 2002 and furtherextended to December 31, 2003. In 2004 and 2005, the agreement was revisedagain with similar terms. The purpose of this agreement is to benefit from theexpertise and bargaining power of ADD against third parties, regarding theformation of media purchasing strategies for both postpaid and prepaid brands.The contract prices were determined according to prevailing market conditions.Additionally, ADD is a party of the sponsorship and advertisement agreementswhich are integral part of “Restructuring Framework Agreement” signed betweenTurkcell and Digital Platform.

***Agreements with Hobim:***

Hobim, one of the leading data processing andapplication service provider companies in Turkey, is owned by the CukurovaGroup. Turkcell has entered into invoice printing and archiving agreements withHobim under which Hobim provides Turkcell with scratch card printing services,monthly invoice printing services, manages archiving of invoices andsubscription of documents for an indefinite period of time. Prices of theagreements are determined as per unit cost plus profit margin.

F-44

----

***Agreements withBaytur:***

The principal shareholderof Baytur, a construction company, is Cukurova Group. Baytur committed tocomplete construction of 484 apartments within the scope of an agreement signedamong Turkcell, Baytur and the land owner, which is a governmentalorganization, on October 19, 2004. The agreement amount is $39,650 and theproject is planned to be completed in 2008. Turkcell paid $2,000 and $16,550 toBaytur within the scope of this contract in 2004 and 2005, respectively.

***Agreements withBetting SA:***

Betting SA, owned by oneof the major shareholders of Inteltek, is incorporated under the laws ofGreece. The Company signed a service agreement with Betting SA onMarch 11, 2004 to get consultancy services including; monitoringoperations, providing continuous evaluation of betting, maximizing gamerevenues of fixed odds betting, operating fixed odds betting games in the mostefficient manner, with integrity and securely. In consideration of suchservices, Betting SA receives an amount equal to 0.95% of the gross revenues ofthe fixed odds betting games.

***Transactions withkey management personnel:***

As of December 31,2004 and 2005, none of the Turkcell’s directors and executive officers hasoutstanding personal loans from the Company.

**(27)   Commitmentand Contingencies**

As ofDecember 31, 2004 and 2005, commitments and contingent liabilitiescomprised the following:

|                                                              | ** ** | **December 31,** | ** **  | **December 31,** | ** ** |
|--------------------------------------------------------------|------------|-----------------------|-------------|-----------------------|------------|
| ** **                                                   | ** ** | **2004**              | ** **  | **2005**              | ** ** |
| Bank Letters of  Guarantee                                   | ** ** | **$**                 | **257,607** |                  | **41,319** | ** ** |
| Guarantees                                                   |       | ** **            |        | ** **            | ** ** |
| Digital Platform                                             | ** ** | **25,066**            |        | **5,419**             | ** ** |
| *BNP—Brussels  (Buyer Credit)*                          |       | 19,634                |        | 4,015                 | ** ** |
| *BNP—Hungary  (Buyer Credit)*                           |       | 4,845                 |        | 1,404                 | ** ** |
| *BNP—Brussels  (Financial Loan)*                        |       | 470                   |        | —                | ** ** |
| *Websterbank—USA*                                       |       | 117                   |        | —                | ** ** |
| Irancell Consortium                                          |       | **285,842**           | ** **  | **—**            | ** ** |
| *Iranian  Authorities—Payment Guarantee*                |       | 285,842               |        | —                | ** ** |
| Purchase Commitments                                         |       | **269,210**           | ** **  | **175,553**           | ** ** |
| Digital Platform                                             |       | —                |        | 99,785                | ** ** |
| Ericsson AB                                                  |       | 46,964                |        | 48,732                | ** ** |
| Baytur                                                       |       | 39,650                |        | 21,100                | ** ** |
| Sysdate                                                      |       | 9,045                 |        | 5,936                 | ** ** |
| Nokia                                                        |       | 147,052               |        | —                | ** ** |
| Asli Gazetecilik                                             |       | 17,500                |        | —                | ** ** |
| ADD Production Medya AS  (“ADD”)                   |       | 8,000                 |        | —                | ** ** |
| ABN Amro Finansal Kiralama AS (“ABN Amro Leasing”) |       | 999                   |        | —                | ** ** |
|                                                              |            |                       |             |                       |            |  |

 

F-45

----

**Guarantees**

As of December 31, 2005, the Company iscontingently liable in respect of bank letters of guarantee obtained from YapiKredi and given to customs authorities, private companies and other publicorganizations amounting to TRY 53,900 (equivalent to $40,170 at December 31,2005) (December 31, 2004: $41,522). In addition, as of December 31,2005, the Company is contingently liable in respect of bank letters ofguarantee obtained from other banks and given to private companies and otherpublic organizations amounting to $1,149 (December 31, 2004: $767).

As of December 31, 2004, the Company wascontingently liable to the Turkish Treasury in relation to the Turk Telekomsettlement agreement, amounting to TRY 288,978 (equivalent to $215,318 at December 31,2004). As of December 31, 2005, payments related to the bank letter ofguarantee have been completed and contingent liability has been released.

Guarantees on behalf of Digital Platform are relatedto loans for set-top boxes, head-end and uplink imports and workingcapital financing used from the respective banks. In February 2006, allrelated loans have been repaid by Digital Platform and the corporate guaranteeshave been released.

As a condition of the GSM license bid in Iran,Turkcell had provided a guarantee of EUR 210,000 (equivalent to $285,842 at December 31,2004) to the Iranian Authorities, which was released on July 26, 2005.

**PurchaseObligations**

According to the “Sponsorship and AdvertisingAgreements” signed in the context and as an integral part of the “RestructuringFramework Agreement”, Turkcell committed to purchase sponsorship andadvertisement from Digital Platform amounting to $99,785 excluding VAT through July 15,2011.

Purchase obligations in relation to GSM equipmentarise from GSM equipment supply and service contracts signed by Astelit. During2004, Astelit has entered into a $89,042 supply financing agreement withEricsson AB, EUR 125,397 supply financing agreement (equivalent to $148,359 asof December 31, 2005) with Nokia and $12,445 supply financing agreementwith Sysdate. On August 28, 2005 and November 2, 2005, Astelit hassigned addendum agreements with Ericsson Credit AB and Ericsson AB increasingthe amount of supply and service agreements to $174,036 and increasing thefinancing agreements to $134,042. As of December 31, 2005, Astelit hasfully utilized its commitment under Nokia’s agreement and utilized $125,304 and$6,509 of its commitments from Ericsson AB and Sysdate, respectively.

On February 10, 2006, Astelit signed additionalvendor financing agreements with Nokia to purchase GSM equipments and toreceive services amounting approximately to $75,000.

With respect to the sponsorships agreement signedbetween ADD and Turkcell on June 21, 2004, relating to the sponsorship ofBesiktas Jimnastik Klubu (“BJK”), a football club in Istanbul, Turkcell haspaid $7,000 to ADD on June 23, 2004 for 2004-2005 and 2005-2006Football League Seasons. In respect to the agreement, Turkcell had alsocommitted to pay $8,000 to ADD in two equal installments on July 1, 

F-46

----

2006 and July 1,2007 with respect to 2006-2007 and 2007-2008 Football LeagueSeasons. Upon the termination between parties, Turkcell’s commitment amountingto $8,000 was released with the mutual agreement of the parties.

The principal shareholder of Baytur, a constructioncompany, is the Cukurova Group. Baytur committed to complete construction of484 apartments within the scope of an agreement signed among Turkcell, Bayturand the land owner, which is a governmental organization, on October 19,2004. The contract amount is $39,650 and the project is planned to be completedin 2008. Turkcell paid $18,550 to Baytur within the scope of this agreement asof December 31, 2005.

**License Agreements**

***Turkcell:***

On April 27, 1998, Turkcell signed the LicenseAgreement with the Turkish Ministry. In accordance with the License Agreement,Turkcell was granted a 25 year GSM license for a license fee of $500,000. TheLicense Agreement permits Turkcell to operate as a stand-alone GSM operator.Under the License, Turkcell collects all of the revenue generated from theoperations of its GSM network and pays the Turkish Treasury an ongoing licensefee equal to 15% of its gross revenues. On June 25, 2005, the Turkishgovernment declared that GSM operators are required to pay 10% portion of theirexisting monthly ongoing license fee to the Ministry of Transportation asuniversal service fund in accordance with the Law No. 5369. As a result,starting from June 30, 2005, Turkcell pays the 90% of the ongoing licensefee to the Turkish Treasury and 10% to the Ministry of Transportation asuniversal service fund. Turkcell is authorized to, among other things, set itsown tariffs within certain limits, charge peak and off-peak rates, offer avariety of service and pricing packages, issue invoices directly tosubscribers, collect payments and deal directly with subscribers.

In February 2002,the Company renewed its License with the Telecommunications Authority, andbecame subject to a number of new requirements, including those regarding thebuild-out, operation, quality and coverage of Turkcell’s GSM network,prohibitions on anti-competitive behavior and compliance with national andinternational GSM standards. Turkcell may incur significant penalties fordelays in meeting these coverage requirements. Failure to meet any requirementin the renewed License, or the occurrence of extraordinary unforeseencircumstances, can also result in revocation of the renewed License, includingthe surrender of the GSM network without compensation, or limitation ofTurkcell’s rights thereunder, or could otherwise adversely affect Turkcell’sregulatory status. Certain conditions of the renewed License Agreement includethe following:

**Coverage:****  **Turkcell had to attain geographical coverage of 50%and 90% of the population of Turkey with certain exceptions within three yearsand five years, respectively, of the License’s effective date. Turkcell hascompleted its related liabilities with respect to coverage as of December 31,2005.

**Serviceofferings:**   Turkcell must provide certainservices in addition to general GSM services, including free emergency callsand technical assistance for subscribers, free call forwarding to police andother public emergency services, receiver-optional short messages, video textaccess, fax capability, calling 

F-47

----

and connected numberidentification and restrictions, call forwarding, call waiting, call hold,multi-party and third-party conference calls, billing information and barringof a range of outgoing and incoming calls.

**Servicequality:**   In general, Turkcell must meet all thetechnical standards determined and updated by the European TelecommunicationsStandards Institute and Secretariat of the GSM MoU. Service qualityrequirements include that call blockage cannot exceed 5% and unsuccessful callscannot exceed 2%.

**Tariffs:**   TelecommunicationsAuthority sets the initial maximum tariffs in TRY and US Dollar. Thereafter,the revised License provides that the Telecommunications Authority will adjustthe maximum tariffs at most every six months or, if necessary, more frequently.Turkcell is free to set its own tariffs up to the maximum tariffs.

**Rightsof the Telecommunications Authority, Suspension and Termination:**   Therevised License is not transferable without the approval of the TelecommunicationsAuthority. In addition, the License Agreement gives the TelecommunicationsAuthority certain monitoring rights and access to Turkcell’s technical andfinancial information and allows for inspection rights, and gives certainrights to suspend operations under certain circumstances. Also, Turkcell isobliged to submit financial statements, contracts and investment plans to theTelecommunications Authority.

The Telecommunications Authority may suspend Turkcell’soperations for a limited or an unlimited period if necessary for the purpose ofpublic security and national defense. During period of suspension, theTelecommunications Authority may operate Turkcell’s GSM network. Turkcell isentitled to any revenues collected during such period and the Licensee’s termwill be extended by the period of any suspension. The revised License may alsobe terminated upon a bankruptcy ruling against Turkcell or for other licenseviolations, such as operating outside of its allocated frequency ranges, andthe penalties for such violations can include fines, loss of frequency rights,revocation of the license and confiscation of the network management center,the gateway exchanges and central subscription system, including relatedtechnical equipment, immovables and installations essential for the operationof the network.

Based on the enacted law on July 3, 2005 withrespect to the regulation of privatization, gross revenue description based forthe calculation of treasury share has been changed. According to this new regulation,accrued interest charged for the late payments, taxes such as indirect taxes,and accrued amounts accounted for reporting purposes excluded from thedescription of gross revenue. Turkcell has submitted to TelecommunicationsBoard for the revision of the related articles of Amended Agreement andcompleted necessary procedures. Danistay approved the agreement on March 10,2006. Calculation of gross revenue for treasury share according the newregulation is valid after March 10, 2006.

***Astelit:***

Astelit owns three GSM frequency licenses and one GSMactivity license. GSM frequency licenses are valid until June 8, 2008, March 3,2019 and July 26, 2019, respectively. Astelit GSM Activity license willexpire on June 8, 2008. On November 10, 2005, Astelit signed alicense agreement which is granting a 

F-48

----

GSM 900 frequency. Theright to use the GSM 900 license starts from January 1, 2006 and willexpire in November 2020.

According to licenses Astelit should adhere to statesanitary regulations to ensure that equipment used does not injure thepopulation by means of harmful electro-magnetic emissions. Licenses requiresAstelit to inform authorities about start / end of operations in one month;about changes in incorporation address in ten days; also Astelit must present all the required documents forinspection by Ukrainian Telecommunications Authority at their request. TheUkrainian Telecommunications Authority may suspend the operations of Astelitfor a limited or an unlimited period if necessary because of the expiration oflicenses, upon mutual consent, or in case of violation of terms of radiofrequencies use. If such a violation is determined, UkrainianTelecommunications Authority notifies Astelit of provisions violated and setsdeadline for recovery. If the deadline is not met, licenses may be terminated.

***DCC:***

DCC owns four licenses; three on for local telephonenetwork construction, maintenance and use compliant to D-AMPS standard and oneon long distance and international traffic carriage business. DCC licenses forlocal telephone network construction, maintenance and use compliant to D-AMPSstandard will expire on July 8, 2005, October 30, 2017, and December 15,2018, respectively. DCC Long distance and international carrier serviceslicense was issued on June 17, 1998 and will expire on June 17, 2013.

The Ukrainian Telecommunications Authority may suspendDCC operations for a limited or an unlimited period if necessary because ofexpiration of licenses, upon mutual consent, or in case of violation of terms ofradio frequencies use. If such a violation is determined, UkrainianTelecommunications Authority notifies DCC of provisions violated and setsdeadline for recovery. If the deadline is not met, licenses may be terminated.

**InterconnectionAgreements**

Turkcell has entered into interconnection agreementswith a number of operators in Turkey and overseas including Turk Telekom,Telsim Mobil Telekomunikasyon Hizmetleri AS (“Telsim”), Aycell Haberlesme vePazarlama Hizmetleri AS (“Aycell”), Is-Tim Telekomunikasyon Hizmetleri AS(Is-Tim), Milleni.com and Globalstar Avrasya Uydu Ses ve Data Iletisim AS (“Globalstar”).The Access and Interconnection Regulation (the “Regulation”) became effectivewhen it was issued by the Telecommunications Authority on May 23, 2003.

The Regulation is driven largely by a goal to improvethe competitive environment and ensure that users benefit fromtelecommunications services and infrastructure at a reasonable cost. Under theRegulation, the Telecommunications Authority may compel all telecommunicationsoperators to accept another operator’s request for use of and access to itsnetwork. All telecommunications operators in Turkey may be required to provideaccess to other operators on the same terms and qualifications provided totheir shareholders, subsidiaries and affiliates.

F-49

----

In accordance with the Regulation, thetelecommunications providers in Turkey (including Turk Telekom), are obliged torenew their interconnection agreements within two months following the issuanceof the Regulation. Turkcell entered into a new interconnection agreement withGlobalstar on September 9, 2003, and as a result of intervention by theTelecommunications Authority, the Company entered into supplemental agreementswith Turk Telekom on November 10, 2003, Telsim on November 21, 2003,and Globalstar on December 11, 2003, with amended tariffs and tariffadoption procedures. After the merger of Is-Tim and Aycell, a new company wasformed with the name TT&TIM Iletisim Hizmetleri A.S. (“TT&TIM”). Theinterconnection agreement with Is-Tim was renewed with TT&TIM and theinterconnection agreement with Aycell was cancelled. On October 15, 2004,TT&TIM changed its name to AVEA Iletisim Hizmetleri A.S. (“AVEA”). On theother hand, the business relationship on interconnection between Milleni.comand Turkcell has been bilaterally terminated as of June 21, 2004.

On February 21, 2005, Tellcom and Milleni.comhave signed an agreement to provide telecommunications services to each otherwhereby Milleni.com may convey calls to Turkcell’s switch and Turkcell mayconvey calls to Milleni.com’s switch, in both cases, for onward transmission totheir destinations.

In addition, the Telecommunications Authority hasrequired operators holding significant market power, as well as Turk Telekom,to share certain facilities with other operators under certain conditions, andto provide co-location on their premises for the equipment of other operatorsat a reasonable price. The Telecommunications Authority may also requiretelecommunications operators to provide number portability, which meansallowing users to keep the same phone numbers even after they switch from onenetwork to another.

Under a typical interconnection agreement, each partyagrees, among other things to permit the interconnection of its network withTurkcell’s network to enable calls to be transmitted to, and received from, theGSM system operated by each party in accordance with technical specificationsset out in the interconnection agreement. Typical interconnection agreementsalso establish understandings between the parties relating to a number of keyoperational areas, including call traffic management, quality and performancestandards, interconnection interfaces and other technical, operational andprocedural aspects of interconnection. Turkcell’s interconnection agreementsusually provide that each party will assume responsibility for the safeoperation of its own network. Each party is also typically responsible forensuring that its network does not endanger the safety or health of employees,contractors, agents or customers of the other party or damage interfere with orcause any deterioration in the operation of the other party’s network.

Interconnection agreements also specify the amount ofthe payments that each party will make to the other for traffic originated onone network but switched to the other. These payments vary by contract, and insame cases, may require the Company to pay the counterparty less, the sameamount, or a greater amount per minute, for traffic originating on Turkcell’snetwork but switching to the counterparty’s network, then it receives for asimilar call originating on another network and switched to Turkcell’s network.

F-50

----

There are no minimum payment obligations under theinterconnection agreements; however, failure to carry the counterparty’straffic may expose the Company to financial and other penalties or loss ofinterconnection privileges for its own traffic.

Turkcell and other operators have entered intointerconnection agreements which set out the terms and conditions regarding theprice terms as well as periodical revision of such terms. However, revisions ofthe pricing terms of the interconnection agreements have been pending asTurkcell has not been able to agree on the pricing terms with other operatorsthrough discussions. As per the Access and Interconnection Regulation, theissue has been escalated to the Telecommunications Authority by Turk Telekomand Telsim. Meanwhile, the Telecommunications Authority issued referenceinterconnection rates during the fourth quarter of 2004, which indicate pricingterms. Consequently, on August 10, 2005, the Telecommunications Authorityissued a ‘temporary interconnection price schedule’ for the interconnectionbetween Turk Telekom and Turkcell which are in line with the reference tariffstructure defined by the Telecommunications Authority during the fourth quarterof 2004. The Telecommunications Authority is expected to issue a final pricestructure. In a case that the new prices determined by the TelecommunicationAuthority are lower than the temporary prices, the financial situation, and/oroperating results and cash flows could be negatively affected.

**Legal Proceedings**

The Company is involved in various claims and legalactions arising in the ordinary course of business described below.

***Dispute on VAT on Ongoing License Fee***

On December 28, 2001, the board of accountingexperts of the Ministry of Finance issued an opinion stating that Turkcellshould pay VAT on the ongoing license fee paid to the Turkish Treasury.Accordingly, the Tax Office delivered to Turkcell a notice on January 31,2002, asserting deficiencies in VAT declarations requesting payments ofapproximately TRY 91,374 (equivalent to $68,098 as of December 31, 2005)for VAT, which would be offset by a VAT recoverable and would not result in acash outflow from Turkcell and a total of approximately TRY 145,271 (equivalentto $108,266 as of December 31, 2005) for penalty. Turkcell applied on March 1,2003 to benefit from the Tax Amnesty Law entered into force in February 2003for the amounts covering the period between April 1998 and November 2001.Turkcell’s application was accepted and, accordingly, it received amnesty inrespect to VAT on the ongoing license fee. Turkcell and the Tax Office agreedthat Turkcell would made payments for the VAT amounts amounting to TRY 45,688(equivalent to $34,050 as of December 31, 2005) covering the periodbetween April 1998 and November 2001 by nine equal installmentsbetween March 31, 2003 and June 30, 2004. By completing the paymentsin 2003, Turkcell received a discount of TRY 4,553 (equivalent to $3,393 as of December 31,2005).

Turkcell has begun to make payments for VAT on ongoinglicense fees with reservation starting from June 2003 and commenced alawsuit against the Tax Office for the related period. On December 31,2003, the Tax Court decided that Turkcell would not have to pay VAT on ongoinglicense fee from 

F-51

----

February 2004onwards. The Tax Office has appealed this decision. Based on its management andlegal counsel’s opinion, Turkcell has not provided any accrual related withthis dispute in its consolidated financial statements as of and for the yearended December 31, 2005.

***Dispute on Turk Telekom Transmission Lines Leases***

Effective from July 1, 2000, Turk Telekomannulled the discount of 60% that it provided to Turkcell based on its regularratio, which had been provided for several years, and, at the same time, TurkTelekom started to provide a discount of 25% being subject to certainconditions. Turkcell filed a lawsuit against Turk Telekom for the applicationof the agreed 60% discount. However, on July 30, 2001, Turkcell had beennotified that the court of appeal upheld the decision made by the commercialcourt allowing Turk Telekom to terminate the 60% discount. Accordingly,Turkcell paid and continues to pay transmission fees to Turk Telekom based onthe 25% discount. Although TurkTelekom did not charge any interest on late payments at the time of suchpayments, Turkcell recorded an accrual amounting to TRY 3,022 ($2,252 as of December 31,2005) for possible interest charges as of December 31, 2000. On May 9,2002, Turk Telekom requested an interest amounting to TRY 30,068 (equivalent to$22,409 as of December 31, 2005). Turkcell did not agree with the TurkTelekom’s interest calculation and, accordingly, obtained an injunction fromthe commercial court to prevent Turk Telekom from collecting any amountsrelating to this interest charge. Also, Turkcell initiated a lawsuit againstTurk Telekom on the legality of such interest. The case is still pending. As ofDecember 31, 2005, Turkcell recorded a provision of TRY 13,296 (equivalentto $9,909 as of December 31, 2005) because its management and legalcounsel believe that this is the most likely outcome in accordance with therelevant provisions of the Interconnection Agreement.

***Dispute on National Roaming Agreement***

During the third quarter of 2001, Turkcell wasapproached by Is-Tim to negotiate a national roaming agreement. Thesenegotiations did not result in a mutual agreement. Therefore, the discussionscontinued under the supervision of the Telecommunications Authority. TheTelecommunications Authority proposed a solution on October 18, 2001 andasked the parties to reach a decision by November 15, 2001. As Turkcellbelieves that the Telecommunications Authority is not authorized to intervenein this issue and Is-Tim’s proposal is unreasonable, economically not proportionaland technically impossible, Turkcell obtained an injunction on November 12,2001 from the Ankara Fourth Court of First Instance regarding the conflict. On December 6,2001, the Ankara Fourth Court upheld the injunction it rendered in Turkcell’sfavor on November 12, 2001. According to the Court’s decision, theexecution of a national roaming agreement between Is-Tim and Turkcell has beenprevented. The Telecommunications Authority and Is-Tim have appealed thegranting of the injunction and the appeals were disapproved.

In addition, on November 26, 2001, Turkcellinitiated an arbitration suit in the ICC against the Turkish Ministry and theTelecommunications Authority. On November 25, 2003, the ICC rendered adecision stating that the case is not under its jurisdiction. In January 2004,Turkcell appealed the decision before the Ankara 13th Court of First Instance.On April 6, 2004, the court dismissed the appeal. Turkcell has appealedthis decision. On December 6, 2005, the Supreme Court accepted the appealof Turkcell and 

F-52

----

 

annulled the decision ofthe Ankara 13th Court of First Instance. TelecommunicationsAuthority appealed for correction of this decision. Furthermore, Turkcell hadpreviously initiated an action before the Ankara Ninth Administrative Court on November 13,2001 to annul the above-mentioned proposed solution of the TelecommunicationsAuthority. On April 18, 2002, the court decided that the issue is notunder its jurisdiction and transferred the case to Danistay. On September 13,2003, Danistay rejected Turkcell’s request of injunction. Danistay decided notto conclude on the annulment of the issue under this case since the abovementioned request of Turkcell with respect to this issue had been annulledbeforehand.

On March 8, 2002, the TelecommunicationsAuthority issued a new regulation “Regulation on Principles and ProceduresRelating to National Roaming Agreements”. Two of the most important provisionsof the new regulation are Provisional Article 1 and Article 17.Provisional Article 1, which deals with negotiations, agreements anddocuments relating to the issuance of this regulation, states that all ongoingnegotiations shall continue in compliance with the new regulation and that allagreements and documents completed before issuance of the new regulation shallremain valid and binding. Article 17 sets out penalties to be imposed onany party violating the provisions of the new regulation.

In a letter dated March 14, 2002, theTelecommunications Authority subjected Is-Tim’s request for national roaming tothe condition that it be reasonable, economically proportional, and technicallypossible. Nevertheless the Telecommunications Authority declared that Turkcellis under an obligation to enter a national roaming agreement with Is-Tim withina 30 day period. On April 8, 2002, Turkcell obtained a precautionaryinjunction from the court against the application of the new regulation issuedby the Telecommunications Authority requiring it to agree on national roamingwithin 30 days and providing for penalties in case Turkcell did not agree.Turkcell initiated proceedings against application of the new regulation beforethe ICC on April 11, 2002, requesting certification of the fact that it isnot required to enter into an agreement within 30 days and that it is under noobligation to pay any penalties whatsoever if it does not agree within 30 days.While the ICC proceedings are being pursued Turkcell has initiated a lawsuitbefore the Danistay, concerning the annulment of these regulations. On January 23,2004, the ICC rendered a decision stating that the case is not under itsjurisdiction. In March 2004, Turkcell appealed the decision before theAnkara 21st Court of First Instance. On December 14, 2004 the courtrejected Turkcell’s request of annulment of the ICC’s decision. Turkcell hasappealed this decision. Based on the second request for the injunction of thedecision, on May 12, 2005 Turkcell received a notification from Danistaythat the decisions and actions regarding the notification of TelecommunicationsAuthority dated March 14, 2004 has been ceased until the case isfinalized, but rejected Turkcell’s request for an injunction to ceaseapplication of the procedures and policies under the new regulation withrespect to national roaming. Telecommunications Authority appealed thedecision. The appeal has been rejected by General Assembly of AdminstrativeCourts of Danistay.

On June 9, 2003, the Turkish Competition Board(the “Competition Board”) decided that Turkcell abused its dominant position byrefusing to enter into a national roaming agreement with Is-Tim, and finedTurkcell by approximately TRY 21,822 (equivalent to $16,263 at December 31,2005). On June 7, 2004, the Competition Board’s written decision wascommunicated to Turkcell. Turkcell initiated a lawsuit requesting thecancellation of the Competition Board’s decision. On November 3, 2004,Danistay issued an 

F-53

----

injunction to cease thedecisions and actions subject to the lawsuit until the case is finalized. TheCompetition Board objected to the decision of Danistay. The case is transferredto General Assembly of Administrative Courts of Danistay and subsequently, theobjection request of the Competition Board has been rejected.

On December 10, 2004, Tax Office requestedapproximately TRY 21,822 (equivalent to $16,263 at December 31, 2005)regarding the Competition Board decision. On December 30, 2004, Turkcellinitiated a lawsuit before the Administrative Court against the Tax Office andthe Competition Board’s requesting injunction and cancellation of the paymentorder. Turkcell obtained an injunction from the Administrative Court.Telecommunications Authority and Tax Office appealed this decision. Both theTelecommunications Authority and Tax Office appeals have been rejected. On November 25,2005, the Administrative Court decided the cancellation of the aforementionedpayment order. Both the Competition Board and Tax Office have appealed thedecision. Based on its management and legal counsel’s opinion, Turkcell has notrecorded any accrual for Competition Board’s decision.

The Telecommunications Authority decided that Turkcellhas not complied with its responsibility under Turkish regulations to providenational roaming and fined Turkcell by approximately TRY 21,822 (equivalent to$16,263 at December 31, 2005). On April 7,2004, Turkcell made the related payment. On May 27, 2004, Turkcellcommenced a lawsuit against Telecommunications Authority’s decision. On December 1,2004, the Danistay issued an injunction to cease the decisions and actionssubject to the lawsuit until the case is finalized, but rejected Turkcell’srequest for an injunction to cease application of the procedures and policiesunder the new regulation with respect to national roaming. On January 3,2005 Telecommunications Authority paid back TRY 21,822 (equivalent to $16,263at December 31, 2005) with respect to the aforesaid injunction ofDanistay. Telecommunications Authority appealed the Danistay’s decision withrespect to the injunction. The appeal has been rejected by General Assembly ofAdministrative Courts of Danistay. On December 13, 2005, Danistay decided the cancellation of theadministrative fine but rejected Turkcell’s request for cancellation ofthe regulation on procedures and policies with respect to national roaming.Based on its management and legal counsel’s opinion, Turkcell recorded incomeamounting to TRY 21,822 (equivalent to $16,263 at December 31, 2005) inits consolidated financial statements as of and for the year ended December 31,2004.

If Turkcell is forced to enter a national roamingagreement on terms and conditions that do not provide an adequate return on itsinvestment in its GSM network, its financial position, results of operationsand cash flows could be adversely affected.

***Investigation of the TurkishCompetition Board***

The Competition Board commenced an investigation ofbusiness dealings between Turkcell and KVK Teknoloji, in October 1999. TheCompetition Board decided that Turkcell disrupted the competitive environmentthrough an abuse of dominant position in the Turkish mobile market andinfringements of certain provisions of the Law on the Protection of Competition.As a result, Turkcell was fined by approximately TRY 6,973 (equivalent to$5,197 as of December 31, 2005) and was enjoined to cease theseinfringements. The Competition Board’s written decision was communicated toTurkcell on June 29, 2003 

F-54

----

and Turkcell initiated alawsuit before Danistay for the injunction and cancellation of the decision. OnNovember 15, 2005, Danistay cancelled the Competition Board’s decision onthe ground that Competition Board infringed the procedural rules governingthe investigation process. Turkcell has accrued TRY 6,973 (equivalent to $5,197as of December 31, 2005) on its consolidated financial statements as of December 31,2005.

After the cancellation of the Competition Board’sdecision the Competition Board has given the same decision again on December 29,2005. On March 6, 2006, Turkcell initiated a lawsuit before Danistay forthe injunction and cancellation of the decision. The case is still pending.

***Dispute on Collection of FrequencyUsage Fees***

On May 21, 1998, Turkcell entered into a protocolwith the Wireless Communications General Directorate (the “Directorate”)regarding the application of the governing provisions of the Wireless Law No. 2813to the administration of its GSM mobile phone network. Under this protocol,Turkcell is to collect frequency usage fees, which are calculated by theDirectorate, from the taxpayers using mobile phones on behalf of theDirectorate, and to pay the levied tax to the Directorate. In 2001, theDirectorate’s power, including all of its rights and obligations, wastransferred to the Telecommunications Authority. On March 22, 2002, as aconsequence of the impossibility in fact and at law of collecting such tax fromits prepaid subscribers, Turkcell applied to the Ankara 17th Court of FirstInstance and obtained an injunction in respect of the collection of thefrequency usage fees. Immediately after this decision, on March 27, 2002,Turkcell filed a lawsuit against the Telecommunications Authority requestingcancellation of the protocols obligating it to collect the frequency usage feesfrom the prepaid subscribers and to pay it to the Telecommunications Authority.On July 10, 2002, the court decided in favor of Turkcell. On March 31,2003, the Supreme Court notified Turkcell that it has acceptedTelecommunications Authority’s appeal and annulled the decision of the lowercourt. The lower court revised its decision in line with the Supreme Court’sdecision. On April 20, 2004, Turkcell paid TRY 145,644 (equivalent to$108,544 at December 31, 2005) for the frequency usage fees of 2002including interest through that date with reservation. The court rejected Turkcell’srequest and decided that there should be no further judgement on this issuesince the frequency usage fees of 2002 are paid. Both Turkcell andTelecommunications Authority have appealed this decision. Supreme Court willreview this lawsuit.

***Investigation of the Telecommunications Authority onInternational Voice Traffic***

In May 2003, Turkcell was informed that theTelecommunications Authority had initiated an investigation against Turkcellclaiming that Turkcell has violated Turkish laws by carrying some of itsinternational voice traffic through an operator other than Turk Telekom.Turkcell is disputing whether Turk Telekom should be the sole carrier ofinternational voice traffic. On March 5, 2004, the TelecommunicationsAuthority fined Turkcell by approximately TRY 31,731 (equivalent to $23,648 at December 31,2005). On April 9, 2004, Turkcell made the respective payment. On June 2,2004, Turkcell commenced a lawsuit against the decision of theTelecommunications Authority.

F-55

----

On November 5, 2004, the Danistay issued aninjunction to cease the decisions and actions subject to the lawsuit until thecase is finalized, but rejected Turkcell’s request for an injunction to ceaseapplication of related items of Telecommunications Authority’s regulation with respectto execution of administrative fines to operators. Telecommunications Authority appealed to this decision and the caseis sent to General Assembly of Administrative Courts of Danistay and General Assembly of Administrative Courtsof Danistay  rejected TelecommunicationsAuthority’s above mentioned appeal.

With respect to the Danistay’s injunction on January 26,2005, Telecommunications Authority paid TRY 18,000 (equivalent to $13,415 at December 31,2005) back to Turkcell and the remaining balance amounting to TRY 13,730(equivalent to $10,233 at December 31, 2005) was deducted from Turkcell’spayables. Telecommunications Authority appealed this decision. Based on itsmanagement and legal counsel’s opinion, Turkcell has recorded income amountingto TRY 31,731 (equivalent to $23,648 at December 31, 2005) in theconsolidated financial statements as of and for the year ended December 31,2004.

On March 2, 2005, TurkTelekom notified Turkcell that, Turkcell has damaged Turk Telekom because ofthe interconnection agreement signed with Milleni.com. Accordingly, TurkTelekom requested Turkcell to pay TRY 219,148 (equivalent to $163,324 as of December 31,2005) of principal and TRY 178,364 (equivalent to $132,928 as of December 31,2005) of interest, which make a sum of TRY 397,515 (equivalent to $296,255 asof December 31, 2005) until March 7, 2005.

In addition, on August 5, 2005, Turk Telekom applied to the Ankara 7th Commercial Court of First Instance and filed alawsuit against Turkcell to obtain an injunction and to block all deposits andreceivables of Turkcell to collect its damage amounting TRY 450,932 (equivalentto $336,065 as of December 31, 2005) including principal and interestbecause of the interconnection agreement signed with Milleni.com. Ankara 7th Commercial Court of First Instancerejected the injunction request of Turk Telekom. The case is still pending.However, on December 13, 2005, Danistay rejected the request of TurkTelekom regarding the cancellation of the interconnection agreement betweenMilleni.com and Turkcell.

Management and legal counsel believe that theaforementioned request has no legal basis. At this point, regarding thislitigation it is premature to estimate its potential outcome, if any.Accordingly, the Company has not provided any accruals with respect to thismatter in its consolidated financial statements as of December 31, 2005.

***Dispute on Taxation on InvestmentTax Credit***

On July 14, 2003, the TaxOffice claimed that Turkcell should have paid withholding tax and fund oninvestment tax credit used for 1999. The notice stated that, based oncalculation made by the Tax Office, Turkcell should pay TRY 1,796 (equivalentto $1,339 at December 31, 2005). The Tax Office also imposed a penalty feeof TRY 4,259 (equivalent to $3,174 at December 31, 2005). Managementdecided not to pay such amounts and initiated a juridical process based on thedecision of the general counsel of Danistay in relation with withholding taxand fund on investment tax credit for 1999. On September 10, 2003,Turkcell initiated a lawsuit in the Tax Court related with this dispute. On May 12,2004, the Tax Court decided in 

F-56

----

favorof Turkcell. The Tax Office appealed this decision. On June 15, 2005,Danistay rejected the Tax Office’s appeal. On September 7, 2005, the TaxOffice has applied for correction of this decision. On December 22, 2005,Danistay rejected the tax office request of correction of decision. The casehas been finalized with this decision.

***Investigation of theTelecommunications Authority on Frequency Fee Payments***

On October 23, 2003, the TelecommunicationsAuthority fined Turkcell, claiming that Turkcell has made inadequate annualfrequency usage fee payments by notifying its subscriber numbers less than theactual. The Telecommunications Authority requested TRY 16,005 (equivalent to $11,928 as of December 31, 2005) forprincipal, an interest charge of TRY 10,761 (equivalentto $8,020 as of December 31, 2005) and a penalty of TRY 63,463 (equivalent to $47,297 as of December 31, 2005).Management and legal counsel believe that the Telecommunications Authority’sdecision is due to a misinterpretation of the applicable regulations. OnFebruary 20, 2004, Turkcell initiated the legal proceedings for theannulment of the decision. On April 16, 2004, Turkcell paid TRY 103,740(equivalent to $77,314 as of December 31, 2005) including interest throughthat date regarding the Telecommunication Authority’s claim. The Court rejected the case. Turkcell appealed thisdecision and requested the injuction of the decision of the lower court..However, Danistay rejected Turkcell’s request of injuction. On October 12,2005, the Tax Office sent a payment order amounting to TRY 63,463 (equivalentto $47,297 as of December 31, 2005) which was paid by Turkcell previously.On November 8, 2005 Turkcell initiated a lawsuit before the AdministrativeCourt against the Tax Office requesting an injunction and cancellation of thepayment order.

***Dispute on Special TransactionTaxation Regarding Prepaid Card Sales***

On September 18, 2003, the Ministry of Financeissued a report stating that by applying discounts for prepaid card sales forthe period between June - December 2002, Turkcell calculated thespecial transaction tax on post-discounted amount. Pursuant to this report, theTax Office delivered to Turkcell a notice, asserting deficiencies in specialtransaction tax declarations and requesting a special transaction tax paymentamounting to TRY 6,993 (equivalent to $5,212 at December 31, 2005) and atax penalty of TRY 9,875 (equivalent to $7,360 at December 31, 2005).On November 20, 2003, Turkcell initiated a lawsuit in the Tax Courtrelated with this dispute. On May 31, 2004, the Tax Court decided in favorof Turkcell. The Tax Office has appealed this decision on September 6,2004. The case is still pending. Management and legal counsel believe thatTurkcell will prevail in this matter.

F-57

----

***Disputes on annulment of fixed odd betting tender related to establishmentand operation of risk management center head agency***

Reklam Departmani Basin Yayin Proje Yapim Danismanlikve Ticaret Limited Sirketi (“Reklam Departmani”) commenced a lawsuit againstthe Spor Toto Teskilat Mudurlugu in the Ankara Fourth Administrative Court. Inthe lawsuit, Reklam Departmani claimed for the annulment of fixed odd betting tenderrelated to the establishment and operation of risk management center and actingas head agency. The Company is not a party to the lawsuit but Inteltek’soperations may be affected by the court’s decision. Accordingly, the Companyjoined the case. On February 21, 2005, Ankara Fourth Administrative Courtrejected the case. Reklam Departmaniappealed the case and Danistay accepted the request of Reklam Departmaniwith respect to the appeal. On February 17, 2006, Inteltek has applied for the correction of this decision. The caseis still pending. Legal counsel and management believe that it is not practicableto issue an opinion on the conclusion of the case. The Company has not providedany accruals with respect to this matter in its consolidated financialstatements as of December 31, 2005.

With respect to the same tender Gtech Avrasya TeknikHizmet ve Musavirlik AS (“Gtech”) commenced a lawsuit against Public TenderAuthority and Genclik ve Spor Genel Mudurlugu in the Ankara FourthAdministrative Court. The Company is not a party to the lawsuit but Inteltek’soperations may be affected by the court’s decision. Accordingly, the Companyjoined the case. On February 21, 2005, Ankara Fourth Administrative Courtrejected the case. Gtech appealed the case and Danistay accepted the request ofGtech regarding the appeal. The decision of Danistay was communicated toInteltek on January 26, 2006 and Inteltek has applied for the correctionof decision on February 9, 2006. The case is still pending. Legal counselbelieves that it is not practicable to issue an opinion on the conclusion ofthe case. The Company has not provided any accruals with respect to this matterin its consolidated financial statements as of December 31, 2005.

***Dispute with***Spor Toto Teskilat Mudurlugu

On April 15, 2005, Spor Toto Teskilat Mudurlugu,regulatory authority of sports betting in Turkey, notified Inteltek thatInteltek is obliged to pay TRY 1,434 (equivalent to $1,069 at December 31,2005) including 5% interest charge, with the claim of the inadequacy of thesystem software, failure to spot dealer sales on a live basis and lack of controlmechanisms and cause for the non-collection of a certain portion of turnoverfrom dealers. On November 2, 2005, Spor Toto Teskilat Mudurlugu sent asecond letter to Inteltek that Inteltek is obliged to pay TRY 1,711 (equivalentto $1,275 at December 31, 2005) of uncollected turnover from agentsincluding 5% interest charge regarding the same issue. Inteltek management hasreplied this notification letter and rejected to pay the requested amount.

On November 9, 2005, Spor Toto Teskilat Mudurlugusent another notification letter to Inteltek that Inteltek is obliged to payTRY 3,292 (equivalent to $2,453 at December 31, 2005) due to thedifference in the reconciliation methods. Spor Toto Teskilat Mudurlugu claimsthat the reconciliation periods should be six-month independent periods whereasInteltek management believes that those periods should be cumulative as statedin the agreement. Inteltek did not pay the requested amount.

F-58

----

 

Spor Toto commenced declaratory action in Ankara 22nd Civil Court of First Instance on January 23,2006 to clarify whether the collection risk belongs to Inteltek or Spor Totoand whether the reconciliation method should be based on individual six-monthperiod basis or as cumulative method. Inteltek accrued TRY 3,292 (equivalent to$2,453 at December 31, 2005) for this amount in the accompanyingconsolidated financial statements as of December 31, 2005 due to theprobability of negative outcome of the declaratory action.

***Dispute on call termination fee***

Telsim has initiated a lawsuit claiming that, Turkcellhas not applied the reference interconnection rates determined by theTelecommunications Authority, and has charged interconnection fees exceedingthe ceiling rates approved by Telecommunications Authority and requested an injunctionto be applicable starting from August 1, 2005, to cease this practice andrequested a payment of its damages totaling to TRY 26,108 (equivalent to$19,457 as of December 31, 2005) including principal, interest and penaltyon late payment. On September 6, 2005, the Court rejected Telsim’sinjunction request. On April 6, 2006, Istanbul 10th Commercial Court of First Instance rejectedthe case. Turkcell is still charging interconnection fees under the existingInterconnection Agreement with Telsim. As it is stated in the existingInterconnection Agreement with Telsim, Telsim referred the matter to theTelecommunications Authority. The resolution procedure has not been finalizedyet. The management and legal counsel of Turkcell believe that it is prematureto estimate the legal outcome at this point. Therefore, the Company has notrecorded any accrual with respect to this matter in its consolidated financialstatements as of December 31, 2005.

***Invalidity of the Board Resolution***

On June 23, 2005, theBoard of Directors of Turkcell has decided to allow Alfa Group to conduct a duediligence in Turkcell and to entitle the management. On July 1, 2005,Sonera filed a suit with an injunction request against Turkcell in Beyoglu 2nd Commercial Court of First Instance for thepurpose of determination of the invalidity of the resolution dated June 23,2005. On July 4, 2005, Beyoglu 2nd Commercial Court of First Instancerejected Sonera’s injunction request. On December 28, 2005, Beyoglu 2ndCommercial Court of First Instance rejected the injunction request of Sonera.Sonera has appealed this decision on February 24, 2006.

***Dispute with Iranian Ministry in connection with theGSM tender process***

Turkcell believes the Iranian Ministry has notproperly implemented the laws and regulations passed by the Iranian Parliamentin connection with the GSM tender process, which was won by the Consortium. Asa result, Turkcell has filed an injunction order in Iranian courts seeking tocompel the Ministry to implement the laws and regulations passed by the IranianParliament in connection with the GSM tender process, and such claim wasrejected in April 2006.

F-59

----

***Dispute with the Telecommunications Authority withrespect to temporary set call termination fees***

The interconnection agreement with Turk Telekomprovided for a renegotiation of pricing terms on call termination fees after December 31,2004, and in the event that the parties could not agree on new terms by February 28,2005, for referral to the Telecommunications Authority for resolution. As theparties were unable to agree on new terms, Turk Telekom referred the matter tothe Telecommunications Authority, which has set temporary call termination feesfor calls terminating on each operator’s network starting from August 10,2005. On October 7, 2005 Turkcell filed a lawsuit against theTelecommunications Authority for the injunction and cancellation of thisdecision, which has set temporary call termination fees for calls terminatingon each operator’s network starting from August 10, 2005. The case isstill pending. At this point in the litigation it is premature to estimate thelegal outcome. As of April 13, 2006, the final termination fees have notbeen set yet.

As mentioned above, Telecommunications Authority hasset temporary call termination fees for calls terminating on each operator’snetwork starting from August 10, 2005. However, Turk Telekom does notapply these termination fees for the international calls. That’s why, on December 22,2005, Turkcell filed a lawsuit against Turk Telekom to cease this practice andrequested collection of its damages totaling to TRY 11,970 (equivalent to$8,921 at December 31, 2005) including principal, interest and penalty onlate payment covering the period from August 2005 till October 2005.

These temporary prices are not as favorable toTurkcell as they have been previously, and the Telecommunications Authority mayimpose further reductions in call termination fees. At this point, the Companyis unable to estimate the timing and impact of the possible changes to itsfees, however, new pricing terms, could be lower and these could have anadverse affect on Turkcell’s financial position, results of operations and cashflows.

***Dispute with Avea***

On February 28, 2006,Avea Iletisim Hizmetleri A.S. (Avea) has initiated a lawsuit against Turkcellclaiming that although there is an agreement between Turkcell and Avea statingthat both parties would not charge any SMS interconnection termination fees,Turkcell has charged SMS interconnection fees for the messages terminating onits own network and also assumed liabilities for the messages terminating inAvea’s network and made interconnection payments to Avea after deducting thenet balance of those SMS charges and accruals. Avea requested provisions ofInterconnection Agreement regarding SMS pricing to be applied and requestedcollection of its losses amounting to TRY 12,275 (equivalent to $9,148 at December 31,2005) for the period between February 2005 and December 2005 with itsaccrued interest till payment. Based on its management and legal counsel’sopinion, the Company has the right to charge SMS interconnection terminatingfees with respect to SMS interconnection services provided to Avea. SMSinterconnection fees charged to Avea, is the same with the SMS interconnectionfees charged to other GSM operators in Turkey. Therefore, both the managementand legal counsel believe that the Company’s claim on this issue has a fairbasis. The case is still pending.

F-60

----

***Dispute on value added taxation with respect toroaming services***

On March 6, 2006, the Tax Office claimed thatTurkcell should have paid value added tax (“VAT”) on the invoices issued byforeign GSM operators for the international calls originated by Turkcellsubscribers and terminating on those foreign GSM operators’ networks during theyear 2000. It has been notified that, based on the calculation made by the TaxOffice, Turkcell should pay TRY 3,654 (equivalent to $2,723 at December 31,2005) for VAT and also a penalty fee of TRY 16,137 (equivalent to $12,026 at December 31,2005). Management decided not to pay such amounts and initiated a judicialprocess.

**Operating Leases**

The Company entered into various operating leaseagreements. At December 31, 2004 and 2005, there were no commitments andcontingent liabilities in material amounts arising from those agreements. Forthe years ended December 31, 2003, 2004 and 2005, total rent expenses foroperating leases were $104,751, $124,162 and $136,573, respectively.

**(28)   Concentrations:**

In 2004, the Company’s operations were substantiallyall inside Turkey. However, as explained in Note 1, the Company hasinvestments in Kibris Telekom (Northern Cyprus), Euroasia (the Netherlands)with operations in Ukraine and Fintur (the Netherlands) with operations inAzerbaijan, Kazakhstan, Georgia and Moldova. At December 31, 2005, netassets of Kibris Telekom, Euroasia and Fintur were $25,927, $46,292 and$470,744, respectively (2004: Kibris Telekom $16,223, Euroasia $88,762 andFintur $305,612).

Revenues earned from and charges incurred by TurkTelekom in accordance with the Interconnection Agreement are $259,659 and$132,793, respectively, for the year ended December 31, 2005 (2004:$77,237 and $101,281). As of December 31, 2005 the Company incurred transmissionand infrastructure costs by Turk Telekom totaling to $72,656 and $26,911,respectively (2004: $95,817 and $24,616). The net receivable from Turk Telekomis $16,518 at December 31, 2005. According to the settlement agreementsigned with Turk Telekom on December 24, 2004, after netting thereceivables, Turkcell committed to pay TRY 997.6 million (equivalent to$743,512 as of December 31, 2005) after the deduction of Turk Telekom’scollections through November 30, 2004. Turkcell management further decidedto make an early payment for the amount it owed to Turk Telekom for the year2006 amounting to approximately TRY 286,860 (equivalent to $213,787 as of December 31,2005) pursuant to the early payment option of the agreement and outstandingamount due under this settlement was fully paid off during 2005.

The Company makes a substantial portion of itspurchases of goods and services related to GSM investments from Ericsson Turkey(a subsidiary of Ericsson Radio Communication Ltd, one of the former shareholdersof the Company), Ericsson Sweden, Ericsson AB and Nokia. Total purchases andcharges from Ericsson Turkey, Ericsson Sweden and Ericsson AB were $128,812 in2003, $556,903 in 2004 and $982,004 in 2005 and outstanding balance due tothese companies were $18,772 and $37,142 at 

F-61

----

December 31, 2004and 2005, respectively. The total purchases and charges from Nokia were $20,588and $130,453 in 2004 and 2005, respectively.

**(29)   SubsequentEvents**

**(a)   **OnOctober 20, 2005, Cukurova Group offered Turkcell to sell the A-Tel OptionContract, under which the holder has the right to purchase 50% shares of A-Telfor a consideration of $150 million. Turkcell conducted tax, legal and financial due diligence reviewat A-Tel. On March 22, 2006, the Board of Directors of Turkcell resolvedto accept the proposal and the purchase 50% of A-Tel shares by Turkcell for aconsideration of $150,000 based on the findings of the due diligence conductedat A-Tel.

**(b)   **OnMarch 22, 2006,****Board ofDirectors of Turkcell decided to conduct the required studies for thepre-qualification stage and submit a prequalification application in accordancewith the relevant provisions of the Request for Proposals dated February 19,2006, for the tender of the third GSM license in Arab Republic of Egypt. Inthis respect, Turkcell signed a Memorandum of Understanding with Amwal ElKhaleej and Banque Misr in order to form a consortium to apply for thepre-qualification of the third GSM license in Arab Republic of Egypt. Turkcellwill have a 60% stake in the consortium where the remaining stake will beequally divided between other consortium members. Turkcell is still evaluatingthe third GSM license in Arab Republic of Egypt and conducting studies for thepre-qualification application.

F-62

----