Subject to Completion. Dated November 9, 2006.

The information in this prospectus supplement and the accompanying prospectus is not complete and may be changed. This prospectus supplement and the accompanying prospectus are not an offer to sell these securities and they are not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

Filed pursuant to Rule 424(b)(3)
Registration No. 333-138528

Prospectus Supplement to Prospectus dated November 8, 2006.

Turkcell Iletisim Hizmetleri A.S.

129,393,196.537 Ordinary Shares

Our shareholders, Cukurova Holding A.S. and Cukurova Investments N.V., are selling an aggregate of 129,393,196.537 of our ordinary shares. We will not receive any of the proceeds from the sale of the ordinary shares by the selling shareholders.

Our ADSs, each representing two and one-half ordinary shares, are listed on the New York Stock Exchange under the symbol “TKC”. Our ordinary shares are listed on the Istanbul Stock Exchange under the symbol “TCELL”. On November 7, 2006 the closing price of our ordinary shares on the Istanbul Stock Exchange was TRY 7.70 per ordinary share and the closing price of our ADSs on the New York Stock Exchange was $14.61 per ADS.

Investing in our ordinary shares involves risks. See “Risk Factors” starting on page S-13 of this prospectus supplement and on page 8 of our 2005 Annual Report on Form 20-F, included as Annex B hereto, to read about factors you should consider before buying our ordinary shares.

Due to uncertainty surrounding the application of a Turkish capital gains tax, the ADR Depositary has indefinitely halted issuance and cancellation of ADSs. Accordingly, during the indefinite halt, purchasers of ordinary shares will not be able to deposit them in order to create ADSs. See “Risk Factors—Risks related to the offering.”

Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus supplement and the accompanying prospectus. Any representation to the contrary is a criminal offense.

The underwriter expects to deliver the ordinary shares through the facilities of Merkezi Kayit Kurulusu (“MKK”) on November       , 2006.

JPMorgan

Prospectus Supplement dated November          , 2006.

TABLE OF CONTENTS

Prospectus Supplement

Prospectus

Annex

ABOUT THIS PROSPECTUS SUPPLEMENT

This document consists of three parts. The first part is this prospectus supplement, which describes the specific terms of this offering of ordinary shares of Turkcell Iletisim Hizmetleri A.S. (“Turkcell”). The second part, the accompanying base prospectus, presents more general information. Generally, when we refer only to the “prospectus”, we are referring to both parts combined, and when we refer to the “accompanying prospectus”, we are referring to the base prospectus. The third part contains two annexes, the first of which is our report on Form 6-K filed on November 8, 2006, containing our Consolidated Financial Statements prepared in accordance with accounting principles generally accepted in the United States of America for the nine months ended September 30, 2006, incorporated by reference herein and attached hereto as Annex A (the “Nine Month Report”), and the second of which is our Annual Report on Form 20-F for the year ended December 31, 2005 filed with the U.S. Securities and Exchange Commission (the “SEC”) on April 13, 2006, as amended November 8, 2006 solely to amend the audit report of PricewaterhouseCoopers Accountants NV to cover the 2003 year of Fintur Holdings B.V., incorporated by reference herein and attached hereto as Annex B (the “Form 20-F” or “our 20-F”).

If the description of this offering varies between this prospectus supplement and the accompanying prospectus, you should rely on the information in this prospectus supplement.

You should rely only on the information contained in this document or in one to which we have referred you in this prospectus. We have not authorized anyone to provide you with information that is different. This document may be used only where it is legal to sell these securities. The information in this document may be accurate only on the date hereof.

Unless the context requires otherwise, in this prospectus, the “Company”, “we”, “us”, “our” or similar terms refers to Turkcell and its consolidated subsidiaries.

In this prospectus supplement, references to New Turkish Lira or TRY are to the lawful currency of the Republic of Turkey and references to dollars or $ are to the lawful currency of the United States.

NOTICE TO CERTAIN EUROPEAN INVESTORS

This document and the offering of ordinary shares are only addressed to and directed at persons in member states of the European Economic Area who are “qualified investors” within the meaning of Article 2(1)(e) of the Prospectus Directive (Directive 2003/71/EC) (“Qualified Investors”).  In addition, in the United Kingdom, this document is being distributed only to, and is directed only at, Qualified Investors (i) who have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the “Order”) and Qualified Investors falling within Article 49(2)(a) to (d) of the Order, and (ii) to whom it may otherwise lawfully be communicated (all such persons together being referred to as “relevant persons”).  This document must not be acted on or relied on (i) in the United Kingdom, by persons who are not relevant persons, and (ii) in any member state of the European Economic Area (including the United Kingdom), by persons who are not Qualified Investors.  Any investment or investment activity to which this document relates is available only to (i) in the United Kingdom, relevant persons, and (ii) in any member state of the European Economic Area (including the United Kingdom), Qualified Investors, and will be engaged in only with such persons.

J.P. Morgan Securities Ltd., which is authorized and regulated in the United Kingdom by the FSA, is acting exclusively for the Selling Shareholders and no-one else in connection with the offering of ordinary shares.  It will not regard any other person (whether or not a recipient of this document) as its client in relation to the offering of ordinary shares and will not be responsible to anyone other than the Selling Shareholders for providing the protections afforded to its clients nor for giving advice in relation to the offering of ordinary shares or any transaction or arrangement referred to in this document.

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WHERE YOU CAN FIND MORE INFORMATION

We file annual and other reports with the SEC. You may read and copy any document we file with the SEC at the SEC’s public reference room at 100 F Street, N.E., Washington D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. The SEC maintains a website (http://www.sec.gov) on which our annual and other reports are made available. You may also read and copy certain documents we submit to the New York Stock Exchange at its offices at 20 Broad Street, New York, New York 10005. We maintain a website at http://www.turkcell.com.tr/.

NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus includes forward looking statements within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended, Section 21E of the U.S. Securities Exchange Act of 1934, as amended, and the Safe Harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts included in this prospectus, including, without limitation, certain statements regarding 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 “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe” or “continue” or similar statements.

Although we believe that the expectations reflected in such forward looking statements are reasonable at this time, we can give no assurance that such expectations will prove to be correct. Given these uncertainties, readers are cautioned not to place undue reliance on such forward looking statements. Important factors that could cause actual results to differ materially from our expectations are contained in cautionary statements in this prospectus (including, without limitation, in conjunction with the forward looking statements included in this prospectus) and include, among others, the following:

·       competition in our home market;

·       economic developments in Turkey and the global economy;

·       political developments in Turkey and its neighboring countries;

·       failure of the Turkish mobile telecommunications market to continue to develop;

·       legal and regulatory restrictions, including those imposed by the Telecommunications Authority of Turkey (the “Telecommunications Authority”);

·       enactment of the draft Electronic Communications Law in Turkey;

·       adverse effects on our competitiveness due to our designation by the Telecommunications Authority as an “operator holding significant market power” in the “mobile call termination services market” and as an “operator holding significant market power” in “access to GSM mobile networks and the call origination market”;

·       our disputes with other GSM operators and Turk Telekom over call termination charges;

·       failure to abide by the requirements of our license or applicable regulations;

·       legal actions and claims to which we are a party;

·       foreign exchange rate risks;

·       interest rate risk;

·       the influence and relationship of our controlling shareholders;

·       exposure to certain risks through our interests in associated companies;

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·       our ability to deal with spectrum limitations;

·       rapid and significant change in the communications industry that may reduce the appeal of our services or require us to increase our capital expenditures;

·       failure by our business partners to carry out their obligations under our agreements;

·       potential liability and possible reduced usage of mobile phones as a result of alleged health risks related to base transmitter stations and the use of handsets;

·       our dependence on certain suppliers for network equipment and the provision of data services;

·       our ability to retain key personnel; and

·       financial risks in the event that our majority owned subsidiaries fail to meet some of their obligations set forth in the agreements related to their financing arrangements.

All subsequent written and oral forward looking statements attributable to us are expressly qualified in their entirety by reference to these cautionary statements.

INCORPORATION BY REFERENCE

The SEC allows us to “incorporate by reference” the information we submit to it, which means that we can disclose important information to you by referring you to certain documents filed with or furnished to the SEC that are considered part of this prospectus through incorporation by reference. Information that we file with or furnish to the SEC in the future and incorporate by reference will automatically update and supersede the previously filed or furnished information. We incorporate herein by reference the documents and portions of documents incorporated by reference in the accompanying prospectus.

You may obtain a copy of these filings at no cost by writing or telephoning us at the following address:

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PROSPECTUS SUPPLEMENT SUMMARY

Company Overview

Turkcell Iletisim Hizmetleri A.S., or Turkcell, a joint stock company organized and existing under the laws of the Republic of Turkey, was formed in 1993 and commenced operations in 1994. Our principal shareholders are Sonera Holding, formerly known as Telecom Finland Ltd., and currently owned by TeliaSonera, the Cukurova Group and Alfa Group (through its Altimo subsidiary). The address of our principal office is Turkcell Iletisim Hizmetleri A.S., Turkcell Plaza, Mesrutiyet Caddesi, No. 153, 34430 Tepebasi, Istanbul, Turkey. Our telephone number is +90 (212) 313 10 00.

We are the leading provider of mobile services in Turkey in terms of number of subscribers (based on our estimates and announcements made by other operators). We provide high-quality mobile voice and data services over our GSM network. We have developed one of the premier mobile brands in Turkey by differentiating ourselves from our competition in areas such as quality of service. As part of our focus on subscriber service and subscriber growth, we have introduced a wide range of mobile services for various subscriber needs in order to attract new customers and retain existing ones. At September 30, 2006, our subscriber base was approximately 30.8 million.

Through a state-of-the-art GSM network, we provide comprehensive coverage of an area that as of September 30, 2006, included 100% of the population living in cities of 10,000 or more people, 99.96% of the population living in cities of 5,000 or more people and 99.93% of the population living in cities of 3,000 or more people. Coverage also includes substantially the entire Mediterranean and Aegean coastline of Turkey. As of October 27, 2006, we provided service to our subscribers in 193 countries through roaming agreements with 536 operators.

We operate under a 25-year GSM license, which we were granted in April 1998 upon payment of an upfront license fee of $500 million. At this time we also entered into an interconnection agreement with Turk Telekom providing for the interconnection of our network with Turk Telekom’s fixed-line network. Under our license, we pay the Turkish Treasury a monthly ongoing license fee equal to 15% of gross revenue. Of that monthly ongoing license fee, 10% goes to the Ministry of Transportation for the Universal Services Fund. We have GSM operations in Ukraine and Northern Cyprus through majority owned subsidiaries and GSM operations in Azerbaijan, Georgia, Moldova and Kazakhstan through our minority owned subsidiary, Fintur Holdings B.V. (“Fintur”).

After giving effect to this offering, our major shareholders’ ordinary share ownership will represent approximately 71.7% of our share capital and the public ownership will represent approximately 23.3%. TeliaSonera, the Cukurova Group and the Alfa Group (through its Altimo subsidiary) will own, directly and indirectly, after giving effect to this offering, approximately 37.1%, 21.4% and 13.2%, respectively, of our share capital.

Strategy

Our vision is to enrich and facilitate the life of our subscribers. In line with this vision, our mission is to connect our customers to life by creating value-added communication services and providing creative communications solutions.

In order to achieve our vision and mission, we have adopted the following key strategic priorities:

Enhance Customer Focused and Customer Relationship Management (CRM) Approach

Since our inception, our business approach has been shaped by subscriber needs and expectations. The loyalty of our customers is very important and we use a customer-oriented approach to maintain the loyalty of our customers in a market with increasing competition and changing economic conditions. Our

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CRM program and customer focus play an important role in the management of different marketing campaigns and services for different subscriber segments and in attracting potential subscribers. Through the effective management of our CRM program, we aim to:

·       maintain subscriber acquisition market share;

·       focus on retention; and

·       strengthen the perception of ‘better value for money’ among our subscribers.

Provide Superior Products and Services

We believe that the quality of our network, measured in terms of network coverage and capacity, has been an important factor in the successful provision of new and superior products and services to date. We intend to maintain our high quality network and to upgrade our networks to further facilitate the introduction of more sophisticated data services.

We intend to facilitate increased GSM usage among our existing subscribers and to foster the growth of new GSM subscribers in Turkey by offering value-added services and by allowing our subscribers to access a wide range of services through our network.

Focus on Cost Control and Efficiency

We continue to focus on cost management and increasing the efficiency of our operations without adversely impacting our ability to deliver high quality products and services to our subscribers.

Investment and Financing Plans

Our efforts to selectively seek and evaluate new international investment opportunities continue. These opportunities could include the purchase of a license and acquisitions in markets outside of Turkey in which we currently do not operate. In order to increase our financial flexibility, we plan to put in place significant external debt financing to be utilized for potential international investments, if one or more opportunities are realized. Utilization will be based upon need and in case the facility is not used the only cost will be relevant arrangement and commitment fees.

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SUMMARY FINANCIAL DATA

The selected financial information set forth below for the years ended December 31, 2003, 2004 and 2005, and the nine months ended September 30, 2005 and 2006, has been derived from, and should be read in conjunction with, the financial statements and accompanying notes prepared in accordance with US Generally Accepted Accounting Principles (“US GAAP”) in our Form 20-F and Nine Month Report.

The financial information included in this prospectus has been prepared and is presented on a consolidated basis in accordance with US GAAP in US dollars. We have presented this information in accordance with US GAAP, even though we maintain our books of account and prepare our statutory financial statements in Turkish Lira (New Turkish Lira starting from January 1, 2005 onwards) in accordance with Turkish Accounting Principles promulgated under the Turkish Commercial Code and Turkish tax legislation, because US and international investors are generally unfamiliar with Turkish Accounting Principles. Until January 1, 2006, our financial statements and those of our subsidiaries located in Turkey and Northern Cyprus have been translated into US Dollars, our reporting currency, in accordance with the relevant provisions of SFAS No. 52, “Foreign Currency Translation” as applied to entities in highly inflationary economies. However, as hyperinflationary conditions in Turkey no longer existed starting from January 1, 2006, our financial statements for periods beginning on or after January 1, 2006, are not adjusted for hyperinflationary accounting.

Beginning from the 2006 fiscal year, we have prepared our interim consolidated financial statements and will prepare our annual consolidated financial statements in accordance with International Financial Reporting Standards (“IFRS”) exclusively (with the exception of this prospectus) and will reconcile these to US GAAP only in our annual consolidated financial statements. Please see “Item 5.A. Operating Results” in our Form 20-F for further information on our transition to reporting our consolidated financial statements in accordance with IFRS.

You should read the following information in conjunction with “Operating And Financial Review And Prospects For The Nine Months Ended And As At September 30, 2006”, our Nine Month Report, “Item 5. Operating and Financial Review and Prospects” in our Form 20-F, and our consolidated financial statements as of December 31, 2004 and 2005 and for each of the years in the three-year period ended December 31, 2005, the related notes and the independent auditors’ report appearing in our Form 20-F. Our consolidated balance sheet as of December 31, 2003, and our consolidated financial statements as of and for the years ended December 31, 2002 and 2001 are not included in this prospectus.

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The information appearing under the captions “Other Financial Data” and “Operating Results” is not derived from the audited financial statements.

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             (1)  We adopted EITF 01-09 “Accounting for Consideration Given to a Customer or a Retailer of the Vendor’s Products” on January 1, 2002. As a result of applying the provisions of EITF 01-09, our revenues, gross profit, and selling and marketing expenses were reduced by $84.7 million for the year ended December 31, 2001. The adoption of EITF 01-09 had no impact on operating income, net income (loss) or earnings (loss) per share. As a result of the application of EITF 01-09 to prior periods, certain figures provided in this prospectus will differ from figures provided previously.

             (2)  Direct cost of revenues includes mainly ongoing license fees, transmission fees, base station rents, billing costs, cost of simcards sold, depreciation and amortization charges, repair and maintenance expenses directly related to services rendered, roaming charges paid to foreign GSM operators for calls made by our subscribers while outside Turkey, interconnection fees and wages, salaries and personnel expenses for technical personnel.

             (3)  Until August 2006, equity in net income (loss) of unconsolidated investees included only the income (loss) from Fintur of which we own 41.45%. Fintur currently holds all of our International GSM investments other than our Northern Cyprus and Ukraine operations. During 2002, Fintur restructured its two business divisions, the international GSM businesses and the technology businesses. As part of the restructuring, we acquired 16.45% of Fintur’s international GSM businesses from the Cukurova Group, increasing our ownership interest in that business to 41.45% and Fintur sold its entire interest in its technology businesses to the Cukurova Group. See “Item 4B. Business Overview—International Operations—Fintur” in our Form 20-F. On August 9, 2006, we acquired a 50% stake in the shares of A-Tel from Cukurova Group for consideration of $150.0 million. A-Tel is a joint venture and its remaining 50% shares are held by Turkey’s Savings and Deposit Insurance Fund (the “SDIF”). A-Tel is accounted for under the equity method.

             (4)  Net income (loss) per share figures have been restated to reflect the effect of certain stock splits as explained in note 19 to the consolidated financial statements in our Form 20-F.

             (5)  Distribution of cash dividends in the amount of TRY509,075,181 was approved at our General Assembly meeting held on May 22, 2006. The US dollar equivalent of the cash dividends amounts to $342.2 million using the Central Bank of Turkey’s TRY/US$ exchange rate on May 22, 2006, which is the approval date of dividend distribution at our General Assembly Meeting. Therefore, the effect of dividend distribution in our consolidated statement of cash flows and in our consolidated statement of changes in shareholders’ equity for the nine month period ended September 30, 2006, was $342.2 million.

             (6)  In 2005 we paid dividends of $182.2 million for the year ended December 31, 2004, when 1,854,887,341 of our shares were outstanding. In 2006 paid dividends of $342.2 million for the year ended December 31, 2005, when 2,200,000,000 of our shares were outstanding. The decision of the Board of Directors was approved by the General Assembly held on May 22, 2006. Dividends per share for the year ending December 31, 2004 is computed over 2,200,000,000 shares in order to reflect the effect of certain stock splits.

             (7)  Gross margin has been calculated as gross profit divided by total revenues.

             (8)  Beginning from the 2006 fiscal year, we have revised the definition of EBITDA, to which we refer herein as Adjusted EBITDA, using this new definition starting from the first quarter of  2006 in order  to provide a new measure to reflect solely cash flow from operations. Therefore, Adjusted EBITDA figures for the years 2001, 2002, 2003, 2004 and 2005 and for the nine months period ended 2005 provided in this prospectus will differ from figures provided previously since we have recalculated  these Adjusted EBITDA figures according to our new definition. Our new Adjusted EBITDA equals income from operations excluding depreciation and amortization. Adjusted EBITDA is not a measurement of financial performance under US GAAP and should not be construed as a substitute for net earnings (loss) as a measure of performance or cash flow from operations as a measure of liquidity. It is used in this prospectus because it is a common and useful measure of performance of a mobile operator. See below for a reconciliation of Adjusted EBITDA to the most directly comparable US GAAP measure.

             (9)  Consists of long-term debt and long-term lease obligations.

        (10)  In connection with the redenomination of the Turkish Lira and as per the related amendments of  Turkish Commercial Code, in order to increase the nominal value of the shares to TRY 1, 1,000 units of shares, each having a nominal value of TRY 0.001 shall be consolidated and each unit of share having a nominal value of TRY 1 shall be issued to represent such shares. Turkcell is currently in the process of merging 1,000 existing ordinary shares, each having a nominal value of TRY 0.001 to one ordinary share having a nominal value of TRY 1. After the share consolidation which appears as a provisional article in the Articles of Association to convert the value of each share with a nominal value of TRY 0.001 to TRY 1, all shares will have a value of TRY 1. Although the consolidation process has not been finalized, the practical application is to state each share having a nominal value of TRY 1 which is consented to by Capital Markets Board of Turkey (“CMB”). Basic and diluted weighted average number of shares and net income per share as of December 31, 2001, 2002, 2003 and 2004 are retrospectively changed to reflect each share having a nominal value of TRY 1.

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The following table provides a reconciliation of Adjusted EBITDA, which is a non-GAAP financial measure, to net cash provided by operating activities, which we believe is the most directly comparable financial measure, calculated and presented in accordance with US GAAP.

We believe that Adjusted EBITDA, a measure commonly used in the telecommunications industry in Europe, can enhance the understanding of our operating results.

Operating Results

(1)          The Turkish population for 2001, 2002, 2003, 2004, 2005 and 2006 has been estimated based upon the 1996 and 2000 censuses prepared by the Turkish Statistical Institute, applying projected yearly growth rates of 1.20%-1.50%.

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(2)          Subscriber numbers do not include the subscribers in Ukraine and Northern Cyprus.

(3)          We calculate average revenue per user, ARPU, using the weighted average number of our subscribers during the period. ARPU does not include the results of our operations in Ukraine and Northern Cyprus.

(4)          Average monthly minutes of use per subscriber is calculated by dividing the total of incoming and outgoing airtime minutes of use by the average monthly number of postpaid and prepaid subscribers for the year divided by twelve. Our Minutes of Usage (“MoU”) calculation does not include our operations in Ukraine and Northern Cyprus.

(5)          Churn is calculated as the total number of subscriber disconnections during a period as a percentage of the average number of subscribers for the period. Our churn calculations do not include our operations in Ukraine and Northern Cyprus.

(6)          See “Item 6D. Employees” in our Form 20-F for information with respect to our consolidated subsidiaries.

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THE OFFERING

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RISK FACTORS

This section lists some of the risks that could materially affect an investment in the ordinary shares being offered and describes more fully other risks related specifically to the offering of our ordinary shares pursuant to this prospectus. You should read this section in conjunction with the detailed discussion of the risk factors that are listed starting on page 8 in our Form 20-F, included as Annex B hereto. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business operations.

Risks related to our business

The following is a list of some of the risks that could materially affect an investment in the ordinary shares being offered. These risks are more fully described starting on page 8 of our Form 20-F, included as Annex B hereto.

·       Competition in our home market has increased in recent years and may continue to increase in the future;

·       Economic developments in Turkey and in the global economy have had, and may continue to have, a material adverse effect on our business, consolidated financial condition, results of operations or liquidity;

·       Political developments in Turkey and its neighboring countries may have a material adverse effect on our business, consolidated financial condition, results of operations or liquidity;

·       The growth of our business is dependent upon the continued development of the Turkish mobile telecommunications market;

·       A large amount of our business is or may be subject to significant legal and regulatory restrictions;

·       Enactment of the Electronic Communications Law could have a material adverse effect on our operations and financial results;

·       The Telecommunications Authority has designated Turkcell as an “operator holding significant market power” in the “mobile call termination services market” and an “operator holding significant market power” in “access to GSM mobile networks and the call origination market” which could affect our competitiveness and have a material adverse affect on our results of operations;

·       Our disputes with other GSM operators and Turk Telekom over call termination charges could have a material adverse effect on our results of operations;

·       We could face severe penalties, including limitation or revocation of our license in extreme cases, if applicable regulatory authorities determine that we are not in compliance with the requirements of our license or applicable regulations;

·       We are involved in various claims and legal actions arising in the ordinary course of our business;

·       We are exposed to foreign exchange rate risks that could significantly impact our ability to meet our obligations and finance our network construction;

·       We are also exposed to interest rate risk on our variable rate borrowings. An increase in Libor rates would increase our interest exposure through increased interest expense;

·       We hold interests in several companies that may expose us to various economic, political, social, financial and liquidity risks and may not provide the benefits that we expect;

·       We have financial exposure relating to outstanding receivables from Digital Platform Iletisim Hizmetleri, A.S.;

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·       Spectrum limitations may adversely affect our ability to provide services to our subscribers;

·       The communications industry is subject to rapid and significant changes in technology that could reduce the appeal of our services or require us to increase our capital expenditures;

·       There can be no assurance that the other operators with whom we have entered into interconnection agreements can or will be able to perform their obligations under these agreements;

·       There are alleged health risks related to base transmitter stations and the use of handsets which could expose us to liability and lead to reduced usage of mobile phones;

·       We are dependent on certain suppliers for network equipment and for the provision of data services;

·       If we are unable to retain key personnel, our business, consolidated financial condition or results of operations could be materially and adversely affected; and

·       We face financial risks in the event that our majority owned subsidiaries fail to meet some of their obligations set forth in the agreements related to their financing arrangements or they require additional financing.

The Cukurova Group, TeliaSonera and the Alfa Group together currently hold a majority of our outstanding share capital which allows them together to exercise a controlling influence over us. This ownership may also have the effect of delaying, deferring or preventing a change of control of Turkcell.

As of the date of this prospectus, the Cukurova Group, TeliaSonera and the Alfa Group (through its Altimo subsidiary) currently own, directly or indirectly, approximately 27.3% , 37.1% and 13.2%, respectively, of our share capital. The Cukurova Group, TeliaSonera and the Alfa Group (through its Altimo subsidiary) will own, directly and indirectly, after giving effect to this offering, approximately 21.4%, 37.1% and 13.2%, respectively, of our share capital. If the Cukurova Group, TeliaSonera and the Alfa Group act together they have the ability to exercise a controlling influence over matters requiring a simple majority vote of the shareholders at a general assembly, such as the right to vote against changes to our articles of association and the right to approve the annual accounts. The Cukurova Group, TeliaSonera and the Alfa Group hold a portion of their interests in us through Turkcell Holding, a holding company that holds 51% of our shares. To the extent that the interests of the Cukurova Group, TeliaSonera and the Alfa Group differ from our interests or those of our other shareholders, we or our other shareholders could be disadvantaged by any actions that the Cukurova Group, TeliaSonera and the Alfa Group might seek to pursue.

The ownership of a substantial percentage of our outstanding ordinary shares by the Cukurova Group, TeliaSonera and the Alfa Group and the affiliation of these shareholders with members of the Board of Directors may have the effect of delaying, deferring or preventing a change in control of Turkcell, may discourage bids for our ordinary shares or ADSs and may adversely affect the market price of the ordinary shares or ADSs. Additionally, we benefit from our relationship with TeliaSonera and the Cukurova Group. If our relationship with either or both shareholders is impaired, or if either of our shareholders were to substantially change its shareholding in us, we may be adversely affected.

Certain of our principal shareholders are currently involved in a dispute which could adversely impact their ability to achieve the consensus necessary to approve important matters relating to our business and operations.

The Cukurova Group and TeliaSonera are currently involved in a dispute regarding the previously proposed sale by the Cukurova Group to TeliaSonera of certain holdings in Turkcell Holding A.S. Class B shares. The Cukurova Group and TeliaSonera are also currently involved in a dispute regarding the sale by the Cukurova Group to Cukurova Telecom Holdings Limited, a joint venture between the Cukurova

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Group and the Alfa Group, of certain holdings in Turkcell Holding A.S. Class B shares. In addition, as part of this dispute on August 21, 2006, TeliaSonera, filed a lawsuit for the purpose of determination of the invalidity of our General Assembly Meeting held on May 22, 2006, and the invalidity of all resolutions taken in this meeting, including with respect to dividends and the election of board members.

The foregoing disputes could result in the failure of our three major shareholders to have a cooperative relationship, which could adversely impact the ability of our principal shareholders to achieve the consensus necessary to approve important matters relating to our business and operations.

Turkcell currently does not have a chief executive officer.

Mr. Muzaffer Akpinar resigned as our chief executive officer during the second quarter of 2006 with effect from June 23, 2006. A search for a replacement is underway but has not been concluded. A prolonged period without a chief executive officer may negatively impact the execution of our strategy and Turkcell’s management.

Risks related to the offering

Issuance and cancellation of ADSs has been indefinitely halted and purchasers of ordinary shares will not be able to deposit them to create ADSs. This indefinite halt may affect our ability to make in-kind distributions on our ADSs and long-term may adversely affect ADS liquidity and trading.

Due to the uncertainty surrounding the application of a Turkish capital gains tax imposed from January 1, 2006, our ADR Depositary, Morgan Guaranty Trust Company of New York, has indefinitely halted issuance and cancellation of ADRs. We understand the depositary banks for all the Turkish DR programs (ADRs and GDRs) have taken similar action. Trading of our ADSs on the New York Stock Exchange has continued and purchases and sales of ADSs represented by ADRs are being settled and recorded by the Depositary. Accordingly, during the indefinite halt, purchasers of ordinary shares, including purchasers of ordinary shares in this offering, will not be able to deposit them in order to create ADSs and holders of ADSs will not be able to withdraw the underlying ordinary shares.

During the period that issuance and cancellation of ADSs is halted, we may not be able to make distributions of additional ADSs representing a dividend in bonus shares, as we have in the past.

If the halt in ADS issuance and cancellation continues, and if for any reason there were a sudden or significant increase in persons wishing either to sell or to buy ADSs at the same time, there may be adverse effects on liquidity and market disruption in the trading of our ADSs and ordinary shares.

It may be difficult to enforce a U.S. judgment against us, our officers and directors and the Turkish experts named in this prospectus in Turkey or the United States, or to assert U.S. securities laws claims in Turkey or serve process on our officers and directors and these experts.

We are incorporated in Turkey. None of our executive officers and directors and the Turkish experts named in this prospectus are residents of the United States, and substantially all of our assets and the assets of these persons are located outside the United States. Therefore, it may be difficult for an investor, or any other person or entity, to enforce a U.S. court judgment based upon the civil liability provisions of the U.S. federal securities laws against us or any of these persons in a U.S. or Turkish court, or to effect service of process upon these persons in the United States. Additionally, it may be difficult for an investor, or any other person or entity, to assert U.S. securities law claims in original actions instituted in Turkey. Certain matters of procedure will also be governed by Turkish law. There is little binding case law in Turkey addressing the matters described above. See “Enforceability of Certain Civil Liabilities” in the accompanying prospectus.

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The market prices of our ordinary shares may be volatile, which could cause the value of your investment in us to decline.

The market price of our ordinary shares historically has experienced and may continue to experience high volatility, and the broader stock market has experienced significant price and volume fluctuations in recent years. This volatility has affected the market prices of securities issued by many companies for reasons unrelated to their operating performance and may adversely affect the market prices of our ordinary shares. In addition to such factors as changes in global macro trends, war or acts of terrorism, any of the following factors could affect the market prices of our ordinary shares:

·       general market, political and economic conditions including fluctuations in the TRY/$ exchange rate;

·       our failure to meet financial analysts’ or investors’ performance expectations;

·       changes in recommendations by financial analysts;

·       changes in market valuations of other telecommunications companies;

·       changes in our corporate credit rating by rating agencies; and

·       changes in our ownership structure.

In addition, many of the risks described elsewhere in this “Risk Factors” section could materially and adversely affect the market price of our ordinary shares.

Future sales or issuances of ADSs or ordinary shares may depress the trading price of our ADSs or ordinary shares.

The sale of substantial amounts of our ordinary shares or ADSs could adversely impact the market prices of our ordinary shares and/or ADSs. The Selling Shareholders, Cukurova Holding A.S. and Cukurova Investments N.V., have entered into a lock-up agreement with the underwriter that generally restricts the Selling Shareholders, subject to specified exceptions, from selling or otherwise disposing of any of our ordinary shares or ADSs for 90 days after the date of this prospectus without the consent of the underwriter. Although there is no present intention to do so, the underwriter may, in its sole discretion and without notice, release all or any portion of the shares from the restrictions in any of the lock-up agreements.

Our dividend rates have varied, and we may reduce or eliminate dividends on our common stock.

The declaration and amount of dividends is subject to the discretion of our General Assembly through proposal by our Board of Directors and our dividend rates have varied. Our Board of Directors makes its proposal depending on various factors, including our net earnings, financial condition, cash requirements, future prospects and other factors deemed relevant from time to time. Subject to the Turkish Capital Markets Board’s (the “CMB’’) minimum dividend requirements, we are under no obligation to pay dividends and we may discontinue payment of dividends at any time. Additionally, the CMB has the discretion to require public companies to distribute dividends. See “Description of Ordinary Shares—Dividend Distribution and Allocation of Profits.” In addition, during the period that issuance and cancellation of our ADSs is halted, we may not be able to make distributions of additional ADSs representing a dividend in bonus shares, as we have in the past.

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USE OF PROCEEDS

The Selling Shareholders will receive all of the proceeds from its sale of our ordinary shares pursuant to this prospectus supplement. We will not receive any of the proceeds from the Selling Shareholders’ sales of our ordinary shares pursuant to this prospectus.

CAPITALIZATION

The following table sets forth our consolidated capitalization as at September 30, 2006.

You should read this table together with our consolidated financial statements and related discussion and analysis included in this prospectus.

(1)          Total capitalization has been calculated as the sum of total long term debt and total stockholders’ equity as of September 30, 2006.

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BUSINESS

Operational Review for the Nine Months Ended September 30, 2006

Turkcell occupied the leading position in the new subscriber acquisition market throughout the first nine months of 2006. Our subscriber base grew 10.4% from 27.9 million at December 31, 2005, to 30.8 million at September 30, 2006. Net additions to our subscriber base were 3.3 million in the first nine months of 2005 and were 2.9 million in the first nine months of 2006.

During the first nine months of 2006, the Turkish GSM market continued its strong growth trend in number of subscribers through customer acquisition based campaigns and community offers.

The macroeconomic volatility in global markets during the second quarter of 2006, which also led to foreign currency exchange rate fluctuations in Turkey during the second quarter of 2006,  stabilized during the third quarter of 2006 to a large extent

Throughout the nine month period ended September 30, 2006, our competitors continued to pursue price-based offerings to increase their share of new subscriptions as well as to increase the usage of mobile services. Nonetheless, we did note some upward price adjustments and limiting of usage incentives by our competitors during the second and third quarters of 2006. During the third quarter of 2006, our competitors also focused on improving their infrastructure related capabilities as a high priority.

During the first nine months of 2006, we continued our initiatives to increase usage and strengthen loyalty. Meanwhile, in line with changing market dynamics in the Turkish GSM market, for the nine months through September 30, 2006, we made a cumulative average increase in our tariffs of 9.3%.

During the nine months ended September 30, 2006, average minutes of monthly usage per subscriber (“MoU”) increased to 69.1 minutes from 66.9 minutes for the same period in 2005. During the nine months ended September 30, 2006, our average revenue per user (“ARPU”) decreased 15% to $11.6 for the nine month period ended September 30, 2006 from $13.6 for the same period in 2005. The decrease was mainly due to the depreciation of TRY against USD as well as the dilutive impact of prepaid subscribers and various loyalty campaigns.

The sale of substantially all of the assets and business of our competitor, Telsim, to Vodafone that had been announced in December 2005 was finalized in the second quarter of 2006. In addition, Telecom Italia announced and completed in the third quarter of 2006 the sale of its 40.5% stake in our competitor, Avea, to Turk Telekom.

Mr. Muzaffer Akpinar resigned as our chief executive officer during the second quarter of 2006 with effect from June 23, 2006.

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Please note that all financial data are consolidated and comprise the Company and our subsidiaries and our associates (together referred to as the “Group”) whereas non-financial data are unconsolidated. The terms “we”, “us”, and “our” in this prospectus refer only to the Company, except in discussions of financial data, where such terms refer to the Group, and where the context otherwise requires.

Subscribers

During the nine months ended September 30, 2006, we added 2.9 million net additions to our subscriber base compared with 3.3 million net additions to our subscriber base during the same period in 2005.

Our total number of subscribers reached 28.7 million as of March 31, 2006 in a stable macroeconomic environment. This is an increase of 2.9% compared to 27.9 million as of December 31, 2005. We added approximately 843,000 net new subscribers in the first quarter of 2006. Our subscriber base consisted of 5.5 million postpaid and 23.2 million prepaid subscribers. New gross subscribers acquired in the first quarter of 2006 consisted of 89% prepaid and 11% postpaid subscribers. The overall growth in the Turkish GSM market during the first quarter of 2006 has been above our expectations mainly due to continuation of price based community offers of competitors and acquisition packages containing fewer counter units than packages previously introduced in the market.

Our total number of subscribers reached 29.8 million as of June 30, 2006. This corresponds to an increase of 3.8% from 28.7 million as of March 31, 2006. We added approximately 1.1 million net new subscribers in the second quarter of 2006. Our subscriber base consisted of 5.6 million postpaid and 24.3 million prepaid subscribers in the second quarter of 2006. New gross subscribers acquired in the second quarter of 2006 consisted of 90% prepaid and 10% postpaid subscribers. The subscriber acquisition growth trend during the second quarter of 2006 remained strong despite the volatility in the macroeconomic environment and we maintained our leadership position in the gross subscriber acquisition market.

Our total number of subscribers reached 30.8 million as of September 30, 2006. This corresponds to an increase of 3.3% from 29.8 million as of June 30, 2006 and an increase of 15.3% from 26.7 million as of September 30, 2005. Our subscriber base consists of 5.7 million postpaid and 25.1 million prepaid subscribers. We added approximately 1.0 million net new subscribers in the third quarter of 2006. New gross subscribers acquired in the third quarter of 2006 consisted of 91% prepaid and 9% postpaid subscribers. During this period, we introduced several campaigns and programs targeting various segments in line with our strategy.

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We expect the subscriber market to continue to grow and we estimate that the mobile line penetration rate may reach above the 80% level at the end of the year from approximately 69% based on operators’ announcements as of September 30, 2006. We intend to maintain our leading position in the gross subscriber additions market.

Turkcell Group Subscribers

We have approximately 37.4 million proportionate GSM subscribers as of September 30, 2006, which is calculated by taking the number of GSM subscribers in Turkcell and each of our subsidiaries and multiplying the numbers unconsolidated investees by our percentage ownership interest in each subsidiary. This figure includes the proportionate rather than total number of Fintur’s GSM subscribers of 1.7 million subscribers. However, it includes  the  total  number of GSM subscribers in Ukraine (we have a 54.8% direct and indirect stake in the Ukrainian subsidiary) and in our operations in Turkish Republic of Northern Cyprus (“Northern Cyprus”) (we have a 100% stake in Northern Cyprus) amounting to 4.65 million including TDMA subscribers and 0.2 million subscribers respectively, because the financials of our subsidiaries  in Ukraine  and  Northern Cyprus  are  consolidated with Turkcell’s financial statements.

*                    at 100% and including TDMA subscribers

Churn Rate

Churn rate refers to the total number of subscriber disconnections during a period, whether voluntary or involuntary, as a percentage of the average number of subscribers for the period. Our churn rate for the nine month period ended September 30, 2006, was 10.8% compared to a churn rate of 7.4% for the same period in 2005.

Our churn rate increased to 3.5% in the first quarter of 2006 from 2.9% in the fourth quarter of 2005 mainly due to low priced acquisition packages from our competitors, a seasonal increase in subscriber base in previous quarters and intensified competition in the market. This led to an increase in the churn rate in this quarter, primarily involuntary churn of subscribers at the lower-value end of the subscriber base. During the second quarter of 2006, our churn rate remained almost stable at 3.6% (3.5%) in line with our expectations. In the third quarter of 2006, our churn rate increased to 4.1% mainly due to overall high market growth in the previous quarters and competition.

While our on-going emphasis on retention remains a high priority, we expect our churn rate in 2007 to be higher than 2006.

MoU

Our blended MoU in the first quarter of 2006 decreased to 57.9 minutes from 70.1 minutes in the fourth quarter of 2005 mainly due to the effect of seasonality and the effect of community offers made by our competitors in the first quarter of 2006. Our blended MoU in the second quarter of 2006 increased by 17% to 67.5 minutes mainly due to seasonality as well as retention based offers such as our new loyalty programs for the youth club. Our blended MoU in the third quarter of 2006 increased by 21% to 81.8 minutes mainly due to the loyalty program for the youth segment, the introduction of the incentive program in July for both the consumer and the corporate segments as well as seasonality.

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In 2007, we expect our blended MoU to increase with our continued emphasis on segmented incentives and loyalty programs.

ARPU

During the nine months ended September 30, 2006, our average revenue per user (“ARPU”) decreased 15% to $11.6 for the nine month period ended September 30, 2006 from $13.6 for the same period in 2005. The decrease was mainly due to the depreciation of TRY against USD as well as the dilutive impact of prepaid subscribers and various loyalty campaigns.

Our blended ARPU is expected to decrease in 2007 mainly due to depreciation of TRY combined with the dilutive impact of prepaid subscribers.

Subscriber Acquisition Costs

During the nine months ended September 30, 2006, subscriber acquisition costs per subscriber (“SAC”) increased to $31 from $25 for the same period in 2005.  As of September 2006, our average SAC has increased in line with our expectations mainly due to campaigns initiated during the period parallel to intensified competition, increasing activation and dealer activities.

International Operations

Fintur

We hold a 41.45% stake in Fintur, which currently holds our entire interest in our international GSM investments other than our Turkish Republic of Northern Cyprus and Ukraine operations. Fintur operates in markets which generally have strong subscriber growth due to relatively lower line penetration rates. Our major shareholder, Alfa, operates a GSM mobile company in Kazakhstan through its holdings in the VimpelCom Group.

The Fintur GSM businesses in Azerbaijan, Kazakhstan, Georgia and Moldova added approximately 727,000 net new subscribers during the nine months ended September 30, 2006, raising their total number of subscribers to approximately 6.9 million as of September 30, 2006 from 6.1 million as of December 31, 2005. Second quarter growth in Kazakhstan was negatively affected by increased competition and the requirement to register customer information of prepaid subscribers.

Ukraine—Life:)

In Ukraine, we have operated through our indirect subsidiary, Astelit, under the brand “life:)” since February 2005. We hold our interest in Astelit through our subsidiary, Turktell Uluslararasi Yatirim Holding A.S. (“Turktell Uluslararasi”), which holds an interest in Astelit’s immediate parent, Euroasia Telecommunications Holdings B.V. (“Euroasia”). Euroasia currently holds a 100% interest in Astelit. In April 2006, Astelit announced the merger of CJSC Digital Cellular Communications (“DCC”) with Astelit in order to optimize the internal business processes of both companies. Prior to its merger with Astelit, Euroasia held a direct 100% interest in DCC. The merger was finalized as of August 2006. As of September 30, 2006, Turkcell holds 54.8% stake in Astelit. Our major shareholder, Alfa, operates a mobile company in Ukraine through its holdings in the VimpelCom Group and in addition, has a holding in a second GSM operator in the Ukraine, Kyivstar.

Astelit, through its distribution channel of approximately 16,500 non-exclusive shops and high brand recognition in the market, grew its subscriber base to 4.7 million (including TDMA subscribers) by September 30, 2006 from 2.5 million (excluding approximately 43,000 TDMA subscribers) at December 31, 2005. Penetration in the Ukrainian GSM market has increased to 85% levels by September 30, 2006, reflecting trends toward individual multiple SIM Card usage. Parallel to the market characteristics, life:) grew its market share to about 12%.

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In December 2005, Astelit signed agreements amounting to US$540 million long term financing. The total financing package consists of a syndicated loan and a junior loan. The long term syndicated loan (the “Syndicated Loan”) in the amount of US$390 million has a term of six years of which US$270 million is guaranteed by Export Credit Agency (ECA). Nokia Corporation and Ericsson Credit AB, the two major suppliers of Astelit’s GSM network also took part in the Syndicated Loan in the amount of US$30 million. The junior loan in the amount of US$150 million has a term of six years and is fully guaranteed by Turkcell. The proceeds from these facilities have been used to refinance Astelit’s existing vendor loans and local bank loans and finance additional capital expenditures and working capital requirements.

Based on Astelit’s interim financial statements as at and for the three months ended March 31, 2006, the six months ended June 30, 2006, and the nine months ended September 30, 2006, Astelit has been in breach of certain of its covenants contained in the Syndicated Loan as at each respective date. As a result, for each of the first, second and third quarters of 2006, Astelit’s long term debt has been reclassified as short term debt, amounting to US$501.1 million (including its junior loan) as at the end of the third quarter of 2006. Astelit requested and received certain waiver letters from the facility agent and the lenders under the Syndicated Loan for the breach of its covenants under the Syndicated Loan during the first, second and third quarters of 2006. Such waivers were granted subject to certain conditions, including the condition that we and Euroasia’s other principal shareholder contribute a share of $150 million (proportional to our shareholding in Euroasia) to Astelit and that certain restructuring amendments be agreed prior to November 30, 2006, and documented prior to December 31, 2006. The $150 million contribution to Astelit is to take place in three tranches of $50 million, two of which have been completed and in which we participated. Based on Astelit’s financial status and discussions held with the lenders, significant additional shareholder contribution may be needed in the coming quarters. See “Operating And Financial Review And Prospects For The Nine Months Ended And As At September 30, 2006—Liquidity Outlook—Loans” for further information on Astelit’s financings, including the Syndicated Loan.

Investment and Financing Plans

Our efforts to selectively seek and evaluate new international investment opportunities continue. These opportunities could include the purchase of a license and acquisitions in markets outside of Turkey in which we currently do not operate. In order to increase our financial flexibility, we plan to put in place significant external debt financing to be utilized for potential international investments, if one or more opportunities are realized. Utilization will be based upon need and in case the facility is not used the only cost will be relevant arrangement and commitment fees.

Egypt

In line with our strategy to evaluate potential investment opportunities in the international GSM arena, our Board of Directors took a decision regarding our intention to conduct the required studies for the pre-qualification stage and submit a prequalification application in accordance with the relevant provisions of the Request For Proposals for the tender of the third GSM license in the Arab Republic of Egypt. In this respect, we signed a Memorandum of Understanding (“MOU”) with Amwal El Khaleej and Banque Misr in order to form a consortium to apply for the pre-qualification of the third GSM license. Our Board of Directors took a decision to bid for the tender of the third GSM license in the Arab Republic of Egypt which took place on July 4, 2006. In this respect, we participated in the auction process of the tender. However as per our evaluation based on our business plans, we subsequently decided to withdraw from the tender.

Purchase of A-Tel

We exercised an option to purchase the 50% stake of shares of A-Tel Pazarlama ve Servis Hizmetleri A.S. (“A-Tel”) owned by Yapi ve Kredi Bankasi A.S., completing the transaction as of August 9, 2006, by

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paying US$150 million in cash. Since August 9, 2006, we account for A-Tel under the equity method. A-Tel is a joint venture and its remaining 50% share is held by Turkey’s Savings and Deposit Insurance Fund.

A-Tel is involved in marketing, selling and distributing Turkcell’s prepaid systems. A-Tel acts as our exclusive dealer for the Muhabbet Kart (a prepaid card), and receives dealer activation fees and simcard subsidies for the sale of Muhabbet Kart. A-Tel sells simcards and scratch cards through an extensive network of newspaper kiosks located throughout Turkey.

Since 1999, the business cooperation between Turkcell and A-Tel has provided important support to Turkcell’s sales and marketing activities. With the brand name Muhabbet Kart, A-Tel has proven effective in a competitive environment through well structured campaigns. With the acquisition of a 50% stake in A-Tel, we believe that Turkcell will be better positioned in the changing competitive environment and achieve increased benefits by optimizing our respective sales and marketing efforts. During September 2006, A-Tel’s General Assembly decided to distribute dividends and accordingly we reduced the carrying value of the investment in A-Tel by the dividends declared of TRY 30.3 million (equivalent to $20.2 million at September 30, 2006). On October 16, 2006, such dividend was received by us. A-Tel is a joint venture and its remaining 50% shares are held by Turkey’s Savings and Deposit Insurance Fund.

Regulatory Environment

There were no major developments in the regulatory environment regarding the issuance of any 3G license, or regulations on Mobile Virtual Network Operators (“MVNOs”) or Mobile Number Portability (“MNP”) from those described in our Form 20-F. Regarding the 3G tender process, despite previous announcements made by the Telecommunications Authority that had pointed toward the end of 2006 for the initiation of the 3G tender process, we now expect the 3G tender process to take place in the first half of 2007. With respect to MNP, the Telecommunications Authority is expected to issue the final regulation before the end of 2006, whereas the regulation is expected to be implemented during the second half of 2007.

Legal Developments

Two of our major shareholders, the Cukurova Group and TeliaSonera, are currently involved in a dispute regarding the previously proposed sale by the Cukurova Group to TeliaSonera of certain holdings in Turkcell Holding A.S. Class B shares. The Cukurova Group and TeliaSonera are also currently involved in a dispute regarding the sale by the Cukurova Group to Cukurova Telecom Holdings Limited, a joint venture between the Cukurova Group and the Alfa Group, of certain holdings in Turkcell Holding A.S. Class B shares. In addition, as part of this dispute, on August 21, 2006, our shareholder, TeliaSonera, filed a lawsuit for the purpose of determination of the invalidity of our General Assembly Meeting held on May 22, 2006, and the invalidity of all resolutions taken in this meeting, including with respect to dividends and the election of board members.

While Inteltek, our subsidiary, is not a party to certain lawsuits filed against Genclik ve Spor Genel Mudurlugu (“GSGM”) and the Turkish Public Tender Authority in connection with the fixed odds betting tender by which Inteltek obtained one of its licenses to operate, Inteltek’s operations may be affected by the court’s decision in connection with such lawsuits. If the court annuls the fixed odds betting tender by which Inteltek obtained one of its licenses to operate, Inteltek will not be able to continue its operations pursuant to that license. See “Operating and Financial Review and Prospectus for the Nine Months Ended and as at September 30, 2006—Revenues’’ and “—Nine Month Period Ended September 30, 2006 Compared to Nine Month Period Ended September 30, 2005—Revenues’’.

Please see “Operating and Financial Review and Prospects for the Nine Months Ended and as at September 30, 2006—Legal Proceedings” herein, Note 20 (Commitments and Contingencies—Legal Proceedings) in our Nine Month Report and Note 27 (Commitments and Contingencies) of our consolidated financial statements in our Form 20 F for further information on certain of our legal disputes.

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OPERATING AND FINANCIAL REVIEW AND PROSPECTS FOR THE NINE MONTHS ENDED AND AS AT SEPTEMBER 30, 2006

Overview

The financial information contained in the following discussion and analysis has been prepared and is presented on a consolidated basis in accordance with US GAAP in USD. The following discussion and analysis should be read in conjunction with the consolidated balance sheets as of December 31, 2004 and 2005 and the related consolidated statements of operations, changes in shareholders’ equity and comprehensive income, and cash flows for each of the years in the three year period ended December 31, 2005 and the related notes there to included in our annual report on Form 20-F for the year ended December 31, 2005 and the consolidated balance sheets as of December 31, 2005 and September 30, 2006, and the related consolidated statements of operations, changes in shareholders’ equity and comprehensive income, and cash flows for each of the nine month periods ended September 30, 2005 and 2006 included herein. The information as of September 30, 2006 and for the nine month periods ended September 30, 2005 and 2006 is not audited.

Beginning from the 2006 fiscal year, we started to prepare our interim and will prepare our annual consolidated financial statements in accordance with International Financial Reporting Standards (“IFRS”). Our interim consolidated financial statements includes comparable data for 2005. Our first annual report on Form 20-F that will be filed containing financial information prepared in accordance with IFRS (with a reconciliation to US GAAP) will be that for the fiscal year ending December 31, 2006. The implementation of IFRS may result in material differences in accounting and/or balances of several items in our annual consolidated financial statements, which may include without limitation:

·       Revenue,

·       Sales and marketing expenses,

·       Depreciation and amortization,

·       EBITDA margin,

·       Net income, and

·       Fixed assets, investments, intangibles.

In accordance with US GAAP, our revenues, gross profit and selling and marketing expenses are reduced as a result of the adoption of standards issued by the Emerging Issues Task Force (“EITF”) which operates at the direction of the Financial Accounting Standards Board (“FASB”) that addresses the extent to which cash consideration given to distributors shall be reported as reductions in revenue or incurred as expenses. With the change to IFRS, EITF rules are no longer applied, therefore we expect that our revenues, gross profit, and selling and marketing expenses to some extent.

Until January 1, 2006, our financial statements were prepared in accordance with US GAAP and translated into USD, which is our reporting currency, in accordance with the relevant provisions of Statement of Financial Accounting Standard (“SFAS”) No. 52 “Foreign Currency Translation” as applied to entities in highly inflationary economies. Accordingly, revenues, costs, capital and non-monetary assets and liabilities are translated at historical exchange rates while monetary assets and liabilities are translated at the exchange rates prevailing at balance sheet dates. All foreign exchange adjustments resulting from translation of the financial statements into USD were included in the determination of net income, as “Translation gain/(loss)”. However, under IFRS, in accordance with International Accounting Standard No. 29 “Financial Reporting in Hyperinflationary Economies” the local currency is taken as the functional currency and revenues, costs, capital and non-monetary assets and liabilities are restated to account for changes in the general purchasing power of the local currency. The resulting gain/(loss) on net monetary

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position is included in the determination of net income. Accordingly, revenues, costs, capital and non-monetary assets and liabilities were affected by these differences. However, as hyperinflationary conditions in Turkey no longer existed starting from January 1, 2006, New Turkish Lira (“TRY”) has been treated as a more stable currency since that time and our financial statements and those of the subsidiaries located in Turkey and Turkish Republic of Northern Cyprus prepared in accordance with IFRS are not required to be adjusted for hyperinflationary accounting.

IAS 39 “Financial Instruments Recognition and Measurement” provides recognition and measurement requirements covering financial instruments. Financial assets and liabilities are stated at present value using effective interest method with charges flowing through the income statement. Under US GAAP it does not require discounting in certain specified circumstances including trade receivables and payables maturing in less than a one year.

Similarly, deferred tax calculation is also affected due to the accounting methodology differences between US GAAP and IFRS standards.

Certain statements contained below, including information with respect to our plans and strategy for our business, are forward looking statements. The statements contained in this discussion of operating results, which are not historical facts, are forward looking statements with respect to our plans, projections or future performance, the occurrence of which involves certain risks and uncertainties. For a discussion of important factors that could cause actual results to differ materially from such forward-looking statements see “Item 3D. Risk Factors” in our 20-F and elsewhere in this prospectus supplement.

Overview of Business

We were formed in 1993 and we commenced operations in 1994 pursuant to a revenue sharing agreement with Turk Telekom. Since April 1998, we have operated under a 25-year GSM license (the “License”), which was granted upon payment of an upfront license fee of $500 million. At the same time, we entered into an interconnection agreement with Turk Telekom for the interconnection of our network with Turk Telekom’s fixed-line network. On September 20, 2003, we signed an agreement (the “Amended Agreement”) with Turk Telekom amending certain sections of the Interconnection Agreement dated April 24, 1998. As a result of intervention by the Telecommunications Authority, we entered into a new supplemental protocol with Turk Telekom in 2003.

Under the license, we were paying ongoing license fees to the Turkish Treasury equal to 15% of our gross revenue from our GSM operations in Turkey, which included monthly fixed fees and communication fees including taxes, charges and duties paid to the Turkish Treasury. Since June 2004, SIM card sales in Turkey, outgoing roaming revenues and late payment interest charges have been included in the definition of gross revenue and included in the monthly ongoing license fee computations. Based on the law enacted on July 3, 2005 with respect to the regulation of privatization, the gross revenue description used for the calculation of the treasury share has been changed. According to this new regulation, accrued interest charged for the late payments, taxes such as indirect taxes, and accrued amounts accounted for reporting purposes are excluded from the description of gross revenue. This regulation was published officially on July 21, 2005. We submitted to the Telecommunications Authority a revision of the related articles of the Amended Agreement and completed certain necessary procedures to reflect the revised definition of gross revenue. The Danistay, the highest administrative court in Turkey, approved the agreement on March 10, 2006. Calculation of gross revenue for the ongoing license fee in accordance with the new agreement is valid after March 10, 2006. Therefore, the basis for calculating the universal service fund has also changed. See “—Legal Disputes’’.

Under our Amended Agreement with Turk Telekom, we pay Turk Telekom an interconnection fee per call based on the type and length of call for calls originating on our network and terminating on Turk Telekom’s fixed-line network, as well as fees for other services. We also collect an interconnection fee from

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Turk Telekom for calls originating on their fixed-line network and terminating on our network. We also have interconnection agreements with Vodafone Telekomunikasyon A.S. (“Vodafone”) (named as Telsim Mobil Telekomunikasyon Hizmetleri A.S. (“Telsim”) before 24 May 2006), Avea Iletisim Hizmetleri A.S. (“Avea”), Milleni.com GMBH (“Milleni.com”) and Globalstar Avrasya Uydu Ses ve Data Iletisim A.S. (“Globalstar”) pursuant to which we have agreed, among other things, to pay interconnection fees to the other parties for calls originating on our network and terminating on theirs, and they have agreed to pay interconnection fees for calls originating on their networks and terminating on ours.

From the time of our start-up through September 30, 2006, we have made capital expenditures amounting to approximately $5.0 billion including the cost of our licenses, $0.6 billion of which was related to Ukrainian operations. The build-out of our network in Turkey is now substantially complete, with coverage at September 30, 2006 of 100% of the Turkish population living in cities of 10,000 or more people. As of September 30, 2006, our network covers 99.96% of the Turkish population living in cities of 5,000 or more and 99.93% of the Turkish population living in cities of 3,000 or more. Coverage also includes substantially the entire Mediterranean and Aegean coastline of Turkey. We meet the coverage requirements of our license.

Our Turkish GSM subscriber base has expanded from 63,500 at year-end 1994 to 30.8 million as of September 30, 2006. In 2007, we expect the subscriber market to continue to grow and we estimate that the mobile line penetration rate may reach above an 80% level at the end of the year from approximately 69% based on operators’ announcements as of September 30, 2006. We intend to maintain our leading position in gross additions market.

Our prepaid mobile service increases our market penetration and limits our credit risk. This service permits access to our GSM services to subscribers who prefer to avoid monthly billing or to better control their mobile communication expenses. As of September 30, 2006, we had 25.1 million prepaid subscribers and 5.7 million postpaid subscribers in our GSM network in Turkey. Average minutes of use per prepaid subscriber and average revenue per prepaid subscriber tend to be lower than for postpaid subscribers resulting in dilutive effects if the proportion of prepaid subscribers increases.

Our average monthly minutes of use per subscriber has increased 3% to 69.1 minutes for the nine month period ended September 30, 2006 from 66.9 minutes for the same period in 2005, mainly due to our efforts to promote usage through segmented and volume based incentives. In 2007, we expect our blended MoU to continue to increase with our continued emphasis on segmented incentives and loyalty programs. Our blended average revenue per user (“ARPU”) decreased 15% to $11.6 for the nine month period ended September 30, 2006 from $13.6 for the same period in 2005. The decrease was mainly due to the depreciation of TRY against USD as well as the dilutive impact of prepaid subscribers and various loyalty campaigns. Our blended ARPU is expected to decrease in 2007 mainly due to depreciation of TRY combined with the dilutive impact of prepaid subscribers. We aim to increase our revenues in 2007. However, macroeconomic developments may impact our forecasts.

Our churn rate is the ratio of total subscriber disconnections, both voluntary and involuntary during a period to the average number of subscribers for the period. In addition to voluntary disconnections, under our disconnection process, subscribers who do not pay their bills are disconnected from our network and included in churn upon the commencement of the legal process to disconnect them, which occurs approximately 180 days from the due date of the unpaid bill. Pending disconnection, non-paying subscribers are suspended from service (but are still considered subscribers) and receive a suspension warning, which in some cases results in payment and reinstatement of service. Also, prepaid subscribers who do not use any airtime for a period of seven months are disconnected from our network in Turkey. Our churn rate for operations in Turkey was 7.4 % for the nine month period ended September 30, 2005 compared with 10.8% for the nine month period ended September 30, 2006. Our churn rate as of September 30, 2006 has increased compared to 2005 in line with our expectations. The increase was due to

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intensified competition in the GSM mobile market and the increasing prepaid subscriber base. However, our retention and mass loyalty programs contributed positively to our efforts to keep our churn rate under control. While our on-going emphasis on retention remains a high priority, we expect our churn rate in 2007 to be higher than 2006.

We made a bad debt provision in our financial statements for non-payments and disconnections that amounted to $149.2 million and $151.4 million as of December 31, 2005 and September 30, 2006, respectively, which we believe is adequate. Prior to 2003, the majority of subscriber disconnections were due to non payment of bills. However, starting from 2003, the majority of involuntary subscriber disconnections were prepaid subscribers’ disconnections due to not using the network as a result of the increased number of prepaid subscribers in our subscriber base.

International and Other Domestic Operations

As noted in our Form 20-F, we participated in a consortium (“Irancell”) that in 2004 was awarded the first private GSM operator tender in Iran. Irancell signed a license agreement with the Iranian Ministry of Communication and Information Technology in 2004, but the Iranian Parliament subsequently revised the license agreement in 2005. Although our Board of Directors decided to continue with the project despite the modifications to the license agreement, there has been no notification made by the Iranian Authorities regarding any resolution to the first private GSM operator tender in Iran. As a result, we requested an injunction order in Iranian courts seeking to compel the Ministry of Communication and Information Technology to implement the laws and regulations passed by the Iranian Parliament in connection with the GSM tender process. Such request for an injunction order was rejected in April 2006. We are currently reviewing our options for further legal action to recover our expenses in connection with our participation as part of Irancell in the first private GSM operator tender in Iran. We currently have no plans to invest in the Iranian market.

On October 20, 2005, Cukurova Group offered to sell us the “A-Tel Option Contract”, under which the holder had the right to purchase 50% shares of A-Tel Pazarlama ve Servis Hizmetleri AS (“A-Tel”) for a consideration of $150.0 million. After tax, legal and financial due diligence review in A-Tel, we decided to purchase 50% of A-Tel shares for a consideration of $150.0 million. Following the legal approval of Turkish Competition Board on August 1, 2006, the related payment was made on August 9, 2006 and the transaction has been finalized. A-Tel is a joint venture and its remaining 50% shares are held by Turkey’s Savings and Deposit Insurance Fund.

As of September 30, 2006, we have not yet completed the evaluation of the fair value of identifiable assets and liabilities of A-Tel and the allocation of the purchase price. We have a period up to one year to complete the purchase price allocation effective from 9 August 2006, which is the date of acquisition. Therefore, final purchase accounting adjustments may differ from our initial estimates and the allocation of purchase price is subject to refinement. A-Tel is accounted for under the equity method and results of the operations for the two months period ended September 30, 2006 are included in the accompanying interim consolidated financial statements using the ownership percentage of 50%. In addition, during September 2006, A-Tel’s General Assembly decided to distribute dividends and accordingly we reduced the carrying value of the investment in A-Tel by the dividends declared of TRY 30.3 million (equivalent to $20.2 million at September 30, 2006). On October 16, 2006, we received the dividend.

A-Tel is involved in marketing, selling and distributing our prepaid systems. A-Tel acts as our exclusive dealer for the Muhabbet Kart (a prepaid card), and receives dealer activation fees and simcard subsidies for the sale of Muhabbet Kart.

Since 1999, the business cooperation between us and A-Tel has provided important support to our sales and marketing activities. With the brand name Muhabbet Kart, A-Tel has proven successful in a competitive environment through well-structured campaigns. With the acquisition of the 50% stake in

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A-Tel, we believe that we will be better positioned in the changing competitive environment and achieve increased benefits by optimizing our respective sales and marketing efforts.

In May 2006, we and System Capital Management (“SCM”) (the other shareholder of Astelit-the Ukrainian subsidiary in which we indirectly hold 54.8%) have committed to contribute approximately $150.0 million to Astelit in proportion to our respective shares as required by the lenders of the syndicated loan to obtain a waiver letter for breaches of financial covenants. This capital increase is to be made in three equal installments in July 2006, October 2006 and January 2007. Consequently, we participated in the first tranche payment in the form of a capital increase to Astelit on July 24, 2006 amounting to $27.5 million which is calculated according to an ownership interest in Astelit. We also participated in the second tranche payment amounting $27.5 million on October 20, 2006. Based on Astelit’s financial status and discussions held with the lenders, significant additional shareholder contribution may be needed in the coming quarters. For a description of, and additional information regarding, funding and commitments in relation to Astelit, see “Liquidity and Capital resources—Liquidity—Loans”..

On August 1, 2006, our indirect Ukrainian subsidiary, CJSC Digital Cellular Communications (“DCC”), merged with Astelit, in order to optimize the internal business processes of both companies. Both companies were wholly-owned by Euroasia, in which we hold 54.8%.

Our efforts to selectively seek and evaluate new international investment opportunities continue. These opportunities could include the purchase of a license and acquisitions in markets outside of Turkey in which we currently do not operate. In order to increase our financial flexibility, we plan to put in place significant external debt financing to be utilized for potential international investments, if one or more opportunities are realized. Utilization will be based upon need and in case the facility is not used the only cost will be relevant arrangement and commitment fees.

For a description of, and additional information regarding, our international and other domestic operations, see “Business” in this prospectus supplement and “Item 4B. Business Overview” in our Form 20-F.

Critical Accounting Policies

For a discussion of our critical accounting policies, please see “Item 5. Operating and Financial Review and Prospects-Critical Accounting Policies” in the 20-F. There have been no material changes in our critical accounting policies since the date of the 20-F.

Revenues

Our revenues are mainly derived from communication fees, monthly fixed fees, sales of SIM cards, commission fees and call center revenues. Communication fees consist of charges for calls that originate or terminate on our GSM network, including international roaming, and are based on minutes of actual usage of service. Per-minute communication fees vary according to the subscriber’s service package. Commission fees on betting business relate to our operation of a central betting system and head agency fees. Such fees are recognized at the time the services related to the betting games are rendered. Monthly fixed fees are charged to each postpaid subscriber in a specified monthly amount that varies according to the subscriber’s service package, regardless of actual use of our GSM network services. SIM card revenues are receipts from the sale of SIM cards, which are needed to operate a handset used by a subscriber. Call center revenues consist of revenues for call center services provided by our call center subsidiary to affiliated and third party companies.

We recognize SIM card sales as revenue upon initial entry of a new subscriber into the GSM network only to the extent of the direct costs associated with providing these services. Excess SIM card sales are deferred and recognized over the estimated effective subscription contract life. In connection with

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postpaid and prepaid subscribers, we currently incur costs for activation fees to dealers and other promotional expenses, which historically offset all or substantially all of the subscription fees. We charge a usage fee for certain services we offer, such as SMS, voicemail and data and facsimile transmission. Our revenues depend on the number of subscribers, call volume and tariff pricing.

As is the case throughout Europe, airtime charges generally are paid only by the initiator of a call, except when a subscriber travels outside Turkey, in which case we charge the subscriber for a portion of the incoming call.

In Turkey, we and other operators have entered into interconnection agreements which set out the terms and conditions regarding the price terms as well as periodical revision of such terms. However, revisions of the pricing terms of the interconnection agreements have been pending as we have not been able to agree on the pricing terms with other operators through our discussions. As per the Access and Interconnection Regulation, the issue has been referred to to the Telecommunications Authority by Turk Telekom, Telsim and Avea. Meanwhile, the Telecommunications Authority issued reference interconnection rates during the fourth quarter of 2004, which indicate pricing terms. Subsequently, on August 10, 2005, the Telecommunications Authority issued a ‘temporary interconnection price schedule’ for the interconnection between Turk Telekom and us which are in line with the reference tariff structure defined by the Telecommunications Authority during the fourth quarter of 2004.

The Telecommunications Authority issued final reference call termination rates for all operators in the market in June 2006. These rates were lower than previously applied termination rates with the other GSM operators, as expected, but reveal no change from the temporary interconnection rates applied between Turk Telekom and us since August 2005. Based on the Telecommunications Authority’s resolution, we have started to apply the new reference call termination rates with Vodafone and Avea starting from March 2006 and July 2006 respectively. However, in the end of July 2006, we signed an agreement with Vodafone at relatively more favorable rates than the reference call termination rates suggested by the Telecommunications Authority which had been retroactively effective from May 24, 2006 which is the date of transfer of shares of Telsim to Vodafone. Therefore, we have applied rates based on the agreement dated July 31, 2006, starting from May 24, 2006 with Vodafone. For the period between March 1, 2006 and May 24, 2006, we retroactively applied the new reference call termination rates with Telsim. In the previous periods, disagreements existed between us and the other GSM operators regarding the revision of pricing terms of the interconnection agreements. In addition there is a disagreement with Turk Telekom about international calls. See “—Legal Proceedings’’ and Note 27 to our consolidated financial statements in our Form 20-F.

Our revenues have increased as a result of the growth in our subscriber base, improvement in the macroeconomic indicators and improving minutes of usage.

Inteltek, our betting subsidiary, operates pursuant to a Head Agency Agreement and Central Betting System operation and risk management Agreements (“CBS Agreement”) signed with relevant governmental body. The Head Agency Agreement relates to the fixed odds betting business and the CBS Agreement relates to operating the central betting system entitling Inteltek to receive up to a maximum of 12% and 4.3% of gross takings as commissions, respectively. Under the Head Agency Agreement, Inteltek is obligated to undertake any excess payout, which is presented in our financial statements as a net off from the commission revenues. The Head Agency Agreement, which currently accounts for 99.7% of Inteltek’s revenue, is the subject of a dispute. See “Nine Month Period Ended September 30, 2006 Compared to Nine Month Period Ended September 30, 2005—Revenues’’.

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Operating Costs

Direct Cost of Revenues

Direct cost of revenues includes mainly ongoing license fees, transmission fees, base station rents, billing costs, cost of simcards sold, depreciation and amortization charges, repair and maintenance expenses directly related to services rendered, roaming charges paid to foreign GSM operators for calls made by our subscribers while outside Turkey, interconnection fees mainly paid to Turk Telekom, Vodafone, Avea, Milleni.com and Globalstar and wages, salaries and personnel expenses for technical personnel.

General and Administrative

General and administrative expenses consist of fixed costs, including company cars, office rent, office maintenance, travel, insurance, consulting, collection charges, wages, salaries and personnel expenses for non-technical and non-marketing employees and other overhead charges. Our general and administrative expenses also include bad debt expenses of our postpaid subscribers.

Selling and Marketing

Selling and marketing expenses consist of public relations, sales promotions, dealer activation fees, advertising, prepaid frequency usage fees, wages, salaries and personnel expenses of sales and marketing related employees and other expenses, including travel expenses, office expenses, insurance, company car expenses, training and communication expenses.

The average Turkish GSM subscriber acquisition cost was approximately $31 and $25 per new subscriber for the nine month periods ended September 30, 2006 and 2005, respectively. We compute average acquisition cost per new subscriber by adding sales promotion expenses, SIM card subsidies and activation fees and dividing the sum by the gross number of new subscribers in our Turkish operations for the related period. These costs are recorded as either selling and marketing expense or reduction of revenue in our statements of operations. As of September 2006, our average SAC has increased in line with our expectations mainly due to campaigns initiated during the period parallel to intensified competition, increasing activation and dealer activities.

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Results of Operations

The following table shows information concerning our consolidated statements of operations for the periods indicated.

The following table shows certain items in our consolidated statement of operations as a percentage of revenues.

Nine month period ended September 30, 2006 compared to nine month period ended September 30, 2005

We had 30.8 million Turkish GSM subscribers, including 25.1 million prepaid subscribers, as of September 30, 2006, compared to 26.7 million Turkish GSM subscribers, including 21.4 million prepaid subscribers, as of September 30, 2005. During the first nine months of 2006 and 2005, we added approximately 2.9 million and 3.3 million net new Turkish GSM subscribers respectively.

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In Ukraine, with 4.7 million subscribers as of September 30, 2006, based on various independent market studies, we have a 11.7% share in the Ukrainian mobile market.

Revenues

Total revenues for the nine month period ended September 30, 2006 slightly increased 4% to $3,308.7 million from $3,193.1 million for the same period in 2005. The slight increase in revenues is mainly due to the growth in the number of subscribers and increased usage despite the depreciation of TRY against USD as well as the dilutive impact of prepaid subscribers and various retention campaigns in 2006.

Revenues from communication fees for the nine month period ended September 30, 2006 slightly increased 2% to $3,089.5 million from $3,043.0 million for the same period in 2005. The slight increase in the communication fees resulted from the growth in the number of subscribers, increased usage and cumulative tariff increases of 9.3% despite 6% depreciation of TRY against USD on average terms compared to the same period of the year 2005.

Our majority-owned subsidiary, Inteltek, commenced its operations of fixed odds betting games in April 2004, pursuant to an agreement signed with Genclik ve Spor Genel Mudurlugu on October 2, 2003 and started to generate commission revenue from this betting business. Commission revenue from the betting business for the nine month period ended September 30, 2006 increased 83% to $133.5 million from $72.9 million for the same period in 2005. Commission fees on the betting business are increasing as betting games are becoming widespread in the market.

Inteltek may be affected by ongoing litigation in connection with the fixed odds betting tender under which it obtained its license to operate a risk management center and to act as a head agency. In the event that the ongoing litigation resulted in the cancellation of the fixed odds betting tender under which Inteltek obtained its license, Inteltek would be unable to operate its risk management center, or to act as a head agency with respect to its fixed odds betting business and may not be able to carry out its activities. The portion of Inteltek’s revenues relating to the fixed odds betting business accounted for 99.7% of Inteltek’s revenues in the nine months period ended September 30, 2006. See “Legal Proceedings—Disputes on Annulment of Fixed Odds Betting Tender Related to Establishment and Operation of Risk Management Center Head Agency” for further information on this ongoing litigation.

Revenues from monthly fixed fees for the nine month period ended September 30, 2006 increased 2% to $41.8 million from $40.8 million for the same period in 2005 mainly due to the increase in our subscriber base and increase in the volume of the operations in Ukraine.

SIM card revenues for the nine month period ended September 30, 2006 decreased 37% to $15.0 million from $23.8 million for the same period in 2005 mainly due to the increase in the 100% discounted SIM cards delivered to the sales channel as a part of introduction packages.

Direct cost of revenues

Direct cost of revenues for the nine month period ended September 30, 2006 increased to $1,785.8 million from $1,750.5 million for the same period in 2005.

Ongoing license fees and universal fund paid to the Turkish Treasury and to the Turkish Ministry of Transportation decreased 8% to $574.1 million for the nine month period ended September 30, 2006 from $620.9 million for the same period in 2005. Despite the increase in our revenues, the amendment in our license agreement regarding the definition of gross revenue, which became effective as of March 10, 2006 led to lower ongoing license fees and universal service fund payments. Based on the law enacted on July 3, 2005 with respect to the regulation of privatization, the gross revenue calculation for the ongoing license fee and universal service fund has been changed. According to this new regulation, accrued interest charged for the late payments, indirect taxes such as VAT, and accrued revenues are excluded from the

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calculation of gross revenue. Calculation of gross revenue for the ongoing license fee and universal service fund according to the new regulation was effective after Danistay’s approval on March 10, 2006.

Depreciation and amortization charges increased 12% to $382.2 million for the nine month period ended September 30, 2006 from $340.0 million for the same period in 2005 mainly due to the increase in the capital expenditures, in Turkey and Ukraine. The amortization expense for our GSM license and other telecommunication licenses was $29.6 million and $24.2 million for the nine month periods ended September 30, 2006 and 2005, respectively.

Interconnection costs decreased 14% to $267.1 million for the nine month period ended September 30, 2006 from $309.4 million for the same period in 2005 mainly due to the 6% depreciation of TRY against USD as well as lower tariffs imposed by the Telecommunications Authority for Avea outgoing calls effective from July 2006 and lower tariffs set by the new agreement between us and Vodafone effective from May 24, 2006. In line with the reference tariffs of the Telecommunications Authority the tariffs applied between us and Turk Telekom have decreased approximately by 26%, in the nine months period ended September 30, 2006 compared to the same period in 2005.

Transmission costs, site costs, information technology, network maintenance expenses and infrastructure cost increased approximately 9% to $109.4 million for the nine month period ended September 30, 2006 from $100.3 million for the same period in 2005 mainly due to an increase in transmission and maintenance costs as a result of the capacity increases in the lines. In addition, uncapitalizable antenna site costs and expenses increased 9% to $123.1 million for the nine month period ended September 30, 2006 from $112.6 million for the same period in 2005 mainly due to the increase in radio network operations.

Wages, salaries and personnel expenses for technical personnel increased 10% to $102.3 million for the nine month period ended September 30, 2006 from $92.8 million for the same period in 2005 mainly due to periodic increases in salaries and an increase in number of the employees.

Roaming expenses increased 43% to $71.5 million for the nine month period ended September 30, 2006 from $50.0 million for the same period in 2005, mainly due to the increase in roaming revenue generated from the calls made by our subscribers while outside Turkey, primarily reflecting better economic conditions and the fact that between September 30, 2005 and September 30, 2006 we added 78 new roaming operators for GSM in 12 countries, 64 for GPRS in 22 countries and 72 for Active Customised Applications for Mobile Network Enhanced Logic (“active CAMEL”) technologies in 38 countries which enable our pre-paid subscribers to be able to roam on foreign operators’ networks.

The cost of SIM cards sold decreased 14% to $30.3 million for the nine month period ended September 30, 2006 from $35.1 million for the same period in 2005 in parallel with a 14% decrease in the net additions to our subscriber base from 3.3 million subscribers to 2.9 million subscribers for the nine month periods ended September 30, 2005 and 2006 respectively.

Billing costs increased 19% to $25.2 million for the nine month period ended September 30, 2006 from $21.1 million for the same period in 2005 mainly due to the increase in subscriber numbers and an increase in postage fees despite the decreasing effect of costs related to printing of inserts included in bills.

Consultancy services received for the risk management related to betting operations increased 81% to $9.6 million for the nine month period ended September 30, 2006 from $5.3 million for the same period in 2005 mainly due to the significant increase in our betting business.

As a percentage of revenue, direct cost of revenues decreased to 54% for the nine month period ended September 30, 2006 from 55% for the same period in 2005 mainly due to the amendment in our license agreement regarding the gross revenue definition used in the ongoing license fee and universal service fund calculation and lower interconnection tariffs.

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Gross profit increased to $1,522.9 million for the nine month period ended September 30, 2006 from $1,442.6 million for the same period in 2005 mainly due to the decrease in ongoing license fee, the growth in the number of subscribers, the increase in usage and interconnection costs as discussed above.

General and administrative expenses

General and administrative expenses increased 16% to $125.7 million for the nine month period ended September 30, 2006 from $107.9 million for the same period in 2005, mainly due to the increases in wages, salaries and personnel expenses, bad debt expenses, consulting expenses and collection expenses. As a percentage of revenues, general and administrative expenses slightly increased to 3.8% for the nine month period ended September 30, 2006 from 3.4% for the same period in 2005.

Wages, salaries and personnel expenses for non-technical and non-marketing employees increased 19% to $47.5 million for the nine month period ended September 30, 2006 from $39.9 million for the same period in 2005 mainly due to periodic increase in salaries and an increase in number of employees both in Turkey and Ukraine.

Bad debt expenses increased 14% to $22.2 million for the nine month period ended September 30, 2006 from $19.5 million for the same period in 2005 mainly due to the increase in sales. We provided an allowance of $151.4 million and $149.2 million for doubtful receivables for the nine month period ended September 30, 2006 and 2005, respectively, based upon past experience.

Consulting expenses increased 35% to $13.1 million for the nine month period ended September 30, 2006 from $9.7 million for the same period in 2005, mainly due to the consulting services related with the Egypt GSM tender and the operations in Ukraine.

Collection expenses increased 8% to $10.6 million for the nine month period ended September 30, 2006 from $9.8 million the same period in 2005 mainly resulting from the increase in legal follow-up expenses.

Other expenses increased to $32.3 million for the nine month period ended September 30, 2006 from $29.0 million for the same period in 2005 mainly as a result of the increase in equipment, software maintenance, repairment and rent expenses.

Selling and marketing expenses

Selling and marketing expenses increased 21% to $422.3 million for the nine month period ended September 30, 2006 from $348.6 million for the same period in 2005, mainly due to the increase in prepaid subscribers’ frequency usage fees, increased product management and public relations expenses resulting from intensifying competition and increased dealer and distributor activities. As a percentage of revenues, selling and marketing expenses were 13% and 11% for the nine month periods ended September 30, 2006 and 2005, respectively.

Total prepaid advertising, market research, product management, public relations expenses and prepaid subscribers’ frequency usage fee expenses increased 13% to $205.6 million for the nine month period ended September 30, 2006 from $181.6 million for the same period in 2005. The increase in 2006 stemmed mainly from the increase in prepaid subscribers’ frequency usage fees, the increase in product management expenses mainly due to the retention campaigns and the increase in public relations expenses mainly due to the increase of social and corporate sponsorships.

Total postpaid advertising, market research, product management, public relations and call center expenses remained almost constant and increased to $61.7 million for the nine month period ended September 30, 2006 from $60.8 million for the same period in 2005.

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Wages, salaries and personnel expenses for selling and marketing employees increased 31% to $49.9 million for the nine month period ended September 30, 2006 from $38.1 million for the same period in 2005 mainly due to the increase in the headcount and periodic increase in salaries.

Activation fees and sales promotions increased 69% to $72.8 million for the nine month period ended September 30, 2006 from $43.0 million for the same period in 2005 mainly due to campaigns initiated during the period parallel to intensified competition, increasing activation and dealer activities.

Operating income

Operating income slightly decreased to $974.9 million for the nine month period ended September 30, 2006 from $986.1 million for the same period in 2005, mainly due to increase in selling and marketing expenses despite the increase in revenues and almost stable direct cost of revenues.

Financial income (expense), net

Net financial income was $48.8 million for the nine month period ended September 30, 2006 compared to $28.4 million net financial expense for the same period in 2005. The change between periods was mainly due to the settlement of legal disputes in 2005 with the Turkish Treasury regarding the calculation of license fees and with Turk Telekom regarding an interconnection dispute on call termination pricing. These settlements involved payment of an interest expense of $74.5 million in 2005 and also had the effect that there were lower average time deposited cash balances in 2005 compared to 2006 due to the settlement payments related to legal disputes settlements made in 2005.

For a description of, and additional information regarding legal disputes and their financial impacts, see “Item 5A. Operating Results-Revenues” and Note 27 to our consolidated financial statements in our 20-F.

Translation loss

Since Turkey ceased being regarded as a hyperinflationary country starting from January 1, 2006, no translation gain/(loss) has been realized for the nine month period ended September 30, 2006, whereas we had a translation loss of $8.4 million for the same period in 2005 mainly stemming from the depreciation of TRY against the USD. Foreign exchange differences arising from foreign currency transactions have been accounted under financial income/(expense) for the nine months period ended September 30, 2006.

Income tax expense

Income tax expense for the nine month period ended September 30, 2006 was $455.4 million and $337.3 million for the same period in 2005. The increase in income tax expense stemmed from the increase in revenues. The effective tax rate was 40% and 34% for the periods September 30, 2006 and 2005, respectively. Differences between effective tax rate and statutory tax rate include but are not limited to the effect of tax rates in foreign jurisdictions, non-deductible expenses, reversal of non-taxable translation and indexation and tax incentives not recognized in profit or loss.

The corporate tax rate was 30% for the year ended December 2005. According to the article 32 of New Corporate Tax Law No. 5520 in June 2006, the corporate tax rate has been reduced from 30% to 20%. In this respect, corporate income is subject to corporate tax at the rate of 20%, effective from January 1, 2006 onwards.

According to the Income Tax Law which was published in the Official Gazette on April 8, 2006, the investment allowance application has been abolished effective from January 1, 2006. However, the law allows taxpayers to utilize their investment allowance rights obtained under the scope of the previous provisions only from their income generated in the years 2006, 2007 and 2008.

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Equity in net income of unconsolidated investees

Our share of the net income of unconsolidated investees was $62.5 million for the nine month period ended September 30, 2006 compared $45.3 million for the same period in 2005. The increase in net income of unconsolidated investees was mainly due to an increase in Fintur’s net income to $153.4 million for the nine month period ended September 30, 2006 compared to $109.4 million for nine month period ended September 30, 2005.

As explained in “International and Other Domestic Operations” section, during August 2006, we acquired 50% of the shares of A-Tel for a consideration of $150.0 million. We made the related payment on August 9, 2006 and the results of A-Tel’s operations have been included in the consolidated financial statements since that date. Like Fintur, A-Tel is accounted for under the equity method. During the two months ended September 30, 2006, the subsidiary contributed a loss of $1.1 million.

At September 30, 2006, we have not yet completed the evaluation of the fair value of identifiable assets and liabilities of A-Tel and the allocation of the purchase price. We have a period up to one year to complete purchase price allocation effective from August 2006, which is the date of acquisition. Therefore, final purchase accounting adjustments may differ from our initial estimates and the allocation of purchase price is subject to refinement. A-Tel is accounted for under the equity method and results of the operations for the two months period ended September 30, 2006 are included in the accompanying interim consolidated financial statements using the ownership percentage of 50%. During September 2006, A-Tel’s General Assembly decided to distribute dividends and accordingly we reduced the carrying value of the investment in A-Tel by the dividends declared of TRY 30.3 million (equivalent to $20.2 million at September 30, 2006). On October 16, 2006, such dividend was received by us. A-Tel is a joint venture and its remaining 50% shares are held by Turkey’s Savings and Deposit Insurance Fund.

Net income

Net income increased to $671.1 million for the nine month period ended September 30, 2006 compared to net income of $669.5 million for the same period in 2005. The increase was mainly due to the increase in net income and income from investees, despite the slight decrease in operating income and the increase in taxes, for the nine month period ended September 30, 2006 compared to the same period of 2005.

Taxation Issues in Telecommunications Sector

For a discussion of Turkish Tax legislation on telecommunications revenues, please see “Item 5. Operating and Financial Review and Prospects -Taxation Issues in Telecommunications Sector” in the 20-F. Other than as disclosed herein, there have been no material changes in the taxes imposed on telecommunications services since the date of the 20-F.

Investment Incentive Certificates

In 1993, 1997, 2000, 2001, 2004 and 2005, the Under Secretariat of the Treasury approved investment incentive certificates for a program of capital expenditures made by us and our subsidiaries in our mobile communications operations, call center operations and betting games operations. Such incentives entitle us to a 100% exemption from customs duty on imported machinery and equipment and an investment tax benefit of 100% on qualifying expenditures. The investment tax benefit takes the form of deductions for corporation tax purposes, but these deductions were subject to withholding tax at a rate of 19.8% (for expenditures made after April 24, 2003, the investment tax benefit equals 40% of qualifying expenditures but it is not subject to any withholding tax). However, on April 8, 2006, in line with the changes in corporate tax law, amendments were made to regulations governing investment incentives. Accordingly, tax payers have been granted an option to use the tax benefits of investment incentive certificates given that they file tax returns at 30% corporate tax rate; or file tax returns at 20% corporate tax rate (which is

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the new corporate tax rate effective from January 1, 2006) without using the tax benefits of investment incentive certificates. We preferred to use the tax benefit of investment incentive certificates which provides 0.2% net benefit on corporate taxes. As of September 30, 2006, investment incentive certificates provide for tax benefits on cumulative purchases of up to approximately $4.8 billion in qualifying expenditures as defined in the certificates. As of September 30, 2006, we had unused tax benefit carryforwards under the certificates of approximately $4.1 million ($294.4 million as of December 31, 2005) which can be carried forward until December 31, 2008. The certificates are denominated in TRY. However, approximately $0.5 billion of qualifying expenditures through September 30, 2006 ($0.5 billion as of December 31, 2005) under the certificates are indexed against future inflation.

According to the Income Tax Law which was published in Official Gazette on April 8, 2006, the investment allowance application has been abolished effective from January 1, 2006. However, the law allows taxpayers to utilize their investment allowance rights obtained under the scope of the previous provisions only from their income generated in the years 2006, 2007 and 2008.

Capital Transactions

On March 22, 2006, our board of directors declared that our statutory paid-in capital would be increased from TRY 1,854.9 million to TRY 2,200.0 million by capitalizing TRY 345.1 million out of the total dividend for 2005. After the approval at the General Assembly Meeting held on May 22, 2006, the increase of TRY 345.1 million was distributed to our shareholders in the form of a stock split (345,112,659 units of shares). The capital increase was accounted for as a stock split in our consolidated financial statements. As a result of the aforesaid transactions, we issued new shares with a total nominal value of TRY 345,112,659.

All share amounts and per share figures reflected in our historical financial statements have been retroactively restated for the stock splits discussed above.

Capital Transactions in Astelit

On April 4, 2006, LLC Astelit, our Ukrainian subsidiary, announced the merger with DCC, our other Ukrainian subsidiary, in order to optimize the internal processes of both companies. On August 1, 2006 the merger transaction was completed.

We also participated in the $40 million capital increase in Euroasia, our 54.8% owned holding company for Astelit. On May 11, 2006, we contributed $22.0 million to increase the capital of Euroasia, representing our proportion of shareholding in Euroasia.

Also, in June 16, 2006, we and the other minority shareholder, System Capital Management (SCM) Limited, purchased the existing shares of Eurocorp Invest Limited in exchange of $0.6 million and $0.5 million, respectively.

We and the other minority shareholder decided to contribute an aggregate amount $150 million (in three tranches of each $50 million) to the share capital of Euroasia as a condition to obtaining a waiver of covenant defaults from Astelit’s lenders, whereby we and SCM shall make such contribution proportionate to our shareholding in Euroasia at the time of each capital contribution; in July 2006, October 2006 and January 2007. The first and second tranches of aforesaid $150 million have already been paid in July and October 2006, respectively. See “Liquidity and Capital Resources—Liquidity Outlook—Loans”.

Effects of Inflation

The annual inflation rates in Turkey were 18.4%, 9.3% and 7.7% for the years ended December 31, 2003, 2004 and 2005, respectively, based on the Turkish consumer price index. The annualized inflation rate for the nine-month period ended September 30, 2006 was 10.6%. Liquidity turmoil in certain economies and bias of investors to less risk-averse investment alternatives triggered cost-push inflation in

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Turkey. But, with the help of tight monetary policy followed by the Central Bank of Turkey, this effect has been lessened and demand side inflation has been under control. The current inflation target set by the Central Bank of Turkey is 5% with a confidence interval of 3-7% for 2006. Although it is unlikely to be in that inflation zone in 2006, Central Bank of Turkey announced its commitment to 2007 inflation targets and has been acting to control the comfort zone for 2007. For additional information, see “Item 3A. Selected Financial Data-Exchange Rate Data” and “Item 3D. Risk Factors” in our 20-F.

New Accounting Standards Issued

In February 2006, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 155, “Accounting for Certain Hybrid Financial Instruments-an amendment of FASB Statements No. 133 and 140”. SFAS No.155, resolves issues addressed in Statement 133 Implementation Issue No. D1, “Application of Statement 133 to Beneficial Interests in Securitized Financial Assets”. SFAS No.155, permits fair value remeasurement for any hybrid financial instrument that contains an embedded derivative that otherwise would require bifurcation, clarifies which interest-only strips and principal-only strips are not subject to the requirements of Statement 133, establishes a requirement to evaluate interests in securitized financial assets to identify interests that are freestanding derivatives or that are hybrid financial instruments that contain an embedded derivative requiring bifurcation, clarifies that concentrations of credit risk in the form of subordination are not embedded derivatives and amends Statement 140 to eliminate the prohibition on a qualifying special-purpose entity from holding a derivative financial instrument that pertains to a beneficial interest other than another derivative financial instrument.

SFAS No.155, is effective for all financial instruments acquired or issued after the beginning of an entity’s first fiscal year that begins after September 15, 2006. Earlier adoption is permitted as of the beginning of an entity’s fiscal year, provided the entity has not yet issued financial statements, including financial statements for any interim period for that fiscal year. Provisions of this Statement may be applied to instruments that an entity holds at the date of adoption on an instrument-by-instrument basis. The adoption of SFAS No. 155 is not expected to have a material effect on our consolidated financial statements.

In April 2006, the FASB issued FSP No. 46(R)-6, “Determining the Variability to be Considered in Applying FASB Interpretation No. 46(R)”. The FSP addresses how a reporting enterprise should determine the variability to be considered in applying FIN 46(R). The variability that is considered in applying FIN 46(R) affects the determination of (a) whether an entity is a VIE, (b) which interests are “variable interests” in the entity, and (c) which party, if any, is the primary beneficiary of the VIE. That variability affects any calculation of expected losses and expected residual returns, if such a calculation is necessary. FSP No. 46(R)-6 must be applied prospectively to all entities (including newly created entities) and to all entities previously required to be analyzed under FIN 46(R) when a “reconsideration event” has occurred, in the first reporting period beginning after June 15, 2006. We will evaluate the impact of this FSP at the time any such “reconsideration event” occurs and for any new entities created.

In June 2006, the FASB issued FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement No. 109”. FIN 48, clarifies the criteria for recognizing tax benefits under FASB Statement No. 109, Accounting for Income Taxes. FIN 48, prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48, also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. FIN 48 is effective for fiscal years beginning after December 15, 2006. Earlier application of the provisions of this interpretation is encouraged if the enterprise has not yet issued financial statements, including interim financial statements, in the period FIN 48 is adopted. The adoption of FIN 48 is not expected to have a material effect on our consolidated financial statements.

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In June 2006, FASB issued EITF No. 06-3 “How Taxes Collected from Customers and Remitted to Governmental Authorities Should Be Presented in the Income Statement (That Is, Gross versus Net Presentation)”. EITF No. 06-3 would permit companies to elect to present on either a gross or net basis sales and other taxes that are imposed on and concurrent with individual revenue-producing transactions between a seller and a customer. The gross basis includes the taxes in revenues and costs; the net basis excludes the taxes from revenues. The Consensus would not apply to tax systems that are based on gross receipts or total revenues. Companies would disclose their policy for presenting the taxes and would disclose any amounts presented on a gross basis. Companies would not be required by the Consensus to change their policies for presenting taxes. A change would be permitted only if the new policy is considered preferable. Assuming ratification, the disclosures required by the Consensus will have to be presented for interim and annual financial periods beginning after December 15, 2006. We will evaluate to elect to present taxes collected from customers and governmental authorities either gross or net basis and this may reveal a material effect on our consolidated financial statements.

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”. SFAS No. 157, defines fair value, establishes a framework for measuring fair value in GAAP, and enhances disclosures about fair value measurements. SFAS No. 157 applies when other accounting pronouncements that require or permit fair value measurements. Accordingly, SFAS No. 157 does not require new fair value measurements. However, for some entities, the application of SFAS No. 157 will change current practice. The transition adjustment, measured as the difference between the carrying amounts and the fair values of those financial instruments at the date this statement is initially applied, should be recognized as a cumulative-effect adjustment to the opening balance of retained earnings (or other appropriate components of equity or net assets in the statement of financial position) for the fiscal year in which this statement is initially applied. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007 and interim periods within those years. Earlier application is encouraged, provided the entity has not yet issued financial statements for any interim period for that fiscal year. The adoption of SFAS No. 157 is not expected to have a material effect on our consolidated financial statements.

In September 2006, the FASB issued SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans ‘an amendment of FASB Statements No. 87, 88, 106, and 132 (R)’” (“SFAS 158”). SFAS 158 requires an employer to recognize the over-funded or under-funded status of a defined benefit postretirement plan (other than a multiemployer plan) as an asset or liability in its statement of financial position and to recognize changes in that funded status in the year in which the changes occur through comprehensive income. SFAS 158 also requires the measurement of defined benefit plan assets and obligations as of the date of the employer’s fiscal year-end statement of financial position (with limited exceptions). Under SFAS 158, we will be required to recognize the funded status of its defined benefit postretirement plan to provide the required disclosures in our financial statements as of December 31, 2006. We do not anticipate that the adoption of SFAS 158 will have a material effect on our results of operations or financial condition.

In September 2006, the SEC issued Staff Accounting Bulletin 108 (“SAB108”). SAB 108 establishes an approach requiring the quantification of financial statement errors based on the effects of the error on each of an entity’s financial statements and the related financial statement disclosures. This model is commonly referred to as a “dual approach” because it essentially requires quantification of errors under both of the widely-recognized methods for quantifying the effects of financial statement errors: the “roll-over” method and the “iron-curtain” method. SAB 108 permits existing public companies to record the cumulative effect of initially applying the “dual approach” in the first year ending after November 15, 2006 by recording the necessary “correcting” adjustments to the carrying values of assets and liabilities as of the beginning of that year with the offsetting adjustment recorded to the opening balance of retained earnings.

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We do not anticipate that the adoption of SAB 108 will have a material effect on our financial statements or results of operations.

In September 2006, FASB issued EITF No. 06-1 “Accounting for Consideration Given by a Service Provider to Manufacturers or Resellers of Equipment Necessary for an End-Customer to Receive Service from the Service Provider”. The EITF reached a Consensus on how providers of services that depend on specialized equipment should account for payments they make to the manufacturers or resellers of the specialized equipment. The service provider’s objective is to stimulate demand for its services by facilitating equipment sales to potential customers. TV, radio, and security services are among those that might depend on specialized equipment often sold by unrelated manufacturers, and the payments could be in the form of cash, equity instruments, tooling, technological know-how, or key components of the specialized equipment. The Consensus would require a service provider to characterize the consideration based on the form of the benefit the service provider’s customer receives from the manufacturer or reseller. If the benefit is “other than cash” (such as a discount on the price of the equipment) or the service provider does not control the form of benefit given by the manufacturer or equipment seller to the customer, the consideration would be treated as a cost rather than as a reduction of revenue. If the contractual provisions dictate that the service provider’s customer receives cash consideration, such as a cash rebate, the amount would be reported as a reduction of revenue. If the Consensus is ratified, its requirements will have to be adopted through retrospective application to all prior periods as of the beginning of the first annual reporting period beginning after June 15, 2007, unless retrospective application is impracticable. Earlier adoption will be permitted for financial statements that have not yet been issued. The adoption of EITF No. 06-1 is not expected to have a material effect on our consolidated financial statements.

Liquidity and Capital Resources

Liquidity

We require significant liquidity to finance capital expenditures for the expansion and improvement of our GSM network, for non-operational capital expenditures, for working capital and to service our debt obligations. To date, these requirements have been funded largely through cash generated by our operations as well as supplier financings, bank borrowings, and the issuance of $700 million in bonds by a finance vehicle, Cellco, which issued $300 million of debt securities in July 1998 and $400 million of debt securities in December 1999, and a rights issue. As of September 30, 2006, we do not have any outstanding amounts due related to the Cellco transaction after the extinguishment of the outstanding $400 million senior notes on August 1, 2005.

A summary of our consolidated cash flows for the nine month periods ended September 30, 2006 and 2005 are as follows:

The net cash provided by our operating activities for the nine month period ended September 30, 2006 and 2005 amounted to $1,246.5 million and $894.8 million, respectively. The increase in 2006 was primarily due to the increase in revenues and the absence of litigation-related payments which had a significant outflow impact on the operating activities for the nine month period ended September 30, 2005.

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The net cash used for investing activities for the nine month periods ended September 30, 2006 and 2005 amounted to $606.8 million and $540.1 million, respectively. Total investments in investees amounted to $152.5 million for the nine months period ended September 30, 2006 whereas it was nil for the same period ended September 30, 2006. For the nine month period ended September 30, 2006, we spent approximately $394.1 million for capital expenditures compared with $572.9 million for the same period in 2005. Out of $394.1 million in capital expenditures, $258.8 million is related to capital expenditures especially for our GSM network in Turkey. Total capital expenditures made by Astelit was $117.0 million for the nine months period ended September 30, 2006.

In 2007, we plan to spend approximately US$400 million excluding potential 3G expenditures of operational capital expenditures in Turkey in the core, access and service network. In 2007, we expect to spend less than the approximately US$200 million planned for 2006 in capital expenditures in Ukraine.

New technologies are excluded from the current projections, so addition of any new technology such as 3G technology may require both higher operating expenses and capital expenditures.

The net cash used for financing activities for the nine months period ended September 30, 2006 amounted to $346.5 million and the net cash used for financing activities for the nine month period ended September 30, 2005 amounted to $476.6 million. As of September 30, 2006, we made a $342.2 million dividend payment whereas we made $182.2 million in the year 2005. In addition, in 2005, we extinguished the aggregate principal amount of $400 million of Cellco notes plus accrued interest on August 1, 2005.

In June 2006, we and SCM, in accordance with waiver letter dated May 30, 2006, undertook to contribute $150 million to Astelit by way of a contribution to the share capital of Astelit or a subordinated loan to be made to Astelit whereby we will contribute $82.6 million and SCM will contribute $67.4 million. In July and October 2006, the first and second drawdowns under the contribution were made to Astelit amounting to an aggregate of $100 million. The third drawdown will be made in January 2007. See “Liquidity Outlook—Loans’’.

Source of liquidity

We believe that we will be able to finance our current operations, capital expenditures and financing costs and maintain and enhance our network in 2006 through our operating cash flow and our strong cash balance as of September 30, 2006.

Our efforts to selectively seek and evaluate new international investment opportunities continue. These opportunities could include the purchase of a license and acquisitions in markets outside of Turkey in which we currently do not operate. In order to increase our financial flexibility, we plan to put in place significant external debt financing to be utilized for potential international investments, if one or more opportunities are realized. Utilization will be based upon need and in case the facility is not used the only cost will be relevant arrangement and commitment fees.

For a description of, and additional information regarding source of liquidity, see “Item 5B. Liquidity and Capital Resources-Source of Liquidity” section in our 20-F.

Off-balance sheet arrangements

We routinely enter into operating leases for property in the normal course of business. At September 30, 2006, there were no commitments and contingent liabilities in material amounts arising from such operating leases.

For a description of, and additional information regarding off-balance sheet arrangements, see “Item 5E. Off-Balance Sheet Arrangements” in our 20-F.

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Contractual Obligations and Commercial Commitments

The following table illustrates our major contractual obligations and commitments as of September 30, 2006.