Operator: Welcome to the First Quarter 2016 Results Announcement Conference Call. At this time, I would like to turn the call over to Mr. Nihat Narin, Director of Investor Relations and Business Developments. Please go ahead, sir.

Nihat Narin: Thank you, Marian.

Thank you for your participation. I would like to say, welcome to our call on behalf of the management team here and we will start today with the presentation by CEO, Kaan Terzioglu, and followed by presentation by CFO, Murat. And then we will go into the Q&A session. Just before we start the presentation, I would like to remind you of the brief legal notice. In this presentation, we will make statements that are forward-looking about our future targets and expectations.

These are based on our current views and assumptions which may of course change in the future and our actual results may be different. Mr. Kaan Terzioglu, please, floor is yours.

Kaan Terzioglu: Good afternoon and good evening everyone and welcome to Turkcell first quarter 2016 two thousand results call. Today we’re in Cyprus and I'm joined by our Executive Team including Chief Financial Officer, Murat Erden, Chief Sales Officer, Murat Erkan; Chief Technology Officer, Ilker Kuruöz; Chief Legal and Regulation Officer, Serhat Demir; Chief Strategy Officer, Ilter Terzioglu and Chief Customer Experience Officer [indiscernible].

I am happy to say that we started the year strongly with a record high level revenues and EBITDA both at Turkcell Turkey and at the group level. Our group revenues rose 8.3% to TRY3.2 billion and EBITDA by 8.1% year-over-year to TRY1 billion while the EBITDA margin was sustained at 31.1% despite the non-recurring costs related to 4.5G launch. Group net income as per IFRS rose north to TRY563 million quadrupling over the last year's figure due to elimination of foreign currency risks related to our subsidiaries in Ukraine, Belarus and Azerbaijan. This reflects the success of our restructuring efforts by focusing on balance sheet efficiency. Meanwhile pro-forma net income rose by 15.1% year on year to TRY544 million.

Now to the next page, solid performance of Turkcell Group was primarily attributable to Turkcell Turkey, its revenues rose 10% and EBITDA climbed 10.6%. Pro forma net income level was up 11.4% year on year. Turkcell Turkey's performance was mainly driven by continued solid growth in data and digital services in Turkey. Meanwhile our international subsidiary saw positive growth after several quarters of decline. Based on our first quarter performance in Turkcell Turkey and group we remain on track with our plans and therefore we reiterate our full year guidance.

As communicated before in 2016 8% to 10% revenue growth both for Turkey and the group. We also target an EBITDA margin of 31% to 33% and operational CapEx to sales ratio of 20%. Moving on to the next page, I would like to share some highlights from our operations in Turkey. Turkcell which accounts for 91% of group revenues continued it's double digit growth momentum for three consecutive quarters with an increased EBITDA margin of 31.3% in the first quarter of 2016. These figures clearly reflect the success of our value focus competition strategy and sustained inflationary pricing.

Our company performed strongly across all major business lines. 80% of Turkcell Turkey's revenues coming from the consumer segment grew 10% year on year to TRY2.3 billion on strong growth in data and digital services. The corporate business we generate 18% of Turkcell Turkey's revenues posted 8.7% growth of TRY525 million while wholesale revenues grew 13.9% year on year to TRY81 million. Moving to the next page. Now let's look at the performance of our key revenue drivers, the key growth drivers, data and digital services in total posted 31.1% year on year growth accounting for 42% of our business in Turkey compared to a 35% a year ago.

In details mobile data revenues rose 25.8% on higher smartphone penetration of 55%., a larger number data users and the continued rise in data consumption. Meanwhile fixed broadband revenues were up 28.4% with increased number of customers and higher usage. Services and solutions revenue ramped up by 57.2% to TRY226 million mainly due to increased usage of Turkcell TV+, [indiscernible] along with media and information services. Voice and SMS revenue saw single digit decline reflected in continued sector trends. Moving to the next page.

Operationally we started to see the fruits of our focus on value generation. On the mobile side, our postpaid customer base rose by 1.2 million year on year to 16.7 million. Postpaid customers now constitute 50% of total further improving the subscriber base. On the fixed side our total customers reach 1.6 million supported by a strong fiber network acquisition, dedicated sales force and customer care. In fiber to the home we strengthened our market leader position adding 159,000 new customers over the last 12 months and more than doubling the additions of our closest competitor.

Moreover Turkcell TV+ platform continued its solid user penetration growth reaching 268,000 customers on 169,000 yearly additions Including web and mobile our total TV+ customers base reached more than 700,000. Smartphone penetration on our network reached 55% rising 13 percentage points year-on-year supporting higher data usage. Moreover 52% of our smartphone base supports 4.5 technology which will further boast data revenues. Moving on to the next page, marketplace is a major component of our convergence strategy which we have already started to monetize. Accordingly we have achieved a healthy rise of greater service used for customers both for mobile and fixed segments.

We also see greater potential in cross selling opportunities going forward. On the mobile side a sustainable increase in penetration of double and triple play offers supported an ARPU increase, in the first quarter the double play ratio was up 2 percentage points quarter on quarter to 47% while the triple play ratio rose 3 percentage points to 17%. In light of this and along with higher postpaid share and data and services growth mobile ARPU rose 8.8% year-on-year to TRY24.7. On the fixed side our multiple ratio in total fiber residential customers which includes internet and TV users rose 4 percentage points quarter on quarter to 30%. This along with the inflationary pricing adjustments resulted in a 6.8% year on year rise in fixed residential ARPU to TRY50.3.

Moving on to the next page. As we have highlighted in our previous calls in 2016 and onwards our customers will experience a more converged [indiscernible]. Indeed we took concrete steps in the first four months of the year, we became the first and only company in Turkish market to offer real conversion experience. We recently launched our convert offers that include mobile internet, voice digital services and fixed internet. In addition to a high mobile and fixed internet data allowance we also provide an extra mobile internet quota for the service user to attach to the packages encouraging higher penetration Moreover we are the only telecom operators to offer fully integrated services to it's customers including single invoice and single call center services, we believe these offers and future actions will further strengthen our market position and help us achieve our target of becoming the leader of the Turkish telecommunications market.

Next page in-line with our game plan we continue to leverage our wide range of digital services and solutions such as our instant messaging platform, Fizy our video and music seeming service. Smart storage and goals [ph] on your mobile and TV+. Digital services are a key component of our future positioning and we have opened them to all access and widened our global [indiscernible] services portfolio. Our new generation communication platform BiP continued its rapid rise surpassing selling 7.5 downloads today. Global downloads increased to 503,000 of the total and 39% of the BiP users are non-Turkcell customers.

In line with our all access approach we recently rebranded our leading music platform as Fizy with new feature of music video streaming which has reached 5.7 million downloads. The mostly widely used personal cloud service of Turkcell smart storage geared up to 2.6 million downloads while the best sports up in the sector goes on your mobile has been downloaded 2.2 million times. The mobile Turkcell TV+ application will shortly be an all access product as well. As of today we have around 700,000 Turkcell TV customers including mobile, web and IPTV users. Moving to the next page.

The highlight of the sector at the beginning of the year was the national launch of 4.5G services on April 1st, 2016. We acquired the largest spectrum with 47% of the available total at the tender. We started offering mobile internet speeds of 375 megabits at launch. With this spectrum Turkcell will again be the first and only operator to offer over 1 gigabit speed on mobile devices through carrier aggregation technology. As of April 1, our 4.5G services is available in all provinces with a population coverage of over 70%.

970 provinces of 970 total now have 4.5G coverage. Further to offer our customers the best experience we launch the sector's highest size data packages up to 50 gigabytes data allowance. We have also widened our smart device portfolio. With affordable payment plans offered by our consumer finance company, smart devices such as the smart projector and Samsung Galaxy tablet TV will further boost the mobile TV experience. Furthermore we declared a list of 10 principles for our approach to our customers and we are mobilizing all our means to reach high satisfaction levels.

We are pleased with the initial demand for our 4.5G services. Shortly after the launch in two minutes we reached 1 million active users and we have reached 42% .4.5G enabled smartphones in our network and 16% of our customers have already 4.5G compatible devices and simcards. This far exceeds the one year global averages of penetration. Moreover more than 20% of data traffic is now on our 4.5G network. Moving to the next page, Turkcell International revenues at 6% of the group total were at TRY197 million with an EBITDA margin of 27.2% for this quarter Turkcell International revenue saw positive year on year growth despite legal currency trends compared to last year.

Moreover through actions to restructure our subsidies that eliminate foreign currency risk [indiscernible] continue to post positive bottom line, Lifecell the major component of our international business grew 6.9% in local terms due to migrations to higher [indiscernible] rising, mobile broadband revenues driven by 3G plus services and up for price adjustments. The EBITDA margin rose 0.5 percentage points to 31.4% year on year. In [indiscernible] in local currency terms revenue rose 30.7% year on year on the back of increasing active subscribers, higher voice and terminal revenues with a 1.5 percentage points rise in the EBITDA margin. Our operation in Northern Cyprus comprising 16% of our international revenues recorded a 3.2% year on year increase due to mobile broadband growth and the EBITDA margin was at 34.8%. Now let me handover to Murat for the financial review.

Murat Erden: Thank you, Kaan. Good afternoon and good evening to all particpants, I will talk in more detail about our financial results. In the first quarter as Kaan highlighted our business in Turkey is clearly the main revenue in the EBITDA growth drivers. Turkcell Turkey incremental contribution to our top line was TRY265 million or 79% and the remaining from services and solutions. Despite the continued evolution in international operations our top line grew by 7% and 31% in Ukraine and Belarus respectively in local currencies.

Consolidated EBITDA rose by 8.1% exceeded TRY$1 billion year on year. This was mainly due increase in revenues which were partially offset by rising in direct cost of living and administrative expenses. The rising direct cost of revenues was mainly related to expenses, moving onto next page. In the first quarter net income as per IFRS rose almost four times to TRY563 million whereas as the pro forma net income rose 16.1% to TRY544 million. Net income increased mainly due to higher EBITDA and lower transmission losses due to a more efficient balance sheet as well as to a lower tax expense related to Turkcell Turkey from less interest income and a decrease in translation on year-over-year.

This was despite a lower contribution from [indiscernible] and increase interest expense on loans and license payables. I will not talk about our balance sheet and cash flow items on the next page. As of the end of the March 2016 our net debt position was at TRY1.5 billion and our consolidated debt was TRY4.0 billion. The decreasing debt balance was mainly due to Turkcell Turkey short term loan payments. During this quarter the major cash flow items includes mainly capital expenditure of TRY738 million or TRY675 million was related to Turkcell Turkey and regulatory key payments of TRY491 million.

Moving on to the final page. In order to improve our balance sheet in 2015 we successfully implemented our action plans and completed the restructuring of [indiscernible]. This eliminated currency risk in international subsidiaries which operate in more volatile markets, in the first quarter of 2015 we needed 6% of our debt portfolio was in foreign currency named in dollar and euros. After the debt restructuring and [indiscernible] obtained by Turkcell Turkey, 81% of our total debt is in foreign currency and as a result we now manage all our FX debt to Turkcell Turkey. This allows us to benefit from two main advantages firstly the relatively lower volatilities in Turkish market and secondly our convenient use of hedging options such inflationary pricing and cash conversion in the [indiscernible] currency in a more liquidity Turkish markets.

At the end of the first quarter of 2016 [indiscernible] was TRY393 million denominated all in local currency [indiscernible] while the best -- 5 million of debt denominated again in Belarusian rubles. Finally in the first quarter of 2016, our net debt to EBITDA rose slightly to 0.4 times which is expected to rise going forward while maintaining our investment grade. This brings our introductory presentation there, let me hand over to Nihat for the Q&A session.

Nihat Narin: At this point we are ready to have a Q&A session, Marian, could you please initiate the Q&A session?

Operator: [Operator Instructions]. We now take our first question from Ranjan Sharma from JPMorgan Dubai.

Please go ahead. Your line is open.

Ranjan Sharma: Just couple of questions from my side, firstly as you’ve seen the announcement of the decision to IPO the global tower company, can you share for the details on how many towers there are in this company and what stake are you looking to list? Secondly if you can share what percentage of a base stations are connected with fiber in Turkey and the third question is on your depreciation and amortization expense, if you can share in more details on how you're accounting for the amortization of the 4.5G license? Because you're amortizations doesn’t seem to have increased much from the fourth quarter to the first quarter of this year. Thank you.

Kaan Terzioglu: First of all on the tower IPO we will not be able to share the details of the number of towers at this particular moment but we have decided actually to start the process for the IPO and we will keep you informed as we have more available data for that purpose.

With regard to the fiber infrastructure, we’re as of today can have 95% of our transmission on our own network. We will not be able to provide the exactly the number of fiber sites but we’re are very comfortable in terms of providing the seats that we need to our nation. Unidentified

Company Representative: The infrastructure would be like [Technical Difficulty] is capable of all our background traffic more than 95% and main station we have recently launched with the 4.5G has high speed back haul connectivity, either way our fiber infrastructure or our high speed radio networks.

Kaan Terzioglu: And with regard to the depreciation expense, maybe Murat you can provide the answer.

Murat Erden: Starting from December 2015 on a monthly basis we will be sharing 8 million for the license and starting from the first April when we had the lunch, we're going to have additional TRY26 million is going to come and the total is going to be going forward TRY34 million.

Operator: We will now take our next question from [indiscernible]. Please go ahead. Your line is open.

Unidentified Analyst: Could you please share your observations regarding the increase in data usage after 4G and maybe it's potential impact going ARPU going forward when campaigns are ended in a couple of months and my second question is on your subscriber losses, you alone been focusing on postpaid segment but you're losing market share and your ARPU growth is not very strong for awhile. Does that concern you? My question is that,

Kaan Terzioglu: With regard to the increase in data usage we have seen actually a very healthy uplink in the data usage.

We are now at 1.9 gigabites per user up from 1.7 levels actually we have seen overall 10% increase in the mobile data consumption. More than 22% of our total data has moved to LTE network which is also very, very was that. Maybe one anecdotal thing I can share is if look to the average number of minutes that people watch TV on their mobile devices has moved from seven minutes to 60 minutes over a period of six months and we have seen a strong increase of the services which you really encourages us and actually shows that our customers really enjoying the doubling the quarters for the next three months. If With regard to the subscriber base we are very comfortable with the growth we see on our portfolio. Actually the ARPU levels increases are a result of the switching from prepaid to postpaid which shows the average is lower but if you look to our double play and triple play customer base the changes we see are exactly in the right direction.

So we considered the higher value generating customer focus as the right thing to do for us.

Operator: We will now take our next question from Ivan Kim from VTB Capital. Please go ahead. Your line is open.

Ivan Kim: Questions from my side please.

Firstly on the mobile revenue, their decline accelerated to 8% year-over-year during the first quarter. I was just wondering whether you can elaborate on reasons behind that and probably we have been trying to increase prices for inflation or for everybody but for heavier users less price sensitive users, does it work at all because in this mobile [indiscernible] trend it's not that feasible. And the second question is on your fixed residential broadband business. There you see a mid-30% revenue growth for several quarters now. By now it started being driven ARPU rather than subscriber growth, so I was just wondering how sustainable do you think this trend is and do you think you will able to sustain such high growth for much longer? Thank you.

Kaan Terzioglu: First of all mobile voice revenue, let me correct growth or decline rate, it's not 8% but 4.1%. This is actually in our second page -- it was on the seventh page of our report as well and this is actually better than our forecasts. As you know the revenues is an allocation of the total packages and we actually see the growth on the date side and the digital services side helpfully compensating for this decline and this is in line and better than actually our plans for 2016. With regards to the inflationary pricing we continue to raise our prices in to the level that we are comfortable with the customer feedback. On the residential fixed business, we see 30% revenue growth.

The total home pass increase was seasonally lower on a winter period. So we’re not also surprised to see this levels of growth. We believe that this is a substantial level of growth for our fixed data revenues on the fixed side as well. And I am also particularly happy with the growth of double play and triple play customers in subscriber mix which is the most healthy sign.

Operator: We will now take our next question from Vyacheslav Degtyarev from Goldman Sachs.

Please go ahead. Your line is open.

Vyacheslav Degtyarev: Two questions from my side. Your first quarter EBITDA margin is at the bottom range of your annual guidance. So what makes you comfortable in your guidance for the full year and what are the improvement that you target to achieve over the course of the next nine months.

So you mentioned one of course related to 4G launch, can you estimate the amount of such cost? And my second question is can you please provide any update with regards to the [indiscernible] is there any formal deadline for [indiscernible] reply to you? Thank you.

Kaan Terzioglu: With regard to the EBITDA margin actually Q1 we have done better than our plans, we’re expecting a higher promotions and marketing expense with regard to the 4.5G costs and despite these one-off expenses and aggressive marketing campaigns including promotions, additional quarter doubling and also advertising costs we are comfortable with where we’re and we’re reiterating our guidance for the year. With regard to 4.5G costs I think in our report we have already provided you the CapEx figure, 735 million I believe and with regard to the marketing we have lined again in line with our plans. We have increased almost additional marketing dollars by 35 million for the total quarter. And despite these one off we are well in our plans.

The deadline for [indiscernible] deal, our discussions are continuing. We have been provided a binding offer and we will let you know when these discussions progress.

Operator: We will now take our next question from Atınç Özkan from Credit Suisse. Please go ahead. Your line is open.

Atınç Özkan: If I may I have two questions. I heard your previous reply on global tower, I do perfectly understand you cannot disclose any numerical data, could you just provide some color on the revenue mix of the first set I mean how much of better the majority of revenues are external or internal. Just asking that because as far as I know this is no cover collocation regulation in Turkey so I'm just trying to figure out whether the material revenue generator or not? And my second question is regarding your effective tax rate which was significantly below versus what you reported in full year '14 and '15. I know you have been simplifying streamlining your corporate structure eliminating some subset reasons as well as lower tax charge driven by this or anything else? Thank you.

Kaan Terzioglu: For the tower, this is in-line with our strategy of an asset light model.

So we are actually consolidating all our assets in different countries under the global tower structure. As you can guess we'll not be in a position to provide you numbers with regard to that but revenue generation potential will also be in a healthy balance in terms of the foreign currency revenue generating assets of the mix. With regard to the effective tax rate we have actually applied a very efficient way of restructuring and looking to our balance sheet making sure that none of the expenses are incurring outside of the country eliminates our tax shelter benefit so by doing this in the right way consolidating all our cash management practices also in Turkey simplifying our operations in terms of number of companies, we have come to a point I think we are slightly about 20% in corporate tax rate which is which is in Turkey. So we are comfortable with this and we can foresee that this will be the future trends.

Operator: [Operator Instructions].

We will now take our next question from Dalibor Vavruska from Citigroup. Please go ahead. Your line is open.

Dalibor Vavruska: I just wanted to ask about the 4.5G and how the launch went and how you think that you are positioned relatively to competitors in this area. Also referring to the fiber into the discussions that has been taking place about sharing fiber.

I'm just wondering where we are and whether you have any whether -- you can maybe talk about scenarios that if the fiber sharing goes ahead, where is the scenario when it doesn't, what sort of CapEx differences are we talking about in the next couple of years? Thank you.

Kaan Terzioglu: With regards to the 4.5G launch I think the team did a fantastic job in terms of executing on the plans. As of the launch dates we have seen more than 70% of population coverage. We are in 81 of the 81 cities, 970 of the 970 provinces in Turkey. With regard the pick-up I think we world record in terms of 1 million subscribers in a minute or two and as of today we are getting close to 4 million which is actually a very, very strong figure, we almost are 15% of our customer base already enjoying from 4.5G and as you know in the global averages this takes almost more than a year for telcos to get to these levels.

So we are happy. We are seeing the benefits of hitting 47% of the available spectrum. By carrier aggregation we're seeing maximum speeds of almost up to 400 megabits per second. You know I think Istanbul and Ankara, Turkcell Networks are currently the fastest metropolitan mobile networks in the world based on the speed test averages that we’re following and when you come to Turkey I'm sure you will enjoy having 60, 70 megabits of connectivity while we’re in the city. If you got the fiber sharing our hypotheses and proposals have been embraced by Ministry of Telecommunications and regulatory bodies, so we are now working hand in hand exploring different options on this.

There are two main issues one fiber sharing, either through a joint infrastructure company or through the right sharing and pricing mechanisms for access to fiber but also the government has taken steps for eliminating the hurdles with regard to getting licenses in terms of construction licenses and they are working on a new law which will allow us a much smoother operations in this area. So I am hopeful that as an industry and within in hand in hand with the regulatory buddies we will find a mutually acceptable solution. Based on our calculations a joint infrastructure could save almost $12 billion in order to achieve the desirable fiber infrastructure for the country.

Operator: [Operator Instructions]. I would now like to actually take another question from [indiscernible].

Please go ahead. Your line is open.

Unidentified Analyst: Very good performance in a the broadband sector, what are you seeing from the competition in the support end [ph], has your outlook changed regarding the wireline segment and could you also share a home pass for fiber as of Q1?

Kaan Terzioglu: As you know this was a winter period so home pass growth is relatively low because of the seasonality.

Murat Erden: Yes, Kaan as I mentioned actually the Q1 has been in-line with our yield plans and since there is a heavy winter conditions the roll out of [indiscernible] has been slower in the first quarter. but this is a usual seasonal traffic.

Our plans are in-line and we will be concluding with 100s of 1000s of home pass related to our network at the end of 2016. I recall we had 350,000 passes and I think we will be reinventing our plans.

Kaan Terzioglu: I think we’re now with about 2.4 million target for this year.

Murat Erden: Yes 2.4, 75 [ph].

Operator: This will conclude your question and answer session.

I would like now to hand the call back to Mr. Nihat Narin.

Nihat Narin: Thank you, Marian. On behalf of the management here I would like to thank you and all for the participations to the call and please do call IR team if you’ve further questions and also please be aware that our audio will be available. So feel free to call.

Thank you very much and have a good day and have a good night. Thank you.

Operator: That will conclude today's conference call. Thank you for your participation. Ladies and gentlemen you may now disconnect.