Business Wire | Aug 18, 2020 01:54AM EDT

Partner Communications Reports Second Quarter 2020 Results1

Aug. 18, 2020

ROSH HA'AYIN, Israel--(BUSINESS WIRE)--Aug. 18, 2020--Partner Communications Company Ltd. ("Partner" or the "Company") (NASDAQ and TASE: PTNR), a leading Israeli communications provider, announced today its results for the quarter ended June 30, 2020.

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

"The rapid adjustments we have made at Partner to adapt to the coronavirus period are reflected in the results that we publish today.

Partner finished the quarter with a net profit of NIS 7 million, despite the harmful impacts from the restrictions on international travel and the reduced activity in shopping malls. The strengthening of the fixed-line segment and our status as a communications group contributed to our ability to remain stable during this period.

In addition, Partner's financial strength led to an improvement in the outlook of our A+ rating from negative to stable. This change, when the impact of the coronavirus crisis is at its peak, demonstrates our ability to continue to operate in times of uncertainty.

In the business sector, we are focusing our efforts on ensuring our customers' business continuity, as they have expanded the transition to working from home, by implementing the information security systems and cloud services which Partner offers. These changes in business practices, and the need for advanced communication services and infrastructure, support the continued growth in Partner's business sector activities.

In the cellular segment, our subscriber base increased by 32 thousand and the churn rate remained stable at 7.5%. Last month we unveiled Partner 5G - the cellular network which Partner is building with the ability to reach data transfer speeds of 1 Gb/s.

Last week the Company recorded a strategic accomplishment in the frequency auction tender with the acquisition of 4G & 5G frequencies that will enable Partner to offer its retail and business subscribers advanced 5G services.

Partner's independent fiber infrastructure, 'Partner Fiber', reaches today over 657 thousand households across Israel - from Eilat in the south to Naharia in the north, as well as dozens of other cities through the country.

This month we are marking the three-year anniversary of Partner TV, whose subscriber base has grown more than any other TV service in Israel since its launch, and, as of today, reaches over 220 thousand subscribers."

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

"The results for the second quarter of 2020 reflect, on the one hand, the negative impact of the global coronavirus crisis on the Company's revenues and, on the other hand, the Company's agility in quickly adjusting to the changes made, the impact of which largely offset the harmful effects of the crisis.

In the second quarter, we saw the effect of the near-complete cessation of international travel which caused a significant decrease in revenues from roaming services, and the effect of the closure of shopping malls which negatively impacted equipment sales. Nevertheless, the overall impact of the coronavirus crisis on our results in the second quarter 2020 was not significant, owing, among other factors, to the fact that the Company mitigated the impact by cutting costs by temporarily reducing our headcount through putting a significant number of employees on unpaid leave, and by using alternative sales channels to support equipment sales. In addition, we recorded improvements in our fixed-line business performance as a result of the heightened need for fast and stable communications services both in the residential and business sectors.

Despite the restrictions in our operations during part of the quarter, in the cellular segment our subscriber base increased by 32 thousand subscribers, including 24 thousand Post-Paid subscribers, in conjunction with stability in the churn rate, which remained unchanged at 7.5%, reflecting a decline in the churn of Post-Paid subscribers and an increase in the churn of Pre-Paid subscribers. ARPU this quarter totaled NIS 51 compared with NIS 53 in the previous quarter, which reflected the negative impact on roaming revenues of the coronavirus crisis which significantly reduced international travel. In addition, the Company's TV subscriber base increased by 15 thousand subscribers, the majority of whom are also internet subscribers of the Company.

Adjusted EBITDA this quarter totaled NIS 200 million, compared with NIS 215 million in the previous quarter. The decline in Adjusted EBITDA resulted from the refund during the previous quarter of approximately NIS 20 million of surplus payments to Bezeq for access to the wholesale internet infrastructure during the years 2017 to 2019, in accordance with the Ministry of Communications' decision regarding the update of the wholesale market tariffs. Excluding this refund, the Company recorded an increase in Adjusted EBITDA, despite the full quarter impact of the coronavirus crisis compared to only a partial impact in the first quarter, reflecting, among other factors, the Company's cost cutting measures and improvement in performance in a number of the Company's activities.

Adjusted Free Cash Flow (before interest) totaled NIS 44 million in the second quarter. CAPEX totaled NIS 119 million, with investments continuing to reflect 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 have continued through the challenging period of the coronavirus crisis, as we see an increase in the amount of subscribers who are joining our fiber optic infrastructure service, reflecting, among other things, an understanding of the necessity of this product during this period.

The level of net debt at the end of the second quarter stood at NIS 658 million, compared with NIS 965 million at the end of the second quarter 2019, a decrease of NIS 307 million. The decrease mainly reflected the Company's successful equity raise of NIS 276 million, net, in January 2020.

In light of the near-complete cessation of international travel which has caused a significant decrease in revenues from roaming services to date, the Company estimates that continuation in the international travel cessation will result in a material negative impact on the Company's results of operations for the second half of 2020. We estimate that we will be able to partially mitigate the aforementioned material effects through proactive measures the Company has taken, and continues to take, to cut costs and also by improvements in other business parameters, including positive improvements resulting from an increase in demand for the Company's services following the crisis."

Q2 2020 compared with Q1 2020

NIS Million Q1'20 Q2'20 Comments

Service The decrease resulted from a decline in cellularRevenues 629 616 service revenues as a result of the coronavirus crisis

Equipment The decrease mainly reflected lower sale volumes dueRevenues 178 158 to the closure of sale points during April and part of May as a result of the coronavirus crisis

Total Revenues 807 774

Gross profitfrom equipment 37 30 sales

The decrease mainly reflects the savings in OPEX due to cost cutting measures taken to mitigate the coronavirus crisis offset by the refund in the firstOPEX 460 456 quarter from Bezeq of approx. NIS 20 million of surplus payments made in 2017-2019 for access to wholesale internet infrastructure due to MoC decision

Adjusted 215 200 EBITDA

Profit for the 10 7 Period

CapitalExpenditures 129 121 (additions)

Adjusted FreeCash Flow The increase resulted mainly from a decline in cash(before 10 44 flow used in capital expendituresinterestpayments)

Net Debt 673 658

Q1'20 Q2'20 Comments

Cellular Subscribers Increase of approx. 24 thousand Post-Paid(end of period, 2,676 2,708 subscribers and 8 thousand Pre-Paidthousands) subscribers

Monthly Average Revenue The decrease resulted from the decline inper Cellular User 53 51 roaming revenues as a result of the(ARPU) (NIS) coronavirus crisis

Quarterly Cellular The stability reflected a decline inChurn Rate (%) 7.5% 7.5% Post-Paid subscriber churn and an increase in Pre-Paid subscriber churn

TV Subscribers (end of 200 215 period, thousands)

Key Financial Results

NIS MILLION (except EPS) Q2'19 Q2'20 % Change

Revenues 781 774 -1%

Cost of revenues 650 653 0%

Gross profit 131 121 -8%

Operating profit 22 20 -9%

Profit for the period 3 7 +133%

Earnings per share (basic, NIS) 0.02 0.04

Adjusted Free Cash Flow (before interest) 31 44 +42%

Key Operating Indicators

Q2'19 Q2'20 Change

Adjusted EBITDA (NIS million) 214 200 -7%

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

Cellular Subscribers (end of period, thousands) 2,616 2,708 +92

Quarterly Cellular Churn Rate (%) 7.9% 7.5% -0.4

Monthly Average Revenue per Cellular User (ARPU) (NIS) 58 51 -7

Partner Consolidated Results

Cellular Segment Fixed-Line Segment Elimination Consolidated

NIS Q2'19 Q2'20 Change Q2'19 Q2'20 Change Q2'19 Q2'20 Q2'19 Q2'20 ChangeMillion % % %

Total 568 539 -5% 254 272 +7% (41) (37) 781 774 -1%Revenues

Service 453 409 -10% 230 244 +6% (41) (37) 642 616 -4%Revenues

Equipment 115 130 +13% 24 28 +17% - - 139 158 +14%Revenues

Operating 14 13 -7% 8 7 -13% - - 22 20 -9%Profit

Adjusted 159 129 -19% 55 71 +29% - - 214 200 -7%EBITDA

Financial Review

In Q2 2020,total revenues were NIS 774 million (US$ 223 million), a decrease of 1% from NIS 781 million in Q2 2019.

Service revenues in Q2 2020 totaled NIS 616 million (US$ 178 million), a decrease of 4% from NIS 642 million in Q2 2019.

Service revenues for the cellular segment in Q2 2020 totaled NIS 409 million (US$ 118 million), a decrease of 10% from NIS 453 million in Q2 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 Q2 2020 totaled NIS 244 million (US$ 70 million), an increase of 6% from NIS 230 million in Q2 2019. The increase mainly reflected higher revenues from internet and TV services, which were partially offset by a decline in revenues from international calling services.

Equipment revenues in Q2 2020 totaled NIS 158 million (US$ 46 million), an increase of 14% from NIS 139 million in Q2 2019, mainly reflecting increased sales of cellular equipment to wholesale customers, as well as an increase in sales volumes in the fixed-line segment, despite the adverse impact of the coronavirus crisis on retail customer sales.

Gross profit from equipmentsales in Q2 2020 was NIS 30 million (US$ 9 million), compared with NIS 35 million in Q2 2019, a decrease of 14%, largely reflecting lower profit margins as a result of the change in the product mix.

Total operating expenses('OPEX') totaled NIS 456 million (US$ 132 million) in Q2 2020, a decrease of 3% or NIS 16 million from Q2 2019. The decrease mainly reflected a decrease in payroll and related expenses mainly due to employees placed on unpaid leave during April and part of May. In addition, it reflected a decrease in international calling services expenses, a partial refund of rent expenses, and savings in other overhead costs due to the coronavirus crisis and various cost cutting measures implemented by the Company. These decreases were partially offset by an increase in interconnect expenses and in expenses related to internet and television services. Including depreciation and amortization expenses and other expenses (mainly amortization of employee share based compensation), OPEX in Q2 2020 decreased by 5% compared with Q2 2019.

Operating profit for Q2 2020 was 20 million (US$ 6 million), a decrease of 9% compared with NIS 22 million in Q2 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 EBITDAin Q2 2020 totaled NIS 200 million (US$ 58 million), a decrease of 7% from NIS 214 million in Q2 2019. As a percentage of total revenues, Adjusted EBITDA in Q2 2020 was 26% compared with 27% in Q2 2019.

Adjusted EBITDA for the cellular segment was NIS 129 million (US$ 37 million) in Q2 2020, a decrease of 19% from NIS 159 million in Q2 2019, largely reflecting the decrease in cellular service revenues and cellular equipment gross profit mainly as a result of the coronavirus crisis. This decrease was partially offset by a decrease in cellular operating expenses including payroll and related expenses, rent and overheads and other cost cutting measures, partially offset by an increase in interconnect expenses. As a percentage of total cellular segment revenues, Adjusted EBITDA for the cellular segment in Q2 2020 was 24% compared with 28% in Q2 2019.

Adjusted EBITDA for the fixed-line segment was NIS 71 million (US$ 20 million) in Q2 2020, an increase of 29% from NIS 55 million in Q2 2019, mainly reflecting the increase in fixed-line segment service revenues and the cost cutting measures implemented by the Company in order to mitigate the impact of the crisis. As a percentage of total fixed-line segment revenues, Adjusted EBITDA for the fixed-line segment in Q2 2020 was 26%, compared with 22% in Q2 2019.

Finance costs, net in Q2 2020 were NIS 13 million (US$ 4 million), a decrease of 19% compared with NIS 16 million in Q2 2019.

In Q2 2020, no income tax expenses were recorded, compared with NIS 3 million from Q2 2019.

Profitin Q2 2020 was NIS 7 million (US$ 2 million), an increase of 133% compared with a profit of NIS 3 million in Q2 2019.

Based on the weighted average number of shares outstanding during Q2 2020, basic earnings per share or ADS, was NIS 0.04 (US$ 0.01), compared with basic earnings per share of NIS 0.02 in Q2 2019.

Cellular Segment Operational Review

At the end of Q2 2020, the Company's cellular subscriber base (including mobile data, 012 Mobile subscribers and M2M subscriptions included on an adjusted basis) was approximately 2.71 million, including approximately 2.40 million Post-Paid subscribers or 89% of the base, and approximately 304 thousand Pre-Paid subscribers, or 11% of the subscriber base.

During the second quarter of 2020, the cellular subscriber base increased net by approximately 32 thousand. The Post-Paid subscriber base increased by approximately 24 thousand, and the Pre-Paid subscriber base increased by approximately 8 thousand.

Total cellular market share (based on the number of subscribers) at the end of Q2 2020 was estimated to be approximately 25%, unchanged from the end of Q2 2019.

The quarterly churn rate for cellular subscribers in Q2 2020 was 7.5%, compared with 7.9% in Q2 2019 and 7.5% in Q1 2020.

The monthly Average Revenue per User ("ARPU") for cellular subscribers in Q2 2020 was NIS 51 (US$ 15), a decrease of 12% from NIS 58 in Q2 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 Q2 2020, Adjusted Free Cash Flow (including lease payments)totaled NIS 44 million (US$ 13 million), an increase of 42% compared to NIS 31 million in Q2 2019.

Cash generated from operating activities totaled NIS 193 million (US$ 56 million) in Q2 2020, a decrease of 11% from NIS 216 million in Q2 2019, mainly reflecting the decrease in Adjusted EBITDA and a decrease in operating assets and liabilities.

Lease payments (principal and interest), recorded in cash flows from financing activities under IFRS 16, totaled NIS 33 million (US$ 10 million) in Q2 2020, a decrease of NIS 10 million from NIS 43 million in Q2 2019.

Cash capital expenditures ('CAPEX payments'), as represented by cash flows used for the acquisition of property and equipment and intangible assets, were NIS 119 million (US$ 34 million) in Q2 2020, a decrease of 17% from NIS 143 million in Q2 2019.

The level of Net Debt at the end of Q2 2020 amounted to NIS 658 million (US$ 190 million), compared with NIS 965 million at the end of Q2 2019, a decrease of NIS 307 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.

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").

Further to the description in our 2019 Annual Report, on July 7, 2020, the MOC published an amendment to our cellular license which provides that the license terms applicable to Israeli Shareholders may be replaced by an order issued by virtue of section 13 of the Communications Law (Telecommunications and Broadcasting), 1982.

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.

Inter-departmental recommendations on the structural separation provisions applicable to the Bezeq and Hot groups - Further to the description in our 2019 Annual Report, on June 30, 2020, the MOC published the report of the inter-departmental team ("the Team") tasked with examining the structural separation provisions applicable to the Bezeq and Hot groups. After weighing the alternatives, and considering the ramifications of canceling the current provisions - the Team recommended not to cancel the current structural separation provisions at this time. The Team's MOC members are of the opinion that the current provisions applicable to Bezeq have been effective thus far and cancelling them would severely harm competition and the welfare of consumers.

Joint use of fiber optic infrastructure in existing residential buildings - Further to the description in our 2019 Annual Report, on July 7, 2020, the MOC published its decision on the joint use and deployment of fiber optic infrastructure in existing residential buildings. The decision stipulates that the first operator to deploy fiber optic cables in an existing residential building will be required to offer other operators to jointly use those cables in return for them taking part in the costs involved plus a reasonable premium. The first operator to deploy in such buildings will also be required to deploy the infrastructure in such a way as to enable at least one more operator (in addition to the operator/operators who have agreed to joint use of the infrastructure) to jointly use such infrastructure.

Conference Call DetailsPartner will hold a conference call on Tuesday, August 18, 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: +972.3.918.0650 North America toll-free: +1.888.407.2553 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 fromAugust 18, 2020 until September 1, 2020, at the following numbers: International: +972.3.925.5900 North America toll-free: +1.888.782.4291 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 that the continued cessation of international travel will result in a material negative impact on the Company's results of operations for the second half of 2020, but that we will be able to mitigate and partially reduce the effects. 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 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 and on the continuation of the improvements we have experienced in other business parameters, including increases in demand for the Company's services following the crisis. 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 at June 30, 2020: US $1.00 equals NIS 3.466. 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.

Non-GAAP Calculation Most Comparable IFRSMeasure Financial Measure

Profit (Loss)

Adjusted addEBITDA 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 Adjusted EBITDAEBITDAmargin (%) divided by

Total revenues

Net cash provided by operating activities

add

Net cash used in investing activities Net cash provided by operating activities deductAdjusted Free addCash Flow Proceeds from (investment in) short-term deposits, net Net cash used in investing activities deduct

Lease principal payments

deduct

Lease interest payments

Cost of service revenues

add

Selling and marketing expenses Sum of: addTotal Cost of service revenues,Operating General and administrativeExpenses expenses Selling and marketing(OPEX) expenses, deduct General and administrative Depreciation and amortization expenses expenses,

Other expenses (mainly amortization of employee share based compensation)

Current maturities of notes payable and borrowings

add Sum of:

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

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

PARTNER COMMUNICATIONS COMPANY LTD.(An Israeli Corporation) INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION



New Israeli Shekels Convenience translation into U.S. Dollars

December June 30, June 30, 31,

2019 2020 2020

(Audited) (Unaudited) (Unaudited)

In millions

CURRENT ASSETS

Cash and cash equivalents 299 409 118

Short-term deposits 552 607 175

Trade receivables 624 557 161

Other receivables and prepaid 39 38 11expenses

Deferred expenses - right of use 26 28 8

Inventories 124 132 38

1,664 1,771 511



NON CURRENT ASSETS

Trade receivables 250 230 66

Deferred expenses - right of use 102 113 33

Lease - right of use 582 559 161

Property and equipment 1,430 1,438 415

Intangible and other assets 538 508 147

Goodwill 407 407 117

Deferred income tax asset 41 35 10

Prepaid expenses and other assets 1 1 *

3,351 3,291 949



TOTAL ASSETS 5,015 5,062 1,460

* Representing an amount of less than 1 million

PARTNER COMMUNICATIONS COMPANY LTD.(An Israeli Corporation) INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION



Convenience translation New Israeli Shekels into U.S. Dollars

December June 30, June 30, 31,

2019 2020 2020

(Audited) (Unaudited) (Unaudited)

In millions

CURRENT LIABILITIES

Current maturities of notes payable 367 367 106and borrowings

Trade payables 716 664 192

Payables in respect of employees 103 89 26

Other payables (mainly institutions) 23 7 2

Income tax payable 30 31 9

Lease liabilities 131 123 35

Deferred revenues from HOT mobile 31 31 9

Other deferred revenues 45 57 16

Provisions 43 36 10

1,489 1,405 405

NON CURRENT LIABILITIES

Notes payable 1,275 1,169 337

Borrowings from banks 138 112 32

Advances on account of notes payables 11 3

Financial liability at fair value 28 15 5

Liability for employee rights upon 43 41 12retirement, net

Lease liabilities 486 469 135

Deferred revenues from HOT mobile 102 86 25

Provisions and other non-current 37 38 11liabilities

2,109 1,941 560



TOTAL LIABILITIES 3,598 3,346 965



EQUITY

Share capital - ordinary shares of NIS0.01

par value: authorized - December 31,2019 2 2 1

and June 30, 2020 - 235,000,000 shares;

issued and outstanding -

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

June 30, 2020 - ?*182,653,572 shares

Capital surplus 1,077 1,321 381

Accumulated retained earnings 576 599 173

Treasury shares, at cost

December 31, 2019 - *?*8,275,837 (238) (206) (60)shares

June 30, 2020 - *?*7,870,294 shares

TOTAL EQUITY 1,417 1,716 495

TOTAL LIABILITIES AND EQUITY 5,015 5,062 1,460

*Net of treasury shares. **Including restricted shares in amount of 1,247,583 and 888,059 as of and December 31, 2019 and June 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

New Israeli shekels Convenience translation into U.S. dollars

6 months 3 months 6 months period ended 3 months period ended period period June 30, June 30, ended ended

June 30, June 30,

2019 2020 2019 2020 2020 2020

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

In millions (except per share data)

Revenues, net 1,575 1,581 781 774 456 223

Cost of 1,327 1,308 650 653 377 188revenues

Gross profit 248 273 131 121 79 35



Selling andmarketing 150 140 75 69 41 20expenses

General andadministrative 82 90 43 39 26 11expenses

Other income, 15 13 9 7 4 2net

Operating 31 56 22 20 16 6profit

Finance income 3 3 1 4 1 1

Finance 33 35 17 17 10 5expenses

Finance costs, 30 32 16 13 9 4net

Profit before 1 24 6 7 7 2income tax

Income taxexpenses (4) 7 3 * 2 *(income)

Profit for the 5 17 3 7 5 2period

Attributable to:

Owners of the 5 17 3 7 5 2Company

Non-controlling * * interests

Profit for the 5 17 3 7 5 2period



Earnings per share

Basic 0.03 0.09 0.02 0.04 0.03 0.01

Diluted 0.03 0.09 0.02 0.04 0.03 0.01

Weightedaverage numberof shares outstanding (inthousands)

Basic 162,771 181,926 162,812 182,615 181,926 182,615

Diluted 163,364 182,522 163,376 183,161 182,522 183,161



* 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

6 months 3 months 6 months period ended 3 months period ended period period June 30, June 30, ended ended

June 30, June 30,

2019 2020 2019 2020 2020 2020

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

In millions

5 17 3 7 5 2Profit for the period

Othercomprehensiveincome (loss) 1 (1) * *for the period,net of incometax

TOTALCOMPREHENSIVE 5 18 3 6 5 2INCOME FOR THE PERIOD

Totalcomprehensiveincome attributableto:

Owners of the 5 18 3 6 5 2Company

Non-controlling * * interests

TOTALCOMPREHENSIVE 5 18 3 6 5 2INCOME FOR THE PERIOD



* 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

6 months period ended June 30, 2020 6 months period ended June 30, 2019

In millions (Unaudited) In millions (Unaudited)

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

Segmentrevenue - 824 421 1,245 886 380 1,266 Services

Inter-segmentrevenue - 8 68 (76) 8 74 (82) Services

Segmentrevenue - 276 60 336 257 52 309 Equipment

Total revenues 1,108 549 (76) 1,581 1,151 506 (82) 1,575

Segment costof revenues - 640 399 1,039 694 398 1,092 Services

Inter-segmentcost of 68 8 (76) 74 8 (82) revenues -Services

Segment costof revenues - 229 40 269 202 33 235 Equipment

Cost of 937 447 (76) 1,308 970 439 (82) 1,327 revenues

Gross profit 171 102 273 181 67 248

Operating 155 75 230 169 63 232 expenses (3)

Other income, 10 3 13 11 4 15 net

Operating 26 30 56 23 8 31 profit

Adjustments topresentationof segment

AdjustedEBITDA

-Depreciationand 229 124 278 94 amortization

-Other (1) 6 8

SegmentAdjusted 261 154 309 102 EBITDA (2)

Reconciliationof segmentsubtotalAdjusted EBITDA toprofit for theperiod

Segmentssubtotal 415 411 AdjustedEBITDA (2)

- Depreciationand (353) (372) amortization

- Finance (32) (30) costs, net

- Income taxincome (7) 4 (expenses)

- Other (1) (6) (8)

Profit for the 17 5 period

PARTNER COMMUNICATIONS COMPANY LTD.(An Israeli Corporation) INTERIM SEGMENT INFORMATION & ADJUSTED EBITDA RECONCILIATION

New Israeli Shekels New Israeli Shekels

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

In millions (Unaudited) In millions (Unaudited)

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

Segmentrevenue - 405 211 616 449 193 642 Services

Inter-segmentrevenue - 4 33 (37) 4 37 (41) Services

Segmentrevenue - 130 28 158 115 24 139 Equipment

Total revenues 539 272 (37) 774 568 254 (41) 781

Segment costof revenues - 318 207 525 347 199 546 Services

Inter-segmentcost of 33 4 (37) 37 4 (41) revenues -Services

Segment costof revenues - 110 18 128 89 15 104 Equipment

Cost of 461 229 (37) 653 473 218 (41) 650 revenues

Gross profit 78 43 121 95 36 131

Operating 70 38 108 87 31 118 expenses (3)

Other income, 5 2 7 6 3 9 net

Operating 13 7 20 14 8 22 profit

Adjustments topresentationof segment

AdjustedEBITDA

-Depreciationand 114 64 141 47 amortization

-Other (1) 2 4

SegmentAdjusted 129 71 159 55 EBITDA (2)

Reconciliationof segmentsubtotalAdjusted EBITDA toprofit for theperiod

Segmentssubtotal 200 214 AdjustedEBITDA (2)

- Depreciationand (178) (188) amortization

- Finance (13) (16) costs, net

- Income tax * (3) expenses

- Other (1) (2) (4)

Profit for the 7 3 period

* 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









New Israeli Shekels Convenience translation into U.S. Dollars

6 months period ended June 30,

2019 2020 2020

(Unaudited) (Unaudited) (Unaudited)

In millions

CASH FLOWS FROM OPERATING ACTIVITIES:

Cash generated from operations 430 398 115(Appendix)

Income tax paid (1) (1) *

Net cash provided by operating 429 397 115activities

CASH FLOWS FROM INVESTING ACTIVITIES:

Acquisition of property and equipment (247) (192) (55)

Acquisition of intangible and other (81) (78) (23)assets

Investment in short-term deposits, net (241) (55) (16)

Interest received * 3 1

Consideration received from sales of 1 property and equipment

Net cash used in investing activities (568) (322) (93)

CASH FLOWS FROM FINANCING ACTIVITIES:

Lease principal payments (72) (67) (19)

Lease interest payments (10) (9) (3)

Interest paid (20) (33) (10)

Share issuance 276 80

Advances on account of notes payables 34 11 3issuance

Proceeds from issuance of notes 222 88 26payable, net of issuance costs

Proceeds from issuance of optionwarrants exercisable for notes 37 payables

Repayment of notes payable (204) (59)

Repayment of non-current borrowings (26) (26) (8)

Repayment of current borrowings (13)

Settlement of contingent consideration (1) *

Transactions with non-controlling (2) interests

Net cash provided by financing 150 35 10activities

11 110 32 INCREASE IN CASH AND CASH EQUIVALENTS



CASH AND CASH EQUIVALENTS AT BEGINNING 416 299 86

OF PERIOD

427 409 118CASH 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





New Israeli Shekels Convenience translation into U.S. Dollars

6 months period ended June 30,

2019 2020 2020

(Unaudited) (Unaudited) (Unaudited)

In millions



Cash generated from operations:

Profit for the period 5 17 5

Adjustments for:

Depreciation and amortization 358 338 98

Amortization of deferred 14 15 4expenses - Right of use

Employee share based 8 5 1compensation expenses

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

Finance costs, net 11 8 2

Interest paid 20 33 10

Interest received * (3) (1)

Deferred income taxes 1 6 2

Income tax paid 1 1 *

Changes in operating assets and liabilities:

Decrease (increase) in accounts receivable:

Trade 78 87 25

Other (5) 1 *

Increase (decrease) in accounts payable and accruals:

Trade (4) (33) (9)

Other payables (4) (30) (9)

Provisions (9) (7) (2)

Deferred revenues from (16) (16) (5)HOT mobile

Other deferred revenues 4 12 4

Increase in deferred expenses - Right (25) (28) (8)of use

Current income tax (6) 1 *

Decrease (increase) in (2) (8) (2)inventories

Cash generated from operations 430 398 115



* Representing an amount of less than 1 million.

At June 30, 2020 and 2019, trade and other payables include NIS 123 million ($35 million) and NIS 145 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:

AdjustedFree Cash Convenience translationFlow into U.S. Dollars New Israeli Shekels

6 months 3 months 6 months period ended 3 months period ended period period ended ended June 30, June 30, June 30, June 30,

2019 2020 2019 2020 2020 2020

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

In millions

Net cashprovidedby 429 397 216 193 115 56operatingactivities

Net cashprovidedby (usedin) (568) (322) (80) 70 (93) 20investing

activities

Investmentinshort-term 241 55 (62) (186) 16 (54)deposits,net

Leaseprincipal (72) (67) (38) (29) (19) (8)payments

Leaseinterest (10) (9) (5) (4) (3) (1)payments

AdjustedFree Cash 20 54 31 44 16 13Flow

Interest (20) (33) (16) (31) (10) (9)paid

AdjustedFree Cash 0 21 15 13 6 4Flow After Interest



Total OperatingExpenses Convenience translation(OPEX) into U.S. Dollars New Israeli Shekels

6 months 3 months 6 months period ended 3 months period ended period period ended ended June 30, June 30, June 30, June 30,

2019 2020 2019 2020 2020 2020

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

In millions

Cost ofrevenues - 1,092 1,039 546 525 299 152Services

Selling andmarketing 150 140 75 69 41 20expenses

General andadministrative 82 90 43 39 26 11expenses

Depreciationand (372) (353) (188) (178) (102) (51)amortization

Other (1) (8) * (4) 1 * *

OPEX 944 916 472 456 264 132



* Representing an amount of less than 1 million.

(1) Mainly amortization of employee share based compensation.

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

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

CellularSegment 454 476 447 441 453 466 438 423 409 1,843 1,798ServiceRevenues

CellularSegment 157 143 165 142 115 142 172 146 130 643 571EquipmentRevenues

Fixed-LineSegment 210 220 220 224 230 233 238 245 244 852 925ServiceRevenues

Fixed-LineSegment 20 25 24 28 24 25 26 32 28 92 103EquipmentRevenues

Reconciliationfor (44) (42) (42) (41) (41) (41) (40) (39) (37) (171) (163)consolidation

Total Revenues 797 822 814 794 781 825 834 807 774 3,259 3,234

Gross Profitfrom Equipment 37 44 42 39 35 33 37 37 30 166 144Sales

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

CellularSegment 126 145 119 150 159 170 156 132 129 524 635AdjustedEBITDA*

Fixed-LineSegment 46 56 53 47 55 55 61 83 71 198 218AdjustedEBITDA*

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

AdjustedEBITDA Margin 22% 24% 21% 25% 27% 27% 26% 27% 26% 22% 26%(%)*

OPEX* 492 504 502 472 472 474 467 460 456 1,996 1,885

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

Profit* 2 26 19 2 3 7 7 10 7 56 19

CapitalExpenditures 104 117 143 185 143 174 127 151 119 502 629(cash)

CapitalExpenditures 98 111 177 157 142 150 129 129 121 499 578(additions)

Adjusted Free 55 70 (22) (11) 31 13 16 10 44 124 49Cash Flow

Adjusted FreeCash Flow 44 62 (37) (15) 15 12 0 8 13 55 12(afterinterest)

Net Debt 893 898 950 977 965 956 957 673 658 950 957

CellularSubscriber 2,623 2,630 2,646 2,620 2,616 2,651 2,657 2,676 2,708 2,646 2,657Base(Thousands)**

Post-PaidSubscriber 2,323 2,333 2,361 2,340 2,337 2,366 2,366 2,380 2,404 2,361 2,366Base(Thousands)**

Pre-PaidSubscriber 300 297 285 280 279 285 291 296 304 285 291Base(Thousands)

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

Cellular Churn 10.1% 8.0% 8.5% 8.5% 7.9% 7.7% 7.2% 7.5% 7.5% 35% 31%Rate (%)**

Number ofEmployees 2,808 2,821 2,782 2,897 2,895 2,923 2,834 1,867 2,745 2,782 2,834(FTE)***

* 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 June 30, 2020

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

Principal Interest Interest Trustee As of 30.06.2020 repayment dates repayment linkage contact Original Principal Annual dates detailsSeries issuance on the interest date date of Principal Linked Interest rate issuance book principal accumulated Market From To value book in books value value

Hermetic Trust 1.413% 30.03, Variable (1975) Ltd. 25.04.10 400 30.06, interest MeravD 218 218 ** 218 30.12.17 30.12.21 30.09, MAKAM Offer. 113 04.05.11* 146 30.12 (4) Hayarkon (MAKAM+1.2%) St., Tel Aviv. Tel: 03-5544553.

Hermetic 20.07.17 255 Trust (1975) Ltd.F 12.12.17* 389 817 817 ** 831 2.16% 25.06.20 25.06.24 25.06, Not Merav(2) 04.12.18* 150 25.12 Linked Offer. 113(3) Hayarkon 01.12.19* 226.75 St., Tel Aviv. Tel: 03-5544553.

06.01.19 225 Hermetic 01.07.19* 38.5 Trust (1975) Ltd.G 28.11.19* 86.5 Not Merav(1) 27.02.20* 15.1 450 450 ** 480 4% 25.06.22 25.06.27 25.06 Linked Offer. 113(2) Hayarkon 31.05.20* 84.8 St., Tel Aviv. Tel: 01.07.20* 12.2 03-5544553.

02.07.20* 300

* 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. 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 78 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. * 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. * 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. * '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 June 30, 2020 (cont.)

Notes Rating Details*

Rating as Rating Additional ratings of assigned Recent date of between the originalSeries Rating 30.06.2020 upon rating as of issuance date and the Company and issuance of 30.06.2020 and recent date of rating (2) 18.08.2020 the Series 18.08.2020 (1) Date Rating

ilAA-, ilAA-, 07/2010, 09/ ilAA-, 2010, 10/2010, ilAA-, 09/2012, ilAA-, 12/2012, 06/ ilAA-, 2013, 07/2014, ilAA-, 07/2015, ilA+,

07/2016, 07/ ilA+, S&P 2017, 08/2018, ilA+,D Maalot ilA+ ilAA- 08/2020 11/2018, ilA+, ilA+, 12/2018, 01/ 2019, 04/2019, ilA+, 08/2019, ilA+, ilA+, 02/2020, 05/ ilA+, 2020, 06/2020, 07/2020 ilA+, ilA+, 08/2020 ilA+, ilA+

ilA+

ilA+, 07/2017, 09/ ilA+, 2017, 12/2017, ilA+, 01/2018, ilA+,

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

12/2018, 01/ ilA+, 2019, 04/2019, ilA+, 08/2019, ilA+, ilA+,G (3) S&P ilA+ ilA+ 08/2020 02/2020, 05/ Maalot 2020, 06/2020, ilA+, 07/2020 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 June 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 Euro (without deduction of tax) linked to linked to Dollar Other CPI CPI

First - 313,385 - - - 37,648year

Second - 358,377 - - - 31,897year

Third - 249,149 - - - 25,017year

Fourth - 249,149 - - - 18,847year

Fifthyear and - 314,947 - - - 30,595on

Total - 1,485,007 - - - 144,004

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 Euro (without deduction of tax) linked to linked to Dollar Other CPI CPI

First - 52,132 - - - 3,542year

Second - 52,132 - - - 2,282year

Third - 37,426 - - - 1,055year

Fourth - 22,760 - - - 357year

Fifthyear and - - - - - -on

Total - 164,450 - - - 7,236

Summary of Financial Undertakings (according to repayment dates) as of June 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 Euro (without deduction of tax) linked to linked to Dollar Other CPI CPI

First - 365,517 - - - 41,190year

Second - 410,509 - - - 34,179year

Third - 286,575 - - - 26,072year

Fourth - 271,909 - - - 19,204year

Fifthyear and - 314,947 - - - 30,595on

Total - 1,649,457 - - - 151,240

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 June 30, 2020, the financial liability totals to an amount of NIS 15 million. * Advances on account of notes payables in a total amount of NIS 11 million which were issued on July 1, 2020. 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20200817005739/en/

CONTACT: Tamir Amar Chief Financial Officer Tel: +972-54-781-4951

CONTACT: Liat Glazer Shaft Head of Investor Relations and Corporate Projects Tel: +972-54-781-5051 E-mail: investors@partner.co.il