Good day and welcome to the Second Quarter 2015 Results Announcement Call; for today’s recorded presentation all participants will be in a listen-only mode. After the presentation there will be an opportunity to ask questions. At this time, I would like to turn the conference over to Mr. Nihat Narin, Director of Investor Relations. Please go ahead sir.

Thank you, Julia. Thank you for your participation and I would like to welcome to our call on behalf of the management team here. We will start today with the presentation by our CEO, Kaan Terzioğlu followed by presentation by CFO, Murat Erkan. And then we will go into the Q&A session. As usual, just before we start the presentation, I would like to remind you of our 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. Please, floor is your sir. Kaan Terzioğlu: Thank you, Nihat. Good evening and good afternoon everyone and welcome to Turkcell’s results call for the quarter ended June 30, 2015. We are here to present our results together with Turkcell’s executive team, including our Chief Marketing Officer, Burak Sevilengül; Chief Financial Officer, Murat Erkan; Chief Technology Officer, İlker Kuruöz; Chief Legal Officer, Serhat Demir; and Chief Business Support Officer, Seyfettin Sağlam. Before getting into numbers I would like to address our progress towards meeting some of the commitments that we have made in our first call last quarter. First, we have completed our new organizational structure having eight executive positions instead of 16 has already led to greater operational efficiency through simplification of our business processes. With this structure we have consolidated the management of our mobile and fixed businesses while achieving simplicity, transparency and accountability. We have also executed on our distribution platform and decided to work with two distributors instead of five, introducing a new channel design for the converged offer. Second, we have adopted a single point of service approach with our converged services. This…

Thank you, Kaan dear audience in the second quarter in line with our Group plan, Group revenues rose 5.8% year-on-year to TRY3.1 billion with strong operational performance in Turkcell Turkey on the back of solid data and mobile services growth. Consolidated EBITDA rose 9.7% to TRY995 million year-on-year, better operational expense management, especially on the sales and marketing activities resulted from the more value oriented acquisition strategy led to a stronger rise in our EBITDA. Meanwhile EBITDA margin reached to 32.2% this quarter. This was resulting from selling and marketing expenses declined by 1.5 percentage point more than offsetting the total 0.4 percentage points increase in administrative expenses and direct cost of revenues the percentage of revenues. Let me move on to Page 15 now. Group net income increased to TRY712 million ramped up by 44.6%. This was mainly driven by increasing EBITDA and translation gain recorded from the quarterly currency movements in Ukraine and Turkey operations despite lower interest income and the absence of monetary gain. Translation gain of 261 million has a positive impact of TRY132 million in net income after accounting for minority share and income tax. Last year, there were negative net impact of TRY113 million. Interest income on time deposits declined after the dividend payment and due to higher composition of FX holdings bearing low interest rates. In the second quarter, no monetary gain booked due to termination of inflationary accounting endeavours. Overall, the net income margin increased to 23% from 4.7% a quarter ago. Moving on to Page 16. As of the end of June 2015, our rate case position decreased to TRY284 million with the dividends paid back in April amounting to TRY3.9 billion. This also improved our net debt to EBITDA ratio to almost flat from minus 1.1. Meanwhile our consolidated debt was recorded at TRY4 billion at the end of this quarter. The debt balance of our Ukrainian operations was TRY2.3 million. As we mentioned before, cost and debt restructuring which decreased our sales outstanding debt to financial institutions to UAH3.6 billion which is equivalent of less than TRY0.5 billion. During this quarter, the other major cash outflow items include capital expenditures of TRY957 million and corporate tax payment of Turkcell Iletisim amounting to TRY218 million. Of the total CapEx figure, TRY683 million was related to Turkcell Turkey and TRY264 million to Turkcell International. This brings our introductory presentation to end, and let me hand over to Nihat for the Q&A session.

Thank you, Murat. Julia I think at this point we can start our Q&A session. Could you just please initiate is there everybody on the line.

Thank you, sir. [Operator Instructions] We’ll take our first question from Ivan Kim, VTB Capital. Please go ahead sir. Your line is open.

Good evening, two questions from my side please. Firstly on evolution and M&A opportunities, I was just wondering what is the rationale behind that and which markets are you looking at in particular, and how much leverage you would be ready to pick up to proceed with M&A transactions? Maybe a more particular question, whether you are looking to acquire control in Fintur. Then secondly on the dividend policy, I mean I know that the dividend policies paid 50% of net income but would you consider maybe paying out more closer to, I don’t know, three-quarters of free cash flow, or you’d really be seeking to at least 50% with Nottingham? Thank you. Kaan Terzioğlu: Ivan, thank you very much. I start with your first question on the rational and the priority markets. We clearly see that we have certain unique competitive advantages in our domestic market which are exportable and that’s why we would like to leverage these capabilities from tower management, to network management, to customer care to billing activities, credit scoring activities as well as sales focus to adjacent markets around us. And clearly the priority markets, which we have in our mind is markets with traditional cultural alignment with our own market and geographically surrounding our core markets in Turkey. With regard to your specific question about Fintur I don’t want to go into the specifics in this type of speculation, I think maybe that question you can raise at certain point to TeliaSonera. But clearly our strategy is aligned with those markets that they are operating and we have a appetite to look into all the markets where we can leverage our core strengths. In terms of the dividend policy we have no change to our dividend policy and it’s a Board issue and a General Assembly issue so I would like to stick to that position.

We’ll now take our next question from Atinc Ozkan from Credit Suisse. Please go ahead. Your line is open.

This is Atinc Ozkan from Credit Suisse. Two questions, the first one is basically regarding today's news on the Turkish 4G spectrum auction. I believe there has been a press release by the regulator but we haven't seen the details. I just wanted to take your views on the way the minimum bidding prices has been structured and whether the license fee is still 15 years and what's your view regarding spectrum pricing? My second question is regarding Slide 15 or your very high net income margin for the quarter. I believe your effective tax rate is around 15% versus 27%-36% range we have seen over the past two years. Can you elaborate on the reasons for this low tax rate? Is it driven by the losses of the subsidiaries and whether we will see a similarly low effective tax rate for the rest of the year? Thank you. Kaan Terzioğlu: Thank you, Atinc. Let me start with the first question about the 4G auction. Clearly this is a sign of Turkish government listening the industry in terms of concerns, so the new tender specifications has start to the level two sides of the story. One, I think what we ask for technology agnostic spectrum to be option has been accepted which is a positive sign. On the other side we still see that the timing of the spectrum license in terms of actually 12 years and nine months now is quite low and the pricing for the spectrum is still too high. So we still have certain concerns about the valuation and how the strategy for bidding will take place, but overall I am glad to see that technology agnostic spectrum auction will take place. On the second question, in terms of the high net income margin and the effective tax rate of 15%. Before giving the work to Murat I would like to mention that as a company we are looking for how we leverage the best out of our operating companies in terms of leveraging all the tax assets that we can leverage and I think you’re seeing the results of those, but Murat please elaborate that.

Yes, thank you. Regarding the outstanding composition, our effective tax rate show that you have mentioned on 15% happens due to unused tax losses, time to time we can realize those and when these effects of unused tax losses of for example in international markets like Astelit and Belarusian Telecom, the effective tax rates in fact and going forward are much more closer 20% level. So right now the 15% is just depends on the quarterly performances but cannot reflect going forward.

[Operator Instructions] We’ll now take our next question from Ranjan Sharma from JPMorgan. Please go ahead. Your line is open.

Thank you for the presentation and congratulations on the results. Two questions from my side. Firstly, can you share some details on what your plans are to optimize the capital structure, and also on how you plan to improve your working capital? The second question is around your integrated strategy and how the TV offering fits into it and is there any plans to strengthen your TV offers? Thank you. Kaan Terzioğlu: So let me start with the first question in terms of optimizing the balance sheet and the capital structure. We currently have a very long depth ratio and we believe it will be healthy looking to the opportunities in front of us as regional expansion as well as CapEx investments to move to two times EBITDA multiple levels of borrowing. So I think it is one of the first areas that we believe there is an opportunity that we can take and make good use of this funding. The second area about the working capital, today our balance sheet has an embedded consumer finance operation and this has been a very good decision in terms of taking care of the opportunities of changes in the credit card market in Turkey. As we move on we spinning out this operation into a consumer finance organization is something that we are working on and we will keep you posted in Q3 about our progress. So these two activities will improve significantly our balance sheet and hopefully there will be no more cold and lazy looking balance sheet in the future. On the second issue about the integrated strategy and how TV fits; we are the largest fiber to the home operator in the country with 53% market-share almost close to 800,000 subscribers. And what we have seen the market has a major demand for TV services and we today are able to provide this through our IP TV offering called TV Plus. We believe there is further room for additional business models like OTT products for this market which we’ll be looking at. As we look into current subscriber base, in less than one-year time actually we have moved 16% on triple play customer base. If you look to Q2 of 2014, we had 47% just data, 53% data and voice customers. Today we have 16% data, voice and TV services customers, 51% data and voice customers and 33% single play customers along. So this shows a strong momentum and in fact that we are even increasing our ARPU moving onward actually gives us more encouragement investing in this particular area. Our expectation is to reach about 400,000 subscribers by the end of this year. This will also be having an impact on the content offers that we’re going to have and we’re working with business partnership, business model in terms of getting more content into our TV offerings.

Can I just ask a quick follow-up? Are you planning to bid for any sports broadcasting rights as you've seen global integrated operators doing? Kaan Terzioğlu: Clearly sports content especially football content is Turkey is a prime content and in line with our expectations and ambitions to become number one or number two TV services company over the next three to five years, I think it is normal to have ambitions to look into that opportunity.

We’ll now take our next question from Koray Pamir from Deutsche Bank. Please go ahead. Your line is open.

Hello. It's Koray from Deutsche Bank here and thank you very much for the presentations. Two questions on my side. First, going forward do you think -- is there further room for improvement of that OpEx side? So far the measures that have been taken appear to be working. And do you think there is further room in terms of sales health and maintaining or keeping OpEx under control? And secondly, regarding competition, ahead of the 4G, are you currently, so for in the third quarter or going forward, seeing any signs or expecting some sort of escalation in the competition particularly on the prospect ahead of the 4G? Thank you. Kaan Terzioğlu: In terms of the OpEx improvement opportunities I think quarter two shows that as we consolidated our teams in mobile and pics into one from an executive level, to operational level to sales level, it is proven that we can see and drive more synergies and operational savings. I will expect this to continue for the foreseeable time as we get better in making these consolidations work. I truly believe that over the next three to five-year timeframe we have North America opportunity increase this savings and increase EBITDA by additional couple of points. In terms of the 3G, 4d standard and the times of competition as Turkcell, we are focused on the market and on the needs of our consumers. We will be focusing on value based pricing and making sure that we focus on the convert service offers. So you will see us rationally pricing our services in line with the pricing in the economy and the inflationary sense.

We’ll now take our next question from Ondrej Cabejsek from Wood & Co. Please go ahead. Your line is open.

I was going to follow up on Ranjan's questions, mostly. In terms of cash flow dynamics, if you could elaborate a bit more on what your working capital is, whether there have been increases in receivables with the smartphone penetration as I haven't had time to look at this in more detail, and whether you expect this dynamic to continue going forward. Because if I just compare the net cash position obviously there was the dividend which was quite big but then there is still some space for explanation from my point of view as to how you got to just 300 million of net cash. And then second question, potentially, with the pay TV product that you are quite ambitious about, you say your target by the end of the year is some 400,000 subscribers. How are you are positioning this product? Because like you said before, there's apparently no exclusive content in terms of sports at this point. I think we heard that next year the exclusivity for the Turkish League is gone so in theory you are able to bid on that next year already. But just how are you positioning this product versus Turk Telekom and Digiturk now since you are basically the only ones in the market with big ambitions who do not have any sports content at this point? Thank you. Kaan Terzioğlu: So let me start with the working capital dynamics. As I mentioned, our penetration for smartphones have moved from 35% to 45% and we are expecting this increase to 52%. The reason this is important because we are heavily driving ownership of smartphones in the market to see that we are using financing for making this happen and especially leveraging our own OEM phones for lower price products. This drives ultimately…

May I have just a short follow-up? On Slide 16 you have also I believe it might be a mistake, it says major cash outflows and then you have increasing trade payables, which doesn’t really make sense to me. So is that an increase in receivables that is associated with the smartphone rollout or is that a decrease in trade payables or? Kaan Terzioğlu: And these just for incentive cash management processes it just means we paid cash I think counter balances.

[Operator Instructions] We’ll take our next question from Atinc Ozkan from Credit Suisse. Please go ahead. Your line is open.

Sorry. Sorry, just a follow-up question. Well, my question is regarding your net cash position. You have paid 3.9 million dividends and in July you have also acquired your minorities in Astelit also de-leveraged the company, and you I think have still some CapEx to realize in the second half plus 4G auction. So a quick and dirty calculation implies that you will be a in a net debt position by the end of the year probably, and that may also trigger a shorter tax position. I’d like to take your -- Murat Erden’s views on this and if you could confirm your short and long FX positions at a country basis as a first-off, that will be most useful. Thank you.

Can you remind the second part, what kind of opinion you like me to have about the position, about the current or the year-ends effects?

Well, maybe as of first half then we can all deduct the short FX position in Astelit I am just asking this because we all know that in the financial footnotes your report has consolidated short or long FX position is misleading because you are realizing your FX losses at International subsidiaries or FX case depending on currency movements and you’ve historically had a long FX position at the [indiscernible] in Turkey? Thank you.

Okay. So let me start with the outstanding position. Right now as of the end of the quarter we start -- we had the strong FX closings. You are absolutely right our FX position is only international operations. But as of the end of the July it’s can’t stated. We made the significant restructuring and we use our FX holdings to restructure our debt capitalization in Astelit, so, almost the half of the outstanding debt exposure of the group will be half, due to the restructuring of Astelit. We’ve made the recent announcement about the restructuring Astelit which means $686 million of equity have been injected to Astelit and from thereon as of end of July we’re going to have only UAH3.6 billion as a loan which corresponds almost $163 million as a debt position and this is completely denominated in Hryvnia. So our overall local currency exposure in Astelit will allow us to minimize or completely enrolled the FX losses going forward in Astelit which brings us an FX position only in Belorussia which is going to be another subject of interest and solution that we are looking in the third quarter of this year. Right now we still keep a majority of our cash in effects which was the strategy in the first half of year and before and after relations we still maintain FX holdings for the upcoming potential acquisitions CapEx payments and restructuring of it. This is how I can summarize.

Okay, that’s very useful. If you could confirm my calculation that by the end of the year because of 4G auction and other CapEx requirements you may end up with a net debt position versus your tiny net cash position as of end of June. Thank you.

Yes, Atinc, the thing is that the 4G tender has also embedded financing capabilities it doesn’t mean a direct full cash payment on euro basis. So there is an opportunity embedded into the tender process itself and seasonally we generate cash more in the second half of the year versus the first half of the year that where we did -- significant regulatory payments. There are dividend payments and corporate tax payment, so the mobility we increasing in the [indiscernible] so cash recommendation in the third quarter and fourth quarter is going to help us as well. Kaan Terzioğlu: Thank you, Atinc. I think if there is no more questions I would like to take the opportunity and thank everyone of you over my first four months you have been extremely helpful for getting me up to speed with the industry and the company. I have valued it a lot, all your feedback. Thank you very much and I will pass now to Nihat.

Thank you, sir. Well that brings us at the end of the day and of course end of the call. I’d like to thank you for participation to all and if you have any follow-up questions please do call IR team and of course our replay will be available. Please also feel free to dial in our Web site to listen our replay. Thank you and have a good day, and looking forward to seeing you all on November 9th in London. Thank you. Bye, bye.

Thank you. That will conclude today’s conference call. Thank you for your participation. Ladies and gentlemen, you may now disconnect.