1

Company Presentation Q1 2014 Results

2 2

3 3

4 4

5 5

6 6

Revenues:

Service Revenues:

Equipment Revenues:

Adjusted EBITDA*:

Profit for the period:

Free Cash Flow (before interest):

Cellular ARPU:

Cellular Churn:

Post paid subscriber base:

7 7 As of March 31, 2014

Partner’s Ownership Structure

30.87%

12.55% 1.4%

6.21%

5.05%

43.92%

S.B. Israel Telecom

Scailex

Suny

Phoenix-Excellence Group

Psagot Investment House

Public

8 8

9

10 10

11 11

in NIS millions Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014

Revenues 1,144 1,130 1,118 1,127 1,103

Cost of Revenues 901 878 861 870 849

Gross Profit 243 252 257 257 254

SG&A 171 171 167 170 169

Other income 23 21 19 16 14

Operating Profit 95 102 109 103 99

Financial Costs, net 49 71 53 38 24

Income Taxes 15 11 18 19 23

Profit for the Period 31 20 38 46 52

Adjusted EBITDA* 268 280 284 282 274

12 12

2,290 2,2822,102 2,133 2,137

870 894

874 823 799

3,160 3,176

2,976 2,956 2,936

0

500

1,000

1,500

2,000

2,500

3,000

3,500

2010 2011 2012 2013 Q1'14

Post-paid Pre-paid

13 13

101 101 97

87 82 83 84 81

77

-

25

50

75

100

125

150

Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13 Q4'13 Q1'14

14 14

8.0%

8.9%

10.4%

10.9%

10.4%

9.4%8.8%

10.7%

11.6%

0%

2%

4%

6%

8%

10%

12%

14%

Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13 Q4'13 Q1'14

15 15

5,6625,224

4,640

3,784

961 876

1,012 1,774

932

735

183 227

6,674 6,998

5,572

4,519

1,144 1,103

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

2010 2011 2012 2013 Q1'13 Q1'14

Service Revenues Equipment Revenues

16 16

2,570

2,178

1,602

1,114

268 274

39%

31%

29%

25%23%

25%

0%

5%

10%

15%

20%

25%

30%

35%

40%

-

500

1,000

1,500

2,000

2,500

2010 2011 2012 2013 Q1'13 Q1'14

% t

ota

l re

ven

ues

NIS

mil

lio

ns

Adjusted EBITDA EBITDA margin

17 17

872853

793

744720

700 696675

661

500

600

700

800

900

Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13 Q4'13 Q1'14

18 18

3,395

4,639

3,812

3,000 2,849

1.3

2.1

2.4

2.72.5

-

0.5

1.0

1.5

2.0

2.5

3.0

3.5

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

5,500

2010 2011 2012 2013 Q1'14

Ne

t De

bt

/ Ad

just

ed

EB

ITD

A

NIS

mill

ion

s

Net Debt Net debt / Adjusted EBITDA

19 19

2,175

1,707

1,110

639

138 161

-

400

800

1,200

1,600

2,000

2,400

2010 2011 2012 2013 Q1'13 Q1'14

20 20

395 471 492 475 130 113

6,6746,998

5,572

4,519

1,144 1,103 6%

7%

9%

11%

11%

10%

2%

4%

6%

8%

10%

12%

14%

16%

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

2010 2011 2012 2013 Q1'13 Q1'14

Cap

ex a

s %

of

To

tal

Reven

ues

NIS

mil

lio

ns

CAPEX Revenues CAPEX margin

21 21

1,502

1,082

1,234

1,041

203145

-

200

400

600

800

1,000

1,200

1,400

1,600

2010 2011 2012 2013 Q1'13 Q1'14

22 22

4

26

14

39

11

2

Cellular ServiceRevenues

Fixed LineService

Revenues

IntersegmentRevenues

Elimination

EquipmentGross Profit

OperatingService

Expenses

Other IncomeQ4 2013 Q1 2014

274

282

23 23

41

5944

36

5

9

Cellular ServiceRevenues

Fixed LineService

Revenues

IntersegmentRevenues

Elimination

EquipmentGross Profit

OperatingService

Expenses

Other Income

268 274

Q1 2013 Q1 2014

24 24

Assets Liabilities and Equity

Cash and cash equivalents 620 Current maturities of Notes payables and loans 333

Trade receivables and other 1,083 Trade payables 719

Inventories 96 Other current liabilities 312

Total Current Assets 1,799 Total Current Liabilities 1,364

Trade receivables and other 442 Long term borrowings 3,136

Property and equipment 1,730 Other liabilities 91

Goodwill 407 Total Long-term Liabilities 3,227

Intangible assets 1,141

Total Long-term Assets 3,720 Equity 928

Total Assets 5,519 Total Liabilities and Equity 5,519

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26 26

•

•

•

•

•

•

•

•

Key benefits:

•

•

•

•

•

27 27

Excellence in

enhancing the

customer

experience

Multi-channel

Policy of

transparency

and fairness

orange™ -

premium

brand

012 – “value

for money”

brand

Comprehensive

value proposition

in the field of

communications,

which includes

cellular, fixed, data

and content

First in

launching

Orange 4G

Developing

growth

engines and

entering new

markets

(wholesale

market, TV

and advanced

products)

Optimizing

synergies

between the

organization’s

units

Network

sharing

agreement

Culture of

constant

improvement

Employee

nurturing

Unique

organizational

culture

28 28

29 29

Ziv Leitman

Elana Holzman

The future is bright. The future is orange™