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Cellcom Company Presentation | 2016 FORWARD LOOKING STATEMENTS - PowerPoint PPT Presentation

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Israel Cellcom Company Presentation | 2016 FORWARD LOOKING STATEMENTS The following information contains, or may be deemed to contain forward-looking statements (as defined in the U.S. Private Securities Litigation Reform Act of 1995 and the

  1. Israel Cellcom Company Presentation | 2016

  2. FORWARD LOOKING STATEMENTS The following information contains, or may be deemed to contain forward-looking statements (as defined in the U.S. Private Securities Litigation Reform Act of 1995 and the Israeli Securities Law, 1968). In some cases, you can identify these statements by forward-looking words such as “may,” “might,” “will,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential” or “continue,” the negative of these terms and other comparable terminology. These forward-looking statements, which are subject to risks, uncertainties and assumptions about us, may include projections of our future financial results, our anticipated growth strategies and anticipated trends in our business. These statements are only predictions based on our current expectations and projections about future events. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements. Factors that could cause such differences include, but are not limited to: changes to the terms of our license, new legislation or decisions by the regulator affecting our operations, the outcome of legal proceedings to which we are a party, particularly class action lawsuits, our ability to maintain or obtain permits to construct and operate cell sites, and other risks and uncertainties detailed from time to time in our filings with the U.S. Securities and Exchange Commission, including under the caption “Risk Factors” in our Annual Report for the year ended December 31, 2016. Although we believe the expectations reflected in the forward-looking statements contained herein are reasonable, we cannot guarantee future results, level of activity, performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. We assume no duty to update any of these forward-looking statements after the date hereof to conform our prior statements to actual results or revised expectations, except as otherwise required by law. 2

  3. 2016 Key Financial Summary In M’Nis 2015 2016 YoY % (M NIS) (M NIS) Total Revenues 4,180 4,027 -3.7% Service Revenues 3,132 3,033 -3.2% Equipment Revenues 1,048 994 -5.2% (1) EBITDA 872 858 -1.6% Net Income 97 150 +54.6% Free Cash Flow 494 416 -15.8% (1) EBITDA for 2015 includes one-time expense in the amount of approximately NIS 30 million as a result of entering a collective employment 3 agreement.

  4. Full end-to-end Service Communications Group Appx. 2.8 2.8 Leading brand in Largest market Mobile million Israel’s mobile market share 27% mobile subs Fixed (1) Appx. 16 163k Appx. 111 111k VOB International line broadband subs TV subs offering Calls (2) & 630 30k ISP subs Residential Independent transmission Internet Security Fixed network line Cloud services Hosting Services Business Transmission Integration services (1) Internet Infrastructure subscribers 4 (2) Internet access subscribers

  5. 2017 Goals  Implementation of the network sharing and hosting agreement with Golan (when owned by Electra) (1)  Offering customers comprehensive telecommunications solutions  Investing in growing engine in mobile services  Continue to grow in Fixed line services (1)  Ongoing Optimization of cost structure 5 (1) Subject to the MOC's approval and the completion of Electra's acquisition of Golan. (2) Internet infrastructure service based on the wholesale market, launched in February 2015

  6. Implementation of the network sharing and hosting agreement with Golan (1)  Agreement for a minimum of 10 years with with an average annual payments of NIS 210-220m per year (starting with lower annual payments and increasing over the term)  Use of the Golan frequencies by the shared network customers  Creates a similar cost structure for all the competitors in the market (1) Subject to the MOC's approval and the completion of Electra's acquisition of Golan 6

  7. Continued growth in Fixed line services  Leading the TV revolution in Israel – In Thousands TV Subscribers offering OTT TV service for 99 Nis 111 99 87 74 63  The most attractive triple play offer in 50 37 20 Israel for 149 Nis Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 (2) Broadband Subscribers  Reaching 7.0% market share in TV in just 163 146 136 (1) two years 120 94 70  40% from wholesale market (5.0% from 32 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 (1) Internet infrastructure market) 7 (1) As of December 2016, based on Bezeq and HOT reports

  8. Ongoing Cutting Costs  Reduction of head count Employee Positions  Dealers commission reduction 7,254 5,435 4,403 3,921  Reduction of advertising and sales 3,645 3,563 promotion expenses 2 2 2 2 3 2 4 2 5 2 6  IT Systems and building maintenance expenses reduction SG&A (M’Nis)  Warranty and repair services expenses 1,676 1,494 reduction 1,287 1,135 1,085 994  Reduction in walk in centers branches and office space 2 2 2 2 3 2 4 2 5 2 6 8

  9. Investing in growth engines in mobile segment IOT  Smart city 360 end-to-end solution  JV with the leading enterprises in this field Streaming Music  Access to a wide variety of music content (with focus on Israeli content) using simple & intuitive interface  Synergy with Cellcom tv Cyber Leading range of solutions for both private and business customers covering varied content  Enables safe surfing and blocking of malicious sites  Delivers leading solutions for protecting end-user equipment 9

  10. Substantial reduction of financial debt (1) Net Debt (M’Nis)  The company substantially reduced the 4,553 3,842 level of financial debt 2,951 2,747 2,547 (2)  Net debt / EBITDA ratio – 2.99 2 2 2 3 2 4 2 5 2 6 (1) The figures are based on company reports for the relevant quarters (2) As of December 2016, Net Debt defined as credit and loans from banks and others and debentures, net of cash and cash equivalents and current investments in tradable securities

  11. Debt Structure As of December 31, 2016 Yield to Series Name Amount Coupon Duration Linkage Maturity Series B 22 5.3 % 0.01 CPI Linked 1.52 % 348 5. 9% 0.50 . 55 % Series D CPI Linked 64 6.25% 0.01 1.98 % Series E Fixed 729 4.6 % 1.70 . 15 % Series F CPI Linked Series G 285 6.99% 1.04 Fixed . 04 % 95 1.98% 4.48 1.98 % Series H CPI Linked 8 4 4.14% 4.65 2.86 % Series I Fixed 103 2.45% 6.58 2.61 % Series J CPI Linked Series K 304 3.55% 6.33 Fixed 3.84 % 2 4.60% 2.74 - Loan A Fixed 140 4.90% 3.13 - Loan B Fixed Total 4,247

  12. Contact us Shlomi Fruhling Chief Financial Officer E-mail: investors@Cellcom.co.il Tel : + 972 52 9989735 Elad Levy Fax: + 972 52 9989700 Investors Relations Manager 2

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