Istanbul, Turkey, January 31 -Turkcell, the leading provider of mobile communications in Turkey, announced today an update on the approval process of its GSM license agreement in Iran.
As announced on September 23, 2004, the GSM license agreement has been signed between Irancell, the company that will carry out the GSM operations in Iran, and the Iranian government, which is 51% owned by Turkcell. However, we had also announced that Irancell would not become a licensed GSM operator until the license fee of EUR300 million is paid.
Following the talks between Turkcell and Iranian officials, Turkcell was informed that the Iranian Parliament has clarified that the Iranian law, which requires the approval of Parliament for investments with more than 50.1% foreign ownership, is applicable to Turkcell's GSM investment in Iran through Irancell.
As per an unofficial statement, we understand that the Iranian Commission, which is still studying this issue, may suggest reducing Turkcell's stake in Irancell to 49%, and therefore restricting its managing and controlling rights over Irancell and the ability of Turkcell to consolidate Irancell's financial results into its financial statements.
These possible suggestions conflict with the licence agreement's terms and conditions approved by the Turkcell's Board of Directors, the licence agreement signed by Irancell and the agreements signed between Irancell and its current shareholders.
The Iranian Parliament is expected to consider the studies of the Commission shortly. In the event of Parliament approval of any changes regarding the terms and conditions of the licence agreement with Irancell, particularly any changes resulting in restrictions on Turkcell's control of Irancell and financial consolidation of Irancell's results into Turkcell's financial statements, such significant changes may jeopardize Turkcell's position to go forward with the project.
Turkcell is the leading GSM operator in Turkey with 23.4 million postpaid and prepaid Customers as of December 31, 2004. Turkcell provides high-quality wireless telephone services throughout Turkey and has coverage of 100% of the towns with more than 10,000 inhabitants. Turkcell provides roaming with 436 operators in 174 countries as of January 31, 2005. Turkcell is the only NYSE listed company in Turkey. Turkcell has interests in International GSM operations in Azerbaijan, Georgia, Kazakhstan, Moldova and Northern Cyprus, which have a total of 3.5 million subscribers as of September 30, 2004.
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