Press release

Turkcell Iletisim Hizmetleri: First Quarter 2019 Results

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Turkcell Iletisim Hizmetleri (NYSE:TKC) (BIST:TCELL):

  • Please note that all financial data is consolidated and comprises that
    of Turkcell Iletisim Hizmetleri A.S. (the “Company”, or “Turkcell”)
    and its subsidiaries and associates (together referred to as the
    “Group”), unless otherwise stated.
  • We have three reporting segments:

    • “Turkcell Turkey” which comprises all of our telecom related
      businesses in Turkey (as used in our previous releases in periods
      prior to Q115, this term covered only the mobile businesses). All
      non-financial data presented in this press release is
      unconsolidated and comprises Turkcell Turkey only figures, unless
      otherwise stated. The terms “we”, “us”, and “our” in this press
      release refer only to Turkcell Turkey, except in discussions of
      financial data, where such terms refer to the Group, and except
      where context otherwise requires.
    • “Turkcell International” which comprises all of our telecom
      related businesses outside of Turkey.
    • “Other subsidiaries” which is mainly comprised of our information
      and entertainment services, call center business revenues,
      financial services revenues and inter-business eliminations.
      Turkcell Ödeme ve Elektronik Para Hizmetleri A.Ş., our subsidiary
      responsible for payment services, was previously reported under
      Turkcell Turkey but with effect from the first quarter of 2019 is
      now included in “Other Subsidiaries”. We made this change due to
      the fact that its non-group revenues, which are not telco related,
      and consumer finance business related revenues now comprise the
      majority of its total revenues. All figures presented in this
      document for prior periods have been restated to reflect this
      change.
  • In this press release, a year-on-year comparison of our key indicators
    is provided, and figures in parentheses following the operational and
    financial results for March 31, 2019 refer to the same item as at
    March 31, 2018. For further details, please refer to our consolidated
    financial statements and notes as at and for March 31, 2019, which can
    be accessed via our website in the investor relations section (www.turkcell.com.tr).
  • Selected financial information presented in this press release for the
    first and fourth quarters of 2018 and the first quarter of 2019 is
    based on IFRS figures in TRY terms unless otherwise stated.
  • In accordance with our strategic approach and IFRS requirements,
    Fintur is classified as ‘held for sale’ and reported as discontinued
    operations as of October 2016. Certain operating data that we
    previously presented with Fintur included has been restated without
    Fintur.
  • In the tables used in this press release totals may not foot due to
    rounding differences. The same applies to the calculations in the text.
  • Year-on-year and quarter-on-quarter percentage comparisons appearing
    in this press release reflect mathematical calculation.

FINANCIAL HIGHLIGHTS

TRY million   Q118   Q418   Q119   y/y %   q/q %
Revenue   4,762   5,626   5,675   19.2%   0.9%
EBITDA1 2,022 2,239 2,281 12.8% 1.9%
EBITDA Margin (%) 42.5% 39.8% 40.2% (2.3pp) 0.4pp
Net Income   501   864   1,224   144.5%   41.7%

FIRST QUARTER HIGHLIGHTS

  • Strong set of financials:

    • Group revenues of TRY5,675 million, up 19.2% year-on-year
    • Group EBITDA of TRY2,281 million, with an EBITDA margin of 40.2%
    • Positive quarterly trend in EBITDA margin, up 0.4pp for the Group
      and up 2.2pp for Turkcell Turkey
    • Group net income of TRY1,224 million on strong operating
      performance, disciplined financial risk management and
      contribution of Fintur sale
  • Solid operational performance:

    • Mobile ARPU2 growth of 13.4% year-on-year,
      like-for-like ARPU3 growth of 19.6%
    • Residential fiber ARPU growth of 12.3% year-on-year
    • Digital services downloads reached 178 million
    • Mobile multiplay subscriber ratio4 reached 68.6%, up
      9.9pp year-on-year; multiplay with TV subscribers5
      reached 49.5%, up 3.8pp year-on-year
    • Data usage of 4.5G users at 7.8GB in March
  • The transfer of our stake in Fintur to Sonera Holding B.V. was
    completed. The final transaction value was EUR352.9 million. TRY772.4
    million profit was generated from the transaction.
  • Restructuring of the sales organization enables us to closely focus on
    customer needs and respond with more effective services and solutions.
  • We revise our guidance6 for 2019. Accordingly, we now
    target revenue growth of 17%-19% up from 16%-18% and an EBITDA margin
    of 38%-40% compared to 37%-40% previously. We maintain our target
    operational capex over sales ratio7 of 16%-18%.

(1) EBITDA is a non-GAAP financial measure. See page 13 for the
explanation of how we calculate Adjusted EBITDA and its reconciliation
to net income.
(2) Excluding M2M
(3) The ARPU of customers who
have stayed with Turkcell for at least 14 months
(4) Share of
mobile voice line users which excludes subscribers who have not used
their line in the last 3 months. Multiplay refers to mobile customers
who use voice, data and one of core digital services.
(5) Multiplay
subscribers with TV: Fiber internet + IPTV users & fiber internet + IPTV
+ fixed voice users
(6) Please note that this paragraph contains
forward looking statements based on our current estimates and
expectations regarding market conditions for each of our different
businesses. No assurance can be given that actual results will be
consistent with such estimates and expectations. For a discussion of
factors that may affect our results, see our Annual Report on Form 20-F
for 2018 filed with U.S. Securities and Exchange Commission, and in
particular, the risk factor section therein
(7) Excluding license
fee
For further details, please refer to our consolidated financial
statements and notes as at and for March 31, 2019 which can be accessed
via our website in the investor relations section (www.turkcell.com.tr).

COMMENTS BY MURAT ERKAN, CEO

Economic fragility has prevailed in the emerging markets in the first
quarter of 2019. Regardless, as Turkcell Group, we have delivered robust
results on the back of our solid business model built on strong pillars.
Our consolidated revenues grew yearly by 19.2% to TRY5.7 billion with an
EBITDA1 of TRY2.3 billion, resulting in an EBITDA margin of
40.2%. Including the TRY772 million profit generated from the Fintur
transaction, we reported TRY1.2 billion net income, 1.4 times higher
than for the same period of last year. Accordingly, we revise our
full-year guidance2 for 2019 upwards to 17% – 19% for revenue
growth and 38% – 40% for the EBITDA margin. In addition to our solid
financial performance, our leverage ratio has declined to 1.3x with the
contribution of the Fintur transaction, and we expect it to further
decline over the coming periods.

Demand for mobile data has remained strong this quarter with the
contribution of our digital services. Monthly average data consumption
of customers on our 4.5G network has increased 28% yearly to 7.4GB.
Total downloads of our digital services reached 178 million, while we
have continued efforts to increase the time spent on these services. In
the fixed segment, Superbox, our Fixed Wireless Access (FWA) product
providing fiber-like speeds at locations not covered by our fiber
network, has earned customer appreciation, reaching 56 thousand
subscribers. Our capability to provide the Superbox service for the
first time in Turkey through our wide frequency and strong
infrastructure has also proven our readiness for 5G.

As Turkcell, with our “customer first” motto we continue to
contribute to our people and our country.

We marked our twenty-fifth anniversary in February. Over the past 25
years, Turkcell has transformed from a conventional telco into the
world’s first digital operator. We have developed digital services; and
what’s more, we export technology. Following the one signed with
Moldcell, we have also signed cooperation agreements with ALBtelecom of
Albania, CG Corp Global of Nepal and Digicel Group of the Caribbean to
allow the use of our digital services. Our customer-focused approach,
which we have always pursued in achieving this success, will only gain
strength in the upcoming periods as we contribute to their lives with
new smart technologies. In this new era, we aim to strengthen our
emotional ties with our customers and have redesigned our sales
organization accordingly. We now have a structure enabling us to focus
on customer needs more closely, and design more effective services and
solutions.

We have three strategic focus areas.

We believe we can sustain profitable growth with a strategic focus on
three key areas: Our digital services, digital business solutions and
our techfin platform. While continuing to work on increasing the usage
of our locally-developed digital services, we plan to establish new
commercial partnerships for digital exports, the destinations of which
today number 38 countries. We will serve the digital transformation of
both private and public sectors through Digital Business Solutions, our
new subsidiary. The digitization of financial services, which in our
view offers great potential, as well as other new opportunities in this
field form the third focus area.

We continue our efforts towards a shared infrastructure.

As we offer our services through a strong mobile and fixed
infrastructure, we continue to work towards accomplishing a shared
infrastructure; one that best serves the interests primarily of our
country, but also of all parties involved. In this context, we already
provide fixed broadband to additional households through bilateral
agreements with Türksat and Vodafone Turkey. Regarding the next phase,
we believe in the necessity of joint investments into infrastructure to
position Turkey’s communication infrastructure among the best in the
world. We particularly perceive the importance of joint infrastructure
in the era of 5G, which will serve as the platform for Industry 4.0.

We are determined to pioneer Turkey’s technological advancement.

In April, we hosted the technology summit, which coinciding with our 25th
anniversary, was particularly significant. The latest advances,
particularly of locally manufactured technologies formed the agenda of
the summit in its 10th year. The summit hosted over 70
opinion and business leaders in around 30 sessions where 5G, artificial
intelligence, Industry 4.0, smart technologies, entrepreneurship, cyber
security, robotics and cloud technologies were the key topics of
discussion. Over 10,000 attendees in person witnessed the introduction
of our locally-developed AI-powered personal assistant “Yaani Assistant”.

We will continue to serve our country and people through our
investments.

Turkcell has accomplished its pioneering role in the technological
transformation of Turkey with its well-established infrastructure. We
have been the fastest growing telco globally on the back of our services
and solutions developed for our customers over the past three years. We
own a strong mobile network operating over the widest frequency in
Turkey. We have laid 43 thousand km of fiber and built eight data
centers, enabling us to provide high-quality services. For this, we have
already invested TRY50 billion in our technological infrastructure over
the past 25 years, and going forward we will continue our investments.

We will announce our 3-year targets in New York.

We have seen a strong start to 2019 and have revised our full-year
targets upwards. Accordingly, we are scheduled to announce our 3-year
targets on October 31, 2019 in New York at the Turkcell Capital Markets
Day.

We thank all our colleagues for the part they have played in our
success, along with our Board of Directors for their unyielding trust
and support. We also express our gratitude to our customers and business
partners, who have remained with us throughout our success story.

(1) EBITDA is a non-GAAP financial measure. See page 13 for the
explanation of how we calculate Adjusted EBITDA and its reconciliation
to net income.
(2) Please note that this paragraph contains forward
looking statements based on our current estimates and expectations
regarding market conditions for each of our different businesses. No
assurance can be given that actual results will be consistent with such
estimates and expectations. For a discussion of factors that may affect
our results, see our Annual Report on Form 20-F for 2018 filed with U.S.
Securities and Exchange Commission, and in particular, the risk factor
section therein

FINANCIAL AND OPERATIONAL REVIEW

Financial Review of Turkcell Group

Profit & Loss Statement (million TRY)   Q118   Q418   Q119   y/y %   q/q %
Revenue   4,761.6   5,626.3   5,675.3   19.2%   0.9%
Cost of revenue1 (2,134.9) (2,607.3) (2,730.2) 27.9% 4.7%
Cost of revenue1/Revenue (44.8%) (46.3%) (48.1%) (3.3pp) (1.8pp)
Gross Margin1 55.2% 53.7% 51.9% (3.3pp) (1.8pp)
Administrative expenses (154.3) (198.2) (190.6) 23.5% (3.8%)
Administrative expenses/Revenue (3.2%) (3.5%) (3.4%) (0.2pp) 0.1pp
Selling and marketing expenses (356.6) (500.8) (403.1) 13.0% (19.5%)
Selling and marketing expenses/Revenue (7.5%) (8.9%) (7.1%) 0.4pp 1.8pp
Net impairment loses on financial and contract assets (93.8) (81.0) (70.3) (25.1%) (13.2%)
EBITDA2 2,022.0 2,239.0 2,281.1 12.8% 1.9%
EBITDA Margin 42.5% 39.8% 40.2% (2.3pp) 0.4pp
Depreciation and amortization (979.8) (1,287.0) (1,178.1) 20.2% (8.5%)
EBIT3 1,042.1 952.0 1,103.0 5.8% 15.9%
Net finance income / (costs) (313.5) (18.5) (420.4) 34.1% n.m.
Finance income 355.6 (1,225.9) 583.0 63.9% (147.6%)
Finance costs4 (669.1) 1,207.4 (1,003.4) 50.0% (183.1%)
Other income / (expense) (33.5) 46.5 (51.8) 54.6% (211.4%)
Non-controlling interests (24.2) (77.7) (19.8) (18.2%) (74.5%)
Share of profit of equity accounted investees 0.3 0.8 n.a. 166.7%
Income tax expense (170.2) (38.7) (159.8) (6.1%) 312.9%
Discontinued operations 772.4 n.a. n.a.
Net Income   500.8   863.9   1,224.5   144.5%   41.7%

(1) Excluding depreciation and amortization expenses.
(2) EBITDA is
a non-GAAP financial measure. See page 13 for the explanation of how we
calculate Adjusted EBITDA and its reconciliation to net income.
(3)
EBIT is a non-GAAP financial measure and is equal to EBITDA minus
depreciation and amortization expenses.
(4) Fair value loss and
interest expense in relation to derivative instruments reported under
finance cost were netted off from respective fair value gain and
interest income in relation to derivative instruments reported under
finance income. Historical periods were restated to reflect this change.

Revenue of the Group rose 19.2% year-on-year in Q119. This was
driven mainly by growth in Turkcell Turkey revenues on the back of
successful execution of digital services focused strategy and upsell
performance.

Turkcell Turkey revenues, at 85% of Group revenues, increased 18.7% to
TRY4,833 million (TRY4,072 million).

  • Data and digital services revenues rose by 18.1% to TRY3,215 million
    (TRY2,722 million).

    • Higher number of data users, increased data consumption per user,
      rise in 4.5G smartphone penetration as well as the rise in
      penetration of digital services were the main drivers of growth on
      the mobile front.
    • Larger fiber subscriber base, price adjustments and upsell
      efforts, as well as the increased ratio of multiplay subscribers
      with TV, were the main drivers of growth on the fixed front.
  • Wholesale revenues rose by 38.9% to TRY232 million (TRY167 million)
    due to increased carrier traffic and the positive impact of currency
    movements.

Turkcell International revenues, comprising 7% of Group revenues, grew
by 52.0% to TRY425 million (TRY279 million), resulting mainly from the
rise in lifecell and BeST revenues.

Other subsidiaries’ revenues, at 7% of Group revenues, and which
includes information and entertainment services, call center revenues
and revenues from financial services were at TRY417 million (TRY410
million).

  • Please note that we completed the sale of our shares in Azerinteltek,
    our sports betting business in Azerbaijan, as of January 11, 2019. As
    we received the transfer of proceeds on December 27, 2018 and
    transferred the control of the subsidiary, we did not report any
    revenues in Q119 in relation to Azerinteltek operations.
  • Our consumer finance company’s revenues grew by 14.1% to TRY242
    million (TRY212 million). Revenue growth was impacted by the decline
    in consumer loan portfolio from TRY4.4 billion as of Q118 to TRY3.6
    billion as of Q119 due to the installment limitation on consumer loans
    for telecom devices.
  • Turkcell Ödeme ve Elektronik Para Hizmetleri A.Ş., our subsidiary
    responsible for payment services, was previously reported under
    Turkcell Turkey but with effect from the first quarter of 2019 is now
    included in “Other Subsidiaries”. We made this change due to the fact
    that its non-group revenues, which are not telco related, and consumer
    finance business related revenues now comprise the majority of its
    total revenues. All figures presented in this document for prior
    periods have been restated to reflect this change.

Cost of revenue (excluding depreciation and amortization)
increased to 48.1% (44.8%) as a percentage of revenues in Q119. This was
mainly due to the rise in cost of goods sold (4.6pp), despite the
decline in other cost items (1.3pp) as a percentage of revenues.

Administrative expenses were at 3.4% (3.2%) as a percentage of
revenues in Q119.

Selling and marketing expenses declined to 7.1% (7.5%) as a
percentage of revenues in Q119. This was mainly due to the decline in
selling expenses (0.7pp), despite the rise in other cost items (0.3pp)
as a percentage of revenues.

Net impairment loses on financial and contract assets were at
TRY70 million (TRY 94 million) in Q119.

EBITDA1 rose by 12.8% year-on-year in Q119,
leading to an EBITDA margin of 40.2% (42.5%).

  • Turkcell Turkey’s EBITDA grew by 9.7% to TRY1,910 million (TRY1,741
    million) resulting in an EBITDA margin of 39.5% (42.8%). Turkcell
    Turkey’s EBITDA margin improved by 2.2pp compared to Q418 (37.3%).
  • Turkcell International EBITDA2 increased to TRY194 million
    (TRY93 million) with an EBITDA margin of 45.6% (33.2%).
  • The EBITDA of other subsidiaries was at TRY178 million (TRY188
    million).

(1) EBITDA is a non-GAAP financial measure. See page 13 for the
explanation of how we calculate adjusted EBITDA and its reconciliation
to net income.

(2) We started to capitalize the frequency usage fees of lifecell in
Q418 in accordance with IFRS16 which led to a positive impact on
Turkcell International EBITDA. The change was implemented
retrospectively; impact regarding previous quarters of 2018 was booked
in Q418.

Depreciation and amortization expenses increased by 20.2% in Q119.

Net finance expense increased to TRY420 million (TRY313 million)
in Q119, mainly due to the higher interest expense of loans. Please note
that the Group started to apply hedge accounting as of July 1, 2018 for
existing participating cross currency swap and cross currency swap
transactions, in accordance with the IFRS 9 hedge accounting
requirement. Please see the IFRS report for details.

See Appendix A for details of net foreign exchange gain and loss.

Income tax expense declined 6.1% year-on-year in Q119. Please see
Appendix A for details.

Net income of the Group rose to TRY1,224 million (TRY501 million)
in Q119, mainly driven by strong operating performance, disciplined
financial risk management and contribution of the Fintur sale, which had
a positive impact of TRY772 million.

Total cash & debt: Consolidated cash as of March 31, 2019
increased to TRY8,888 million from TRY7,419 million as of December 31,
2018. Excluding the FX swap transactions for TRY borrowing, 79% of our
cash is in US$ and 21% is in EUR.

Consolidated debt as of March 31, 2019 increased to TRY22,867 million
from TRY20,156 million as of December 31, 2018. Please note that
TRY1,410 million of our consolidated debt is comprised of lease
obligations resulting from the implementation of IFRS 16.

  • Consolidated debt breakdown excluding lease obligations resulting from
    the implementation of IFRS 16:

    • Turkcell Turkey’s debt balance was TRY16,771 million, of which
      TRY9,727 million (US$1,728 million) was denominated in US$,
      TRY6,299 million (EUR997 million) in EUR, TRY214 million (CNY257
      million) in CNY and the remaining TRY531 million in TRY.
    • The debt balance of lifecell was TRY1,071 million all denominated
      in UAH.
    • Our consumer finance company had a debt balance of TRY3,610
      million, of which TRY1,759 million (US$312 million) was
      denominated in US$, and TRY1,077 million (EUR170 million) in EUR
      with the remaining TRY774 million in TRY.
  • TRY705 million of IFRS 16 lease obligations is denominated in TRY,
    TRY39 million (US$7 million) in US$, TRY178 million (EUR28 million) in
    EUR and the remaining balance in other local currencies (please note
    that the figures in parentheses refer to US$ or EUR equivalents).

TRY13,342 million of our consolidated debt is set at a floating rate.
Excluding the consumer finance business borrowings, TRY5,048 million of
consolidated debt will mature within less than a year.

Net debt as of March 31, 2019 was at TRY13,979 million. Including the
proceeds of the Fintur deal of EUR352.9 million (equivalent of TRY2,230
million as of March 31, 2019), which is booked under due from related
parties, net debt was TRY11,749 with a net debt to EBITDA ratio of 1.3
times. Excluding consumer finance company consumer loans, our telco only
net debt was at TRY8,108 million with a leverage of 0.9 times.

Turkcell Group has a long FX position of US$216 million as at the end of
Q119. (Please note that this figure takes into account advance
payments and hedging but excludes FX swap transactions for TL borrowing.
Derivatives (VIOP) and forward transactions are included).

Capital expenditures: Capital expenditures, including
non-operational items, amounted to TRY1,352.6 million in Q119. In Q119,
operational capital expenditures (excluding license fees) at the Group
level were at 15.6% of total revenues.

Capital expenditures (million TRY)   Q118   Q418   Q119
Operational Capex   (526.3)   (1,448.6)   (883.6)
License and Related Costs (188.0) (1.7) (0.7)
Non-operational Capex (Including IFRS15 & IFRS16)   (1,845.9)   (784.3)   (468.4)
Total Capex1   (2,560.1)   (2,234.6)   (1,352.6)

(1) Breakdown of capex for Q118 has been restated.

Operational Review of Turkcell Turkey

Summary of Operational Data   Q118   Q418   Q119   y/y %   q/q %
Number of subscribers (million)   37.3   36.7   36.6   (1.9%)   (0.3%)
Mobile Postpaid (million) 18.6 18.8 18.7 0.5% (0.5%)
Mobile M2M (million) 2.4 2.4 2.4
Mobile Prepaid (million) 16.0 14.9 15.0 (6.3%) 0.7%
Fiber (thousand) 1,248.7 1,385.6 1,411.1 13.0% 1.8%
ADSL (thousand) 916.6 905.6 861.7 (6.0%) (4.8%)
Superbox (thousand)1 3.5 33.5 56.4 n.m 68.4%
Cable (thousand) 9.7 n.a. n.a.
IPTV (thousand) 535.0 613.4 632.0 18.1% 3.0%
Churn (%)2
Mobile Churn (%)3 1.4% 2.9% 1.9% 0.5pp (1.0pp)
Fixed Churn (%) 1.8% 2.2% 2.0% 0.2pp (0.2pp)
ARPU (Average Monthly Revenue per User) (TRY)
Mobile ARPU, blended 31.5 35.0 35.7 13.3% 2.0%
Mobile ARPU, blended (excluding M2M) 33.6 37.4 38.1 13.4% 1.9%
Postpaid 45.4 49.5 50.6 11.5% 2.2%
Postpaid (excluding M2M) 51.5 56.4 57.4 11.5% 1.8%
Prepaid 15.3 17.4 17.2 12.4% (1.1%)
Fixed Residential ARPU, blended 55.3 56.6 59.8 8.1% 5.7%
Residential Fiber ARPU 55.9 58.2 62.8 12.3% 7.9%
Average mobile data usage per user (GB/user) 4.4 5.9 5.9 34.1%
Mobile MoU (Avg. Monthly Minutes of usage per subs) blended   344.8   356.4   393.1   14.0%   10.3%

(1) Superbox subscribers are included in mobile subscribers.
(2)
Presentation of churn figures has been changed to demonstrate average
monthly churn figures for the respective quarters.
(3) In Q117, our
churn policy was revised to extend from 9 months to 12 months (the
period at the end of which we disconnect prepaid subscribers who have
not topped up above TRY10). Additionally, under our revised policy,
prepaid customers who last topped up before March will be disconnected
at the latest by year-end.

Our mobile subscriber base stood at 33.7 million by the end of Q119.
While we registered 73 thousand quarterly prepaid subscriber net
additions, our postpaid subscribers declined by 155 thousand during the
quarter. The share of postpaid subscribers was at 55.4% (53.8%) of our
mobile subscriber base.

Our fixed subscriber base was at 2.3 million by the end of Q119. Our
fiber customer base exceeded 1.4 million on 25 thousand quarterly and
162 thousand annual net additions. Superbox, our fixed wireless access
product, exceeded 56 thousand subscribers in Q119. IPTV subscribers
reached 632 thousand on 19 thousand quarterly and 97 thousand annual net
additions. Total TV subscribers, including OTT only users, reached 4.1
million4. As of April, the Turkcell TV+ mobile application
has been downloaded 12.6 million times.

In Q119, our average monthly mobile churn rate was at 1.9% and our
average monthly fixed churn rate was at 2.0%.

Mobile ARPU (excluding M2M) rose by 13.4% year-on-year in Q119, mainly
driven by the rise in penetration of digital services, increased data
consumption per user and price adjustments as well as our upsell
efforts. The increased share of multiplay customers, who use voice, data
and digital services combined, to 68.6%5,contributed
to the ARPU rise as well.

Our residential fiber ARPU grew by 12.3% in Q119 year-on-year. This was
driven by upsell efforts and price adjustments, as well as by the rise
in multiplay subscribers with TV6 to 49.5% of total
residential fiber subscribers.

Average mobile data usage per user rose by 34.1% in Q119 year-on-year,
on the back of rising number and data consumption of 4.5G users and
rising digital services usage. Average mobile data usage of 4.5G users
was at 7.8 GB in March.

4.5G compatible smartphones increased to 18.5 million in Q119 on 0.5
million quarterly additions, comprising 82% of total smartphones on our
network by the end of Q119.

(4) IPTV users and OTT only cumulative active users
(5) Share among
mobile voice users excluding subscribers who have not used their lines
in the last 3 months. Multiplay refers to mobile customers who use
voice, data and one of core digital services
(6) Multiplay
subscribers with TV: Fiber internet + IPTV users & fiber internet + IPTV
+ voice users

TURKCELL INTERNATIONAL

lifecell1 Financial Data   Q118   Q418   Q119   y/y%   q/q%
Revenue (million UAH)   1,207.9   1,417.0   1,415.5   17.2%   (0.1%)
EBITDA(million UAH) 504.9 1,083.5 815.5 61.5% (24.7%)
EBITDA margin (%) 41.8% 76.5% 57.6% 15.8pp (18.9pp)
Net income / (loss) (million UAH) (178.2) (730.1) (267.2) 49.9% (63.4%)
Capex (million UAH)   2,588.7   2,694.9   357.8   (86.2%)   (86.7%)
Revenue (million TRY) 167.9 273.3 275.8 64.3% 0.9%
EBITDA (million TRY) 69.8 205.9 159.0 127.8% (22.8%)
EBITDA margin (%) 41.6% 75.3% 57.7% 16.1pp (17.6pp)
Net income / (loss) (million TRY)   (24.9)   (126.3)   (52.1)   109.2%   (58.7%)

(1) Since July 10, 2015, we hold a 100% stake in lifecell.

lifecell (Ukraine) revenues rose by 17.2% year-on-year in Q119 in
local currency terms mainly on the back of increased mobile data
revenues with rising penetration of 4.5G users and higher data
consumption. EBITDA in local currency terms increased 61.5% year-on-year
to UAH816 million, which led to an EBITDA margin of 57.6%. Please also
note that starting from Q418, lifecell started to capitalize its radio
frequency usage costs in accordance with IFRS16. The overall impact,
including the retrospective adjustments for previous quarters of 2018,
was booked in Q418.

lifecell revenues in TRY terms increased 64.3% year-on-year, while its
EBITDA rose to TRY159 million in Q119.

lifecell Operational Data   Q118   Q418   Q119   y/y%   q/q%
Number of subscribers (million)2   10.3   9.9   9.4   (8.7%)   (5.1%)
Active (3 months)3 7.7 7.3 6.9 (10.4%) (5.5%)
MOU (minutes) (12 months) 138.5 148.6 141.4 2.1% (4.8%)
ARPU (Average Monthly Revenue per User), blended (UAH) 37.7 47.2 49.0 30.0% 3.8%
Active (3 months) (UAH)   51.4   63.1   66.7   29.8%   5.7%

(2) We may occasionally offer campaigns and tariff schemes that have an
active subscriber life differing from the one that we normally use to
deactivate subscribers and calculate churn.
(3) Active subscribers
are those who in the past three months made a revenue generating
activity.

lifecell’s three-month active subscriber base declined to 6.9 million in
Q119, mainly due to the declining multiple SIM card usage trend in the
country. lifecell continued its strong ARPU performance with 29.8%
growth in Q119, mainly on increased mobile data consumption and upsell
efforts. Leveraging the quality of its 4.5G and 3G networks and
attractive digital services, lifecell continued to attract high ARPU
generating subscribers, which supported the solid ARPU performance.

The 4.5G subscriber base of lifecell continued to expand in Q119. 4.5G
users reached 36% of total mobile data users. The penetration of 4.5G
services continued to rise as reflected by the increased number of
3-month active 4.5G users, which exceeded 1.6 million. Average data
consumption per user rose by 117% year-on-year, mainly driven by the
higher data consumption of 4.5G users. lifecell continued its leadership
of the Ukrainian market in smartphone penetration, which reached 77% as
at the end of Q119.

In accordance with Turkcell’s global digital services strategy, lifecell
continued to increase the penetration of its digital services within its
customer base. Accordingly, the number of three-month active digital
services users exceeded 1 million in Q119. Furthermore, lifecell
continued to enrich its digital services portfolio launching new
offerings during the quarter in order to meet the digital needs of both
retail and corporate customers.

BeST1   Q118   Q418   Q119   y/y%   q/q%
Number of subscribers (million)   1.6   1.6   1.6    
Active (3 months)   1.2   1.2   1.2    
Revenue (million BYN) 29.2 32.9 31.9 9.2% (3.0%)
EBITDA (million BYN) 5.3 12.7 7.4 39.6% (41.7%)
EBITDA margin (%) 18.2% 38.6% 23.2% 5.0pp (15.4pp)
Net loss (million BYN) (10.0) (8.3) (8.8) (12.0%) 6.0%
Capex (million BYN)   29.5   18.3   10.8   (63.4%)   (41.0%)
Revenue (million TRY) 56.6 83.8 79.5 40.5% (5.1%)
EBITDA (million TRY) 10.3 31.3 18.4 78.6% (41.2%)
EBITDA margin (%) 18.2% 37.4% 23.1% 4.9pp (14.3pp)
Net loss (million TRY)   (19.4)   (21.3)   (21.9)   12.9%   2.8%

(1) BeST, in which we hold an 80% stake, has operated in Belarus since
July 2008.

BeST revenues grew by 9.2% year-on-year in Q119 in local currency
terms, mainly driven by growth in mobile data revenues. Digital services
revenue growth also contributed to the revenue increase. BeST’s EBITDA
rose by 39.6% year-over-year to BYN7.4 million, which led to an EBITDA
margin of 23.2%.

BeST’s revenues in TRY terms grew by 40.5% year-on-year in Q119, with an
EBITDA margin of 23.1%.

BeST continued to increase the penetration of its 4G services as
reflected by the number of 4G users, which reached 40% of its 3-month
active subscriber base, resulting in increased data consumption and
digital services usage. Average monthly data consumption of subscribers
rose by 76% year-over-year to 6.3GB in Q119. Digital services
penetration continued to increase within its customer base. Accordingly,
subscribers who use at least one digital service comprise 21% of the
3-month active subscriber base. Meanwhile, BeST launched its new digital
offering PLAY, which includes 7 digital services.

Kuzey Kıbrıs Turkcell2 (million TRY)   Q118   Q418   Q119   y/y%   q/q%
Number of subscribers (million)   0.5   0.5   0.6   20.0%   20.0%
Revenue 43.5 45.8 47.9 10.1% 4.6%
EBITDA 14.1 11.6 16.7 18.4% 44.0%
EBITDA margin (%) 32.4% 25.3% 34.9% 2.5pp 9.6pp
Net income 5.2 8.9 7.6 46.2% (14.6%)
Capex   15.2   23.3   10.6   (30.3%)   (54.5%)

(2) Kuzey Kıbrıs Turkcell, in which we hold a 100% stake, has operated
in Northern Cyprus since 1999.

Kuzey Kıbrıs Turkcell revenues grew by 10.1% year-on-year in
Q119, mainly driven by mobile data revenue growth. EBITDA increased by
18.4% resulting in an EBITDA margin of 34.9%.

Fintur: In accordance with our strategic approach and IFRS
requirements, Fintur is classified as ‘held for sale’ and reported as
discontinued operations as of October 2016.

On December 12, 2018, Turkcell signed a binding agreement and on April
2, 2019 completed the transfer of its shares in Fintur to Sonera Holding
B.V., the majority shareholder of Fintur. The final value of the
transaction was EUR352.9 million. As the conditions precedent required
for the share transfer were completed within Q119, TRY772 million profit
generated from the transaction is reflected in Q119 financial statements.

Turkcell Group Subscribers

Turkcell Group subscribers amounted to approximately 48.4 million
as of March 31, 2019. This figure is calculated by taking the number of
subscribers of Turkcell Turkey and each of our subsidiaries. It includes
the total number of mobile, fiber, ADSL, cable and IPTV subscribers of
Turkcell Turkey, and the mobile subscribers of lifecell and BeST, as
well as those of Kuzey Kıbrıs Turkcell and lifecell Europe.

Turkcell Group Subscribers   Q118   Q418   Q119   y/y%   q/q%
Mobile Postpaid (million)   18.6   18.8   18.7   0.5%   (0.5%)
Mobile Prepaid (million) 16.0 14.9 15.0 (6.3%) 0.7%
Fiber (thousand) 1,248.7 1,385.6 1,411.1 13.0% 1.8%
ADSL (thousand) 916.6 905.8 861.7 (6.0%) (4.9%)
Superbox (thousand)1 3.5 33.5 56.4 n.m 68.4%
Cable (thousand) 9.7 n.a. n.a.
IPTV (thousand) 535.0 613.4 632.0 18.1% 3.0%
Turkcell Turkey subscribers (million)2 37.3 36.7 36.6 (1.9%) (0.3%)
lifecell (Ukraine) 10.3 9.9 9.4 (8.7%) (5.1%)
BeST (Belarus) 1.6 1.6 1.6
Kuzey Kıbrıs Turkcell 0.5 0.5 0.6 20.0% 20.0%
lifecell Europe3 0.3 0.2 0.2 (33.3%)
Turkcell Group Subscribers (million)   50.1   48.9   48.4   (3.4%)   (1.0%)

(1) Superbox subscribers are included in mobile subscribers.
(2)
Subscribers to more than one service are counted separately for each
service.
(3) The “wholesale traffic purchase” agreement, signed
between Turkcell Europe GmbH operating in Germany and Deutsche Telekom
for five years in 2010, had been modified to reflect the shift in
business model to a “marketing partnership”. The new agreement between
Turkcell and a subsidiary of Deutsche Telekom was signed on August 27,
2014. The transfer of Turkcell Europe operations to Deutsche Telekom’s
subsidiary was completed on January 15, 2015. Subscribers are still
included in the Turkcell Group Subscriber figure. Turkcell Europe was
rebranded as lifecell Europe on January 15, 2018.

OVERVIEW OF THE MACROECONOMIC ENVIRONMENT

The foreign exchange rates used in our financial reporting, along with
certain macroeconomic indicators, are set out below.

    Q118   Q418   Q119   y/y%   q/q%
GDP Growth (Turkey)   7.4%   (3.0%)   n.a.   n.a.   n.a.
Consumer Price Index (Turkey) (yoy) 10.2% 20.3% 19.7% 9.5pp (0.6pp)
US$ / TRY rate
Closing Rate 3.9489 5.2609 5.6284 42.5% 7.0%
Average Rate 3.8077 5.4369 5.3378 40.2% (1.8%)
EUR / TRY rate
Closing Rate 4.8673 6.0280 6.3188 29.8% 4.8%
Average Rate 4.6795 6.2121 6.0777 29.9% (2.2%)
US$ / UAH rate
Closing Rate 26.54 27.69 27.25 2.7% (1.6%)
Average Rate 27.42 28.18 27.41 (2.7%)
US$ / BYN rate
Closing Rate 1.9501 2.1598 2.1285 9.1% (1.4%)
Average Rate   1.9663   2.1307   2.1470   9.2%   0.8%

RECONCILIATION OF NON-GAAP FINANCIAL MEASUREMENTS: We believe
Adjusted EBITDA, among other measures, facilitates performance
comparisons from period to period and management decision making. It
also facilitates performance comparisons from company to company.
Adjusted EBITDA as a performance measure eliminates potential
differences caused by variations in capital structures (affecting
interest expense), tax positions (such as the impact of changes in
effective tax rates on periods or companies) and the age and book
depreciation of tangible assets (affecting relative depreciation
expense). We also present Adjusted EBITDA because we believe it is
frequently used by securities analysts, investors and other interested
parties in evaluating the performance of other mobile operators in the
telecommunications industry in Europe, many of which present Adjusted
EBITDA when reporting their results.

Our Adjusted EBITDA definition includes Revenue, Cost of Revenue
excluding depreciation and amortization, Selling and Marketing expenses
and Administrative expenses, but excludes translation gain/(loss),
finance income, finance expense, share of profit of equity accounted
investees, gain on sale of investments, minority interest and other
income/(expense).

Nevertheless, Adjusted EBITDA has limitations as an analytical tool,
and you should not consider it in isolation from, or as a substitute for
analysis of, our results of operations, as reported under IFRS. The
following table provides a reconciliation of Adjusted EBITDA, as
calculated using financial data prepared in accordance with IFRS as
issued by the IASB, to net profit, which we believe is the most directly
comparable financial measure calculated and presented in accordance with
IFRS as issued by the IASB.

Turkcell Group (million TRY)   Q118   Q418   Q119   y/y%   q/q%
Adjusted EBITDA   2,022.0   2,239.0   2,281.1   12.8%   1.9%
Depreciation and amortization (979.8) (1,287.0) (1,178.1) 20.2% (8.5%)
Finance income 355.6 (1,225.9) 583.0 63.9% (147.6%)
Finance costs (669.1) 1,207.4 (1,003.4) 50.0% (183.1%)
Other income / (expense) (33.5) 46.5 (51.8) 54.6% (211.4%)
Share of profit of equity accounted investees 0.3 0.8 n.a. 166.7%
Consolidated profit from continued operations before income tax &
minority interest
695.2 980.4 631.6 (9.1%) (35.6%)
Income tax expense (170.2) (38.7) (159.8) (6.1%) 312.9%
Consolidated profit from continued operations before minority
interest
525.0 941.7 471.8 (10.1%) (49.9%)
Discontinued operations 772.4 n.a. n.a.
Consolidated profit before minority interest   525.0   941.7   1,244.3   137.0%   32.1%

NOTICE: This release includes forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, Section
21E of the Securities Exchange Act of 1934 and the Safe Harbor
provisions of the US Private Securities Litigation Reform Act of 1995.
This includes, in particular, our targets for revenue, EBITDA and capex
for 2019. More generally, all statements other than statements of
historical facts included in this press release, including, without
limitation, certain statements regarding the launch of new businesses,
our operations, financial position and business strategy may constitute
forward-looking statements.
In addition, forward-looking
statements generally can be identified by the use of forward-looking
terminology such as, among others, “will,” “expect,” “intend,”
“estimate,” “believe”, “continue” and “guidance”.

Although Turkcell believes that the expectations reflected in such
forward-looking statements are reasonable at this time, it can give no
assurance that such expectations will prove to be correct.
All
subsequent written and oral forward-looking statements attributable to
us are expressly qualified in their entirety by reference to these
cautionary statements. For a discussion of certain factors that may
affect the outcome of such forward looking statements, see our Annual
Report on Form 20-F for 2018 filed with the U.S. Securities and Exchange
Commission, and in particular the risk factor section therein. We
undertake no duty to update or revise any forward looking statements,
whether as a result of new information, future events or otherwise.

The Company makes no representation as to the accuracy or
completeness of the information contained in this press release, which
remains subject to verification, completion and change. No
responsibility or liability is or will be accepted by the Company or any
of its subsidiaries, board members, officers, employees or agents as to
or in relation to the accuracy or completeness of the information
contained in this press release or any other written or oral information
made available to any interested party or its advisers.

ABOUT TURKCELL: Turkcell is a digital operator headquartered
in Turkey, serving its customers with its unique portfolio of digital
services along with voice, messaging, data and IPTV services on its
mobile and fixed networks. Turkcell Group companies operate in 5
countries – Turkey, Ukraine, Belarus, Northern Cyprus, Germany. Turkcell
launched LTE services in its home country on April 1
st,
2016, employing LTE-Advanced and 3 carrier aggregation technologies in
81 cities. Turkcell offers up to 10 Gbps fiber internet speed with its
FTTH services. Turkcell Group reported TRY5.7 billion revenue in Q119
with total assets of TRY46.1 billion as of March 31, 2019. It has been
listed on the NYSE and the BIST since July 2000, and is the only
NYSE-listed company in Turkey. Read more at
www.turkcell.com.tr

This press release can also be viewed using the Turkcell Investor
Relation app, which can be downloaded
here for
iOS,
and 
here for
Android mobile devices.

Appendix A – Tables

Table: Net foreign exchange gain and loss details

Million TRY   Q118   Q418   Q119   y/y%   q/q%
Turkcell Turkey   (367.5)   1,030.1   (558.5)   52.0%   (154.2%)
Turkcell International (9.4) 5.7 (25.8) 174.5% (552.6%)
Other Subsidiaries (117.1) 434.3 (128.1) 9.4% (129.5%)
Net FX loss before hedging (494.0) 1,470.1 (712.5) 44.2% (148.5%)
Fair value gain on derivative financial instruments1 213.7 (1,551.9) 452.3 111.7% (129.1%)
Net FX gain / (loss) after hedging   (280.3)   (81.8)   (260.2)   (7.2%)   218.1%

(1) Definition of fair value gain on derivative financial instruments
has been extended to include the impact of interest income and expense
in relation to derivative instruments and fair value of FX swaps, option
contracts engaged in during the period to manage operational cash flow
balance.

Table: Income tax expense details

Million TRY   Q118   Q418   Q119   y/y%   q/q%
Current Tax expense   (180.2)   (114.9)   (153.8)   (14.7%)   33.9%
Deferred Tax income / (expense) 10.0 76.2 (6.0) (160.0%) (107.9%)
Income Tax expense   (170.2)   (38.7)   (159.8)   (6.1%)   312.9%
  TURKCELL ILETISIM HIZMETLERI A.S.

IFRS SELECTED FINANCIALS (TRY Million)

             
Quarter Ended   Quarter Ended   Year Ended   Quarter Ended
Mar 31, Dec 31, Dec 31, Mar 31,
2018   2018   2018   2019
 
 
Consolidated Statement of Operations Data
Turkcell Turkey 4,072.0 4,747.5 18,092.6 4,833.3
Turkcell International 279.4 421.9 1,457.0 424.8
Other 410.2 457.0 1,742.9 417.3
Total revenues 4,761.6 5,626.4 21,292.5 5,675.4
Direct cost of revenues (3,114.8)   (3,894.5)   (14,146.0)   (3,908.3)
Gross profit 1,646.8 1,731.9 7,146.5 1,767.1
Administrative expenses (154.3) (198.2) (673.4) (190.6)
Selling & marketing expenses (356.6) (500.8) (1,626.7) (403.2)
Other Operating Income / (Expense) (33.4) 46.5 (140.1) (51.8)
Net impairment loses on financial and contract assets (93.8)   (80.9)   (346.4)   (70.3)
Operating profit before financing costs 1,008.7 998.5 4,359.9 1,051.2
Finance costs (669.1) 1,207.4 (3,619.1) (1,003.4)
Finance income 355.6 (1,225.9) 1,932.1 583.0
Share of profit of equity accounted investees   0.3   (0.1)   0.8
Income before tax and non-controlling interest 695.2 980.3 2,672.8 631.6
Income tax expense (170.2)   (38.8)   (495.5)   (159.8)
Income from continuing operations before non-controlling interest 525.0 941.5 2,177.3 471.8
Discontinued operations 772.4
Non-controlling interests (24.2)   (77.8)   (156.3)   (19.8)
Net income 500.8   863.7   2,021.0   1,224.4
 
Net income per share 0.23 0.40 0.93 0.21
 
Other Financial Data
 
Gross margin 34.6% 30.8% 33.6% 31.1%
EBITDA(*) 2,022.0 2,239.0 8,788.0 2,281.1
Total Capex 2,560.1 2,234.6 7,644.1 1,352.6
Operational Capex 526.3 1,448.6 3,943.1 883.6
Licence and related costs 188.0 1.7 414.1 0.7
Non-operational Capex 1,845.9 784.3 3,286.9 468.4
 
 
Consolidated Balance Sheet Data (at period end)
Cash and cash equivalents 4,589.7 7,419.2 7,419.2 8,888.3
Total assets 37,073.1 42,765.3 42,765.3 46,078.6
Long term debt 9,414.2 13,119.6 13,119.6 15,407.7
Total debt 15,130.5 20,155.5 20,155.5 22,866.9
Total liabilities 22,825.5 26,711.7 26,711.7 28,976.3
Total shareholders’ equity / Net Assets 14,247.6 16,053.6 16,053.6 17,102.3
 
(*) Please refer to the notes on reconciliation of Non-GAAP
Financial measures on page 13
For further details, please refer to our consolidated financial
statements and notes as at 31 March 2019 on our web site
  TURKCELL ILETISIM HIZMETLERI A.S.

TURKISH ACCOUNTING STANDARDS SELECTED FINANCIALS (TRY Million)

             
Quarter Ended   Quarter Ended   Year Ended   Quarter Ended
Mar 31, Dec 31, Dec 31, Mar 31,
2018 2018 2018 2019
 
 
Consolidated Statement of Operations Data
Turkcell Turkey 4,072.0 4,747.5 18,092.6 4,833.3
Turkcell International 279.4 421.9 1,457.0 424.8
Other 410.2   457.0   1,742.9   417.3
Total revenues 4,761.6 5,626.4 21,292.5 5,675.4
Direct cost of revenues (3,114.8)   (3,894.5)   (14,146.0)   (3,908.3)
Gross profit 1,646.8 1,731.9 7,146.5 1,767.1
Administrative expenses (154.3) (198.2) (673.4) (190.6)
Selling & marketing expenses (356.6) (500.8) (1,626.7) (403.2)
Other Operating Income / (Expense) 100.5   (500.8)   1,392.4   248.7
Operating profit before financing and investing costs 1,236.4 532.1 6,238.8 1,422.0
Net impairment loses on financial and contract assets (93.8) (80.9) (346.4) (70.3)
Income from investing activities 8.7 212.9 238.8 12.7
Expense from investing activities (14.2) 58.1 (118.9) (50.1)
Share of profit of equity accounted investees   0.3   (0.1)   0.8
Income before financing costs 1,137.1 722.5 6,012.2 1,315.1
Finance income 288.9 (1,533.0) 1,280.3 461.5
Finance expense (730.8)   1,790.8   (4,619.7)   (1,145.0)
Income from continuing operations before tax and non-controlling
interest
695.2 980.3 2,672.8 631.6
Income tax expense from continuing operations (170.2)   (38.8)   (495.5)   (159.8)
Income from continuing operations before non-controlling interest 525.0 941.5 2,177.3 471.8
Discontinued operations       772.4
Income before non-controlling interest 525.0 941.5 2,177.3 1,244.2
Non-controlling interest (24.2)   (77.8)   (156.3)   (19.8)
Net income 500.8 863.7 2,021.0 1,224.4
 
Net income per share 0.23 0.40 0.93 0.21
 
Other Financial Data
 
Gross margin 34.6% 30.8% 33.6% 31.1%
EBITDA 2,022.0 2,239.0 8,788.0 2,281.1
Total Capex 2,560.1 2,234.6 7,644.1 1,352.6
Operational Capex 526.3 1,448.6 3,943.1 883.6
Licence and related costs 188.0 1.7 414.1 0.7
Non-operational Capex 1,845.9 784.3 3,286.9 468.4
 
 
Consolidated Balance Sheet Data (at period end)
Cash and cash equivalents 4,589.7 7,419.2 7,419.2 8,888.3
Total assets 37,073.1 42,765.3 42,765.3 46,078.6
Long term debt 9,414.2 13,119.6 13,119.6 15,407.7
Total debt 15,130.5 20,155.5 20,155.5 22,866.9
Total liabilities 22,825.5 26,711.7 26,711.7 28,976.3
Total shareholders’ equity / Net Assets 14,247.6 16,053.6 16,053.6 17,102.3