PR Newswire | Nov 25, 2020 02:45AM EST

11/25 01:44 CST

Partner Communications Reports Third Quarter 2020 Results[1]ADJUSTED EBITDA[2] TOTALED NIS 204 MILLIONNET DEBT2 TOTALED NIS 646 MILLION AT QUARTER ENDPARTNER TV SUBSCRIBER BASE TOTALS APPROXIMATELY 229 THOUSAND AS OF TODAYPARTNER'S FIBER OPTIC INFRASTRUCTURE REACHES APPROXIMATELY 700 THOUSAND HOUSEHOLDS ACROSS ISRAEL AS OF TODAY ROSH HA'AYIN, Israel, Nov. 25, 2020

ROSH HA'AYIN, Israel, Nov. 25, 2020 /PRNewswire/ -- Third quarter 2020 highlights (compared with third quarter 2019)

* Total Revenues: NIS 800 million (US$ 232 million), a decrease of 3% * Service Revenues: NIS 631 million (US$ 183 million), a decrease of 4% * Equipment Revenues: NIS 169 million (US$ 49 million), an increase of 1% * Total Operating Expenses (OPEX)2: NIS 475 million (US$ 138 million), approx. unchanged * Adjusted EBITDA2: NIS 204 million (US$ 59 million), a decrease of 9% * Adjusted EBITDA Margin2: 26% of total revenues compared with 27% * Loss for the Period: NIS 5 million (US$ 1 million), a decrease in profit of NIS 12 million * Net Debt: NIS 646 million (US$ 188 million), a decrease of NIS 310 million * Adjusted Free Cash Flow (before interest)2: NIS 21 million (US$ 6 million), an increase of NIS 8 million * Cellular ARPU: NIS 51 (US$ 15), a decrease of 14% * Cellular Subscriber Base: approximately 2.76 million at quarter-end, an increase of 4% * TV Subscriber Base: 224 thousand subscribers at quarter-end, an increase of 48 thousand subscribers since Q3 2019, and an increase of 9 thousand in the quarter

Partner Communications Company Ltd. ("Partner" or the "Company") (NASDAQ: PTNR) (TASE: PTNR), a leading Israeli communications provider, announced today its results for the quarter ended September 30, 2020.

Commenting on the results for the third quarter 2020, Mr. Isaac Benbenisti, CEO of Partner noted:

"Despite the effects of the coronavirus crisis, Partner's results exhibit stability and resilience in the third quarter due to the consistent growth in the fixed-line segment, which contributes to a revenue mix that establishes long-term financial strength.

In the cellular segment, we added 54,000 subscribers, net, in the third quarter, and continued to strengthen customer loyalty. Since the beginning of the year we have added 105,000 subscribers, net, to Partner's cellular services.

In addition, we launched the 5G network and met the coverage goals that entitle us to a grant of tens of millions of shekels that is expected to be received from the Ministry of Communications.

The coronavirus crisis has heightened the awareness of the importance of quality communication services, with an emphasis on stable and fast internet services. In recent months, there has been a significant increase in demand for the Partner Fiber service that provides an ultra-fast internet service over Partner's independent fiber optic network, which already reaches approximately 700 thousand households in 50 cities across the country.

Partner's TV service has approximately 229 thousand subscribers as of today, an addition of over 40 thousand subscribers since the beginning of the year. Most of our TV subscribers subscribe to packages offering a combination of services, thus strengthening Partner's standing as a communications group which offers a variety of communications services among the most advanced in Israel."

Mr. Tamir Amar, Partner's Chief Financial Officer, commented on the results:

"As expected, the continuation of the significant decline in international travel into the third quarter resulted in a material negative impact on the Company's results of operations for the quarter, compared with the Company's normal seasonal trends. And whilst the Company succeeded in substantially mitigating the aforementioned effects through proactive cost cutting measures in a number of areas and also through making adjustments in a variety of business areas, including capitalizing on the increase in demand for some of the Company's services as a result of the crisis and shifting our focus towards alternative sales channels, the overall net impact remained materially negative.

Our cellular subscriber base increased by 54 thousand subscribers, net, during the quarter, including an increase of 33 thousand Post-Paid subscribers, in conjunction with a further decrease in the quarterly churn rate to 7.3% compared with 7.5% in the previous quarter. Since the beginning of the year the cellular subscriber base has increased by 105 thousand subscribers, net. ARPU this quarter totaled NIS 51, unchanged from the previous quarter, and a decrease of NIS 8 compared with the third quarter of 2019, largely reflecting the negative impact of the decrease in roaming revenues due to the coronavirus crisis which significantly reduced international travel. The Company's TV subscriber base increased by 9 thousand during the quarter, the majority of whom also subscribe to the Company's internet services.

Adjusted EBITDA this quarter totaled NIS 204 million, compared with NIS 200 million in the previous quarter, the increase reflecting, among other factors, an increase in service revenues and in gross profit from equipment sales, which were partially offset by the larger reduction of expenses in the second quarter.

Looking ahead, the Company expects that for the fourth quarter of 2020, the near-complete cessation of international travel will continue to have a negative impact, although smaller in scale than in the third quarter, and, in addition, the Company will continue to take proactive cost cutting measures in a number of areas, such that the overall net impact in the fourth quarter is not expected to be material.

Adjusted Free Cash Flow (before interest) totaled NIS 21 million in the third quarter. CAPEX totaled NIS 147 million, with investments also this quarter reflecting the Company's continued efforts to expand the deployment of its fiber optic network and to further penetrate the TV market. These investments continue to be possible as a result of Partner's financial stability and strong balance sheet, and are continuing through the challenging period of the coronavirus crisis.

Net debt stood at NIS 646 million at the end of the third quarter, compared with NIS 956 million at the end of the third quarter 2019, a decrease of NIS 310 million mainly due to the Company's successful equity raise of NIS 276 million, net, in January 2020.

During the third quarter, the Company completed the partial early repayment of its Notes Series F in a total amount of NIS 305 million, which led to one-time expenses of approximately NIS 7 million being recorded under the Company's finance costs, net. In addition, in the third quarter the Company expanded its Notes Series G in a total amount of NIS 300 million. These measures lengthened the duration of the Company's debt.

During the third quarter, we participated in the Ministry of Communications' tender for 5G frequencies and secured the frequencies anticipated, at a price which reflects the lowest cost of all contenders. In addition, in view of the Company's compliance with the qualifying conditions for 5G, the Company, as a partner in the shared cellular radio access network, PHI, is expected to share with another communications group the highest grant among all the communications groups that competed in the tender. In addition, the Company is expected to benefit from a significant discount with respect to the frequency fees, provided that certain conditions are met in accordance with the terms of the tender.

Following enquiries received from a number of potential investors, the Company announced that it is considering the possibility to solicit offers from a potential partner or partners to acquire up to 20% of the rights to use the Company's existing and future fiber optic network for services to private households."

Q3 2020 compared with Q2 2020

NIS Million Q2'20Q3'20Comments

The increase resulted from increases both in cellular Service Revenues 616 631 service revenues and in fixed-line segment service revenues

The increase mainly reflected higher sale volumes due to Equipment Revenues 158 169 the closure of points of sale during the second quarter as a result of the coronavirus crisis

Total Revenues 774 800

Gross profit from equipment sales30 38

OPEX 456 475 The increase mainly reflected the larger reduction of expenses in the second quarter

Adjusted EBITDA 200 204

Profit (Loss) for the Period 7 (5)

Capital Expenditures (additions) 121 179

Adjusted Free Cash Flow (before 44 21 The decrease resulted mainly from an increase in cash interest payments) used in capital expenditures

Net Debt 658 646

Q2'20Q3'20Comments

Cellular Subscribers (end of 2,7082,762Increase of approx. 33 thousand Post-Paid subscribers and period, thousands) 21 thousand Pre-Paid subscribers

Monthly Average Revenue per 51 51 Cellular User (ARPU) (NIS)

Quarterly Cellular Churn Rate (%)7.5% 7.3%

TV Subscribers (end of period, 215 224 thousands)

Key Financial Results

NIS MILLION (except EPS) Q3'19Q3'20 % Change

Revenues 825 800 -3%

Cost of revenues 687 677 -1%

Gross profit 138 123 -11%

Operating profit 26 20 -23%

Profit (Loss) for the period 7 (5)

Earnings (Losses) per share (basic, NIS) 0.04 (0.03)

Adjusted Free Cash Flow (before interest)13 21 +62%

Key Operating Indicators

Q3'19Q3'20Change

Adjusted EBITDA (NIS million) 225 204 -9%

Adjusted EBITDA margin (as a % of total revenues) 27% 26% -1

Cellular Subscribers (end of period, thousands) 2,6512,762+111

Quarterly Cellular Churn Rate (%) 7.7% 7.3% -0.4

Monthly Average Revenue per Cellular User (ARPU) (NIS)59 51 -8

Partner Consolidated Results

Cellular Segment Fixed-Line Segment Elimination Consolidated

NIS Million Q3'19 Q3'20 Change % Q3'19 Q3'20 Change % Q3'19 Q3'20 Q3'19 Q3'20 Change %

Total Revenues 608 549 -10% 258 287 +11% (41) (36) 825 800 -3%

Service Revenues 466 415 -11% 233 252 +8% (41) (36) 658 631 -4%

Equipment Revenues 142 134 -6% 25 35 +40% - - 167 169 +1%

Operating Profit 24 20 -17% 2 0 - - 26 20 -23%

Adjusted EBITDA 170 134 -21% 55 70 +27% - - 225 204 -9%

Financial Review

In Q3 2020, total revenues were NIS 800 million (US$ 232 million), a decrease of 3% from NIS 825 million in Q3 2019.

Service revenues in Q3 2020 totaled NIS 631 million (US$ 183 million), a decrease of 4% from NIS 658 million in Q3 2019.

Service revenues for the cellular segment in Q3 2020 totaled NIS 415 million (US$ 121 million), a decrease of 11% from NIS 466 million in Q3 2019. The decrease was mainly the result of the negative impact of the coronavirus crisis on roaming service revenues and the continued price erosion of cellular services due to the continued competitive market conditions, which were partially offset by an increase in interconnect revenues.

Service revenues for the fixed-line segment in Q3 2020 totaled NIS 252 million (US$ 73 million), an increase of 8% from NIS 233 million in Q3 2019. The increase mainly reflected higher revenues from the growth in internet and TV services, which were partially offset by a decline in revenues from international calling services.

Equipment revenues in Q3 2020 totaled NIS 169 million (US$ 49 million), an increase of 1% from NIS 167 million in Q3 2019, mainly reflecting increased sales of fixed-line equipment, partially offset by a decrease in equipment sales in the cellular segment, largely a result of the adverse impact of the coronavirus crisis on retail customer sales.

Gross profit from equipment sales in Q3 2020 was NIS 38 million (US$ 11 million), compared with NIS 33 million in Q3 2019, an increase of 15%, reflecting both the higher sales volumes and an increase in profit margins as a result of a change in the product mix.

Total operating expenses ('OPEX') totaled NIS 475 million (US$ 138 million) in Q3 2020, an increase of NIS 1 million from Q3 2019, largely reflecting an increase in interconnect expenses and in expenses related to internet services, partially offset by a decrease in payroll and related expenses and other expenses. Including depreciation and amortization expenses and other expenses (mainly amortization of employee share based compensation), OPEX in Q3 2020 decreased by 2% compared with Q3 2019.

Operating profit for Q3 2020 was NIS 20 million (US$ 6 million), a decrease of 23% compared with NIS 26 million in Q3 2019. The decrease mainly resulted from the decrease in Adjusted EBITDA (see Adjusted EBITDA analysis by segment below), partially offset by a decrease in depreciation and amortization expenses.

Adjusted EBITDA in Q3 2020 totaled NIS 204 million (US$ 59 million), a decrease of 9% from NIS 225 million in Q3 2019. As a percentage of total revenues, Adjusted EBITDA in Q3 2020 was 26% compared with 27% in Q3 2019.

Adjusted EBITDA for the cellular segment was NIS 134 million (US$ 39 million), in Q3 2020, a decrease of 21% from NIS 170 million in Q3 2019, largely reflecting the decrease in cellular service revenues mainly as a result of the coronavirus crisis and the increase in interconnect expenses, partially offset by a decrease in various cellular operating expenses including in payroll and related expenses and other cost cutting measures. As a percentage of total cellular segment revenues, Adjusted EBITDA for the cellular segment in Q3 2020 was 24% compared with 28% in Q3 2019.

Adjusted EBITDA for the fixed-line segment was NIS 70 million (US$ 20 million) in Q3 2020, an increase of 27% from NIS 55 million in Q3 2019, mainly reflecting the increase in fixed-line segment service revenues which was partially offset by an increase in fixed-line operating expenses. As a percentage of total fixed-line segment revenues, Adjusted EBITDA for the fixed-line segment in Q3 2020 was 24%, compared with 21% in Q3 2019.

Finance costs, net in Q3 2020 were NIS 24 million (US$ 7 million), an increase of 33% compared with NIS 18 million in Q3 2019. The increase largely reflected one-time expenses in an amount of approximately NIS 7 million relating to the partial early repayment of the Company's Notes Series F during the quarter.

Income tax expenses for Q3 2020 were NIS 1 million (US$ 0.3 million), unchanged from Q3 2019.

Loss in Q3 2020 was NIS 5 million (US$ 1 million), a decrease in profit of NIS 12 million compared with a profit of NIS 7 million in Q3 2019.

Based on the weighted average number of shares outstanding during Q3 2020, basic losses per share or ADS, was NIS 0.03(US$ 0.01), compared with basic earnings per share of NIS 0.04 in Q3 2019.

Cellular Segment Operational Review

At the end of Q3 2020, the Company's cellular subscriber base (including mobile data, 012 Mobile subscribers and M2M subscriptions included on an adjusted basis as described in the Company's annual report) was approximately 2.76 million, including approximately 2.44 million Post-Paid subscribers or 88% of the base, and approximately 325 thousand Pre-Paid subscribers, or 12% of the subscriber base.

During the third quarter of 2020, the cellular subscriber base increased net by approximately 54 thousand. The Post-Paid subscriber base increased by approximately 33 thousand, and the Pre-Paid subscriber base increased by approximately 21 thousand.

Total cellular market share (based on the number of subscribers) at the end of Q3 2020 was estimated to be approximately 26%, compared with 25% at the end of Q3 2019.

The quarterly churn rate for cellular subscribers in Q3 2020 was 7.3%, compared with 7.7% in Q3 2019 and 7.5% in Q2 2020.

The monthly Average Revenue per User ("ARPU") for cellular subscribers in Q3 2020 was NIS 51(US$ 15), a decrease of 14% from NIS 59 in Q3 2019. The decrease resulted from the impact of the coronavirus crisis on roaming service revenues and the continued price erosion of cellular services due to the continued competitive market conditions, which were partially offset by an increase in interconnect revenues.

Funding and Investing Review

In Q3 2020, Adjusted Free Cash Flow (including lease payments) totaled NIS 21 million (US$ 6 million), an increase of 62% compared with NIS 13 million in Q3 2019.

Cash generated from operating activities totaled NIS 207 million (US$ 60 million) in Q3 2020, a decrease of 10% from NIS 230 million in Q3 2019, mainly reflecting the decrease in Adjusted EBITDA.

Lease payments (principal and interest), recorded in cash flows from financing activities under IFRS 16, totaled NIS 39 million (US$ 11 million) in Q3 2020, a decrease of NIS 3 million from NIS 42 million in Q3 2019.

Cash capital expenditures ('CAPEX payments'), as represented by cash flows used for the acquisition of property and equipment and intangible assets, were NIS 147 million (US$ 43 million) in Q3 2020, a decrease of 16% from NIS 174 million in Q3 2019.

Following the receipt of the new 5G frequencies in the third quarter, the cost of the new frequencies was recognized as capital expenditures in intangible assets, to be paid in September 2022 according to the terms of the frequencies tender.

The level of Net Debt at the end of Q3 2020 amounted to NIS 646 million (US$ 188 million), compared with NIS 956 million at the end of Q3 2019, a decrease of NIS 310 million. The decrease mainly reflected the Company's share issuance in January 2020 for which the total net consideration received was approximately NIS 276 million. In addition, during the third quarter, the Company completed the partial early repayment of its Notes Series F in a total amount of NIS 305 million, and expanded its Notes Series G in a total amount of NIS 300 million.

Regulatory Developments

Holdings of approved Israeli shareholders in the Company

The provisions of the Company's cellular license require, among others, that the "founding shareholders or their approved substitutes", as defined in the cellular license, hold at least 26% of the means of control in the Company, including 5% which must be held by Israeli shareholders (Israeli citizens and residents), who were approved as such by the Minister of Communications ("Israeli Shareholders").

On November 12, 2019, the Israeli Ministry of Communications ("MoC") issued a temporary order (ending on November 1, 2020) amending the Company's cellular license and reducing the percentage that the approved Israeli Shareholders are required to hold by the amount of shares now held by the foreign entities (from 5% down to 3.82% of the means of control in the Company).

On October 26, 2020, the MoC extended the term of the abovementioned order (ending on March 1, 2021). This temporary order is expected to allow the MoC and the Company sufficient time in which to resolve the issue of holdings of approved Israeli shareholders in the Company.

Upgrade of Bezeq's infrastructure to VDSL35b Technology

On July 12, 2020, Bezeq reported that the MoC has allowed it make use of VDSL35b Technology, According to Bezeq's report, this technology will allow it to substantially improve internet connection speeds and will allow it to market connections of up to 200 Mbps. Bezeq's report states that the rollout of this new technology is expected to be limited to approximately 230,000 subscribers. According to the MoC's approval, the relevant retail offering may be launched four months after the update to the existing interface with wholesale providers is published by Bezeq. In accordance with the MoC's approval, Bezeq has informed the Company that it launched the VDSL35b Technology. The Launch of this service will allow Bezeq to better respond to FTTH (Fiber to the Home) services offered by the Company, but would also allow the Company to improve the speed of the wholesale infrastructure services it offers, thus improving its TV services.

Hearing regarding a reform in the structure of the Internet Market

The fixed internet access market in Israel was historically divided into two tiers of services: infrastructure services and ISP (internet service provider) service. This split was intended to allow entry of new competitors, which provide services over Bezeq's infrastructure.

On October 4, 2020, the MoC published a hearing regarding a reform in the structure of the Internet Market. The hearing is aimed at ending the split of this segment into two tiers and allowing Bezeq and Hot Telecom to market a unified product (comprised of both infrastructure and ISP components). This proposed reform will not apply to the business sector. According to the hearing document, the proposed reform will enter into force on January 1, 2022 allowing ISPs to prepare for the change in the structure of this market. The Company has filed its position regarding this hearing. The Company agrees with the consumer need for a unified service but has argued that Bezeq and HOT should not be allowed to market this service themselves, but rather through their subsidiaries (which would purchase the infrastructure component at the same prices and terms as all other competitors).

Maximum tariff for wholesale access to BSA service over Bezeq's fiber optic network

Further to the description in the Company's annual report for 2018 regarding policy principles for the deployment of fiber-optic infrastructure in Israel and the public hearing description in the Company's Q2 2019 report, on August 25, 2020 the MoC published its decision regarding the maximum tariff that Bezeq will be allowed to charge for access to the BSA (Bitstream Access) service over Bezeq's fiber optic network. The maximum tariffs have been set as follows - for a line with a speed of up to 550 Mbps the maximum tariff will be NIS 71 per month (excluding VAT) and for aline with a speed of up to 1,100 Mbps the maximum tariff will be NIS 79 per month (excluding VAT). These tariffs shall not include installation fees.These tariffs mark a decrease from the initial tariffs proposed by the MoC in its hearing on this matter (71 NIS for a speed of up to 400 Mbps, and 85 NIS for a speed of up to 1,100 Mbps), however, the proposed tariffs were meant to include installation costs.

Business Developments

On November 9, 2020, Hermetic Trust (1975) Ltd., which serves as a trustee, among others, of the holders of the (Series F) debentures and the (Series G) debentures issued by the Company, informed the Company that the scope of its professional liability insurance coverage totals an amount of NIS 10 million.This notice was given in accordance with the provisions of the Series F and Series G trust deeds, according to which the trustee must update the Company should the insurance amount be reduced below the amount of US$ 8 million for any reason, in order to enable a report to be published on the subject.

Conference Call Details

Partner will hold a conference call on Wednesday, November 25, 2020 at 10.00AM Eastern Time / 5.00PM Israel Time.

To join the call, please dial the following numbers (at least 10 minutes before the scheduled time):

International: +972.3.918.0609North America toll-free: +1.866.860.9642

A live webcast of the call will also be available on Partner's Investors Relations website at: www.partner.co.il/en/Investors-Relations/lobby/

If you are unavailable to join live, the replay of the call will be available fromNovember 25, 2020 until December 9, 2020, at the following numbers:

International: +972.3.925.5925 North America toll-free: +1.888.326.9310

In addition, the archived webcast of the call will be available on Partner's Investor Relations website at the above address for approximately three months.

Forward-Looking Statements

This press release includes forward-looking statements within the meaning of Section 27A of the US Securities Act of 1933, as amended, Section 21E of the US Securities Exchange Act of 1934, as amended, and the safe harbor provisions of the US Private Securities Litigation Reform Act of 1995. Words such as "estimate", "believe", "anticipate", "expect", "intend", "seek", "will", "plan", "could", "may", "project", "goal", "target" and similar expressions often identify forward-looking statements but are not the only way we identify these statements. In particular, this press release communicates our expectation regarding the impact of the continued cessation of international travel on the Company's results of operations for the fourth quarter of 2020 and with respect to the grant amount and/or discounts that the Company will receive due to the frequency tender. In addition, all statements other than statements of historical fact included in this press release regarding our future performance are forward-looking statements. We have based these forward-looking statements on our current knowledge and our present beliefs and expectations regarding possible future events. These forward-looking statements are subject to risks, uncertainties and assumptions, including in particular the grant amount and/or discounts due to the frequency tender and the severity and duration of the impact on our business of the current health crisis, and on the effectiveness of the proactive measures the Company has taken to cut costs. We have also assumed that we will continue to be able to take proactive cost-cutting measures. In light of the current unreliability of predictions as to the ultimate severity and duration of the health crisis, future results may differ materially from those currently anticipated. For further information regarding risks, uncertainties and assumptions about Partner, trends in the Israeli telecommunications industry in general, the impact of current global economic conditions and possible regulatory and legal developments, and other risks we face, see "Item 3. Key Information - 3D. Risk Factors", "Item 4. Information on the Company", "Item 5. Operating and Financial Review and Prospects", "Item 8. Financial Information - 8A. Consolidated Financial Statements and Other Financial Information - 8A.1 Legal and Administrative Proceedings" and "Item 11. Quantitative and Qualitative Disclosures about Market Risk" in the Company's Annual Reports on Form 20-F filed with the SEC, as well as its immediate reports on Form 6-K furnished to the SEC. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

The quarterly financial results presented in this press release are unaudited financial results. The results were prepared in accordance with IFRS, other than the non-GAAP financial measures presented in the section, "Use of Non-GAAP Financial Measures". The preparation of interim condensed consolidated financial statements in conformity with IFRS requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Management based such estimates on historical experience, information available at the time, and assumptions believed to be reasonable under the circumstances and at such time, including the impact of extraordinary events such as the novel coronavirus ("COVID-19"). Actual results could differ from those estimates.

The financial information is presented in NIS millions (unless otherwise stated) and the figures presented are rounded accordingly. The convenience translations of the New Israeli Shekel (NIS) figures into US Dollars were made at the rate of exchange prevailing atSeptember30, 2020: US $1.00 equals NIS 3.441. The translations were made purely for the convenience of the reader.

Use of Non-GAAP Financial Measures

The following non-GAAP measures are used in this report. These measures are not financial measures under IFRS and may not be comparable to other similarly titled measures for other companies. Further, the measures may not be indicative of the Company's historic operating results nor are meant to be predictive of potential future results.

Most Comparable Non-GAAP Calculation IFRS Measure Financial Measure

Profit (Loss) Adjusted add EBITDA Income tax expenses, Finance costs, net, Depreciation and amortization expenses (including amortization of intangible assets, deferred expenses-right of use and impairment charges), Profit (Loss) Other expenses (mainly amortization of share based compensation) Adjusted EBITDA margin Adjusted EBITDA (%) divided by Total revenues

Net cash provided by operating activities add Net cash used in investing activities Net cash provided by deduct operating activities Adjusted Proceeds from (investment in) short-term Free add Cash Flowdeposits, net Net cash used in deduct investing activities Lease principal payments deduct Lease interest payments

Cost of service revenues add Sum of: Selling and marketing expenses Cost of service revenues, Total add Operating Selling and Expenses General and administrative expenses marketing (OPEX) expenses, deduct General and Depreciation and amortization expenses, administrative expenses Other expenses (mainly amortization of employee share based compensation)

Sum of: Current maturities of notes payable and borrowings Current add maturities of notes Notes payable payable and borrowings, add Notes payable, Borrowings from banks Borrowings from add banks, Advances on account of Net Debt Advances on account of notes payables notes payables, add Financial liability at Financial liability at fair value fair value deduct Less Cash and cash equivalents Sum of: deduct Cash and cash equivalents, Short-term deposits Short-term deposits

About Partner Communications

Partner Communications Company Ltd. is a leading Israeli provider of telecommunications services (cellular, fixed-line telephony, internet services and TV services). Partner's ADSs are quoted on the NASDAQ Global Select Market(tm) and its shares are traded on the Tel Aviv Stock Exchange (NASDAQ and TASE: PTNR).

For more information about Partner, see: http://www.partner.co.il/en/Investors-Relations/lobby

Contacts:

Tamir Amar Amir Adar

Chief Financial Officer Head of Investor Relations and Corporate Projects

Tel: +972-54-781-4951 Tel: +972-54-781-5051

E-mail: investors@partner.co.il

PARTNER COMMUNICATIONS COMPANY LTD.

(An Israeli Corporation)

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

Convenience New Israeli Shekels translation into U.S. Dollars

December 31, September 30, September 30,

2019 2020 2020

(Audited) (Unaudited) (Unaudited)

In millions

CURRENT ASSETS

Cash and cash equivalents 299 364 106

Short-term deposits 552 658 191

Trade receivables 624 582 169

Other receivables and prepaid 39 34 10expenses

Deferred expenses - right of use 26 28 8

Inventories 124 109 32

1,664 1,775 516

NON CURRENT ASSETS

Trade receivables 250 235 68

Deferred expenses - right of use 102 111 32

Lease - right of use 582 569 165

Property and equipment 1,430 1,455 424

Intangible and other assets 538 531 154

Goodwill 407 407 118

Deferred income tax asset 41 35 10

Prepaid expenses and other assets 1 9 3

3,351 3,352 974

TOTAL ASSETS 5,015 5,127 1,490

PARTNER COMMUNICATIONS COMPANY LTD.

(An Israeli Corporation)

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION



Convenience New Israeli Shekels translation into U.S. Dollars

December 31,September 30,September 30,

2019 2020 2020

(Audited) (Unaudited) (Unaudited)

In millions

CURRENT LIABILITIES

Current maturities of notes payable and borrowings 367 290 84

Trade payables 716 693 201

Payables in respect of employees 103 79 24

Other payables (mainly institutions) 23 25 7

Income tax payable 30 32 9

Lease liabilities 131 127 37

Deferred revenues from HOT mobile 31 31 9

Other deferred revenues 45 65 19

Provisions 43 33 10

1,489 1,375 400

NON CURRENT LIABILITIES

Notes payable 1,275 1,265 368

Borrowings from banks 138 99 29

Financial liability at fair value 28 14 4

Liability for employee rights upon retirement, net 43 41 12

Lease liabilities 486 474 138

Deferred revenues from HOT mobile 102 79 23

Provisions and other non-current liabilities 37 66 18

2,109 2,038 592



TOTAL LIABILITIES 3,598 3,413 992



EQUITY

Share capital - ordinary shares of NIS 0.01 par value: authorized - December 31, 2019 2 2 1 and September 30, 2020 - 235,000,000 shares; issued and outstanding -

December 31, 2019 - ?*162,915,990 shares

September 30, 2020 - ?*182,736,313 shares

Capital surplus 1,077 1,315 382

Accumulated retained earnings 576 597 173

Treasury shares, at cost December 31, 2019 - *?*8,275,837 shares (238) (58) September 30, 2020 - *?*7,787,618 shares (200)

TOTAL EQUITY 1,417 1,714 498

TOTAL LIABILITIES AND EQUITY 5,015 5,127 1,490

* Net of treasury shares.

** Including restricted shares in amount of 1,247,583 and 940,226 as of December 31, 2019 and September 30, 2020, respectively, held by a trustee under the Company's Equity Incentive Plan, such shares may become outstanding upon completion of vesting conditions.

PARTNER COMMUNICATIONS COMPANY LTD.

(An Israeli Corporation)

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF INCOME

Convenience New Israeli shekels translation into U.S. dollars

9 months period ended 3 months period ended 9 months 3 months period ended period ended September 30, September 30, September 30, September 30,

2019 2020 2019 2020 2020 2020

(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)

In millions (except per share data)

Revenues, net 2,400 2,381 825 800 692 233

Cost of revenues 2,014 1,985 687 677 577 197

Gross profit 386 396 138 123 115 36

Selling and marketing expenses 228 212 78 72 62 21

General and administrative expenses 124 129 42 39 37 11

Other income, net 23 21 8 8 6 2

Operating profit 57 76 26 20 22 6

Finance income 4 4 1 1 1 *

Finance expenses 52 60 19 25 17 7

Finance costs, net 48 56 18 24 16 7

Profit (loss) before income tax 9 20 8 (4) 6 (1)

Income tax expenses (income) (3) 8 1 1 2 *

Profit (loss) for the period 12 12 7 (5) 4 (1)

Attributable to:

Owners of the Company 12 12 7 (5) 4 (1)

Non-controlling interests *

Profit (loss) for the period 12 12 7 (5) 4 (1)

Earnings (losses) per share

Basic 0.07 0.06 0.04 (0.03) 0.02 (0.01)

Diluted 0.07 0.06 0.04 (0.03) 0.02 (0.01)

Weighted average number of shares

outstanding (in thousands)

Basic 162,802 182,183 162,864 182,688 182,183 182,688

Diluted 163,497 182,839 163,505 182,688 182,839 182,688



* Representing an amount of less than 1 million.

PARTNER COMMUNICATIONS COMPANY LTD.

(An Israeli Corporation)

INTERIM CONDENSED CONSOLIDATED STATEMENTS

OF COMPREHENSIVE INCOME

New Israeli shekels Convenience translation into U.S. dollars

9 months 3 months 9 months period ended 3 months period ended period ended period ended September 30, September 30, September 30, September 30,

2019 2020 2019 2020 2020 2020

(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)

In millions

12 12 7 (5) 4 (1)Profit (loss) for the period

Other comprehensive income 1 * for the period, net of income tax

TOTAL COMPREHENSIVE INCOME (LOSS) FOR THE PERIOD 12 13 7 (5) 4 (1)

Total comprehensive income (loss) attributableto:

Owners of the Company 12 13 7 (5) 4 (1)

Non-controlling interests *

TOTAL COMPREHENSIVE INCOME (LOSS) FOR THE PERIOD 12 13 7 (5) 4 (1)

* Representing an amount of less than 1 million.

PARTNER COMMUNICATIONS COMPANY LTD.

(An Israeli Corporation)

INTERIM SEGMENT INFORMATION & ADJUSTED EBITDA RECONCILIATION

New Israeli Shekels New Israeli Shekels

9 months period ended September 30, 2020 9 months period ended September 30, 2019

In millions (Unaudited) In millions (Unaudited)

Cellular Fixed line Elimination Consolidated Cellular Fixed line Elimination Consolidated segment segment segment segment

Segment revenue - Services 1,235 641 1,876 1,348 576 1,924

Inter-segment revenue - Services 12 100 (112) 12 111 (123)

Segment revenue - Equipment 410 95 505 399 77 476

Total revenues 1,657 836 (112) 2,381 1,759 764 (123) 2,400

Segment cost of revenues - Services 960 625 1,585 1,044 601 1,645

Inter-segment cost of revenues - Services 100 12 (112) 111 12 (123)

Segment cost of revenues - Equipment 339 61 400 321 48 369

Cost of revenues 1,399 698 (112) 1,985 1,476 661 (123) 2,014

Gross profit 258 138 396 283 103 386

Operating expenses (3) 227 114 341 253 99 352

Other income, net 15 6 21 17 6 23

Operating profit 46 30 76 47 10 57

Adjustments to presentation of segment

Adjusted EBITDA

-Depreciation and amortization 342 192 418 149

-Other (1) 7 2 14 (2)

Segment Adjusted EBITDA (2) 395 224 479 157

Reconciliation of segment subtotal Adjusted EBITDA to profit for the period

Segments subtotal Adjusted EBITDA (2) 619 636

- Depreciation and amortization (534) (567)

- Finance costs, net (56) (48)

- Income tax income (expenses) (8) 3

- Other (1) (9) (12)

Profit for the period 12 12

PARTNER COMMUNICATIONS COMPANY LTD.

(An Israeli Corporation)

INTERIM SEGMENT INFORMATION & ADJUSTED EBITDA RECONCILIATION



New Israeli Shekels New Israeli Shekels

3 months period ended September 30, 2020 3 months period ended September 30, 2019

In millions (Unaudited) In millions (Unaudited)

CellularFixed lineEliminationConsolidatedCellularFixed lineEliminationConsolidated segment segment segment segment

Segment revenue - Services 411 220 631 462 196 658

Inter-segment revenue - Services 4 32 (36) 4 37 (41)

Segment revenue - Equipment 134 35 169 142 25 167

Total revenues 549 287 (36) 800 608 258 (41) 825

Segment cost of revenues - Services 320 226 546 350 203 553

Inter-segment cost of revenues - Services 32 4 (36) 37 4 (41)

Segment cost of revenues - Equipment 110 21 131 119 15 134

Cost of revenues 462 251 (36) 677 506 222 (41) 687

Gross profit 87 36 123 102 36 138

Operating expenses (3) 72 39 111 84 36 120

Other income, net 5 3 8 6 2 8

Operating profit 20 * 20 24 2 26

Adjustments to presentation of segment Adjusted EBITDA

-Depreciation and amortization 113 68 140 55

-Other (1) 1 2 6 (2)

Segment Adjusted EBITDA (2) 134 70 170 55

Reconciliation of segment subtotal Adjusted EBITDA to profit (loss) for the period

Segments subtotal Adjusted EBITDA(2) 204 225

- Depreciation and amortization (181) (195)

- Finance costs, net (24) (18)

- Income tax expenses (1) (1)

- Other (1) (3) (4)

Profit (loss) for the period (5) 7

* Representing an amount of less than 1 million.

(1) Mainly amortization of employee share based compensation. (2) Adjusted EBITDA as reviewed by the CODM represents Earnings Before Interest (finance costs, net), Taxes, Depreciation and Amortization (including amortization of intangible assets, deferred expenses-right of use and impairment charges) and Other expenses (mainly amortization of share based compensation). Adjusted EBITDA is not a financial measure under IFRS and may not be comparable to other similarly titled measures for other companies. Adjusted EBITDA may not be indicative of the Group's historic operating results nor is it meant to be predictive of potential future results. The usage of the term "Adjusted EBITDA" is to highlight the fact that the Amortization includes amortization of deferred expenses - right of use and amortization of employee share based compensation and impairment charges. (3) Operating expenses include selling and marketing expenses and general and administrative expenses.

PARTNER COMMUNICATIONS COMPANY LTD.

(An Israeli Corporation)

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Convenience translation New Israeli Shekels into U.S. Dollars

9 months period ended September 30,

2019 2020 2020

(Unaudited) (Unaudited) (Unaudited)

In millions

CASH FLOWS FROM OPERATING ACTIVITIES:

Cash generated from operations (Appendix) 660 605 175

Income tax paid (1) (1) *

Net cash provided by operating activities 659 604 175



CASH FLOWS FROM INVESTING ACTIVITIES:

Acquisition of property and equipment (378) (293) (85)

Acquisition of intangible and other assets (124) (124) (36)

Acquisition of a business, net of cash acquired (3)

Investment in short-term deposits, net (156) (106) (31)

Interest received 1 3 1

Consideration received from sales of property 2and equipment

Net cash used in investing activities (658) (520) (151)



CASH FLOWS FROM FINANCING ACTIVITIES:

Lease principal payments (109) (102) (30)

Lease interest payments (15) (13) (4)

Interest paid (21) (42) (12)

Share issuance 276 80

Proceeds from issuance of notes payable, net of 256 412 120issuance costs

Proceeds from issuance of option warrantsexercisable for notes 37

payables

Repayment of notes payable (510) (148)

Repayment of non-current borrowings (39) (39) (11)

Repayment of current borrowings (13)

Settlement of contingent consideration (1) *

Transactions with non-controlling interests (2)

Net cash provided by financing activities 94 (19) (5)

95 65 19

INCREASE IN CASH AND CASH EQUIVALENTS

416 299 87CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

511 364 106CASH AND CASH EQUIVALENTS AT END OF PERIOD

* Representing an amount of less than 1 million.

PARTNER COMMUNICATIONS COMPANY LTD.

(An Israeli Corporation)

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Appendix - Cash generated from operations and supplemental information

Convenience translation New Israeli Shekels into U.S. Dollars

9 months period ended September 30,

2019 2020 2020

(Unaudited) (Unaudited) (Unaudited)

In millions

Cash generated from operations:

Profit for the period 12 12 4

Adjustments for:

Depreciation and amortization 546 511 149

Amortization of deferred expenses 21 23 7- Right of use

Employee share based compensation 13 8 2expenses

Liability for employee rights upon 2 (1) * retirement, net

Finance costs, net 4 (1) (1)

Lease interest payments 15 13 4

Interest paid 21 42 12

Interest received (1) (3) (1)

Deferred income taxes 2 6 2

Income tax paid 1 1 *

Capital loss from property and (2)equipment

Changes in operating assets andliabilities:

Decrease (increase) in accountsreceivable:

Trade 71 57 16

Other (2) 3 1

Increase (decrease) in accounts payable andaccruals:

Trade 28 (14) (4)

Other payables 8 (22) (7)

Provisions (14) (10) (3)

Deferred revenues from HOT (24) (23) (7)mobile

Other deferred revenues 6 20 6

Increase in deferred expenses - Right of (39) (34) (10)use

Current income tax (6) 2 1

Decrease (increase) in (2) 15 4inventories

Cash generated from operations 660 605 175

* Representing an amount of less than 1 million.

At September 30, 2020 and 2019, trade and other payables include NIS 114 million ($33 million) and NIS 133 million, respectively, in respect of acquisition of intangible assets and property and equipment; payments in respect thereof are presented in cash flows from investing activities.

These balances are recognized in the cash flow statements upon payment.

Reconciliation of Non-GAAP Measures:

Adjusted Free Cash Convenience translationFlow New Israeli Shekels into U.S. Dollars

9 months 3 months 9 months period ended 3 months period ended period period ended ended September 30, September 30, September September 30, 30,

2019 2020 2019 2020 2020 2020

(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)

In millions

Net cash providedby operating 659 604 230 207 175 60activities

Net cash used ininvesting (658) (520) (90) (198) (151) (58)

activities

Investment inshort-termdeposits, 156 106 (85) 51 31 15net

Lease principal (109) (102) (37) (35) (30) (10)payments

Lease interest (15) (13) (5) (4) (4) (1)payments

Adjusted Free Cash 33 75 13 21 21 6Flow

Interest paid (21) (42) (1) (9) (12) (3)

Adjusted Free Cash 12 33 12 12 9 3Flow After Interest

Convenience translationTotal Operating Expenses (OPEX) New Israeli Shekels into U.S. Dollars

9 months period ended 3 months period ended 9 months 3 months period ended period ended September 30, September 30, September 30, September 30,

2019 2020 2019 2020 2020 2020

(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)

In millions

Cost of revenues - Services 1,645 1,585 553 546 461 159

Selling and marketing 228 212 78 72 62 21expenses

General and administrative expenses 124 129 42 39 37 11

Depreciation and amortization (567) (534) (195) (181) (156) (53)

Other (12) (1) (4) (1) * *

OPEX 1,418 1,391 474 475 404 138

* Representing an amount of less than 1 million.

Key Financial and Operating Indicators (unaudited) ****

NIS M unless otherwise stated Q3' Q4' Q1' Q2' Q3' Q4' Q1' Q2' Q3' 2018 2019 18 18 19 19 19 19 20 20 20

Cellular Segment Service Revenues 476 447 441 453 466 438 423 409 415 1,8431,798

Cellular Segment Equipment Revenues 143 165 142 115 142 172 146 130 134 643 571

Fixed-Line Segment Service Revenues 220 220 224 230 233 238 245 244 252 852 925

Fixed-Line Segment Equipment Revenues 25 24 28 24 25 26 32 28 35 92 103

Reconciliation for consolidation (42) (42) (41) (41) (41) (40) (39) (37) (36) (171)(163)

Total Revenues 822 814 794 781 825 834 807 774 800 3,2593,234

Gross Profit from Equipment Sales 44 42 39 35 33 37 37 30 38 166 144

Operating Profit* 48 14 9 22 26 30 36 20 20 116 87

Cellular Segment Adjusted EBITDA* 145 119 150 159 170 156 132 129 134 524 635

Fixed-Line Segment Adjusted EBITDA* 56 53 47 55 55 61 83 71 70 198 218

Total Adjusted EBITDA* 201 172 197 214 225 217 215 200 204 722 853

Adjusted EBITDA Margin (%)* 24% 21% 25% 27% 27% 26% 27% 26% 26% 22% 26%

OPEX* 504 502 472 472 474 467 460 456 475 1,9961,885

Finance costs, net* 10 12 14 16 18 20 19 13 24 53 68

Profit (Loss)* 26 19 2 3 7 7 10 7 (5) 56 19

Capital Expenditures (cash) 117 143 185 143 174 127 151 119 147 502 629

Capital Expenditures (additions) 111 177 157 142 150 129 129 121 179 499 578

Adjusted Free Cash Flow 70 (22) (11) 31 13 16 10 44 21 124 49

Adjusted Free Cash Flow (after interest)62 (37) (15) 15 12 0 8 13 12 55 12

Net Debt 898 950 977 965 956 957 673 658 646 950 957

Cellular Subscriber Base (Thousands)** 2,6302,6462,6202,6162,6512,6572,6762,7082,7622,6462,657

Post-Paid Subscriber Base (Thousands)** 2,3332,3612,3402,3372,3662,3662,3802,4042,4372,3612,366

Pre-Paid Subscriber Base (Thousands) 297 285 280 279 285 291 296 304 325 285 291

Cellular ARPU (NIS) 60 57 56 58 59 55 53 51 51 58 57

Cellular Churn Rate (%)** 8.0% 8.5% 8.5% 7.9% 7.7% 7.2% 7.5% 7.5% 7.3% 35% 31%

Number of Employees (FTE)*** 2,8212,7822,8972,8952,9232,8341,8672,7452,7312,7822,834

* Figures from 2019 include impact of adoption of IFRS 16 - Leases (see also report 20-F).

** As from Q4 2018, M2M subscriptions are included in the post-paid subscriber base on a standardized basis. This change had the effect of increasing the Post-Paid subscriber base at December 31, 2018, by approximately 34 thousand subscribers.

*** From 2019, the number of employees (FTE) also includes the number of FTE of PHI on a proportional basis of Partner's share in the subsidiary (50%). Excluding employees on unpaid leave as of March 31, 2020.

****See footnote 2 regarding use of non-GAAP measures.

Disclosure for notes holders as of September 30, 2020

Information regarding the notes series issued by the Company, in million NIS

As of 30.09.2020 Principal repaymentInterest repayment Interest Trustee contact details Original Principal on Annual interestdates dates linkage Seriesissuance the date of rate date issuance Principal Linked principalInterest accumulatedMarket From To book valuebook value in books value

1.228% 25.04.10 400 Hermetic Trust (1975) Ltd. D 218 218 ** 219 30.12.1730.12.21 30.03, 30.06, 30.09, 30.12Variable interest MAKAM (4)Merav Offer. 113 Hayarkon St., 04.05.11*146 Tel Aviv. Tel: 03-5544553. (MAKAM+1.2%)

20.07.17 255 F Hermetic Trust (1975) Ltd. 12.12.17*389 (2) 512 512 3 526 2.16% 25.06.2025.06.24 25.06, 25.12 Not Linked Merav Offer. 113 Hayarkon St.,(3) 04.12.18*150 Tel Aviv. Tel: 03-5544553. 01.12.19*226.75

06.01.19 225 01.07.19*38.5 G 28.11.19*86.5 Hermetic Trust (1975) Ltd. (1) 27.02.20*15.1 762 762 8 849 4% 25.06.2225.06.27 25.06 Not Linked Merav Offer. 113 Hayarkon St.,(2) Tel Aviv. Tel: 03-5544553. 31.05.20*84.8 01.07.20*12.2 02.07.20*300

(1) In April 2019, the Company issued in a private placement 2 series of untradeable option warrants that are exercisable for the Company's Series G debentures. The exercise period of the first series is between July 1, 2019 and May 31, 2020 and of the second series is between July 1, 2020 and May 31, 2021. The Series G debentures that will be allotted upon the exercise of an option warrant will be identical in all their rights to the Company's Series G debentures immediately upon their allotment, and will be entitled to any payment of interest or other benefit, the effective date of which is due after the allotment date. The debentures that will be allotted as a result of the exercise of option warrants will be registered on the TASE. The total amount received by the Company on the allotment date of the option warrants is NIS 37 million. For additional details see the Company's press release dated April 17, 2019. Following exercise of option warrants from the first series, the Company issued Series G Notes in a total principal amount of NIS 225 million. Following exercise of option warrants from the second series in July 2020, the Company issued Series G Notes in a principal amount of NIS 12.2 million. In November 2020 the Company received an advance of NIS 55 million, for which the Company will issue additional Series G Notes in a principal amount of NIS 62 million by the end of November 2020. As of today, the total future considerations expected to the Company in respect of the allotment of the option warrants from the second series (after the exercises of option warrants as described above) and in respect of their full exercise (and assuming that there will be no change to the exercise price) is approximately NIS 23 million.

In July 2020, the Company issued in a private placement additional Series G Notes in a principal amount of NIS 300 million, under the same conditions of the original series.

(2) Regarding Series F and G Notes, the Company is required to comply with a financial covenant that the ratio of Net Debt to Adjusted EBITDA shall not exceed 5. Compliance will be examined and reported on a quarterly basis. For the purpose of the covenant, Adjusted EBITDA is calculated as the sum total for the last 12 month period, excluding adjustable one-time items. As of June 30, 2020, the ratio of Net Debt to Adjusted EBITDA was 0.8. Additional stipulations regarding Series F and G Notes mainly include: shareholders' equity shall not decrease below NIS 400 million and NIS 600 million, respectively; the Company shall not create floating liens subject to certain terms; the Company has the right for early redemption under certain conditions; the Company shall pay additional annual interest of 0.5% in the case of a two-notch downgrade in the Notes rating and an additional annual interest of 0.25% for each further single-notch downgrade, up to a maximum additional interest of 1%; the Company shall pay additional annual interest of 0.25% during a period in which there is a breach of the financial covenant. In any case, the total maximum additional interest for Series F and G, shall not exceed 1.25% or 1%, respectively. For more information see the Company's Annual Report on Form 20-F for the year ended December 31, 2019.

In the reporting period, the Company was in compliance with all financial covenants and obligations and no cause for early repayment occurred.

(3) In July 2020, the Company executed a partial early redemption of Series F Notes in a total principal amount of NIS 305 million. The total amount paid was NIS 313 million.

(4) 'MAKAM' is a variable interest based on the yield of 12 month government bonds issued by the government of Israel. The interest rate is updated on a quarterly basis.

* On these dates additional Notes of the series were issued. The information in the table refers to the full series. ** Representing an amount of less than NIS 1 million.

Disclosure for Notes holders as of September 30, 2020 (cont.)

Notes Rating Details*

Recent Rating as Rating date of Additional ratings between the original issuance date and the recent date of of assignedrating rating (2) SeriesRating 30.09.2020upon as of Companyand issuance30.09.2020 25.11.2020of the and (1) Series 25.11.2020Date Rating

07/2010, 09/2010, 10/2010, 09/2012, ilAA-, ilAA-, ilAA-, ilAA-, 12/2012, 06/2013, 07/2014, 07/2015, ilAA-, ilAA-, ilAA-, ilA+, S&P 07/2016, 07/2017, 08/2018, 11/2018, ilA+, ilA+, ilA+, ilA+, D Maalot ilA+ ilAA- 08/2020 12/2018, 01/2019, 04/2019, 08/2019, ilA+, ilA+, ilA+, ilA+, 02/2020, 05/2020, 06/2020, 07/2020 ilA+, ilA+, ilA+, ilA+ 08/2020 ilA+

07/2017, 09/2017, 12/2017, 01/2018, ilA+, ilA+, ilA+, ilA+, S&P 08/2018, 11/2018, 12/2018, 01/2019, ilA+, ilA+, ilA+, ilA+, F Maalot ilA+ ilA+ 08/2020 04/2019, 08/2019, 02/2020, 05/2020, ilA+, ilA+, ilA+, ilA+ 06/2020, 07/2020, 08/2020 ilA+, ilA+, ilA+

12/2018, 01/2019, 04/2019, 08/2019, ilA+, ilA+, ilA+, ilA+, S&P G (3) Maalot ilA+ ilA+ 08/2020 02/2020, 05/2020, 06/2020, 07/2020 ilA+, ilA+, ilA+, ilA+ 08/2020 ilA+

(1) In August 2020, S&P Maalot has reaffirmed the Company's ilA+ credit rating and updated the Company's rating outlook from "negative" to "stable".

(2) For details regarding the rating of the notes see the S&P Maalot reports dated August 10, 2020.

(3) In January 2019, the Company issued Series G Notes in a principal amount of NIS 225 million. In July 2019, November 2019, February 2020 and May 31, 2020 the Company issued additional Series G Notes in a principal amount of NIS 38.5 million, NIS 86.5 million, NIS 15.1 million and NIS 84.8 million, respectively. In July, 2020, the Company issued additional Series G Notes in a total principal amount of NIS 312.2 million.

* A securities rating is not a recommendation to buy, sell or hold securities. Ratings may be subject to suspension, revision or withdrawal at any time, and each rating should be evaluated independently of any other rating

Summary of Financial Undertakings (according to repayment dates) as of September 30, 2020

a. Notes issued to the public by the Company and held by the public, excluding such notes held by the Company's parent company, by a controlling shareholder, by companies controlled by them, or by companies controlled by the Company, based on the Company's "Solo" financial data (in thousand NIS).

Principal payments Gross interest payments ILS ILS not (without deduction linked linked Euro DollarOtherof tax) to CPI to CPI

First year - 237,130 - - - 43,244

Second year- 313,342 - - - 39,115

Third year - 204,114 - - - 32,962

Fourth year- 204,114 - - - 27,217

Fifth year - 533,487 - - - 51,824 and on

Total - 1,492,187- - - 194,362

b. Private notes and other non-bank credit, excluding such notes held by the Company's parent company, by a controlling shareholder, by companies controlled by them, or by companies controlled by the Company, based on the Company's "Solo" financial data - None.

c. Credit from banks in Israel based on the Company's "Solo" financial data (in thousand NIS).

Principal payments Gross interest payments ILS ILS not (without deduction of linked linked Euro DollarOthertax) to CPI to CPI

First year - 52,132 - - - 3,229

Second year - 52,132 - - - 1,959

Third year - 30,073 - - - 825

Fourth year - 17,080 - - - 213

Fifth year and- - - - - - on

Total - 151,417 - - - 6,226

Summary of Financial Undertakings (according to repayment dates) as of September 30, 2020 (cont.)

d. Credit from banks abroad based on the Company's "Solo" financial data - None.

e. Total of sections a - d above, total credit from banks, non-bank credit and notes based on the Company's "Solo" financial data (in thousand NIS).

Principal payments Gross interest payments ILS ILS not (without deduction of linked linked Euro DollarOthertax) to CPI to CPI

First year - 289,262 - - - 46,473

Second year - 365,474 - - - 41,074

Third year - 234,187 - - - 33,787

Fourth year - 221,194 - - - 27,430

Fifth year and- 533,487 - - - 51,824 on

Total - 1,643,604 - - - 200,588

f. Off-balance sheet Credit exposure based on the Company's "Solo" financial data (in thousand NIS) - 50,000 (Guarantees on behalf of a joint arrangement, without expiration date).

g. Off-balance sheet Credit exposure of all the Company's consolidated companies, excluding companies that are reporting corporations and excluding the Company's data presented in section f above - None.

h. Total balances of the credit from banks, non-bank credit and notes of all the consolidated companies, excluding companies that are reporting corporations and excluding Company's data presented in sections a - d above - None.

i. Total balances of credit granted to the Company by the parent company or a controlling shareholder and balances of notes offered by the Company held by the parent company or the controlling shareholder - None.

j. Total balances of credit granted to the Company by companies held by the parent company or the controlling shareholder, which are not controlled by the Company, and balances of notes offered by the Company held by companies held by the parent company or the controlling shareholder, which are not controlled by the Company - None.

k. Total balances of credit granted to the Company by consolidated companies and balances of notes offered by the Company held by the consolidated companies - None.

In addition to the total credit above, Company's financial debt includes financial liability at fair value in respect of option warrants issued in May 2019. At September 30, 2020, this financial liability totals to an amount of NIS 14 million.

In July 2020, the Company executed a partial early redemption of Series F Notes in a total principal amount of NIS 305 million.

[1]The quarterly financial results are unaudited.

[2]For the definition of this and other Non-GAAP financial measures, see "Use of Non-GAAP Financial Measures" in this press release.

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SOURCE Partner Communications Company Ltd.