TENDER ANNOUNCEMENT

Republic of Turkey

Prime Ministry Privatization Administration

on behalf of

Türk Telekomünikasyon A.Ş.

Tender Committee

Pursuant to Telegram and Telephone Law No. 406 (“Law No. 406”), the Republic of Turkey Prime Ministry Privatization Administration (the “Administration”), on behalf of Türk Telekomünikasyon A.Ş. Tender Committee (“Tender Committee”), hereby announces the commencement of the privatization process of Türk Telekomunikasyon A.S. (“Türk Telekom”) by way of the block sale of 55% of its shares. Cable TV infrastructure belonging to Türk Telekom and all ownership and management rights in relation thereto are outside the scope of the tender.

Türk Telekom is currently 100% owned by the Republic of Turkey, Prime Ministry, Undersecretariat of Treasury.

The tender will be undertaken by the independent Tender Committee established under Additional Article 21 of Law No. 406. The Administration is authorized to undertake certain procedural services for the Tender Committee in accordance with Law No. 4046. 

1)        The tender shall be made by the "Closed Bidding Method" as defined in article 18 of Law No. 4046 under the provisions set out in the tender specifications.

2)        To participate in the tender process, applicants must execute and deliver to the Administration the confidentiality undertaking (“Confidentiality Undertaking”) which can be obtained from the Administration as of the date of this tender announcement and acquire the tender package which includes the information memorandum and tender specifications and its appendices. Applicants can obtain the said documents from the address of the Administration set out below. Where the applicant is a joint venture group each of its members must execute the Confidentiality Undertaking separately.

Applicants are also required to pay a non-refundable participation fee of US$50,000, (fifty thousand)  into the Privatization Incomes US Dollar Account No.321502 of  Turkish Ziraat Bank or  the equivalent in Turkish Lira (calculated according to the foreign exchange selling rate for transactions in cash of the Turkish Central Bank as of the date of payment) into the Privatization Incomes Turkish Lira Account No. 282487 of Turkish Ziraat Bank, provided always that if an applicant, who has already paid the preliminary fee of US$20,000 for participating in the Turk Telekom Informatory Process between 22 April 2004 and 30 July 2004 arranged by the Administration, participates in this tender as a single applicant or a joint venture group member such amount shall be deducted from the participation fee payable by that applicant.

To receive the tender package, the signed Confidentiality Undertaking  and the document showing that the person who signed the Confidentiality Undertaking is authorized to represent and bind the applicant and the bank receipt evidencing payment of the participation fee and showing the name/titles thereon must be delivered to the Administration.

Where the applicant is a joint venture group its members shall only be required to purchase one tender package between them.

3)        The Tender Committee has been authorized to apply pre-qualification criteria to the applicants during the tender process by the Council of Ministers Decree dated 15 October 2004 and numbered 2004/7931. Accordingly, to be eligible to submit a bid the applicants will be required to satisfy the following criteria which have been determined by the Tender Committe and further details of which are set out in the tender specifications:         

a) in the case of a joint venture group at least one member of the joint venture group shall have an interest not less than 34 per cent in the joint venture group and that member shall be nominated as the joint venture group leader; and

b) the aggregate of the total assets of the single applicant or in the case of a joint venture group, either the total assets of the joint venture group leader itself, or the aggregate total assets of each of the members of the joint venture group multiplied by the fraction representing such member's interest in the joint venture group shall be at least US$500 million; and

c) the aggregate of the shareholders' equity of the single applicant or in the case of a joint venture group, either the shareholders' equity of the joint venture group leader itself, or the aggregate of the shareholders' equity of each of the members of the joint venture group multiplied by the fraction representing such member's interest in the joint venture group shall be at least US$250 million; and

d) the single applicant or a joint venture group member having not less than a 5% interest in the joint venture group shall have at least 3 years experience in managing or operating a fixed line or mobile telecommunications company anywhere in the world with a network of at least 2 million lines or has controlled for a minimum of 3 years a fixed line or mobile telecommunications company having these qualifications; or a single applicant or in the case of a joint venture group either all of the members of the joint venture group or the joint venture vehicle shall have entered into a management agreement/management consultancy agreement with a fixed line or mobile telecommunications company satisfying these conditions for at least 5 years. The management agreement/ management consultancy agreement shall provide that the management/management consultancy services to be provided under such agreement shall commence on a date that is no later than the date of the transfer of the shares. The agreement shall set out inter alia (i) strategic planning, budgets, cost control (ii) operational and technical management (iii) marketing and sales (iv) human resources and training.

If an applicant or joint venture group undertakes in its prequalification application to satisfy the criteria in Article 3 (d) above after the prequalification evaluation and evidences the fulfillment of this undertaking by no later than 10 June 2005 it may still  submit a bid.

In the prequalification evaluation, the total assets and shareholders’ equity shall be calculated with reference to the total assets and shareholders' equity of the single applicants or joint venture group members or their respective groups.

If an applicant or a joint venture group member is a private equity fund its 'funds under management' as set out in a statement by its auditors shall be used in place of its total assets and shareholder's equity. 

Applications for prequalification must be prepared in accordance with the tender specifications and delivered to the Administration by no later than 11 January 2005.

4)        Bids must be prepared in accordance with the tender specifications and delivered by hand to the Administration by no later than the bidding deadline, being 16.00 Turkish time on 24 June 2005.  Bids submitted to the Administration after the bidding deadline will not be accepted. 

5)        Applicants must provide a bid bond of US$30,000,000 (thirty million dollars) in order to submit a bid.  The Committee reserves the right to request submission of an additional bid bond from bidders at any stage of the tender.

6)        Furthermore undertakings dominant in the GSM mobile telecommunication services market in Turkey cannot participate in the tender on their own. The conditions under which such undertakings and related parties may participate in the tender process are set out in the Competition Boards opinion dated 02 September 2004 and numbered 04-57 and in the tender specifications.

7)        The tender is not subject to the State Tender Law No. 2886 and the Tender Committee reserves the right to proceed or not to proceed with the tender, to award it to any person or entity and to amend any deadline within the tender process, including but not limited to the bidding deadline. The final transfer is subject to the approval of the Council of Ministers.

8)        The sale of shares to parties domiciled abroad is subject to the Foreign Direct Investment Law. The said Law may be obtained from the Undersecretariat of Treasury, General Directorate of Foreign Investment.

9)        Other issues relating to the tender are set out in the tender specifications. If there is a conflict between the terms of this tender announcement and the terms of the tender specifications, the tender specifications shall prevail.

10)              Information regarding the tender process of Türk Telekom may be obtained before the bidding deadline from the authorized representative of the Administration and the Financial Advisors of the Tender Committee whose correspondence addresses are set out below.

REPUBLIC OF TURKEY

PRIME MINISTRY

PRIVATIZATION ADMINISTRATION

Ziya Gökalp Caddesi No: 80 Kurtuluş 06600 ANKARA /TURKEY

Phone: 90 312 435 83 59 or 435 83 86  or 430 45 19 Fax: 90 312 435 29 93