Law No. 4673 Date: 12.5.2001

ARTICLE 1.- Paragraphs two and nine of the amended article 1 of the Telegram and Telephone Law no. 406 dated 4.2.1924 shall be amended as follows.

The opinion of the Ministry of Transport should be obtained for any amendment in the articles of association of the Company until the shares held by public [entities] decrease below 50%.

Türk Telekom is a joint stock corporation subject to this Law and to private law provisions. Without prejudice to the provisions of this Law, the legislation applicable to public entities, institutions and partnerships, more than half of the share capital of which belongs to the public including the state economic establishments shall not apply to Türk Telekom. The provisions of article 9 of the Law no. 3346 dated 2.4.1987 relating to auditing by the Turkish Grand National Assembly shall apply, so long as half of its share capital remains with public [entities]. The provisions of the Law no. 697 dated 16.7.1965 and of special laws on national security and public order and the provision of telecommunication services during mobilisation and state of emergency periods are reserved.

ARTICLE 2.- The following sentence shall be added to the end of the first sub-paragraph of paragraph (c) of amended article 2 of the Law no. 406, paragraph (f) shall be amended as follows.

However, in case the public [entities’] share in Türk Telekom decreases below 50%, all monopoly rights of Türk Telekom shall expire even prior to 31.12.2003.

f) The Authority is empowered to take the necessary measures to ensure compliance with the terms of the concession agreements it has executed with and telecommunication licenses it has issued to operators including Türk Telekom, to supervise and inspect the carrying out of the activities in accordance with the applicable legislation and the concession agreement, telecommunication license, general authorization, and if there exists a breach, to impose, an administrative fine up to 3 % of the turnover of the operator concerned for the previous calendar year, to take the necessary measures for purposes of national security, public order, or orderly provision of public services, and where necessary, to take over the facilities against compensation, or in the event of a gross default, to cancel the concession agreement, the telecommunication license or the general authorization.

ARTICLE 3.- Paragraphs one, two, three and seven of additional article 17 of the Law no. 406 shall be amended as follows.

Apart from one privileged share, which, for the purposes of protecting national interests regarding economy and security, including preventing any inconveniences that may arise due to the monopoly right, gives opinion and approval right to the State in decisions that will be adopted in the authorised boards, all shares of Türk Telekom may be sold.

The golden share possesses the right to opine on and approve amendments to the articles of association; incorporation of new companies or joining in companies already established; becoming a member of international telecommunication associations or being party to international treaties; transfer of registered shares in an amount that will effect the control of management and registration of the transfer of registered shares in the shareholders’ ledger, for the purposes of protecting the national interests.

The Undersecretariat of Treasury shall appoint one member, representing the golden share, to the board of directors of Türk Telekom. The owner of the golden share shall hold the right to attend to and express opinions during the general assembly meetings. The owner of the golden share shall not participate in capital increases and shall not receive any dividends.

The foreign real and legal persons shall not hold more than 45% of Türk Telekom shares and these persons shall not directly or indirectly own the majority shares of the company. Majority of the votes in Türk Telekom’s management and auditing shall not be given to foreign real and legal persons. This condition and the reciprocity principle shall be observed in all sale transactions.

In the sale of Türk Telekom shares, 5% of the shares shall be allocated to the employees of Türk Telekom, the R.T. Posts and Telegraph Organisation General Directorate and to small investors. The sale of these shares shall be realised through public offering and in accordance with the capital market legislation. Results of the value assessment, the number of shares to be sold and the method to be used and what portion of 5 percent shares allocated to employees and small investors shall be sold are to be determined by the Council of Ministers upon the opinion of the Presidency of the Privatisation Administration and the proposal of the Ministry of Transport. In block sales, the tender specifications are published at least 45 days prior to the date of the tender and the final results of tenders are published within 15 days, at least once, in the Official Gazette and in two news papers having high rate of circulation throughout Turkey and they will be published through an appropriate press and broadcasting means in the relevant foreign country. The sealed envelope method mentioned in Law no. 4046 shall be used in tenders for block sale of the shares. The Council of Ministers approves the final transfer transactions relating to the sale.

ARTICLE 4.- The additional article 19 of the Law no. 406 shall be amended as follows.

Additional Article 19.- All proceeds obtained from the sale of public shares in Türk Telekom, from GSM authorization and concession agreements related to telecommunication services and from telecommunication licenses and general authorisations shall be transferred to the Treasury.

ARTICLE 5.- The additional article 21 of the Law no. 406 shall be amended as follows.

Additional Article 21.- Pursuant to this Law, a valuation assessment committee shall be set up to assess the value of the shares and a tender committee shall be set up to carry out the sale and tender procedures with the value determined and then approved by the Council of Ministers. The committees shall be composed of fives members, two of them being the representatives of the Ministry of Transport, and two others being the representatives of the Presidency of the Privatisation Administration and one of them being the representative the Undersecretariat of Treasury. For each member, an alternate member will be appointed from the same institution. One of the representatives of the Presidency of the Privatisation Administration shall be the chairman of the committees. Members of the committees are required to be graduate holders in one of the fields of business administration, economics, public administration, international relations, law, statistics and engineering. However, those persons holding postgraduate degree in one of the above mentioned fields after attending any undergraduate program may also become a member to these committees.

Term of office of the committee members shall be one year. Any member whose term has expired may be re-elected. An alternate member shall be called to the meeting when the permanent member is not able to attend a meeting due to actual or legal reasons. Committees’ meetings shall be held in the presence of all members. Committees shall adopt decisions with the approval of at least three members. Local and foreign advisors may be appointed in order to provide assistance to valuation and tender committees, provided that they do not participate in the decisions of the committees. Appointment of advisors shall be made by the Presidency of the Privatisation Administration upon proposal of the committees.

Secretarial services of the committees shall be carried out by the Presidency of the Privatisation Administration. Members of the committees shall be deemed to be at leave as long as they perform duty in committees, provided that their salaries, any and all premiums and compensations and other financial and social rights and benefits will be paid by their respective institutions.

Any and all expenses regarding the works of valuation and tender committees shall be met from the Privatisation Fund.

The Presidency of the Privatisation Administration is authorized to execute the consultancy services agreements with the advisors and the underwriting agreement relating to the public offer, upon the proposal of the tender committee.

ARTICLE 6.- The phrase “Until the public share in Türk Telekom decreases below 50%, the persons who will be appointed to the Board of Directors shall satisfy the general qualifications of public servants and shall hold a undergraduate degree of at least four years“ shall be added to paragraph (a) of additional article 22 of the Law no. 406, after the phrase “Status of the Personnel” and the phrase ”having eight years of experience in the field of telecommunications” contained in the same paragraph is deleted.

ARTICLE 7.- The following articles shall be added to Law no. 406.

ADDITIONAL ARTICLE 27.- All references made to the Ministry of Transport in this Law and in other legislations with respect to the authority to execute authorization agreements or concession agreements or to grant telecommunication licenses or general authorisations and references to all tasks related to the regulation of such authority shall deemed to be made to the Authority.

Plans regarding the authorisations for the telecommunications services and infrastructure to be provided under concession agreements shall be prepared by the Authority. The plans prepared by the Authority shall be approved by the Council of Ministers upon the proposal of the Ministry of Transport and shall be effected by the Authority.

The minimum values of authorization and concession agreements, telecommunication licenses and general authorisations shall be determined by the Council of Ministers upon the proposal of the Authority.

ADDITIONAL ARTICLE 28.- All agreements and protocols regarding the provision of telecommunications services, executed or to be executed by and between Türk Telekom and the Turkish Army Forces, the Ministry of National Defense and all public entities and institutions related to the national security, safety and public order shall continue to be valid.

ADDITIONAL ARTICLE 29.- In case the public shares decrease below 50% as a result of the sale of Türk Telekom shares, the list of the personnel who perform the primary and continuous duties as determined under paragraph (a) of the additional article 22, the employees in the cadres who are subject to Decree with the Force of Law no. 399 and non-classified personnel of Türk Telekom shall be communicated to the State Personnel Directorate within thirty days following the execution of the share transfer agreement. This personnel shall be transferred to other public entities and institutions by the State Personnel Directorate within thirty days. The principles and procedures governing such transfer shall be set out in the regulation to be issued by the State Personnel Directorate within sixty days following the promulgation of this Law.

The salaries, allowances, any and all premiums and compensations and other fringe benefits and social rights and their personnel rights such as per diems and health aids of the personnel to be transferred shall be paid by the Treasury for the period until the transfer of such personnel to other public entities and institutions is completed and such personnel commences work in their new places. The relationship with the R.T. Retirement Fund of those personnel who are subject to the Retirement Fund shall continue during that period.

In case the personnel employed under contracts and the non-classified personnel are transferred to entities subject to the Civil Servants Law no. 657 and thus they are converted into civil servant status, then, the term of their services either when employed under contracts or as non-classified employees shall be taken into consideration for the determination of their vested rights, salaries, degrees and grades without necessitating a specific cadree, pursuant to provisional articles 1, 2 and 3 of the same Law and taking into account the provisions of the Decree with the Force of Law no. 458, provided that they shall not to exceed the level of hierarchy they may be promoted based upon their educational background.

In case, the salaries, allowances, additional chart amounts, bonus, any kind of premium and compensation rights or the net value of contracted salaries pertaining to respective cadrees and degrees of the personnel appointed to public entities and institutions as of the date of their appointment exceed the salaries, additional chart amounts, bonus if any and any kind of premium and compensation rights or the net value of the contracted salaries (including bonus if any) payable according to the legislation related to the institution they have been transferred to, then, the difference shall be compensated by the Treasury without any deductions, until such difference is remedied.

However, the salaries, additional chart and any kind of premium and compensation rights (excluding the additional compensation) payable under the respective ex-cadrees of the personnel mentioned in Table (I) annexed to Decree with the Force of Law no. 399 among the personnel transferred according to this article shall be reserved as long as they are employed in tasks they have personally been recruited. From the time the salaries, additional chart amounts, bonus if any and any kind of premium and compensation rights determined for similar positions mentioned in Table (I) annexed to Decree with the Force of Law no. 399 become equal to the amount of salaries and bonus of the personnel transferred according to this article while performing primary and continuous duties as per the paragraph (a) of additional article 22; then their salaries, additional chart amounts and any kind of premium and compensation (excluding additional compensation) rights for similar positions shall be reserved as long as they are employed in tasks they have personally been recruited. Persons whose transfer was made beforehand, within the framework of the provisions of paragraph three of provisional article 4 of the Law no. 4502 while subject to Table (I) according to Decree with the Force of Law no. 399 shall also benefit from this article.

The persons, who become unemployed, within one year following decrease of public shares to 50% upon sale of Türk Telekom shares, due to termination of their employment contracts by the employer without any justified reason according to Labour Law no. 1475 or in case they terminate their employment contracts on justified grounds as set out in the Labour Law no. 1475 (excluding the retirement), then such persons shall benefit from compensation for loss of employment and other services mentioned in article 21 of Law no. 4046. The Turkish Labour Institution shall be authorized, in charge of and liable for the execution of these transactions. All payments to be made by the Presidency of the Privatisation Administration under this article shall be made by the Treasury.

ARTICLE 8.- Article 1 of the Law No. 4157 dated 22.12.1941 on Savings and Aid Fund of the Posts Telegraphs and Telephone Administration shall be amended as follows.

Article 1.- The Savings and Aid Fund of the Posts, Telegraphs and Telephone Administration, which is set up by this Law and which will continue to be valid until a new arrangement is made, shall be divided into two with this Law; two separate “Savings and Aid Fund of the Posts, Telegraphs Organisation” and “Savings and Aid Fund of Türk Telekom’s Personnel” shall be set up in order to ensure the continuity of the rights and obligations.

The personnel working in the subsidiaries and companies wherein PTT and Türk Telekom own more than 50% shareholding may also be members of these funds.

The revenues of the funds shall be composed of:

1. Membership fee collected from the member personnel,

2. Revenues obtained from sale, lease and operation of movables and immovables,

3. Revenues obtained from interests on the Fund’s deposits/assets and donations,

4. Other revenues.

The administration of the funds shall be regulated by regulations to be separately issued in their respective General Assembly meetings. The provisions of the current legislation, which do not contradict with this Law, shall apply until new regulations are adopted.

ARTICLE 9.- The article stated below shall be added to the Law no. 4157.

ADDITIONAL ARTICLE 1.- References made in this Law and other legislation to the R.T. General Directorate of Postal, Telegraph and Telephone Administration shall deemed to be made either to the R.T. General Directorate of the Posts and Telegraph Organisation or to the General Directorate of Türk Telekom Anonim Şirketi, with respect to their service areas.

ARTICLE 10.- The provisional article stated below shall be added to the Law no. 4157.

PROVISIONAL ARTICLE 1.- The Savings and Aid Fund of the Posts, Telegraphs Organisation and Savings and Aid Fund of Türk Telekom’s Personnel shall establish their respective boards of directors upon convening Extraordinary General Assembly meeting within one month following the publication of this Law.

All assets, properties, debts and obligations of the Savings and Aid Fund of the Posts, Telegraphs and Telephone Organisation shall be liquidated along with their actual balances between the Savings and Aid Fund of the Posts, Telegraphs Organisation and Savings and Aid Fund of Türk Telekom’s Personnel in proportion to the aggregate amount of retirement aids which means total savings with accumulated interest of the existing members among the personnel of the General Directorate of the Organisation of the Posts and Telegraph and Türk Telekom. Same liquidation rules and proportions shall be applied to the splitting up of all movable and immovable assets of the Fund.

The liquidation transaction shall commence at the date of entry into force of this Law and be carried out through the appointment of three headinspectors from each Inspection Board of the General Directorate of Posts, Telegraphs Organisation and of Türk Telekom. The liquidation transaction shall be completed within six months. Transactions related to such separation shall be exempt from any kind of tax, levies, charges and funds.

The Extraordinary General Assembly meetings shall be held within a month following the completion of the liquidation in accordance with the By-Laws and Regulations existing prior to the division. The current personnel of the Savings and Aid Fund of the Posts, Telegraphs and Telephone Organisation shall be shared out to funds with their personnel rights according to the needs of such funds.

ARTICLE 11.- Paragraph (g) of article 13 of Law No. 3348 dated 9.4.1987 on the Organisation and Responsibilities of the Ministry of Transport shall no longer be in force.

PROVISIONAL ARTICLE 1.- The golden share and its scope regulated under additional article 17 of the Telegraph and Telephone Law No. 406 shall be inserted in the articles of association of the Company within three months following the entry into force of this Law.

PROVISIONAL ARTICLE 2.- Within maximum one month following the entry into force of this Law, the Authority and the operators who executed authorization, GSM authorization or concession agreements with the Ministry of Transport or who provide services through telecommunication licenses or general authorisations granted by the Ministry of Transport, may amend the agreements upon mutual understanding, provided that the amendments do not violate the provisions of this Law and the Authority’s regulations. However, the provisions regarding national security and public order in the authorization agreement shall continue to be valid.

During the renewal period of the agreements through mutual understanding between the parties, the Authority is obliged to take the opinion of the Undersecretariat of Treasury on the arrangement of articles relating to the portion of shares hold by the Treasury.

In case mutual understanding is not reached during that period of time, the operators providing services through authorization, GSM authorization or concession agreements executed with the Ministry of Transport, or through telecommunication licenses or general authorisations granted by the Ministry of Transport, shall be obliged to renew their authorization or concession agreements with the Authority, in compliance with this Law and the Authority’s regulations without prejudice to the rights and obligations contained in their existing agreements, within one month following the expiry of the said period. In case the concession agreements are not renewed within the given period, then the Authority shall use its powers set out in paragraph (f) of article 2 of the Law No. 406.

The provisions of paragraph (b) of article 2 of the Law No. 406 shall apply to the renewed agreements.

PROVISIONAL ARTICLE 3.- In case the employment contracts, of the personnel employed under the Labour Law No: 1475 in Türk Telekom or the personnel who was employed in Türk Telekom under the cadrees or under contracts pursuant to the Decree with the Force of Law No. 399 but then converted or will be converted to the Labour Law status upon their own choice, are terminated in such a way to necessitate the severance payment pursuant to the reasons and principles indicated in article 14 of the Labour Law No. 1475, then the term of the services provided before in other public entities and institutions including the services provided in Türk Telekom shall be taken into account in the calculation of such severance payments.

The relationship with the Retirement Fund of the personnel being transferred from Türk Telekom to the companies established, to be established and to be joined in by Türk Telekom and who are subject to the labour legislation and having continuing relationship with the Retirement Fund may continue their relationship with the Retirement Fund if they so prefer and the provisions of paragraph (c) of the additional article 22 of the Law No. 406 shall apply to them. The calculation of the severance payments of the personnel who are transferred to such companies and subject to Labour Law shall be made in accordance with the principles stated in paragraph one above.

PROVISIONAL ARTICLE 4.- In case the persons from among the personnel working in Türk Telekom from the date of this Law who acquired the right of retirement in accordance with the Law No. 5434 on the R.T. Retirement Fund including the personnel who became or will become subject to the labour legislation in accordance with Law No. 4502 applies for retirement within six months following the entry into force of this Law, and the personnel who will acquire this right before the end of year 2002 applies for the retirement within three months following the acquisition of such right, the retirement bonus or severance payments shall be paid with an increase of 30%. Such difference shall be borne by the Treasury.

PROVISIONAL ARTICLE 5.- When the transfer of the personnel indicated in additional article 29 of the Law No. 406 dated 4.2.1924 is made upon decrease of public shares below 50% as a result of the sale of Türk Telekom shares, , the additional article 22 of the said Law and the provisional article 4 of the Law No. 4502 shall cease to be effective. However, the personnel who has continuous relationship with the Retirement Fund pursuant to paragraph (c) of provisional Article 22 of the said Law, shall continue such relationship with the Retirement Fund within the framework of same principles, without the need for any operation, provided that the personnel concerned made the payment of deductions and their allowances are paid up by Türk Telekom.

PROVISIONAL ARTICLE 6.- A state economic establishment which will be subject to the Decree with the Force of Law No: 233 shall be established in order to carry out the satellite services provided by Türk Telekom.

ARTICLE 12. – This Law shall enter into force on the date of its publication.

ARTICLE 13.- The Council of Ministers shall apply the provisions of this Law.

LAW NUMBER 4502

ARTICLE 1. – The section heading of the Telegram and Telephone Law dated 4.2.1924 and numbered 406 as “SECTION: 1 Monopoly” is amended to read as “SECTION 1 -: Basic Rules, Principles and Definitions”, and the third and fourth paragraphs of amended Article 1 is deleted and the following paragraphs are added at the end of the Article.

“The provision of telecommunication services and establishment and operation of telecommunication infrastructure is subject to this Law.

Türk Telekom is authorised within the framework of this Law to provide all kinds of telecommunication services and operate telecommunication infrastructure.

The rights and obligations of Türk Telekom in relation to the foregoing authorisation shall be set out in the authorisation agreement and/or authorisation agreements which shall be executed with the Ministry. Türk Telekom is obliged to provide universal services set out in its authorisation agreements.

Türk Telekom is a joint stock company subject to the provisions of this Law and private law. Legislation regarding the establishment, organization and activities of State Economic Establishments shall not apply to Türk Telekom. Only the provisions of Article 9 of Law dated 2.4.1987 and numbered 3346 relating to auditing by the Turkish Grand National Assembly shall apply.

This Law shall not be applicable to any kind of telecommunication and command-control system, equipment, devices and networks of the Turkish Armed Forces, and to telecommunication and command-control facilities and services which are established or shall be established by operators as ordered and paid by the Turkish Armed Forces.

In this Law:

Ministry: shall mean the Ministry of Transport,

Authority:, shall mean the Telecommunication Authority established by the amended Article 5 of the Wireless Law dated 5.5.1983 and numbered 2813,

Türk Telekom: shall mean Türk Telekomünikasyon Anonim Tirketi,

Operator: shall mean a capital company including Türk Telekom providing telecommunication services and/or operating telecommunication infrastructure under an authorisation agreement, a concession agreement entered into with, and/or a telecommunication license or a general authorization obtained from, the Ministry,

Capital company: shall mean the capital company incorporated or to be incorporated in Turkey which satisfies the conditions determined by the Ministry,

Subscriber: shall mean an individual or a legal entity who executes an agreement with an operator providing telecommunication services to benefit from such services,

Public Telecommunications Network: shall mean the transmission system network including without limitation transmission infrastructure and switching equipment which provides telecommunication between certain points through which publicly available telephone services are provided,

Minimum service: shall mean the minimum set of universal services types of special quality whose subject and scope is defined by the Ministry upon receipt of affirmative opinion of the Authority and the operators, which is accessible to everyone independent of their geographical location and at a reasonably affordable price, including public pay-phone, emergency telecommunication services and telephone directory services,

General authorisation: shall mean the general regulatory act of the Ministry which authorizes the operators to provide telecommunication services subject to certain general conditions and registration before the Ministry,

Authorization agreement: shall mean a contract between Türk Telekom and the Ministry the term of which shall be determined by the Ministry pursuant to its terms and which sets out all the relevant authorities, rights and obligations for the provision of all kinds of telecommunication services including the value added services and operation of telecommunication infrastructure,

GSM authorization agreement: shall mean a contract between Türk Telekom and the Ministry which is executed to set out such authorities, rights and obligations to provide GSM 1800 mobile telecommunication services and to operate relevant telecommunication infrastructure,

Concession agreement: shall mean a contract between the Ministry and an operator pursuant to which such operator may provide telecommunication services and/or operate infrastructure as set out in that concession agreement,

Value added telecommunication services: shall mean the telecommunication services which employ computer processing applications that act on the format, content, code, protocol or similar aspects of the subscriber’s transmitted voice, data and all other types of messages; provide the subscriber or the user additional, different or restructured messages; or involve subscriber interaction with stored message,

Private telecommunication network: shall mean the telecommunication networks set out in the paragraph (a) of Article 2,

User” shall mean an individual or a legal entity who uses telecommunication services regardless of same having a subscription,

Mobile telecommunication services: shall mean telecommunication services between land mobile stations and satellite and land stations or between land mobile stations themselves,

Roaming: shall mean inter-systems conveyance which provides operation of services of an operator through the equipment of clients of another operator or which provides interconnection to another system, provided that certain technical compatibility exists,

Network: shall mean all kinds of transmission system including switching equipment and lines between one or more termination points to provide telecommunication between such points,

Telecommunications: shall mean the transmission, emission and reception through cable, wireless, optical, electric, magnetic, electro magnetic, electro chemical, electro mechanic and other transmission systems of all kinds of sign, symbol, voice and image and all kinds of data which can be converted into electric signals,

Telecommunication infrastructure: shall mean all types of network units including without limitation switching equipment, hardware and softwares, terminals and lines on or through which telecommunication is conveyed,

Operating (to operate) telecommunication infrastructure: shall mean to establish, cause others to establish and to lease or to procure in such other ways the necessary telecommunication facilities for the relevant infrastructure and to provide that facility to the use of other operators or to other requesting individuals and legal entities,

Telecommunication service: shall mean the provision of all or some of the activities which fall within the definition of telecommunication, as a service,

Telecommunication license: shall mean the license issued by the Ministry for the provision of telecommunication services and/or operation of infrastructure as set out in such license.”

Interconnection: shall mean the connection of two networks for the provision of telecommunication traffic between two different telecommunication networks,

Interconnection provider: shall mean the individual or legal entity (owning the) network upon which interconnection will be provided.

ARTICLE 2. – Article 2 of Telegram and Telephone Law dated 4.2.1924 and numbered 406 is amended as follows.

“Article 2 - a) No person may provide a telecommunication service and/or establish and operate an infrastructure except under an authorisation agreement, a concession agreement entered into with, or a telecommunication license or a general authorization obtained from, the Ministry. However, the following activities are not subject to a concession agreement, a telecommunication license or a general authorization:

1)Personal telecommunication networks of an individual or a legal entity which are within immovables in its use and do not exceed the borders of each of these immovables, and which are used exclusively for personal or institutional needs and which do not involve the provision to third parties of any telecommunication services.

2)telecommunication facilities established exclusively for the purposes of the services entrusted to public entities and organisations pursuant to special laws relating to such entities and organisations.

The Authority is empowered to inspect such facilities in respect of them being compliant with the principles under this article to determine the applicable terms and procedures and to detect the compatibility of the equipment to the standards if and when interconnection is requested, the equipment used in respect of compliance with the standards, and to cause the removal of non-compliant facilities and equipment.

b) The authorization agreement and/or agreements which sets out the authorities, rights and obligations of Türk Telekom in respect of the provision of telecommunication services and the operation of telecommunication infrastructure shall be executed after such agreement is submitted to Danıştay for its opinion and the period mentioned in the Constitution has elapsed. After the expiration of their terms such agreements may be renewed under the same terms and conditions with other concession agreements applicable to similar fields. The ownership right of Türk Telekom on the public telecommunications network shall continue after the expiration of the term of the authorization agreement. The conditions applicable to certain telecommunication services which may be carried out by or through companies that are established by Türk Telekom or to which Türk Telekom is a shareholder; are regulated under the authorization agreements.

c) Türk Telekom shall carry out telephone services which are provided through telecommunication networks and including national and international voice telephony as a monopoly, until 31.12.2003, within the framework of this Law and the authorisation agreement. Establishment and operation of all telecommunications infrastructure, other than private telecommunication networks and telecommunication infrastructure which is contemplated to be established by the relevant operator pursuant to their concession agreements or telecommunication licenses or general authorizations, are included in the monopoly scope.

Requests of other operators and individuals using private telecommunication networks to interconnect to the public telecommunications network and their requirements to benefit from telecommunication infrastructure facilities shall be initially met by Turk Telekom during the monopoly period specified above. If Turk Telekom will not be able to meet the need of an operator or an owner of a private telecommunication network then, such operator or the owner of a private telecommunication network may establish the necessary infrastructure facility himself pursuant to terms of its concession agreement or telecommunication license or the Ministry may grant a concession or a telecommunication licence for the establishment of such infrastructure.

d) After the expiration of the monopoly rights of Turk Telekom, capital companies other than Türk Telekom shall also be authorized to provide telecommunication services and to operate infrastructure which are within the scope of paragraph (c) above within the framework of article 3 provisions, if such authorization is considered as appropriate by the Authority. Provisions of the authorization agreement of Turk Telekom shall continue to be in effect after the expiration of the monopoly period. Unless stated otherwise in the authorization agreement and GSM authorization agreement, authorization agreement and GSM authorization agreement shall be subject to the provisions determined for concession agreements. No discrimination shall be made between Turk Telekom and other operators for the provision of new generation telecommunication services.

e) In the authorisation agreement to be executed between the Ministry and Turk Telekom and in concession agreements to be executed between the Ministry and other capital companies and if deemed necessary, in licenses and general authorizations granted by the Ministry, provisions addressing, among others, the following matters shall be included under reasonable and non-discriminatory terms and conditions:

1) A clear definition of the telecommunication service and infrastructure, and its geographical and qualitative coverage,

2) The term of rights and obligations under the concession agreement, and the principles for renewal,

3) Investments to be made in accordance with plans and programs, and targets, if any, to be achieved through those investments,

4) General conditions to be applied to, and principles to be observed in the relations with, subscribers, users, users of private telecommunication networks and other operators, including conditions for interconnection,

5) The basis on which tariffs to be applied for telecommunication works and services are to be calculated, and principles on which those tariffs are modified,

6) Conditions with respect to quality of service,

7) Whether or not a certain fee, shall be paid under the concession agreement and if payable its amount,

8) The manner in which the Ministry shall require other issues and investments in infrastructure, and undertakings, which are not determined in the concession agreement, license and general authorization,

9) The basis of the implementation of the principles set out in article 4 in respect of types of telecommunication services and infrastructure,

10) Principles for using public property including; (frequencies and limited orbit positions allocated to the Republic of Turkey and immovables owned by third parties, and transactions to be carried out by the Ministry in this respect,

11) Conditions relating to the preparation of accounts and provision of all kind of information to the Authority,

12) Provisions relating to numbering and number portability,

13) Rights and obligations of the parties in the event of force majeure and unforeseen circumstances,

14) Sanctions which may be imposed for breaches of the concession agreement,

15) Implementation principles relating to widespread and efficient provision of services, solution ventures, service distribution and provision of other similar subcontracting services.

f) The Authority is empowered to take the necessary measures to ensure compliance with the terms of the concession agreement it has executed with and telecommunication licenses it has issued to operators including Turk Telekom, to supervise and inspect the carrying out of the activities in accordance with the applicable legislation and the concession agreement, telecommunication license, general authorization, and if there exists a breach, to impose, an administrative fine up to 3 % of the turnover of the operator concerned for the previous calendar year. The Ministry is authorised to take the necessary measures for purposes of national security, public order, or orderly provision of public services, and where necessary, to take over the facilities against compensation, or in the event of a gross default, to cancel the concession agreement, the telecommunication license or the general authorization.

g) Regulations setting out the principles for the implementation of the foregoing provisions, penalties and the principles set out in article 4 shall be enacted.”

ARTICLE 3- Article 3 of Telegram and Telephone Law dated 4.2.1924 and numbered 406 is amended as follows.

“Article 3 – a) All telecommunication services, including the value added telecommunication services, services within the scope of additional article 18, and telecommunication services within the scope of monopoly rights after the expiration of such monopoly period set out in paragraph (c) of article 2 may only be provided through an authorization agreement, a concession agreement, telecommunication license or general authorization as the relevant service requires. Services within the scope of additional article 18 may only be provided with a concession agreement or a telecommunication licence.

b) The Ministry, upon receipt of the opinion of the Authority within the framework of this Law, shall determine whether the authorization shall be made through a concession agreement, telecommunication license or a general authorization and under which conditions, and how such authorization shall be made, and the procedures and principles applicable to such authorization.

Operators or individuals who wish to provide a certain telecommunication service shall request from the Ministry the determination of the above mentioned conditions if such conditions are not specified. Upon such request, the Ministry shall decide whether such determination is necessary or not. If the Ministry deems such determination is necessary, then it shall set out such terms under supplementary regulations within maximum four months following the receipt of the advisory opinion of the Authority.

The Authority shall also prepare a report each year which sets out the executed concession agreements, granted licenses and general authorizations and specifies relevant service types which such agreements, telecommunication licenses and authorizations relates to with the information provided by the Ministry.

c) Telecommunication services or infrastructure which involve the allocation of scarce resources such as frequency, satellite position and numbering and require the granting of particular special rights and obligations to each operator, or which shall be provided by a limited number of operators shall only be carried out pursuant to a concession agreement to be entered into with the Ministry. Notwithstanding the paragraph (d) of this article, value added telecommunication services may be provided by a capital company through a telecommunication license or general authorization obtained from the Ministry.

d) Without prejudice to the other provisions of this article, the relevant provisions of additional articles 19 and 21 shall apply where any kind of payment other than a fixed fee is envisaged for the authorisation of a limited number of capital companies through a concession agreement or a telecommunication license for a particular telecommunication service.

e) The terms and conditions relating to the implementation of this article, the conditions to be required from the operators and the conditions applicable to execution of concession agreements, awarding of telecommunication license or granting of general authorizations and registration for a particular type of a telecommunication service and terms and procedures applicable to the foregoing shall be set out in the regulations to be issued by the Ministry pursuant to this Law after obtaining the opinion of the Authority.”

ARTICLE 4. –Article 4 of the Telegram and Telephone Law dated 4.2.1924 and numbered 406, which is repealed by the Law dated 9.6.1937 and numbered 3222 is amended as follows.

“Article 4 - The following guidelines shall be taken into consideration both in qualitative and quantitative aspects in relation to the provision of telecommunication services and/or operation of infrastructure and to rulings to be made to this effect:

a) Promotion of practices which shall provide access by every person to telecommunication services and infrastructure at affordable prices.

b) Unless otherwise required on the basis of objective reasons, equal and non-discriminatory treatment of subscribers, users and telecommunication service providers under similar conditions, and accessibility of services by everyone similarly situated under equal conditions.

c) Unless otherwise provided by this Law or required on the basis of objective reasons, observation of the principles of qualitative and quantitative continuity, reliability, productivity, clarity, transparency and efficient use of resources.

d) Provision of minimum services within the framework of specific technical and economic conditions, at a reasonably affordable price.

e) Mutual compatibility of telecommunication systems in accordance with international norms.

f) Taking into account targets set out in development plans and programs.

g) Use of advanced technology and supporting of research/development investments.

h) Compliance with clearly articulated service quality standards.

ı) Attaining and maintaining a competitive environment in authorising through concession agreements or telecommunication licenses relating to telecommunication services and/or infrastructure and generally in all telecommunication fields, provided that the provisions of Law dated 7.12.1994 and numbered 4054 on the Protection of Competition are reserved and without prejudice to Türk Telekom’s monopoly rights as set out herein.

i) Priority to be given to the necessities of national security and public order and needs arising in emergency situations.

j) Taking into account the special needs of the disabled and elderly, and protection of social groups who are in need, and including offering special subscriber schemes principles, terms and conditions of which are specified by the Authority, which contains economic advantages to users.

k) Except in cases where it is otherwise clearly specified in the relevant legislation, concession agreement or the telecommunication licence, reflection, to the extent possible, in the tariffs to be charged for telecommunications services provided, including tariffs for interconnection and line rentals and circuits, the costs of investments and operations and a relevant share of overheads, depreciation and a reasonable profit.”

ARTICLE 5. – The words “and telephone” in article 6 of the Telegram and Telephone Law dated 4.2.1924 and numbered 406 are deleted and the following paragraphs are added to article 6 of the Law.

“Operators and other real or legal persons, in the telecommunication sector may execute all kinds of commercial agreements with local and multinational companies on any field of telecommunication including cross-border telecommunication services; provided that they shall comply with the telecommunication legislation.

Principles regarding the membership to international telecommunication organizations or becoming party to international treaties which require the representation of the Republic of Turkey or Turkish telecommunication sector before such organizations or the principles to benefit from the rights, authorities and obligations arising from such treaties shall be determined by the Council of Ministers. In order for an operator, or a real or a legal person in the telecommunication sector to become a party to such a treaty, such operator or person should apply to the Ministry with the necessary information about the treaty. The Ministry, upon receiving the opinion of the relevant ministries and the Authority, shall decide on the application as soon as possible pursuant to the principles determined by the Council of Ministers. The Ministry may request from the relevant persons the information related to such treaties and may take the necessary measures, as it seems necessary.

ARTICLE 6. - Article 10 of Telegram and Telephone Law dated 4.2.1924 and numbered 406 is amended as follows.

“Article 10 – Interconnection requests of all the operators and users of private telecommunication networks shall be provided by the operators who are responsible to provide interconnection, save that the provisions of the relevant legislation are reserved. The operators which are responsible to interconnect shall be determined by the Authority, pursuant to regulations to be enacted upon the legal base produced in this Article. However, Turk Telekom is under the obligation and duty to provide interconnection in all circumstances. Turk Telekom and operators, which are responsible to provide interconnection as determined by the Authority, are defined as “interconnection providers”.

Interconnection providers are required to satisfy the interconnection requests, subject to the provisions of this Article, and based on the principles of equality, non-discrimination, transparency, cost-orientation, reasonable profit and under the same conditions and quality as interconnection providers or their shareholders, affiliates or partnerships provide for their own services. Requests which are technically feasible and which does not include disproportionate costs for interconnection are be accepted except for a reasonable and just cause.

Agreements to be concluded for interconnection between networks, including the necessary technical and financial provisions, shall be executed between the operators pursuant to this Law and other relevant legislation and shall include the necessary technical provisions, conditions and tariffs. A certified copy of all of such agreements, their annexes and amendments shall be submitted to the Authority. All interconnection agreements executed and maintained at the Authority shall be publicly available provided that the Authority shall take various precautions to protect commercial secrets of the parties.

If an interconnection agreement cannot be agreed within maximum three months from the date of the initial request, the Authority, upon an application by the requesting party, shall initiate mediation procedures between the parties on the basis of principles it shall determine in the public interest and may take such other measures as it deems reasonable and necessary in the public interest. If the parties fail to reach an agreement within a period of six weeks, extendable by the Authority by a further four weeks, of such initiation by the Authority, the Authority shall be authorized to set such terms, conditions and tariffs of such interconnection agreement as it thinks fit. Such terms, conditions and tariffs shall remain in effect unless and until the parties agree otherwise.

Within the content of this Article, mobile telecommunication, data operators or operators of other services and infrastructure as determined by the Authority are also required to satisfy reasonable, economically proportionate and technically feasible roaming requests of other operators working in the same field for permitting the use of the customer equipment of the requesting operator on their telecommunication system.

The Authority shall publish and amend from time to time standard reference interconnection tariffs which relevant operators may, as appropriate, incorporate in their standard terms and conditions. The Authority shall issue regulations setting out the principles of implementation of this provision and the details to which standard reference tariffs, interconnection and roaming agreements are subject, and, if needed, may apply to the Competition Board pursuant to provisions of Law dated 7.12.1994 and numbered 4054 in order to ensure that standard reference tariffs or the agreements for interconnection of networks and roaming do not impede free competition in provision of telecommunication services and operation of infrastructure.”

ARTICLE 7. – The following paragraphs are added at the end of article 12 of the Telegram and Telephone Law dated 4.2.1924 and numbered 406.

“The provisions of this Article are also applicable to other operators under the principles as determined by the Authority. Procedures and principles regarding the application of this article to Turk Telekom and other operators shall be stipulated under regulations to be issued by the Authority.

The relevant official authorities may, in reliance upon their authority and on the basis of just cause, request the courts to suspend such usage.”

ARTICLE 8. - Article 18 of the Telegram and Telephone Law dated 4.2.1924 and numbered 406 is amended as follows.

“Article 18 – Telecommunication facilities ofthe persons who, by way of breaching the paragraph (a) of Article 2, establish and operate without a concession agreement or an authorization agreement shall be closed by the relevant administrative authority having jurisdiction in the relevant district, upon a request by the Authority and their operation shall be ceased. In addition perpetrators of such acts shall be subject to heavy fines between two billion liras to thirty billion liras. Such persons shall be subject to imprisonment of between six months to two years and to fines between four billion liras to sixty billion liras in recurrence of such breaches.

Facilities of the persons who, by way of breaching the paragraph (a) of Article 2, provide telecommunication services without obtaining a general authorization or a license shall be closed by the relevant administrative authority having jurisdiction in the relevant district, upon a request by the Authority and their operation shall be ceased. Such persons shall be subject to fines between two hundred million liras to three billion liras in recurrence of such breaches.

Individuals and legal entities who execute a subscription agreement with an operator providing telecommunication services may provide the services, which they are receiving for their own needs in their activities, to third parties with or without consideration. Subscribers cannot provide the service they use to third parties for commercial purposes. Subscription agreements of those who do not comply with this rule shall be cancelled.

ARTICLE 9. - The section heading “SECTION: 4 Tariffs” of the Telegram and Telephone Law dated 4.2.1924 and numbered 406 is amended to read as “SECTION: 4 – Principles of Tariffs for Telecommunication Services” and the article 29 of Telegram and Telephone Law dated 4.2.1924 and numbered 406, which is repealed by Law dated 18.5. 1935 and numbered 2722, is amended as follows.

“Article 29 - Operators may freely determine tariffs, which they shall receive in return for the provision of telecommunication services and/or for the operation of infrastructure, provided that they comply with the relevant legislation and their authorization or concession agreement, telecommunication license or general authorization and the instructions of the Authority. The Authority is empowered to determine and set the methods of calculation and caps of tariffs, including line and circuit rentals, under reasonable and non-discriminatory terms, through regulations, communiques and other administrative rules to be issued and by taking into consideration the terms and conditions of concession agreements and telecommunication licenses, and the guidelines set out in article 30 in the following instances:

a) In cases where Türk Telekom or other operators need to meet the costs of certain services including the minimum services required to be provided within the framework of public services from the tariffs for other services,

b) In cases where one operator enjoys a legal or practical dominant position in a relevant service or geographic market as determined by the Authority,

c) In cases where the tariffs are determined through means or actions which are in breach of the regulations of the Authority,

d) In such other cases as may be provided for by the Authority in the regulations to be enacted.”

ARTICLE 10. – Article 30 of Telegram and Telephone Law dated 4.2.1924 and numbered 406 is amended as follows.

“Article 30 - The regulation of tariffs charged for provision of telecommunication services and operation of infrastructure shall be implemented by the Authority with a view to achieving the following principles:

a) Tariffs should be fair and should not involve any undue discrimination without justified reasons against persons under the same circumstances. This principle, however, shall not prevent provision of favourable terms, within clear and specific limits, for social groups in need,

b) In situations which fall under the scope of article 29 tariffs should be balanced and in principle and to the extent possible, be determined to reflect the costs of relevant services, including costs of investments and operations, and balancing of tariffs in providing the services, as set out in sub-paragraph (k) of article 4 and cross-subsidisation of the cost of a certain service from the tariff collected for another service should be avoided,

c) Tariffs reflect all individual elements of the service for which there is an associated cost,

d) The tariffs should, where appropriate, be approximated to international standards and levels in line with technological developments,

e) For different types and categories of services, tariffs should be determined at levels which are aimed at encouraging technological development and new investments,

f) International agreements to which Turkey is a party and the recommendations of international institutions should, where appropriate, be taken into consideration in the determination of tariffs,

g) In the event that there are justifiable reasons, a cap may be applied to tariffs on the condition that compensatory costs and a reasonable profit are recovered.”

ARTICLE 11. - The following subsection is added at the end of the amended additional article 17 of Telegram and Telephone Law dated 4.2.1924 and numbered 406 which was added by Law dated 3.5.1995 and numbered 4107.

“The Minister to which the Undersecretariat of Treasury is associated or such other authorized representative to be designated by the Minister are authorised to execute the agreements for the transfer of ownership of the shares to be sold and other agreements and other necessary documents in all kinds of sale transactions within the terms and conditions set out in the Council of Ministers’ decrees referred to above.”

ARTICLE 12. - The following sentence is added to the end of the additional article 18 of Law numbered 406 and dated 4.2.1924 .

Tariffs charged in consideration for a work and service may be determined as a subscription fee, fixed line fee, telephony fee, line rental and similar rental payments, fees and as one or more of the several other different tariff headings.

ARTICLE 13. - The following articles are added to Law numbered 406 and dated 4.2. 1924.

“Additional Article 22 – Status, salary regime and retirement of the Türk Telekom personnel is as follows:

a) Status of the Personnel: Primary and continuous duties shall be performed and executed by the general manager who has an experience of 8 years in the telecommunication field and has completed a higher education degree of at least 4 years, and the personnel whose cadrees, titles, degrees and numbers are suggested by the Board of Directors and proposed by the Ministry and who are employed in the cadrees determined by the Council of Ministers within 180 days after the entry into force of this Law. Without prejudice to the provisions of this Law, the provisions of the Decree with the Force of Law numbered 399 shall apply to such personnel. Other personnel shall be employed under the general labour legislation. Terms and conditions applicable to those who are employed under the general labour legislation shall be determined by the Board of Directors.

Investigation for security purposes shall be carried out pursuant to the provisions of the current legislation for the recruitment of the Turk Telekom personnel.

Türk Telekom may employ local and foreign managers and experts under private contracts upon a resolution adopted by the Board of Directors.

b) Salary Regime: The monthly salaries of the personnel who perform the primary and continuous duties determined under this Law shall be determined by the General Assembly, provided that such salary shall not exceed twice as much of the net monthly salary of a highest ranking public servant including all other payments. Within the framework of the principles, procedures and criteria to be determined by the Board of Directors, bonuses may be paid to such personnel in March, June, September and December equal to the amount of their monthly salary in proportion with the numbers of days they have worked. Furthermore, on the condition that it is resolved by the board of directors, two additional bonuses may also be paid to such personnel by taking work efficiency and similar matters into consideration. The amount of each bonus shall not exceed the monthly salary of the relevant employee to whom the payment is to be made.

The monthly salaries, of the Turk Telekom employees other than those whose cadres are determined by the Council of Ministers pursuant to this Law and who are subject to general labour legislation and are not the ones, shall be determined by the Board of Directors.

Per diem allowances of Türk Telekom employees and principles and procedures applicable to the payment of per diem allowances shall be determined by the Board of Directors of Turk Telekom.

c) Retirement of the personnel:

In the event that the personnel working subject to the T.R. Retirement Fund on the date of the entry into force of this Law prefers to be employed under the Labour Code, their relationship with the Retirement Fund shall continue if they so prefer. In this event, term of employment of such personnel shall be evaluated as per the Civil Servants Law numbered 657 and the T.R. Retirement Fund Law numbered 5434. In the retirement proceedings of such personnel, additional charts and specified office compensations applicable to the same cadrees, titles and degrees of positions similar to classes of those which they may fit in considering the tasks they are performing, as per the Civil Servants Law numbered 657 shall be applicable to such personnel, provided that it shall not exceed the additional chart amount applicable to general managers under the General Administrative Services class. This provision shall not be applicable if 51% of Turk Telekom’s shares is disposed of by the State.

Additional Article 23 – A Türk Telekom Health Aid Fund, which is a successor to the existing Health Aid Fund, is established to deal with the medical treatment of Turk Telekom employees and their families pursuant to the terms to be determined by the board of directors of Türk Teklekom. Sources of this Fund are:

a) Money to be paid every year to the budget of Turk Telekom corresponding to the salaries of the personnel up to the 0.1% portion of the appropriation amount,

b) Withholdings from the salaries of the personnel which shall not exceed %1 of their salaries,

c) Interests and other revenues arising from investments made with the capital of the fund and its activities,

d) Donations, and

e) Other revenues.

Principles and procedures applicable to the organization, duties, authorities, responsibilities and implementations; liquidation of the fund, conversion of it into private health insurance system or carrying out other necessary arrangements shall be determined by the board of directors of Turk Telekom until 31/12/2003.

Additional Article 24 – PTT Members Joint Bail Fund which is established pursuant to Article 17 of the Law dated 13.7.1953 and numbered 6145 and determined to be in effect until a new regulation is made is hereby terminated with this Law. All the assets, goods, debts and obligations of PTT Civil Servants Bail Fund shall be divided with a protocol to be executed between the T.R. General Directorate of Posts and Telegraphs Administration and Turk Telekom and thereupon such fund shall be dissolved. Such protocol shall be executed within maximum three months after the entry into force of this Law.

Two separate funds named as “PTT Personnel Joint Bail Fund” and “Turk Telekom Personnel Joint Bail Fund” shall be established to provide the continuity of the rights and obligations of the fund which shall be dissolved and divided between the T.R. General Directorate of Posts and Telegraphs Administration and Turk Telekom. PTT Personnel Joint Bail Fund is subject to the provisions of the Bail Law dated 02.06.1934 and numbered 2489. Turk Telekom Personnel Joint Bail Fund shall be operated and regulated within the framework of the principles to be determined by the board of directors of Turk Telekom. The personnel who shall be related with this fund shall be determined pursuant to the principles specified by the board of directors of Turk Telekom.

The board of directors of Turk Telekom is authorized for the liquidation of the fund and to carry out necessary arrangements it deems necessary.

The personnel currently working in the PTT Civil Servants Bail Fund shall be transferred with their current status and rights to T.R. General Directorate of Posts and Telegraphs Administration and Türk Telekom according to the ratios applied in the division of the assets of the fund and as agreed in the relevant protocol.

Temporary article 5 shall be applicable to the personnel transferred to Türk Telekom.

Procedures regarding the dissolution of the fund and transfer of the personnel shall be finalized within one month after the execution of the relevant protocol.

Additional Article 25 – Usufruct and usage rights granted to subscribers and users in relation with telecommunication services such as number and line usage rights shall not be subject to attachment.