Turkcell Iletisim Hizmetleri A.S. Reports 2001 First Quarter Results

Subscriber Base Grew 8% to 10.9 Million During Q1 2001



Apr 26, 2001, 01:00 ET from Turkcell Iletisim Hizmetleri A.S.

    ISTANBUL, Turkey, April 26 /PRNewswire/ --
 Turkcell (NYSE:   TKC; ISE: TCELL), (http://www.turkcell.com.tr), the leading
 provider of mobile communications services in Turkey, today announced results
 as of and for the quarter ended March 31, 2001. All financial results in this
 press release are unaudited and reported in accordance with accounting
 principles generally accepted in the United States (US GAAP).
 
     Highlights
     1) Subscriber base grew 8% to 10.9 million at March 31, 2001 from
        10.1 million at December 31, 2000. In total, 864,485 net new
        subscribers were added during the first three months of 2001. New gross
        subscribers acquired in the first quarter of 2001 consist of 83%
        prepaid and 17% post paid subscribers.
 
     2) Revenue and net loss for the quarter ending March 31, 2001 were
        impacted by the steep slide in the value of the Turkish Lira ("TL")
        against the US$ and volatile economic conditions. The TL was devalued
        34% against the US$ during the first quarter of 2001.
 
     3) Revenue decreased 10% to $530.3 million for Q1 2001 from $587.5 million
        for Q4 2000 primarily as a result of 34% devaluation, lower usage due
        to economic crisis and the continued application of the Special
        Communications Tax of 25%, which was enacted after the earthquakes in
        Turkey in 1999 (the "earthquake tax") for two more years until December
        31, 2002. As of April 26 2001, the devaluation rate is 45%.
 
     4) Turkcell posted a net loss of $74.5 million for Q1 2001 compared to net
        loss of $3.7 million in Q4 2000, mainly due to the increased
        translation loss caused by Turkish Lira's devaluation against the
        US$ during the first quarter of 2001.
 
     5) Consumer worries resulted in a 10% decline in postpaid ARPU to $23.4 in
        Q1 2001, from $26.0 in Q4 2000. Prepaid ARPU slipped by 22% to
        $9.0 from $11.6, reflecting the volatile economic environment. On a
        blended basis, ARPU was $16.5 for the first three months of 2001
        compared to $20.5 for the fourth quarter of 2000.
 
     6) EBITDA on a pre-fx (foreign exchange) basis was $148.9 million for Q1
        2001 compared to $138.1 in Q4 2000. Adjusted EBITDA stood at
        $68.3 million for Q1 2001, down from $151.6 million in Q4 2000 due
        mainly to the impact of the translation loss and devaluation on tariffs
        despite increases enacted as 9% in January and 12% in March 2001.
        Reduced consumer spending and the effect of the expanding prepaid
        subscriber base on ARPU also lowered EBITDA. The steep devaluation of
        the TL against the US$ rate caused a total translation loss of
        $80.6 million for Q1 2001, compared to a translation gain of
        $13.5 million for Q4 2000.
 
     7) In a cost saving measure, Turkcell reduced capex planned for 2001.
        Capex fell from $117.3 million in Q4 2000 to $101.3 million in Q1 2001.
 
     8) The churn rate for Q1 2001 was 3.7% mainly due to disconnection of
        non-payers.
 
     Comments from the CEO, Cuneyt Turktan
    "Turkey has been through a very tough three months. Consumer confidence,
 which was already shaken by the November financial crisis, sank to an
 unprecedented low as the government abandoned the IMF-supported disinflation
 program and floated the TL, resulting in the 34% devaluation of TL against the
 US$ by the end of March. The lagged impact of this devaluation -- which had
 reached 45% as of April 26, 2001 -- will be seen in the coming quarters.
     In mid-April, the announcement of a new economic program by the government
 has provided hopes for a gradual recovery based on lasting, deep-rooted
 change. The new program calls for bold steps aimed at minimizing the
 involvement of the state in the economy. Turkcell is convinced of the positive
 benefits of this liberalization, which foresees eliminating state monopolies
 in many areas, including fixed line telecommunications. Turkcell believes that
 the new program will enable Turkey to move forward quickly to reach a new
 stage of expansion and prosperity.
     At present, however, the unknown duration and magnitude of market slowdown
 is affecting Turkcell as well as its customers. The decline in disposable
 income and purchasing power has depressed consumer spending across all
 sectors. In this environment, Turkcell's revenues decreased 10% to
 $530.3 million in Q1 2001 from $587.5 million in Q4 2000.  However, subscriber
 growth continued to climb reaching 10.9 million at the end of Q1 2001.
     Turkcell managed the economic crisis with flexibility and sensitivity.
 Turkcell is raising tariffs in small increments in order to retain customers.
 Turkcell has taken measures to control operating and capital expenditures and
 has reviewed the roll out of new investments in data related services.
 Although Turkcell is putting less emphasis on rolling out new data related
 services due to the depressed state of the market, it remains committed to its
 long-term vision of converging technologies.
     Despite the market turmoil, Turkcell is dedicated to its strategy.
 Innovative tariff packages, its superior network and a variety of
 customer-focused product offerings will help to grow its current customer base
 while contributing to customer retention. These competitive new tariff
 packages will encourage usage within the Turkcell network and prevent churn to
 other operators.
     Turkcell is focused on maintaining its strong brand awareness throughout
 this down period, retaining its subscribers, and ensuring the continuing
 loyalty of its dealers. Turkcell believes that this strategy will pay off in
 the long term as the Turkish economy regains its vitality."
 
     Overview of the First Quarter 2001
     Turkcell has been successful in expanding its subscriber base. Turkcell's
 value proposition has been improved by the introduction of differentiated
 tariffs in Q4 2000 and by "Super On Net" in March 2001, a new tariff package
 that provides advantageous discounts on Turkcell-to-Turkcell calls. Turkcell
 is now in a very competitive position in the market in terms of both rates and
 its product offering. However, the lagged impact of both devaluation and new
 competition may impact results in the coming months.
     Subscriber growth continued in the first quarter, despite the economic
 downturn, indicating continuing consumer need for mobile communications.
 Turkcell gained 864,485 net new subscribers during the three months period
 ended March 31, 2001. Although the larger subscriber base and increasing share
 of prepaid customers in its subscriber base have contributed to a decline in
 ARPU, Turkcell believes that an increase in the number of subscribers is one
 of the key elements in future earnings growth.
     Increased operational efficiency will be key to Turkcell's performance in
 2001. Turkcell reacted promptly to the devaluation of the TL by tightening
 operating and capital expenditures. Better controls over general and
 administrative expenses and stricter HR policies have reduced operating costs.
 Turkcell expects slower growth during the next three quarters as a result of
 decreased purchasing power, consumer worries and economic contraction.
 Nevertheless, Turkcell intends to move forward to fortify the power of its
 brand and the quality of its services in order to maintain its leading market
 position.
 
     Update on License VAT Dispute
     Since the beginning of 2001 there have been two developments in Turkcell's
 legal proceedings with the Turkish Tax Office regarding payment of VAT on the
 upfront license fee paid to Turkish Treasury. On March 16, 2001, Turkcell has
 agreed on a payment schedule for the disputed VAT, interest and penalties.
 Accordingly, Turkcell paid approximately $21.5 million on March 16. The
 remaining approximately $68.9 million, which includes interest and
 penalties, will be paid in equal monthly installments over the 15 months
 period. In a related case, on April 20, 2001, the Istanbul 5th division of the
 Tax Court ruled that interest payments were applicable to the VAT payment
 claimed by the Tax Office. However, in a positive outcome for Turkcell, the
 court rejected the Tax Office's claim that interest should be calculated for
 the period starting April 27, 1998 through May 4, 2000. Rather, the court
 found that interest should be calculated for the shorter period starting April
 27, 1998 through December 31, 1998. A final decision on the VAT dispute is
 still pending at Danystay. The company and its Turkish legal council believe
 that the Company will prevail. Therefore the management has not included such
 payments in the determination of net income.
 
     Financial Section
     Due to developments in our business and the events in the Turkish economy,
 the following textual discussion focuses on the developments and trends in our
 business in the first quarter of 2001 compared to the fourth quarter of 2000.
 For your information, selected financial information for the first quarter of
 2000 is included at the end of this press release.
 
     1. SUBSCRIBERS
     Turkcell acquired approximately 864,485 net new subscribers in the first
 quarter of 2001. New gross subscribers acquired in the first quarter of 2001
 consist of 83% prepaid and 17% post paid subscribers.
    Turkcell's subscriber base increased 8% to 10.9 million at March 31, 2001
 from 10.1 million at December 31, 2000.
     The overall subscriber base at March 31, 2001 consisted of 5.6 million
 prepaid and 5.3 million postpaid subscribers.
 
     2. REVENUES
     Total revenues for the three months ended March 31, 2001 decreased 10% to
 $530.3 million from $587.5 million for the last quarter of 2000. The decrease
 in revenues in Q1 2001 resulted primarily from the low usage patterns of
 customers due to the economic crisis and the extension of the earthquake tax
 through December 31, 2002.
     In Q1 2001, Turkcell's revenues in TL increased, compared to Q4 2000,
 revenues in US$ decreased because of 34 % quarterly devaluation of TL compared
 to only 1% of devaluation in Q4 2000.
    Turkcell's revenues are mostly derived from communication fees. Revenues
 from communication fees for the three months ended March 31, 2001 decreased by
 8% to $482.3 million from $524.8 million for the last quarter of 2000 mainly
 due to the lower usage arising from the economic crisis, the extension of
 earthquake taxes and the 34% quarterly devaluation.
 
     3. ARPU
     Turkcell's average monthly revenue per customer per month decreased 19.5%
 to $16.5 in the first quarter of 2001 from $20.5 in the fourth quarter of
 2000.
     Turkcell's average revenue per postpaid customer per month decreased 10%
 to $23.4 in the first quarter of 2001 from $26.0 in the fourth quarter of
 2000. Its average revenue per prepaid customer per month also decreased 22% to
 $9.0 in the first quarter of 2001 from $11.6 in the fourth quarter of 2000.
 Blended ARPU has decreased in the first quarter of 2001 compared to the fourth
 quarter of 2000 due to the economic crisis, the TL's steep devaluation against
 the US$, increase in prepaid subscriptions with low usage patterns and
 extension of earthquake tax through December 31, 2002.
 
     4. MoU
     Turkcell's average monthly minutes of use per customer decreased 19% to
 66.4 minutes in the first quarter of 2001 from 81.9 minutes in the fourth
 quarter of 2000. The decrease in MoU was primarily due to the economic crisis
 and increasing share of prepaid customers with low usage patterns.
 
     5. EBITDA
     Adjusted EBITDA decreased 55% to $68.3 million in the first quarter of
 2001 from $151.6 million in the fourth quarter of 2000 mainly due to the 34%
 devaluation of TL against US$ which resulted a steep increase in translation
 loss. Translation Loss for the first quarter of 2001 was $80.6 million
 compared to a gain of $13.5 million for the fourth quarter of 2000.
     The continued fluctuations in the exchange rate for the Turkish Lira is
 likely to result in our requesting further amendments to our EBITDA based
 financial covenants for purposes of our financial results for the first
 financial quarter of 2001. We are having discussions with our principal
 shareholders and related banks to address this, and anticipate being in a
 position to put forward a proposal shortly. In the meantime, we would like the
 present Amendment and Waivers to become effective to address our concerns
 regarding our position at the end of December 2000.
     Operating income increased 11% to $54.2 million from $48.8 million mainly
 due to the impact of TL's devaluation against US$ on our operating expenses.
 
     6. TRANSLATION GAIN (LOSS)
     Translation loss was approximately $80.6 million for the three months
 ended March 31, 2001 and translation gain was $13.5 million for the fourth
 quarter of 2000.
     The sharp increase in translation loss experienced in Q1 2001 stemmed from
 high devaluation of TL/USD rate as a result of the economic difficulties that
 have emerged in Turkey in the first three months of 2001. These economic
 difficulties include, but are not limited to a steep decline in prices of
 domestic debt and equity securities and increasing rates on government and
 corporate borrowings. In an attempt to overcome the liquidity crisis in the
 banking system, on February 21, 2001, the government allowed Turkish Lira to
 float freely. This caused a 28% devaluation of the Turkish Lira against the US
 Dollar during the first day of floatation. Since Turkcell's receivables are in
 Turkish Liras and majority of its payables and loans are in foreign
 currencies, devaluation of the Turkish Lira against the US Dollar has caused
 the sharp increase in translation loss in Q1 2001 compared to Q4 2000.
     Translation loss increased 697% in Q1 2001 compared to Q4 2000 for the
 same reasons as explained above. The devaluation rate for Q1 2001 was 34%
 compared to 1% in Q4 2000.
 
     7. CHURN RATE
     Turkcell adopted a shorter disconnection process for non-paying
 subscribers on September 14, 2000. "Churn" refers to disconnected subscribers,
 both voluntary and involuntary.  According to the new disconnection policy,
 subscribers who do not pay their bills will be disconnected from the Turkcell
 network, and included in churn, upon the commencement of the legal process to
 disconnect them which occurs approximately 180 days from the due date
 of the unpaid bill. Pending disconnection, non-paying subscribers are
 suspended from service (but are still considered subscribers) and receive a
 suspension warning, which in some cases results in payment and reinstatement
 of service. As a result, for the quarter ended March 31, 2001, Turkcell
 disconnected approximately 254,000 subscribers for non-payment of bills and
 for the quarter ended March 31, 2001 Turkcell's churn rate was 3.7%.  The
 management believes that Turkcell has an adequate bad debt provision in its
 financial statements for such non-payments and disconnections.
 
     8. PROFIT & LOSS AND BALANCE SHEET STATEMENTS
 
     Net loss.
     Net loss was $74.5 million in the first quarter of 2001 compared to
 $3.7 million in the fourth quarter of 2000 mainly due to the devaluation of TL
 against US$ resulted in a translation loss of $80.6 million in the first
 quarter of 2001 compared to translation gain of $13.5 million in the fourth
 quarter of 2000.
 
     Direct cost of revenues.
     Direct cost of revenues decreased 4% to $323.2 million for the first
 quarter of 2001 from $335.1 million for the fourth quarter of 2000, due to the
 impact of devaluation of TL against US$ offset partially by the hard currency
 based operational costs.
 
     Depreciation and amortization.
     Depreciation and amortization expenses increased 6% to $94.7 million for
 the first quarter of 2001 from $89.3 million for the fourth quarter of 2000 as
 a result of network expansion.
     As a percentage of revenue, direct cost of revenues increased to 61% for
 the first quarter of 2001 from 57% for the fourth quarter of 2000, mainly due
 to the impact of devaluation on Turkcell's TL denominated revenues.
 
     Selling and marketing.
     Selling and marketing expenses decreased 26% to $106.5 million for the
 first quarter of 2001 from $143.8 million for the fourth quarter of 2000
 mainly due to devaluation of TL's against the US$. As a percentage of
 revenues, selling and marketing expenses were 20% for the first quarter of
 2001, compared to 24% for the fourth quarter of 2000.
 
     General and administrative expenses.
     General and administrative expenses decreased 22% to $46.4 million for the
 first quarter of 2001 from $59.8 million for the fourth quarter of 2000 due to
 the impact of devaluation of TL against US$. General and administrative
 expenses represented 9% of revenues for the first quarter of 2001 compared to
 10% for the fourth quarter of 2000. Bad debt provision expense, as a
 percentage of revenues was 6.8% in Q1 2001 compared to 5.3% as of December 31,
 2000.
 
     Interest income (expense).
     Net interest expense was $40.2 million for the first quarter of 2001. Net
 interest expense remained almost the same for the fourth quarter of 2000
 mainly due to the additional borrowings from domestic banks in the fourth
 quarter of 2000 offset by repayments realized in Q1 2001.
     Turkcell's total assets decreased by 5% to $3,699.2 million at March 31,
 2001 from $3,884.9 million at December 31, 2000 mainly due to the impact of
 devaluation on monetary items.
 
     Capex.
     Total capital expenditures in 1999, 2000 and Q1 2001 are $973.5 million
 $976.8 million and $101.3 million, respectively.
     In a cost saving measure, Turkcell reduced capex planned for 2001. Capex
 fell from $117.3 million in Q4 2000 to $101.3 million in Q1 2001. Capex per
 subscriber declined from $289 in Q4 2000 to $275 in Q1 2001.
 
     Debt.
     As of March 31, 2001, Turkcell had, on a consolidated basis, total
 indebtedness of $2,023.5 million.
    As a result of the recent economic crisis, we may experience a decrease in
 operational cash flow. This may require us to refinance some portion of our
 existing indebtedness or acquire additional financing in 2001.
 
     SUMMARY OPERATING DATA                           Q4 2000        Q1 2001
     Number of postpaid customers
      at end of period (in millions)                      5.6            5.3
     Number of prepaid customers
      at end of period (in millions)                      4.5            5.6
     Total customers at end of period
      (in millions)                                      10.1           10.9
     Average monthly revenue per
      customer - postpaid                               $26.0          $23.4
     Average monthly revenue per
      customer - prepaid                                $11.6           $9.0
     Average monthly revenue
      per customer - blended                            $20.5          $16.5
     Churn                                               2.0%           3.7%
     MoU                                                 81.9           66.4
 
     The statements contained in this release which are not historical facts
 are forward-looking statements with respect to plans, projections or future
 performance of the Company, the occurrence of which involves certain risks and
 uncertainties. For a discussion of important factors which could cause actual
 results to differ materially from such forward-looking statements, refer to
 Turkcell's registration statements on Form F-1 (Commission file No. 333-12118)
 which was declared effective by the U.S. Securities and Exchange Commission on
 July 7, 2000.
 
     Financial Tables Follow
     Consolidated Income Statement Data
     Consolidated Balance Sheet Data
 
 
     SELECTED FINANCIALS
 
                                                Three Months Ended
                                     Q1 2000         Q4 2000       Q1 2001
     Consolidated Income Statement
      Data
     Net Sales / Operating Revenues
      Communication fees               417.3           524.8         482.3
      Monthly fixed fees                56.9            49.9          38.9
      Subscription fees                  0.1           (0.0)            --
      SIM card sales                     3.9             8.9           6.5
      Call Center Revenues               0.4             3.6           2.4
      Other                               --             0.3           0.2
     Total revenues                    478.6           587.5         530.3
     Direct cost of revenues         (229.6)         (335.1)       (323.2)
     Gross profit                      249.0           252.4         207.1
      General & Administrative
       Expenses                       (39.6)          (59.8)        (46.4)
      Selling & Marketing Expenses    (66.4)         (143.8)       (106.5)
 
     Income ( loss ) from operations   143.0            48.8          54.2
     Income from Related Parties , net    --             0.5           0.5
     Net interest expense             (45.8)          (38.2)        (40.2)
     Other Income (expense ) , net       1.1             3.5           1.7
     Gain on Sale of Participations       --                            --
 
     Equity in net Income (loss) of
      unconsolidated Investees           0.1          (18.4)        (18.8)
     Minority Interest                 (0.2)           (0.0)         (0.1)
     Translation Loss                 (19.5)            13.5        (80.6)
     Income ( loss ) before taxes       78.7             9.7        (83.3)
     Income tax benefit ( expense )    (3.6)          (13.4)           8.8
     Net Income ( loss )                75.1           (3.7)        (74.5)
     Net Income ( loss ) from operations
      per share                      0.00032       (0.00002)     (0.00032)
     Other Financial Data
     Gross margin                      52.0%           43.0%         39.1%
     Adjusted EBITDA                   181.5           151.6          68.3
     Adjusted EBITDA margin            37.9%           25.8%         12.9%
     Capital Expenditures              320.2           117.3         101.3
 
     Consolidated Balance Sheet Data (at period end)
     Cash and cash equivalents         181.1           363.4         136.3
     Total assets                    3,145.6         3,884.9       3,699.2
     Long term debt                  1,334.5         1,635.1       1,565.0
     Total debt                      1,793.7         2,083.8       2,023.5
     Total liabilities               2,252.0         2,590.1       2,479.3
     Total shareholders' equity /
      Net Assets                       893.6         1,294.8       1,220.0
     Capital Stock                     211.0           458.2         458.2
     Consolidated Cash Flow Information
     Net Cash (used in) provided by
      operating activities            (99.9)           129.9        (58.2)
     Net Cash used in by investing
      activities                      (91.8)         (476.5)       (115.0)
     Net Cash (used in) provided by
      financing activities             124.0           430.3        (53.9)
 
      (*) Adjusted EBITDA equals net income (loss) before interest, minority
          interest, income from related parties, other income, equity in net
          income (loss) of unconsolidated investees, income tax benefit
         (expense), depreciation and amortization. Adjusted EBITDA is not a
          measurement of financial performance under generally accepted
          accounting principles and should not be construed as a substitute
          for net earnings (loss) as a measure of performance or cash flow from
          operations as a measure of liquidity. It is used in this table
          because it is a common and useful measure of performance of a mobile
          operator.
 
 
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SOURCE Turkcell Iletisim Hizmetleri A.S.
    ISTANBUL, Turkey, April 26 /PRNewswire/ --
 Turkcell (NYSE:   TKC; ISE: TCELL), (http://www.turkcell.com.tr), the leading
 provider of mobile communications services in Turkey, today announced results
 as of and for the quarter ended March 31, 2001. All financial results in this
 press release are unaudited and reported in accordance with accounting
 principles generally accepted in the United States (US GAAP).
 
     Highlights
     1) Subscriber base grew 8% to 10.9 million at March 31, 2001 from
        10.1 million at December 31, 2000. In total, 864,485 net new
        subscribers were added during the first three months of 2001. New gross
        subscribers acquired in the first quarter of 2001 consist of 83%
        prepaid and 17% post paid subscribers.
 
     2) Revenue and net loss for the quarter ending March 31, 2001 were
        impacted by the steep slide in the value of the Turkish Lira ("TL")
        against the US$ and volatile economic conditions. The TL was devalued
        34% against the US$ during the first quarter of 2001.
 
     3) Revenue decreased 10% to $530.3 million for Q1 2001 from $587.5 million
        for Q4 2000 primarily as a result of 34% devaluation, lower usage due
        to economic crisis and the continued application of the Special
        Communications Tax of 25%, which was enacted after the earthquakes in
        Turkey in 1999 (the "earthquake tax") for two more years until December
        31, 2002. As of April 26 2001, the devaluation rate is 45%.
 
     4) Turkcell posted a net loss of $74.5 million for Q1 2001 compared to net
        loss of $3.7 million in Q4 2000, mainly due to the increased
        translation loss caused by Turkish Lira's devaluation against the
        US$ during the first quarter of 2001.
 
     5) Consumer worries resulted in a 10% decline in postpaid ARPU to $23.4 in
        Q1 2001, from $26.0 in Q4 2000. Prepaid ARPU slipped by 22% to
        $9.0 from $11.6, reflecting the volatile economic environment. On a
        blended basis, ARPU was $16.5 for the first three months of 2001
        compared to $20.5 for the fourth quarter of 2000.
 
     6) EBITDA on a pre-fx (foreign exchange) basis was $148.9 million for Q1
        2001 compared to $138.1 in Q4 2000. Adjusted EBITDA stood at
        $68.3 million for Q1 2001, down from $151.6 million in Q4 2000 due
        mainly to the impact of the translation loss and devaluation on tariffs
        despite increases enacted as 9% in January and 12% in March 2001.
        Reduced consumer spending and the effect of the expanding prepaid
        subscriber base on ARPU also lowered EBITDA. The steep devaluation of
        the TL against the US$ rate caused a total translation loss of
        $80.6 million for Q1 2001, compared to a translation gain of
        $13.5 million for Q4 2000.
 
     7) In a cost saving measure, Turkcell reduced capex planned for 2001.
        Capex fell from $117.3 million in Q4 2000 to $101.3 million in Q1 2001.
 
     8) The churn rate for Q1 2001 was 3.7% mainly due to disconnection of
        non-payers.
 
     Comments from the CEO, Cuneyt Turktan
    "Turkey has been through a very tough three months. Consumer confidence,
 which was already shaken by the November financial crisis, sank to an
 unprecedented low as the government abandoned the IMF-supported disinflation
 program and floated the TL, resulting in the 34% devaluation of TL against the
 US$ by the end of March. The lagged impact of this devaluation -- which had
 reached 45% as of April 26, 2001 -- will be seen in the coming quarters.
     In mid-April, the announcement of a new economic program by the government
 has provided hopes for a gradual recovery based on lasting, deep-rooted
 change. The new program calls for bold steps aimed at minimizing the
 involvement of the state in the economy. Turkcell is convinced of the positive
 benefits of this liberalization, which foresees eliminating state monopolies
 in many areas, including fixed line telecommunications. Turkcell believes that
 the new program will enable Turkey to move forward quickly to reach a new
 stage of expansion and prosperity.
     At present, however, the unknown duration and magnitude of market slowdown
 is affecting Turkcell as well as its customers. The decline in disposable
 income and purchasing power has depressed consumer spending across all
 sectors. In this environment, Turkcell's revenues decreased 10% to
 $530.3 million in Q1 2001 from $587.5 million in Q4 2000.  However, subscriber
 growth continued to climb reaching 10.9 million at the end of Q1 2001.
     Turkcell managed the economic crisis with flexibility and sensitivity.
 Turkcell is raising tariffs in small increments in order to retain customers.
 Turkcell has taken measures to control operating and capital expenditures and
 has reviewed the roll out of new investments in data related services.
 Although Turkcell is putting less emphasis on rolling out new data related
 services due to the depressed state of the market, it remains committed to its
 long-term vision of converging technologies.
     Despite the market turmoil, Turkcell is dedicated to its strategy.
 Innovative tariff packages, its superior network and a variety of
 customer-focused product offerings will help to grow its current customer base
 while contributing to customer retention. These competitive new tariff
 packages will encourage usage within the Turkcell network and prevent churn to
 other operators.
     Turkcell is focused on maintaining its strong brand awareness throughout
 this down period, retaining its subscribers, and ensuring the continuing
 loyalty of its dealers. Turkcell believes that this strategy will pay off in
 the long term as the Turkish economy regains its vitality."
 
     Overview of the First Quarter 2001
     Turkcell has been successful in expanding its subscriber base. Turkcell's
 value proposition has been improved by the introduction of differentiated
 tariffs in Q4 2000 and by "Super On Net" in March 2001, a new tariff package
 that provides advantageous discounts on Turkcell-to-Turkcell calls. Turkcell
 is now in a very competitive position in the market in terms of both rates and
 its product offering. However, the lagged impact of both devaluation and new
 competition may impact results in the coming months.
     Subscriber growth continued in the first quarter, despite the economic
 downturn, indicating continuing consumer need for mobile communications.
 Turkcell gained 864,485 net new subscribers during the three months period
 ended March 31, 2001. Although the larger subscriber base and increasing share
 of prepaid customers in its subscriber base have contributed to a decline in
 ARPU, Turkcell believes that an increase in the number of subscribers is one
 of the key elements in future earnings growth.
     Increased operational efficiency will be key to Turkcell's performance in
 2001. Turkcell reacted promptly to the devaluation of the TL by tightening
 operating and capital expenditures. Better controls over general and
 administrative expenses and stricter HR policies have reduced operating costs.
 Turkcell expects slower growth during the next three quarters as a result of
 decreased purchasing power, consumer worries and economic contraction.
 Nevertheless, Turkcell intends to move forward to fortify the power of its
 brand and the quality of its services in order to maintain its leading market
 position.
 
     Update on License VAT Dispute
     Since the beginning of 2001 there have been two developments in Turkcell's
 legal proceedings with the Turkish Tax Office regarding payment of VAT on the
 upfront license fee paid to Turkish Treasury. On March 16, 2001, Turkcell has
 agreed on a payment schedule for the disputed VAT, interest and penalties.
 Accordingly, Turkcell paid approximately $21.5 million on March 16. The
 remaining approximately $68.9 million, which includes interest and
 penalties, will be paid in equal monthly installments over the 15 months
 period. In a related case, on April 20, 2001, the Istanbul 5th division of the
 Tax Court ruled that interest payments were applicable to the VAT payment
 claimed by the Tax Office. However, in a positive outcome for Turkcell, the
 court rejected the Tax Office's claim that interest should be calculated for
 the period starting April 27, 1998 through May 4, 2000. Rather, the court
 found that interest should be calculated for the shorter period starting April
 27, 1998 through December 31, 1998. A final decision on the VAT dispute is
 still pending at Danystay. The company and its Turkish legal council believe
 that the Company will prevail. Therefore the management has not included such
 payments in the determination of net income.
 
     Financial Section
     Due to developments in our business and the events in the Turkish economy,
 the following textual discussion focuses on the developments and trends in our
 business in the first quarter of 2001 compared to the fourth quarter of 2000.
 For your information, selected financial information for the first quarter of
 2000 is included at the end of this press release.
 
     1. SUBSCRIBERS
     Turkcell acquired approximately 864,485 net new subscribers in the first
 quarter of 2001. New gross subscribers acquired in the first quarter of 2001
 consist of 83% prepaid and 17% post paid subscribers.
    Turkcell's subscriber base increased 8% to 10.9 million at March 31, 2001
 from 10.1 million at December 31, 2000.
     The overall subscriber base at March 31, 2001 consisted of 5.6 million
 prepaid and 5.3 million postpaid subscribers.
 
     2. REVENUES
     Total revenues for the three months ended March 31, 2001 decreased 10% to
 $530.3 million from $587.5 million for the last quarter of 2000. The decrease
 in revenues in Q1 2001 resulted primarily from the low usage patterns of
 customers due to the economic crisis and the extension of the earthquake tax
 through December 31, 2002.
     In Q1 2001, Turkcell's revenues in TL increased, compared to Q4 2000,
 revenues in US$ decreased because of 34 % quarterly devaluation of TL compared
 to only 1% of devaluation in Q4 2000.
    Turkcell's revenues are mostly derived from communication fees. Revenues
 from communication fees for the three months ended March 31, 2001 decreased by
 8% to $482.3 million from $524.8 million for the last quarter of 2000 mainly
 due to the lower usage arising from the economic crisis, the extension of
 earthquake taxes and the 34% quarterly devaluation.
 
     3. ARPU
     Turkcell's average monthly revenue per customer per month decreased 19.5%
 to $16.5 in the first quarter of 2001 from $20.5 in the fourth quarter of
 2000.
     Turkcell's average revenue per postpaid customer per month decreased 10%
 to $23.4 in the first quarter of 2001 from $26.0 in the fourth quarter of
 2000. Its average revenue per prepaid customer per month also decreased 22% to
 $9.0 in the first quarter of 2001 from $11.6 in the fourth quarter of 2000.
 Blended ARPU has decreased in the first quarter of 2001 compared to the fourth
 quarter of 2000 due to the economic crisis, the TL's steep devaluation against
 the US$, increase in prepaid subscriptions with low usage patterns and
 extension of earthquake tax through December 31, 2002.
 
     4. MoU
     Turkcell's average monthly minutes of use per customer decreased 19% to
 66.4 minutes in the first quarter of 2001 from 81.9 minutes in the fourth
 quarter of 2000. The decrease in MoU was primarily due to the economic crisis
 and increasing share of prepaid customers with low usage patterns.
 
     5. EBITDA
     Adjusted EBITDA decreased 55% to $68.3 million in the first quarter of
 2001 from $151.6 million in the fourth quarter of 2000 mainly due to the 34%
 devaluation of TL against US$ which resulted a steep increase in translation
 loss. Translation Loss for the first quarter of 2001 was $80.6 million
 compared to a gain of $13.5 million for the fourth quarter of 2000.
     The continued fluctuations in the exchange rate for the Turkish Lira is
 likely to result in our requesting further amendments to our EBITDA based
 financial covenants for purposes of our financial results for the first
 financial quarter of 2001. We are having discussions with our principal
 shareholders and related banks to address this, and anticipate being in a
 position to put forward a proposal shortly. In the meantime, we would like the
 present Amendment and Waivers to become effective to address our concerns
 regarding our position at the end of December 2000.
     Operating income increased 11% to $54.2 million from $48.8 million mainly
 due to the impact of TL's devaluation against US$ on our operating expenses.
 
     6. TRANSLATION GAIN (LOSS)
     Translation loss was approximately $80.6 million for the three months
 ended March 31, 2001 and translation gain was $13.5 million for the fourth
 quarter of 2000.
     The sharp increase in translation loss experienced in Q1 2001 stemmed from
 high devaluation of TL/USD rate as a result of the economic difficulties that
 have emerged in Turkey in the first three months of 2001. These economic
 difficulties include, but are not limited to a steep decline in prices of
 domestic debt and equity securities and increasing rates on government and
 corporate borrowings. In an attempt to overcome the liquidity crisis in the
 banking system, on February 21, 2001, the government allowed Turkish Lira to
 float freely. This caused a 28% devaluation of the Turkish Lira against the US
 Dollar during the first day of floatation. Since Turkcell's receivables are in
 Turkish Liras and majority of its payables and loans are in foreign
 currencies, devaluation of the Turkish Lira against the US Dollar has caused
 the sharp increase in translation loss in Q1 2001 compared to Q4 2000.
     Translation loss increased 697% in Q1 2001 compared to Q4 2000 for the
 same reasons as explained above. The devaluation rate for Q1 2001 was 34%
 compared to 1% in Q4 2000.
 
     7. CHURN RATE
     Turkcell adopted a shorter disconnection process for non-paying
 subscribers on September 14, 2000. "Churn" refers to disconnected subscribers,
 both voluntary and involuntary.  According to the new disconnection policy,
 subscribers who do not pay their bills will be disconnected from the Turkcell
 network, and included in churn, upon the commencement of the legal process to
 disconnect them which occurs approximately 180 days from the due date
 of the unpaid bill. Pending disconnection, non-paying subscribers are
 suspended from service (but are still considered subscribers) and receive a
 suspension warning, which in some cases results in payment and reinstatement
 of service. As a result, for the quarter ended March 31, 2001, Turkcell
 disconnected approximately 254,000 subscribers for non-payment of bills and
 for the quarter ended March 31, 2001 Turkcell's churn rate was 3.7%.  The
 management believes that Turkcell has an adequate bad debt provision in its
 financial statements for such non-payments and disconnections.
 
     8. PROFIT & LOSS AND BALANCE SHEET STATEMENTS
 
     Net loss.
     Net loss was $74.5 million in the first quarter of 2001 compared to
 $3.7 million in the fourth quarter of 2000 mainly due to the devaluation of TL
 against US$ resulted in a translation loss of $80.6 million in the first
 quarter of 2001 compared to translation gain of $13.5 million in the fourth
 quarter of 2000.
 
     Direct cost of revenues.
     Direct cost of revenues decreased 4% to $323.2 million for the first
 quarter of 2001 from $335.1 million for the fourth quarter of 2000, due to the
 impact of devaluation of TL against US$ offset partially by the hard currency
 based operational costs.
 
     Depreciation and amortization.
     Depreciation and amortization expenses increased 6% to $94.7 million for
 the first quarter of 2001 from $89.3 million for the fourth quarter of 2000 as
 a result of network expansion.
     As a percentage of revenue, direct cost of revenues increased to 61% for
 the first quarter of 2001 from 57% for the fourth quarter of 2000, mainly due
 to the impact of devaluation on Turkcell's TL denominated revenues.
 
     Selling and marketing.
     Selling and marketing expenses decreased 26% to $106.5 million for the
 first quarter of 2001 from $143.8 million for the fourth quarter of 2000
 mainly due to devaluation of TL's against the US$. As a percentage of
 revenues, selling and marketing expenses were 20% for the first quarter of
 2001, compared to 24% for the fourth quarter of 2000.
 
     General and administrative expenses.
     General and administrative expenses decreased 22% to $46.4 million for the
 first quarter of 2001 from $59.8 million for the fourth quarter of 2000 due to
 the impact of devaluation of TL against US$. General and administrative
 expenses represented 9% of revenues for the first quarter of 2001 compared to
 10% for the fourth quarter of 2000. Bad debt provision expense, as a
 percentage of revenues was 6.8% in Q1 2001 compared to 5.3% as of December 31,
 2000.
 
     Interest income (expense).
     Net interest expense was $40.2 million for the first quarter of 2001. Net
 interest expense remained almost the same for the fourth quarter of 2000
 mainly due to the additional borrowings from domestic banks in the fourth
 quarter of 2000 offset by repayments realized in Q1 2001.
     Turkcell's total assets decreased by 5% to $3,699.2 million at March 31,
 2001 from $3,884.9 million at December 31, 2000 mainly due to the impact of
 devaluation on monetary items.
 
     Capex.
     Total capital expenditures in 1999, 2000 and Q1 2001 are $973.5 million
 $976.8 million and $101.3 million, respectively.
     In a cost saving measure, Turkcell reduced capex planned for 2001. Capex
 fell from $117.3 million in Q4 2000 to $101.3 million in Q1 2001. Capex per
 subscriber declined from $289 in Q4 2000 to $275 in Q1 2001.
 
     Debt.
     As of March 31, 2001, Turkcell had, on a consolidated basis, total
 indebtedness of $2,023.5 million.
    As a result of the recent economic crisis, we may experience a decrease in
 operational cash flow. This may require us to refinance some portion of our
 existing indebtedness or acquire additional financing in 2001.
 
     SUMMARY OPERATING DATA                           Q4 2000        Q1 2001
     Number of postpaid customers
      at end of period (in millions)                      5.6            5.3
     Number of prepaid customers
      at end of period (in millions)                      4.5            5.6
     Total customers at end of period
      (in millions)                                      10.1           10.9
     Average monthly revenue per
      customer - postpaid                               $26.0          $23.4
     Average monthly revenue per
      customer - prepaid                                $11.6           $9.0
     Average monthly revenue
      per customer - blended                            $20.5          $16.5
     Churn                                               2.0%           3.7%
     MoU                                                 81.9           66.4
 
     The statements contained in this release which are not historical facts
 are forward-looking statements with respect to plans, projections or future
 performance of the Company, the occurrence of which involves certain risks and
 uncertainties. For a discussion of important factors which could cause actual
 results to differ materially from such forward-looking statements, refer to
 Turkcell's registration statements on Form F-1 (Commission file No. 333-12118)
 which was declared effective by the U.S. Securities and Exchange Commission on
 July 7, 2000.
 
     Financial Tables Follow
     Consolidated Income Statement Data
     Consolidated Balance Sheet Data
 
 
     SELECTED FINANCIALS
 
                                                Three Months Ended
                                     Q1 2000         Q4 2000       Q1 2001
     Consolidated Income Statement
      Data
     Net Sales / Operating Revenues
      Communication fees               417.3           524.8         482.3
      Monthly fixed fees                56.9            49.9          38.9
      Subscription fees                  0.1           (0.0)            --
      SIM card sales                     3.9             8.9           6.5
      Call Center Revenues               0.4             3.6           2.4
      Other                               --             0.3           0.2
     Total revenues                    478.6           587.5         530.3
     Direct cost of revenues         (229.6)         (335.1)       (323.2)
     Gross profit                      249.0           252.4         207.1
      General & Administrative
       Expenses                       (39.6)          (59.8)        (46.4)
      Selling & Marketing Expenses    (66.4)         (143.8)       (106.5)
 
     Income ( loss ) from operations   143.0            48.8          54.2
     Income from Related Parties , net    --             0.5           0.5
     Net interest expense             (45.8)          (38.2)        (40.2)
     Other Income (expense ) , net       1.1             3.5           1.7
     Gain on Sale of Participations       --                            --
 
     Equity in net Income (loss) of
      unconsolidated Investees           0.1          (18.4)        (18.8)
     Minority Interest                 (0.2)           (0.0)         (0.1)
     Translation Loss                 (19.5)            13.5        (80.6)
     Income ( loss ) before taxes       78.7             9.7        (83.3)
     Income tax benefit ( expense )    (3.6)          (13.4)           8.8
     Net Income ( loss )                75.1           (3.7)        (74.5)
     Net Income ( loss ) from operations
      per share                      0.00032       (0.00002)     (0.00032)
     Other Financial Data
     Gross margin                      52.0%           43.0%         39.1%
     Adjusted EBITDA                   181.5           151.6          68.3
     Adjusted EBITDA margin            37.9%           25.8%         12.9%
     Capital Expenditures              320.2           117.3         101.3
 
     Consolidated Balance Sheet Data (at period end)
     Cash and cash equivalents         181.1           363.4         136.3
     Total assets                    3,145.6         3,884.9       3,699.2
     Long term debt                  1,334.5         1,635.1       1,565.0
     Total debt                      1,793.7         2,083.8       2,023.5
     Total liabilities               2,252.0         2,590.1       2,479.3
     Total shareholders' equity /
      Net Assets                       893.6         1,294.8       1,220.0
     Capital Stock                     211.0           458.2         458.2
     Consolidated Cash Flow Information
     Net Cash (used in) provided by
      operating activities            (99.9)           129.9        (58.2)
     Net Cash used in by investing
      activities                      (91.8)         (476.5)       (115.0)
     Net Cash (used in) provided by
      financing activities             124.0           430.3        (53.9)
 
      (*) Adjusted EBITDA equals net income (loss) before interest, minority
          interest, income from related parties, other income, equity in net
          income (loss) of unconsolidated investees, income tax benefit
         (expense), depreciation and amortization. Adjusted EBITDA is not a
          measurement of financial performance under generally accepted
          accounting principles and should not be construed as a substitute
          for net earnings (loss) as a measure of performance or cash flow from
          operations as a measure of liquidity. It is used in this table
          because it is a common and useful measure of performance of a mobile
          operator.
 
 
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 SOURCE  Turkcell Iletisim Hizmetleri A.S.

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