Partner Communications Reports Third Quarter 2012 Results

  Partner Communications Reports Third Quarter 2012 Results

   EFFICIENCY MEASURES LED TO A SIGNIFICANT REDUCTION OF NIS 600 MILLION IN
              ANNUAL TERMS^1 OF THE COMPANY’S OPERATING EXPENSES

FREE CASH FLOW^2 THIS QUARTER INCREASED BY 20% COMPARED TO PREVIOUS QUARTER TO
 TOTAL OF NIS 375 MILLION, AFTER INVESTMENT OF NIS 125 MILLION IN THE UPGRADE
                    OF THE NETWORK AND INFORMATION SYSTEMS

   OVER THE PAST 12 MONTHS THE COMPANY HAS REPAID NIS 700 MILLION OF DEBT,
                 INCLUDING NIS 80 MILLION IN THE LAST QUARTER

PARTNER CONTINUES WITH ITS CUSTOMER-CENTRIC STRATEGY AND LEADS IN THE CUSTOMER
SERVICE EXPERIENCE- ARPU IN THE QUARTER WAS NIS 97, THE HIGHEST IN THE ISRAELI
                               CELLULAR MARKET

 THE NETWORK UPGRADE WAS COMPLETED IN MOST AREAS OF THE COUNTRY TO A SPEED OF
42 Mbps AND PARTNER LEADS BY A CONSIDERABLE MARGIN IN BROWSING SPEEDS IN VAST
                          AREAS OVER ITS COMPETITORS

      EBITDA^3 IN THE QUARTER TOTALED NIS 401 MILLION, 30% EBITDA MARGIN

              NET PROFIT IN THE QUARTER TOTALED NIS 110 MILLION

Business Wire

ROSH HA’AYIN, Israel -- November 21, 2012

Partner Communications Company Ltd. (“Partner” or "the Company") (NASDAQ:
PTNR) (TASE: PTNR), a leading Israeli communications operator, announced today
its results for the quarter ending September 30, 2012.

Q3 2012 Highlights (compared with Q3 2011)

  *Total Revenues: NIS 1,315 million (US$ 336 million), a decrease of 25%
  *Service Revenues: NIS 1,150 million (US$ 294 million), a decrease of 16%
  *OPEX: NIS 942 million (US$ 241 million) compared with NIS 1,252 million,
    improved by 25%
  *OPEX excluding equipment^4: NIS 793 million (US $203 million)compared with
    NIS 952 million, improved by 17%
  *Net Debt: NIS 4.1 billion (US$ 1.0 billion), a decrease of NIS 0.6 billion
  *Cellular Subscriber Base: 3.04 million at quarter-end

^1 Annual rate based on comparison of third quarter 2012 to the third quarter
2011.

^2 Free Cash flows from operating activities before interest payments, net of
cash flows used for investing activities.

^3 For definition of EBITDA measure, see “Use of Non-GAAP Financial Measures”
below.

Commenting on the third quarter results, Mr. Haim Romano, Partner's CEO, said:

“The financial results of the third quarter reflect the financial and
operational robustness of Partner. The Company reported a strong free cash
flow for the third quarter after investments, which totaled NIS 375 million,
an increase of 20% compared to the previous quarter. At the same time, we
continue to significantly reduce our financial debt and, in the past year, the
Company has reduced and repaid debt in the amount of NIS 700 million.
Moreover, the operational efficiency measures implemented by the Company over
the past year are yielding good results and, among other things, have led to a
decrease in the operating expenses by approximately NIS 600 million in annual
terms, while improving organizational processes and raising the level of
customer service.

Mr. Haim Romano noted: “In the third quarter, Partner invested NIS 125 million
mainly in the upgrade of major parts of the cellular network to a speed of 42
Mbps, as well as, in preparation for the fourth generation technology and in
vast areas of the country, Partner’s distinct technological advantage is
discernible through the speed of browsing. The Company continues to invest in
the world’s leading IT systems, as well as in the development of digital
channels to enhance the customer experience.”

Mr. Haim Romano emphasized: “We continue to adhere to the strategy of focusing
on the customer and to constantly improve the customer service, with the
understanding that the package price is not the main factor in creating
customer loyalty. We believe that quality service, offering innovative
products and services and an advanced network will enhance and enrich the
customer experience, and strengthen the customer’s attachment and loyalty to
the Company. The Company continues to adhere to the “Clear” policy which does
not prefer new customers over existing customers, even at a cost of a limited
reduction in market share, a concept that reinforces the level of loyalty of
our customers.

Our customer’s satisfaction and loyalty is also reflected in the highest level
of ARPU in the market, despite the increased market competition from a
multiplicity of operators. We believe the Company’s customer service continues
to be the best in the cellular market and, during the third quarter, Orange
was awarded first place among all major cellular operators in Israel in the
’Market-test index for customer experience‘."

Referring to the changes in the telecommunications market, Mr. Haim Romano
said: "At the end of the previous quarter Partner launched the 012 Mobile
brand, which is primarily based on a self-service model through the internet
for customers who want pure cellular network services. We are satisfied with
the enrollment of tens of thousands of customers to 012 Mobile, most of whom
were previously customers of our competitors”.

During the third quarter the operational merger with 012 Smile was completed,
which enhanced Partner’s leadership as a comprehensive communications group
and has increased the value for our customers. During the quarter, the Company
launched bundled service packages offering cellular, fixed line and ISP
services, which have been very successful.

In conclusion, Mr. Haim Romano said: "The financial and operational robustness
of the Company, its significant core strengths and competitive ability to
quickly adapt to the changing reality, in addition to our consistent
investment in innovative growth engines, affirms our position as leaders in
the telecommunications market.”

^4 Operating expenses including cost of service revenues, selling, marketing
and administrative expenses and excluding depreciation and amortization.

Mr. Ziv Leitman, Partner's Chief Financial Officer commented on the quarter
results:

“The financial results of the third quarter compared to the previous quarter
reflect the impact of increasing competition, on the one hand and the
continued impact of the efficiency measures implemented by the Company during
the past year and the seasonality effects, on the other hand.

The Company reported this quarter a strong free cash flow (after interest
payments), which totaled NIS 310 million. The cash flow was positively
affected by the decrease in working capital, following a decrease in equipment
sales and the relatively high proportion of equipment sales by credit card and
cash. Assuming these trends continue, the decrease in working capital is
expected to continue, which should positively affect the free cash flow in the
coming quarters.

Despite the fierce competition in the cellular market the Company succeeded 
this quarter in maintaining an ARPU level which totaled NIS 97, the highest in
the cellular market, compared with NIS 101 in the previous quarter. The ARPU
was mainly affected by the continued price erosion and the transition of
customers to unlimited packages, which was partially offset by seasonal
roaming revenues. The high ARPU reflects the Company's strategy to find a
balance between a high ARPU level and market share, in part as a result of our
refusal to be drawn into a price war, thereby allowing us to maintain high
ARPU. The Company estimates that the level of ARPU for the fourth quarter will
be lower than in the third quarter, as a result of seasonality effects and
continued price erosion in the market.

In the third quarter, the Company continued to implement efficiency measures
while strictly controlling its cost structure. The Company’s operating
expenses (excluding equipment, depreciation and amortization) decreased in the
third quarter by approximately NIS 60 million, a decrease that resulted from
the efficiency measures and one-time decreases in royalty expenses and other
expenses.

The Company continues to adjust its workforce to the changing market
conditions and, in the third quarter, the number of positions was reduced by
approximately 850. In total, from September 2011 until the end of October
2012, the number of positions has been reduced by approximately 2,725
positions, mostly by reducing the level of new recruits. The number of
employees on a FTE basis at the end of October 2012 was 5,863. The Company
will continue in the coming quarters to implement operational efficiency
measures and to reduce operating expenses.

The Company’s investments in fixed assets totaled NIS 125 million in the third
quarter and over the past nine months the Company has invested approximately
NIS 371 million in the network and IT systems. Investments in the fourth
quarter of 2012 are expected to be at a higher level than in the previous
quarters; however, total annual investments will not reach the level of
approximately NIS 650 million that was estimated in the annual forecast for
2012.

The Company's net debt at the end of the quarter totaled NIS 4.1 billion,
reflecting a decrease of approximately NIS 600 million over the past year. The
company intends to use its strong cash flow and to take measures to reduce the
level of net debt by an additional amount of approximately NIS 800 million. In
light of the decreasing net debt trend, the Company took measures in recent
months to reduce the financing costs including, among others, early repayment
of bank loans, a significant reduction in our unused credit facility and the
adoption of a buy-back plan of bonds.”

Key Financial and Operating Indicators^5

                                                      Q3’12  Q3’11  Change
Revenues (NIS millions)                                1,315  1,751  -25%
Operating Expenses^6                                    942     1,252   -25%
Operating Profit (NIS millions)                         217     314     -31%
Net Profit (NIS millions)                               110     172     -36%
Free Cash Flow (NIS millions)                          375    376    -
EBITDA (NIS millions)                                   401     529     -24%
EBITDA Margin (%)                                       30%     30%     -
Cellular Subscribers (end of period, thousands)         3,042   3,201   -5%
Quarterly Cellular Churn Rate (%)                       10.4    7.2     +3.2
Average Monthly Revenue per Cellular Subscriber (NIS)   97      111     -13%
Average Monthly Usage per Cellular Subscriber          457    410    +11%
(minutes)
                                                                        

Partner Consolidated Results

           Cellular Segment        Fixed Line Segment      Elimination    Consolidated
NIS        Q3’12  Q3’11  Change  Q3’12  Q3’11  Change  Q3’12  Q3’11  Q3’12  Q3’11  Change
Millions                    %                        %                                        %
Total       1,049  1,449  -28%     304    347    -12%     (38)   (45)    1,315  1,751  -25%
Revenues
Service     892     1,070   -17%     296     341     -13%     (38)    (45)    1,150   1,366   -16%
Revenues
Equipment   157     379     -59%     8       6       +33%     -       -       165     385     -57%
Revenues
Operating   184     300     -39%     33      14      +136%    -       -       217     314     -31%
Profit
EBITDA     328    447    -27%    73     82     -11%    -      -      401    529    -24%
                                                                                              

^5 See also definitions on first page.

^6 Operating expenses including cost of revenues, selling, marketing and
administrative expenses and excluding depreciation and amortization (NIS
millions)

Financial Review

In Q3 2012, total revenues were NIS 1,315 million (US$ 336 million), a
decrease of 25% from NIS 1,751 million in Q3 2011.

Service revenues in Q3 2012 totaled NIS 1,150 million (US$ 294 million),
decreasing by 16% compared with NIS 1,366 million in Q3 2011.

For the cellular segment, service revenues in Q3 2012 were NIS 892 million
(US$ 228 million), a decrease of 17% from NIS 1,070 million in Q3 2011. The
decrease largely reflected the continuing price erosion of cellular services
including voice and data services, following the entry of new competitors
(MVNO’s and new operators) in the first half of the year, as well as the
continued decrease in revenues from roaming services. The decrease also
reflected the lower postpaid cellular subscriber base which has decreased by
6% on an average basis over the past year. For the fixed line segment, service
revenues totaled NIS 296 million (US$ 76million) in Q3 2012, a decrease of 13%
from NIS 341 million in Q3 2011. The decrease in service revenues for the
fixed line segment mainly reflected the decrease in the average subscriber
base in the fixed line market over the period, as well as price erosion in
fixed line services.

Equipment revenues in Q3 2012 were NIS 165 million (US$ 42 million),
decreasing by 57% from NIS 385 million in Q3 2011. The decrease was due to a
significant reduction in the quantity of cellular equipment sold in Q3 2012
compared with Q3 2011. In line with the second quarter, the main factors that
led to the reduction compared with the parallel quarter included strengthened
competition for handset sales, the Company’s strategy to require more
stringent payment terms, a general decrease in market demand reflecting the
high proportion of smartphones sold last year, and an end to the use of
special discounts for customers with new handsets.

Gross profit totaled NIS 381 million (US$ 97 million) in Q3 2012, decreasing
by 30% compared to NIS 541 million in Q3 2011, principally reflecting the
decrease in gross profit from cellular services and cellular equipment sales.

Operating profit in Q3 2012 was NIS 217 million (US$ 55 million), decreasing
by 31% compared with NIS 314 million in Q3 2011. For the cellular segment,
operating profit decreased by 39%, whereas for the fixed line segment,
operating profit increased by 136%.

EBITDA in  Q3 2012 totaled NIS 401 million (US$ 103 million), a decrease of
24% from NIS 529 million in Q3 2011. The cellular segment contributed EBITDA
of NIS 328 million (US$ 84 million) in Q3 2012, decreasing by 27% from NIS 447
million in Q3 2011. The fixed line segment contributed EBITDA of NIS 73
million (US$ 19 million) in Q3 2012, a decrease of 11% compared with Q3 2011.

Operating expenses (including cost of service revenues, selling, marketing and
administrative expenses and excluding depreciation and amortization) totaled
NIS 793 million (US$ 203 million) in Q3 2012, a decrease of 17% or NIS 159
million from Q3 2011. Operating expenses in Q3 2012 were positively affected
mainly by the efficiency measures implemented by the Company as well as from a
one-time reduction in cellular royalty expenses in an amount of approximately
NIS 20 million, which was recorded following an amendment to the royalty
regulations, as well as a one-time reduction in fixed-line infrastructure
expenses in an amount of approximately NIS 8 million.

Financial expenses, net in Q3 2012 were NIS 68 million (US$ 17 million), a
decrease of 16% compared with NIS 81 million in Q3 2011, mainly reflecting the
lower debt level (see Funding and Investing Review below).

Net profit in Q3 2012 was NIS 110 million (US$ 28 million), a decrease of 36%
from NIS 172 million in Q3 2011. Based on the weighted average number of
shares outstanding during Q3 2012, basic (reported) earnings per share or ADS,
was NIS 0.71 (US$ 0.19), a decrease of 36% compared to NIS 1.11 in Q3 2011.

Funding and Investing Review

In Q3 2012, cash flows generated from operating activities before interest
payments, net of cash flows used for investing activities ("Free Cash Flow")
totaled NIS 375 million (US$ 96 million), approximately no change from NIS376
million in Q3 2011.

Cash generated from operations decreased by 4% from NIS 513 million in Q3 2011
to NIS 491 million (US$ 125 million) in Q3 2012. The decrease was due to the
decrease in net profit, partially offset by a larger decrease in trade
receivables in Q3 2012 than in Q3 2011.Cash generated from operations for Q3
2011 was positively affected by arrangements made by 012 Smile with credit
card companies to advance the billing cycle payments by a number of days.
These arrangements improved operating cash flow by approximately NIS 37
million in Q3 2011.

The level of investment in fixed assets in Q3 2012 including intangible assets
but excluding capitalized subscriber acquisition and retention costs, net, was
NIS 125 million (US$ 32 million), a slight decrease of 5% compared with NIS
132 million in Q3 2011. Investment in the final quarter of 2012 is expected to
be a higher level than in the previous quarters of the year; however, total
annual investments will not reach the level of approximately NIS 650 million
which was provided in the annual 2012 guidance in March 2012. Further to the
Company’s press release in August 2012 regarding the Board of Directors’
resolution to approve a debt Buy-Back plan of the Company’s Notes, the Company
executed a repurchase of Series E Notes in the amount of approximately NIS
650,000 Par value, during the same month. The Notes have subsequently been
cancelled and deleted from trading.

The level of net debt^7 at the end of Q3 2012 was NIS 4.07 billion, compared
with NIS4.64billion at the end of 2011, a decrease of NIS 0.57 billion.

^7 Total current and non-current borrowings less cash and cash equivalents.

Dividend Policy

As the Company reported in its press release and immediate report dated
September 20, 2012, the Board of Directors resolved on September 19, 2012 to
cancel the existing dividend policy for 2012, and to assess dividend
distributions (and their scope) from time to time, by reference to, inter
alia, the Company's cash flow, profitability, debt level, debt coverage ratios
and the business environment in general.

The Board of Directors did not discuss dividend distribution for the third
quarter, and it will be assessed prior to the reporting of the annual
financial statements for 2012.

Business and Regulatory Developments

Regulatory Developments

1. Competition in the Fixed-line telecommunications market

Further to the Company's press release and immediate report dated May 23, 2012
with respect to the increasing competition in the fixed-line
telecommunications market, according to which the Ministry of Communications
published the final policy document regarding this matter on May 2, 2012, the
Company is currently conducting negotiations with Bezeq.

2. Ministry of Communications Hearings

a. Further to the Company's press release and immediate report dated August
14, 2012 with respect to a hearing published regarding to "calling cards for
cellular and international pre-paid calls", the Ministry of Communications
published its decision on August 12, 2012 and determined the following:

i. The manner in which international operators will display the price its
customers that call by using pre-paid calling cards of cellular operators
shall be split and will detail the payment for the international call and the
payment for the interconnect component that is passed onto the cellular
operator.

ii. The calling cards that will be marketed by the cellular operators shall be
marketed in an equal manner towards all of the international operators and all
of the calling cards that will be marketed by the international operators
shall be marketed in an equal manner towards all of the cellular operators -
at a unified and non-discriminatory price in accordance with the type of
subscriber or service.

iii. The cellular operator shall not charge the international operator any
distribution, billing or collection commissions.

b. On September 23, 2012, the Ministry of Communications published a hearing
with respect to roaming during a state of emergency or during a significant
continuous malfunction in which the Ministry of Communications considers
determining that under certain conditions, upon the Minister of Communications
instruction, cellular operators, that have their own network infrastructure,
will be required to provide roaming services to the subscribers of other
cellular operators that have network infrastructure, whose network has been
rendered non-functioning for a significant amount of time following an event
resulting from a state of emergency, a telecommunications crisis or during a
significant continuous malfunction. The Company submitted its response to the
hearing on October 31, 2012.

c. On October 16, 2012, the Ministry of Communications published a hearing
with respect to exemptions from erection and operation permits of Wireless
Local Access Network (WLAN) access points that operate on frequencies set
forth in the Wireless Telegraph Ordinance, according to which the Ministry of
Communications is considering to determine the following:

i. To allow the installation of WLAN access points anywhere and to remove the
existing limitation regarding installations in bordered surroundings only (for
example: cafes, airports, malls etc.).

ii. To allow general and exclusive general licensees for the provision of
domestic fixed-line services to offer its services through the use of WLAN
technology and not to allow Mobile Network Operators (MNOs) licensees or
Mobile Virtual Network Operators (MVNOs) to provide their services through the
same technology.

iii. To determine that the erection and operation of the said access points
shall be exempt from the need to obtain a permit.

Business Developments

1. New Agreement with Apple Distribution International

The Company has entered into a new agreement with Apple Distribution
International for the purchase and resale of iPhone handsets and accessories
in Israel (the "Agreement").

The term of the Agreement is three years, during which Partner has agreed to
purchase a minimum quantity of iPhone handsets per year, which will represent
a significant portion of the Company's expected handset purchases over that
period.

The total cost of the purchases is significant and will depend on the prices
of the handsets and accessories at the time of purchase.

2. Organizational Changes and Changes in Management

During the third quarter, the Company decided on a number of organizational
changes that resulted from an operational efficiency process mandated by the
changing needs of the market. The new structure included the unification of
the Private and the Business Customers Divisions into one Customers Division
under Mr. Avi Cohen, who until now served as VP Business Customers Division;
the dismantling of the Operations Division and the transferring of its
departments to report to the Chief Operating Officer, Mr. Menahem Tirosh, and
to VP Human Resources, Ms. Einat Rom. Ms. Einat Rom, who served until now as
VP Private Customers Division, will replace Mr. Guillermo Codner as VP Human
Resources upon his requested to retire from his office. In addition, Mr.
Shachar Landau, VP Operations, will retire from his office in the next few
months.

Mr. Yacov Kedmi, Head of Marketing, Content & Growth Engines Division, who
rejoined the Company in March 2010 for a pre-defined period of 3 years, will
retire from the Company at the end of this period.

Adv. Roly Klinger has been appointed as VP Legal Affairs, Regulatory and
Business Development as well as Company Secretary, upon her return from a
leave of absence. Adv. Yonit Raviv, who served as interim Legal Counsel and
Company Secretary during Adv. Klinger's absence, will serve as her deputy.

Cellular Segment Financial Review^8

NIS Millions        Q3’12  Q3’11  Change %
Total Revenues      1,049  1,449  -28%
Service Revenues     892     1,070   -17%
Equipment Revenues   157     379     -59%
Operating Profit     184     300     -39%
EBITDA              328    447    -27%
                                     

Total revenues for the cellular segment in Q3 2012 were NIS 1,049 million (US$
268 million), a decrease of 28% from NIS 1,449 million in Q3 2011.

Service revenues for the cellular segment were NIS 892 million (US$ 228
million) in Q3 2012, decreasing by 17% from NIS 1,070 million in Q3 2011. The
decrease mainly reflected the ongoing price erosion of cellular services
including voice, data and roaming services, following the entry of new
competitors in recent months, as described in the results release for Q2 2012.
The decrease also reflected the lower postpaid cellular subscriber base which
has decreased by 6% on an average basis over the past year.

Revenues from  cellular data and content services excluding SMS^9  in Q3 2012
totaled NIS 129 million (US$ 33 million), a decrease of 25% compared with NIS
172 million in Q3 2011. The decrease mainly reflected price erosion of data
and content services including browsing and other services, the lower postpaid
subscriber base, and the impact of new consumer regulations in 2011 which
reduced demand for content services.

SMS service revenues^8 totaled NIS 105 million (US$ 27 million) in Q3 2012, a
decrease of 11% compared with NIS 118 million in Q3 2011. Since over half of
outgoing airtime and content and data (including SMS) revenues is derived from
customers who subscribe to bundled packages which include airtime, data and
SMS, the reporting of data and content service revenues relies heavily on the
allocation of those revenues between the different services offered in the
bundled packages. Since this distinction is not as significant as in the past.
The Company is considering ending the reporting of data and content service
revenues separately in the future.

^8 Includes intersegment revenues and costs of revenues.

^9 In Q4 2011, the Company adjusted its allocation of credits between the
different cellular services. The services revenues for Q3 2011 have been
restated under the new methodology for the purposes of comparison.

In Q3 2012, the gross profit from cellular services totaled NIS 289 million
(US$ 74 million), compared with NIS 384 million in Q3 2011, a decrease of 25%.
This mainly reflected the reduction in cellular service revenues, partially
offset by a reduction in the cost of cellular service revenues. The cost of
cellular service revenues decrease was primarily due to a decrease in payroll
and related expenses and a one-time reduction in cellular royalty expenses in
an amount of approximately NIS 20 million, which was recorded following an
amendment to the royalty regulations, partially offset by an increase in
interconnect expenses as a result of growth in network traffic.

Revenues from cellular equipment sales in Q3 2012 totaled NIS157 million (US$
40 million), decreasing by 59% from NIS 379 million in Q3 2011. The decrease
was due to a significant reduction in the quantity of cellular equipment
(including handsets, modems and laptops etc.) sold in Q3 2012 compared with Q3
2011. In line with the second quarter, the main factors that led to the
reduction compared with the parallel quarter included strengthened competition
for handset sales, increasingly stringent payment terms, a general decrease in
market demand reflecting the high proportion of smartphones sold last year,
and an end to the use of special discounts for customers with new handsets.

The gross profit from cellular equipment sales in Q3 2012 was NIS 16 million
(US$ 4 million), compared with NIS 87 million in Q3 2011, a decrease of 82%.
This was mainly due to the lower quantity of cellular equipment sales, as well
as a decrease in the profit achieved per equipment device sold.

Gross profit for the cellular segment in Q3 2012 totaled NIS 305 million (US$
78 million), a decrease of 35% compared to NIS 471 million in Q3 2011.

Selling, marketing, general and administration expenses for the cellular
segment in Q3 2012 amounted to NIS 148 million (US$ 38 million), decreasing by
26% from NIS 201 million in Q3 2011. The decrease mainly reflected decreases
in payroll and related expenses, selling commissions and marketing and
advertising expenses.

Overall, operating profit for the cellular segment in Q3 2012 was NIS 184
million (US$ 47 million), decreasing by 39% compared with NIS 300 million in
Q3 2011.

EBITDA for the cellular segment totaled NIS 328 million (US$ 84 million) in Q3
2012, a decrease of 27% from NIS 447 million in Q3 2011. As a percentage of
total cellular revenues, EBITDA in Q32012 was 31%, no change from 31% in Q3
2011.

Cellular Segment Operational Review

During the third quarter of 2012, the cellular subscriber base (including
mobile data and 012Mobile subscribers) decreased by approximately 56,000, to
total approximately 3.04 million subscribers at quarter-end. The post-paid
cellular subscriber base, including 012 Mobile and mobile broadband
subscribers, decreased by approximately 53,000 and totaled approximately 2.15
million (71% of the base) at quarter end. The pre-paid subscriber base
decreased by approximately 3,000 and totaled approximately 0.9 million (29% of
the base) at quarter end.

The quarterly churn rate for Q3 2012 was 10.4% compared with 7.2% in Q3 2011
and 8.9% in Q2 2012. Following the trend of the second quarter, the high rate
of churn, primarily due to increased churn in the months of July and August,
largely reflects the impact on postpaid subscribers of the two new cellular
operators which entered the market during the second quarter with aggressive
offerings, and the MVNOs. The churn rate for September was lower than that for
July and August.

Total cellular market share at the end of the third quarter is estimated to be
approximately 30%, compared with 31% at the end of the previous quarter.

The monthly Average Revenue Per User (“ARPU”) for cellular subscribers for Q3
2012 was NIS 97 (US$ 25), a decrease of 13% from NIS 111 in Q3 2011. The
decrease mainly reflects the ongoing price erosion, as described above.

The monthly average Minutes of Use per subscriber (“MOU”) for cellular
subscribers in Q3 2012 was 457 minutes, an increase of 11% from 410 minutes in
Q3 2011. This increase largely reflects the continued increase in the
proportion of cellular subscribers with bundled packages that include large or
unlimited quantities of minutes, and occurred despite the continued increase
in the proportion of mobile broadband and laptop subscribers in the subscriber
base which puts downward pressure on the MOU since such subscribers do not
generate significant airtime use.

Fixed Line Segment Review^10

NIS Millions        Q3’12  Q3’11  Change %
Total Revenues      304    347    -12%
Service Revenues     296     341     -13%
Equipment Revenues   8       6       +33%
Operating Profit     33      14      +136%
EBITDA              73     82     -11%
                                     

^10 The analysis includes intersegment revenues and costs of revenues.

In Q3 2012, total revenues for the fixed line segment was NIS 304 million (US$
78 million) compared with NIS 347 million in Q3 2011, a decrease of 12%.

Fixed line  segment service revenues totaled NIS 296 million (US$ 76 million)
in Q3 2012, a decrease of 13% compared with NIS 341 million in Q3 2011. As
described above, the decrease mainly reflected the decrease in the average
subscriber base in the fixed line market over the period, as well as price
erosion in fixed line services.

The total number of active fixed lines including 012 Smile was approximately
282,000 at the end of Q3 2012, compared with approximately 295,000 at the end
of Q3 2011 and 281,000 and the end of the previous quarter. The ISP subscriber
base was approximately 594,000 as of the end of Q3 2012, compared with
approximately 632,000 at the end of Q3 2011 and 609,000 at the end of the
previous quarter.

Revenues from equipment sales in the fixed line segment in Q3 2012 totaled NIS
8 million (US$ 2 million), compared with NIS 6 million in Q3 2011.

Gross Profit for the fixed line segment was NIS 76 million (US$ 19 million) in
Q3 2012, compared with NIS 70 million in Q3 2011, an increase of 9%. The
increase was attributable to a decrease in the cost of fixed line service
revenues, which more than offset the decrease in service revenues. The
decrease in the cost of service revenues mainly reflected one-time impairment
expenses in Q3 2011 in the amount of NIS 17 million, and a one-time reduction
in fixed-line infrastructure expenses in Q3 2012 in an amount of approximately
NIS 8 million, as well as lower payments made to infrastructure providers and
lower depreciation and amortization expenses.

Selling, marketing, general and administration expenses for the fixed line
segment totaled NIS 44 million (US$ 11 million) in Q3 2012, a decrease of 21%
from NIS 56 million in Q3 2011. The decrease was primarily related to
decreases in salaries and related expenses, and in marketing and advertising
expenses.

Operating profit for the fixed line segment was NIS 33 million (US$ 8 million)
in Q3 2012, an increase of 136% compared to NIS 14 million in Q3 2011. The
increase largely reflected the impact of the decrease in revenues, offset by
the lower depreciation and amortization expenses as well as lower cost of
service revenues and operating expenses, as described above.

EBITDA for the fixed line segment in Q3 2012 totaled NIS 73 million (US$ 19
million), compared with NIS 82 million in Q3 2011, a decrease of 11%, largely
reflecting the impact of the lower service revenues, partially offset by a
reduction in operating expenses. Over than half of the decrease in EBITDA is
due to the change in the inter-segment charging following an adjustment made
to transmission service prices (as reported in Q2 2012).

Conference Call Details

Partner will hold a conference call on Wednesday, November 21, 2012 at 10.00
a.m. Eastern Time / 5.00 p.m. Israel Time.

Please call the following numbers (at least 10 minutes before the scheduled
time) in order to participate: International: +972.3. 918.0609, North America
toll-free: + 1.888.668.9141

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

If you are unavailable to join live, the replay numbers are: International:
+972.3.925.5904,

North America: +1.888.782.4291

Both the replay of the call and the webcast will be available from November
21, 2012 until November 28, 2012.

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
"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. All statements other than statements of historical fact included
in this press release regarding our future performance, plans to increase
revenues or margins or preserve or expand market share in existing or new
markets, plans to reduce expenses, and any statements regarding other future
events or our future prospects, 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
about Partner, consumer habits and preferences in cellular telephone usage,
trends in the Israeli telecommunications industry in general, the impact of
current global economic conditions and possible regulatory and legal
developments. For a description of some of the risks we face, see "Item 3D.
Key Information - Risk  Factors", "Item 4. - Information  on  the  Company",
"Item 5. - Operating  and  Financial  Review  and  Prospects", "Item 8A. -
Consolidated Financial Statements and Other Financial Information - Legal and
Administrative Proceedings" and "Item 11. - Quantitative and Qualitative
Disclosures about Market Risk" in the Company's 2011 Annual Report (20-F)
filed with the SEC on March 22, 2012, as amended on March 26, 2012.  In  light
of  these  risks, uncertainties and assumptions, the forward-looking events
discussed in this press release might not occur, and actual results may differ
materially from the results anticipated. 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 financial results presented in this press release are audited financial
results.

The results were prepared in accordance with IFRS, other than EBITDA and free
cash flow before interest payments, which are non-GAAP financial measures.

The financial information is presented in NIS millions (unless otherwise
stated) and thefigures presented are roundedaccordingly.

The convenience translations of the Nominal New Israeli Shekel (NIS) figures
into US Dollars were made at the rate of exchange prevailing at September 30,
2012: US $1.00 equals NIS 3.912. The translations were made purely for the
convenience of the reader.

Use of Non-GAAP Financial Measures:

Earnings before financial interest, taxes, depreciation, amortization and
exceptional items (including impairment charges) ('EBITDA') is presented
because it is a measure commonly used in the telecommunications industry and
is presented solely to enhance the understanding of our operating results.
This measure, however, should not be considered as an alternative to operating
income or income for the year as indicators of our operating performance.
Similarly, this measure should not be considered as an alternative to cash
flow from operating activities as a measure of liquidity. EBITDA is not a
measure of financial performance under generally accepted accounting
principles and may not be comparable to other similarly titled measures for
other companies. EBITDA may not be indicative of our historic operating
results nor is it meant to be predictive of potential future results.

Reconciliation between our net cash flow from operating activities and EBITDA
on a consolidated basis is presented in the attached summary financial
results.

About Partner Communications

Partner Communications Company Ltd. ("Partner") is a leading Israeli provider
of telecommunications services (cellular, fixed-line telephony and internet
services) under the orange™ brand. The Company provides mobile communications
services to around threemillion subscribers in Israel. Partner’s ADSs are
quoted on the NASDAQ Global Select Market™ and its shares are traded on the
Tel Aviv Stock Exchange (NASDAQ and TASE: PTNR).

Partner provides international long distance services, internet services and
local telecommunication fixed-line services (including telephony services
using VOB) under the 012 Smile brand. 012 Smile is a wholly owned subsidiary
of Partner Communications acquired by Partner Communications on March 3, 2011
(For further details see the press release dated March 3, 2011).

Partner is an approximately 45%-owned subsidiary of Scailex Corporation Ltd.
("Scailex"). Scailex's shares are traded on the Tel Aviv Stock Exchange under
the symbol SCIX and are quoted on "Pink Quote" under the symbol SCIXF.PK.
Scailex currently operates in two major domains of activity in addition to its
holding in Partner: (1) the sole import, distribution and maintenance of
Samsung mobile handset and accessories products primarily to the major
cellular operators in Israel (2) management of its financial assets.

For more information about Scailex, see http://www.scailex.com.

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

                      PARTNER COMMUNICATIONS COMPANY LTD

                           (An Israeli Corporation)

                CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

                                                              Convenience

                              New Israeli shekels           translation into
                                                              U.S.

                                                              dollars
                               September 30,  December 31,   September 30,
                               2012            2011           2012
                               (Unaudited)     (Audited)      (Unaudited)
                               In millions
CURRENT ASSETS
Cash and cash equivalents      600             532            153
Trade receivables              1,420           1,518          363
Other receivables and          48              41             12
prepaid expenses
Deferred expenses - right of   21              19             5
use
Inventories                    101             162            26
Income tax receivable          18              12             5
Derivative financial           7               24             2
instruments
                               2,215           2,308          566
                                                              
NON CURRENT ASSETS
Trade Receivables              608             856            155
Deferred expenses - right of   147             142            38
use
Assets held for employee                       3
rights upon retirement, net
Property and equipment         1,960           2,051          501
Licenses and other             1,220           1,290          312
intangible assets
Goodwill                       407             407            104
Deferred income tax asset      30              30             8
                               4,372           4,779          1,118
                                                              
TOTAL ASSETS                   6,587           7,087          1,684
                                                              

                     PARTNER COMMUNICATIONS COMPANY LTD.

                           (An Israeli Corporation)

                CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

                                                              Convenience

                              New Israeli shekels           translation into
                                                              U.S.

                                                              dollars
                               September 30,  December 31,   September 30,
                               2012            2011           2012
                               (Unaudited)     (Audited)      (Unaudited)
                               In millions
CURRENT LIABILITIES
Current maturities of notes
payable and other              25              498            6
liabilities and current
borrowings
Trade payables                 770             913            197
Parent group - trade           109             142            28
Other payables                 204             216            52
Deferred revenues              40              52             10
Provisions                     59              65             15
Derivative financial           2               3              1
instruments
                               1,209           1,889          309
                                                              
                                                              
NON CURRENT LIABILITIES
Notes payable                  2,633           2,605          673
Bank borrowings                2,014           2,068          515
Liability for employee         48              48             12
rights upon retirement, net
Dismantling and restoring      27              25             7
sites obligation
Other non current              11              10             3
liabilities
Deferred tax liability         7               17             2
                               4,740           4,773          1,212
                                                              
TOTAL LIABILITIES              5,949           6,662          1,521
                                                              
EQUITY
Share capital - ordinary
shares of NIS 0.01

par value: authorized -
December 31, 2011,

and September 30, 2012 -
235,000,000 shares;

issued and outstanding -
December 31, 2011 –
*155,645,708 shares
September 30, 2012 –           2               2              1
*155,645,708 shares
Capital surplus                1,100           1,100          281
Accumulated deficit            (113)           (326)          (29)
Treasury shares, at cost -
December
                              (351)           (351)          (90)
31, 2011 and September 30,
2012 - 4,467,990 shares
TOTAL EQUITY                   638             425            163
TOTAL LIABILITIES AND EQUITY   6,587           7,087          1,684
                                                              

* Net of treasury shares

                         COMMUNICATIONS COMPANY LTD.

                           (An Israeli Corporation)

             INTERIM CONDENSED CONSOLIDATED STATEMENTS OF INCOME

                                                                         Convenience translation
                New Israeli shekels                                    into U.S.

                                                                         dollars
                                                                         9 month       3 month
                 9 month                     3 month                     period        period
                 period ended               period ended                ended        ended
                 September 30                September 30                September     September
                                                                         30,           30,
                 2012         2011          2012         2011          2012          2012
                 (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)
                 In millions (except per share data)
Revenues         4,314         5,409         1,315         1,751         1,103         336
Cost of          3,062         3,699         934           1,210         783           239
revenues
Gross profit     1,252         1,710         381           541           320           97
                                                                                       
Selling and
marketing        435           468           133           172           111           34
expenses
General and
administrative   192           225           59            85            50            15
expenses
Other income -   85            74            28            30            22            7
net
Operating        710           1,091         217           314           181           55
profit
Finance income   17            38            10            22            4             3
Finance          213           277           78            103           54            20
expenses
Finance costs,   196           239           68            81            50            17
net
Profit before    514           852           149           233           131           38
income tax
Income tax       138           221           39            61            35            10
expenses
Profit for the   376           631           110           172           96            28
period
                                                                                       
Earnings per
share
Basic            2.42          4.06          0.71          1.11          0.62          0.19
Diluted          2.42          4.05          0.71          1.10          0.62          0.19
Weighted
average number
of shares
outstanding
(in thousands)
Basic            155,646       155,507       155,646       155,645       155,646       155,646
Diluted          155,662       155,922       155,679       155,726       155,662       155,679
                                                                                       

                     PARTNER COMMUNICATIONS COMPANY LTD.

                           (An Israeli Corporation)

      INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

                                                                        Convenience translation
               New Israeli shekels                                    into U.S.

                                                                        dollars
                                                                        9 month       3 month
                9 month                     3 month                     period        period
                period ended               period ended                ended        ended
                September 30                September 30                September     September
                                                                        30,           30,
                2012         2011          2012         2011          2012          2012
                (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)
                In millions
Profit for      376           631           110           172           96            28
the period
Other
comprehensive
income
                (12)          -             -             -             (3)           -
for the
period, net
of income tax
TOTAL
COMPREHENSIVE   364           631           110           172           93            28
INCOME FOR
THE PERIOD
                                                                                      

                     PARTNER COMMUNICATIONS COMPANY LTD.

                           (An Israeli Corporation)

                             SEGMENT INFORMATION

               New Israeli Shekels                                 New Israeli Shekels
               Nine months ended September 30, 2012                 Nine months ended September 30, 2011
               In millions                                          In millions
                                    Reconciliation                                       Reconciliation
               Cellular   Fixed                                     Cellular   Fixed
               segment   line     for             Consolidated   segment   line     for             Consolidated
                          segment                                              segment
                                    consolidation                                        consolidation
Segment
revenue -      2,784      820                        3,604          3,222      716                        3,938
Services
Inter-segment
revenue -      20         96        (116)                           21         87        (108)
Services
Segment
revenue -      687        23                        710            1,454      17                        1,471
Equipment
Total revenues 3,491      939       (116)            4,314          4,697      820       (108)            5,409
Segment cost
of revenues -  1,787      656                        2,443          1,962      582                        2,544
Services
Inter-segment
cost of        96         20        (116)                           87         21        (108)
revenues-
Services
Segment cost
of revenues -  597        22                        619            1,134      21                        1,155
Equipment
Cost of        2,480      698       (116)            3,062          3,183      624       (108)            3,699
revenues
Gross profit   1,011      241                        1,252          1,514      196                        1,710
Operating      465        162                        627            561        132                        693
expenses
Other income   84         1                          85             74                                   74
Operating      630        80                         710            1,027      64                         1,091
profit
Adjustments to
presentation
of EBITDA
–depreciation
and            420        123                        543            448        146                        594
amortization
–other (1)     8          1                          9              14         1                          15
EBITDA         1,058      204                        1,262          1,489      211                        1,700
Reconciliation
of EBITDA to
profit before
tax
- Depreciation
and                                                  543                                                  594
amortization
- Finance                                            196                                                  239
costs, net
- Other (1)                                          9                                                    15
Profit before                                        514                                                  852
income tax
                                                                                                          

(1) Mainly employee share based compensation expenses

                     PARTNER COMMUNICATIONS COMPANY LTD.

                           (An Israeli Corporation)

                             SEGMENT INFORMATION

               New Israeli Shekels                                 New Israeli Shekels
               Three months ended September 30, 2012                Three months ended September 30, 2011
               In millions                                          In millions
                                    Reconciliation                                       Reconciliation
               Cellular   Fixed                                     Cellular   Fixed
               segment   line     for             Consolidated   segment   line     for             Consolidated
                          segment                                              segment
                                    consolidation                                        consolidation
Segment
revenue -      886        264                        1,150          1,060      306                        1,366
Services
Inter-segment
revenue -      6          32        (38)                            10         35        (45)
Services
Segment
revenue -      157        8                         165            379        6                         385
Equipment
Total revenues 1,049      304       (38)             1,315          1,449      347       (45)             1,751
Segment cost
of revenues –  571        214                        785            651        259                        910
Services
Inter-segment
cost of        32         6         (38)                            35         10        (45)
revenues-
Services
Segment cost
of revenues -  141        8                         149            292        8                         300
Equipment
Cost of        744        228       (38)             934            978        277       (45)             1,210
revenues
Gross profit   305        76                         381            471        70                         541
Operating      148        44                         192            201        56                         257
expenses
Other income   27         1                          28             30                                   30
Operating      184        33                         217            300        14                         314
profit
Adjustments to
presentation
of EBITDA
–depreciation
and            141        40                         181            146        67                         213
amortization
–other (1)     3                                    3              1          1                          2
EBITDA         328        73                         401            447        82                         529
Reconciliation
of EBITDA to
profit before
tax
- Depreciation
and                                                  181                                                  213
amortization
- Finance                                            68                                                   81
costs, net
- Other (1)                                          3                                                    2
Profit before                                        149                                                  233
income tax
                                                                                                          

(1) Mainly employee share based compensation 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 month       3 month
                9 month                     3 month                     period        period
                period ended               period ended                ended        ended
                September 30                September 30                September     September
                                                                        30,           30,
                2012         2011          2012         2011          2012          2012
                (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)
                In millions
CASH FLOWS
FROM
OPERATING
ACTIVITIES:
Cash
generated
from            1,407         1,403         537           581           360           137
operations
(Appendix A)
Income tax      (149)         (253)         (46)          (68)          (38)          (12)
paid
Net cash
provided by     1,258         1,150         491           513           322           125
operating
activities
CASH FLOWS
FROM
INVESTING
ACTIVITIES:
Acquisition
of property     (278)         (247)         (90)          (104)         (71)          (23)
and equipment
Acquisition
of intangible   (99)          (121)         (37)          (36)          (25)          (9)
assets
Acquisition
of 012 smile,
net of cash
acquired of                   (597)

NIS 23
million
(Appendix B)
Interest        6             10            2             5             2             1
received
Consideration
received from
sales of        1                           1                           *             *
property and
equipment
Proceeds from
derivative
financial       23            (2)           8             (2)           6             2
instruments,
net
Net cash used
in investing    (347)         (957)         (116)         (137)         (88)          (29)
activities


CASH FLOWS
FROM
FINANCING
ACTIVITIES:
Proceeds from
exercise of
stock options                 1
granted to
employees
Dividend paid   (160)         (525)         (154)         (210)         (41)          (39)
Proceeds from
non-current                   900
bank
borrowing
Proceeds from
issuance of
notes                         1,136
payable, net
of issuance
costs
Repayment of    (2)           (3)                         (2)           (1)
finance lease
Interest paid   (132)         (152)         (65)          (13)          (34)          (17)
Repayment of
non-current     (155)         (699)         (81)          1             (40)          (21)
bank
borrowings
Repayment of
current                       (128)
borrowings
Repayment of
notes           (394)         (389)         (1)                        (101)         (*)
payables
Net cash
provided by
(used in)       (843)         141           (301)         (224)         (217)         (77)
financing
activities
                                                                                      
INCREASE
(DECREASE) IN   68            334           74            152           17            19
CASH AND CASH
EQUIVALENTS
CASH AND CASH
EQUIVALENTS     532           321           526           503           136           134
AT BEGINNING
OF PERIOD
CASH AND CASH
EQUIVALENTS     600           655           600           655           153           153
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 A - Cash generated from operations and supplemental information

                                                                       Convenience translation
              New Israeli shekels                                    into

                                                                       U.S. dollars
                                                                       9 month       3 month
               9 month                     3 month                     period        period
               period ended               period ended                ended        ended
               September 30                September 30                September     September
                                                                       30,           30,
               2012         2011          2012         2011          2012          2012
               (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)
               In millions
Cash
generated
from
operations:
Profit for     376           631           110           172           96            28
the period
Adjustments
for:
Depreciation
and            524           557           175           189           134           45
amortization
Amortization
of deferred    19            20            7             9             5             2
expenses -
Right of use
Impairment
of                           17                          17
intangible
assets
Employee
share based    9             14            2             1             2             1
compensation
expenses
Liability
for employee
rights upon    (8)           (14)          (5)           (4)           (2)           (1)
retirement,
net
Finance        52            73            22            17            13            5
costs, net
Gain (loss)
from change
in fair
value of       (6)           (10)          7             (19)          (2)           2

derivative
financial
instruments
Interest       132           152           65            13            34            16
paid
Interest       (6)           (10)          (2)           (5)           (2)           (1)
received
Deferred       (11)          (7)           2             (10)          (3)           1
income taxes
Income tax     149           253           46            68            38            12
paid
Capital loss
on sale of                   1                           1
property and
equipment
Changes in
operating
assets and
liabilities:
Decrease
(increase)
in accounts
receivable:
Trade          345           (243)         180           (4)           88            46
Other          (7)           30            6             (2)           (2)           2
Increase
(decrease)
in accounts
payable and
accruals:
Parent         (33)          82            (8)           (26)          (8)           (2)
group- trade
Trade          (128)         (47)          (67)          17            (33)          (17)
Other          (12)          (52)          (34)          53            (3)           (9)
payables
Provisions     (6)           42            (3)           12            (1)           (1)
Deferred       (12)          (2)           (4)                         (3)           (1)
revenue
Increase in
deferred
expenses-                                                1
Adaptors,
net
Increase in
deferred       (25)          (15)          (9)           (4)           (6)           (2)
expenses -
Right of use
Current
income tax     (6)           (24)          (3)           3             (1)           (1)
liability
Decrease
(increase)     61            (45)          50            82            16            12
in
inventories
Cash
generated      1,407         1,403         537           581           360           137
from
operations
                                                                                     

At September 30, 2012 and 2011, trade and other payables include NIS 207
million ($53 million) and NIS123 million in respect of acquisition of
intangible assets and property and equipment, respectively.

                     PARTNER COMMUNICATIONS COMPANY LTD.

                           (An Israeli Corporation)

           INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Appendix B – Acquisition of 012 Smile

 On March 3, 2011, the Company obtained control of 012 Smile. The fair values
         of assets acquired and liabilities assumed were as follows:

                                                              NIS in millions
                                                               (Audited)
Current assets                                                 295
Deferred expenses                                              282
Property and equipment                                         159
Intangible assets                                              408
Goodwill                                                       494
Other non-current assets                                       21
Short term bank borrowings and current maturities of           (201)
long-term loans
Accounts payables and provisions                               (229)
Long term bank borrowings                                      (579)
                                                               650
Less: Advance payment in respect of the acquisition of 012     (30)
smile
Less: cash acquired                                            (23)
Net cash used in the acquisition of 012 Smile                  597
                                                               

                     PARTNER COMMUNICATIONS COMPANY LTD.

                           (An Israeli Corporation)

            RECONCILIATION BETWEEN OPERATING CASH FLOWS AND EBITDA

                                                                      Convenience translation
             New Israeli shekels                                    into U.S.

                                                                      dollars**
                                                                      9 month       3 month
              9 month                     3 month                     period        period
              period ended               period ended                ended        ended
              September 30                September 30                September     September
                                                                      30,           30,
              2012         2011          2012         2011          2012          2012
              (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)
              In millions
                                                                                    
Net cash
provided by   1,258         1,150         491           513           322           125
operating
activities
                                                                                    
Liability
for
employee      8             14            5             4             2             1
rights upon
retirement
Accrued
interest
and
exchange
and linkage   (171)         (212)         (80)          (24)          (44)          (20)
differences
on
long-term
liabilities
Increase
(decrease)
in accounts
receivable:
Trade         (345)         243           (180)         4             (88)          (46)
Other,
including
derivative    38            (5)           (5)           22            10            (1)
financial
instruments
Decrease
(increase)
in accounts
payable and
accruals:
Trade         128           47            67            (17)          33            17
Shareholder
– current     33            (82)          8             26            8             2
account
Other         34            11            33            (65)          9             9
Income tax    149           253           46            68            38            12
paid
Increase
(decrease)    (61)          45            (50)          (82)          (16)          (13)
in
inventories
Increase
(decrease)
in assets     (1)           1             (1)           1             (*)           (*)
retirement
obligation
Financial     192           235           67            79            49            17
expenses***
EBITDA        1,262         1,700         401           529           323           103
                                                                                    

* Representing an amount of less than 1 million

** The convenience translation of the New Israeli Shekel (NIS) figures into US
dollars was made at the exchange prevailing at September 30, 2012: US $1.00
equals 3.912 NIS.

*** Financial expenses excluding any charge for the amortization of pre-launch
financial costs

Key Financial and Operating Indicators^11

NIS M unless     Q1      Q2      Q3      Q4      Q1      Q2      Q3
otherwise       2011   2011   2011   2011   2012   2012   2012   2010   2011
stated
Cellular
Segment         1,099  1,074  1,070  1,005  963    949    892     5,575  4,248
Service
Revenues
Cellular
Segment          555     520     379     294     323     207     157     987     1,748
Equipment
Revenues
Fixed Line
Segment          137     325     341     324     320     300     296     164     1,127
Service
Revenues
Fixed Line
Segment          4       7       6       9       7       8       8       25      26
Equipment
Revenues
Reconciliation
for              -24    -39    -45    -43    -42    -36    -38     -77    -151
consolidation
Total Revenues   1,771   1,887   1,751   1,589   1,571   1,428   1,315   6,674   6,998
                                                                                 
Operating        400     377     314     -55     248     245     217     1,860   1,036
Profit
                                                                                 
Cellular         540     502     447     407     363     367     328     2,558   1,896
Segment EBITDA
Fixed Line       45     84     82     71     75     56     73      12     282
Segment EBITDA
Total EBITDA     585     586     529     478     438     423     401     2,570   2,178
EBITDA Margin    33%     31%     30%     30%     28%     30%     30%     39%     31%
(%)
                                                                                 
OPEX             763     913     952     889     872     853     793     3,382   3,517
                                                                                 
Financial        59      99      81      55      55      73      68      181     294
Expenses, net
Net Profit       254     205     172     -188    146     120     110     1,243   443
Total Dividend   210             140                     160             1,220   350
Declared
Capital          133     75      132     131     133     113     125     395     471
Expenditures
Free Cash Flow   256     158     376     292     223     313     375     1,502   1,082
Free Cash Flow   238     37      363     209     199     270     310     1,384   847
After Interest
                                                                                 
Net Debt         4,856   4,856   4,718   4,639   4,450   4,209   4,072   3,395   4,639
                                                                                 
Cellular
Subscriber       3,149   3,175   3,201   3,176   3,147   3,098   3,042   3,160   3,176
Base
(Thousands)
Cellular ARPU    115     112     111     106     101     101     97      122     111
(NIS)
Cellular MOU     374     396     410     407     424     437     457     366     397
(Minutes)
Cellular Churn   7.3%    6.5%    7.2%    8.2%    8.0%    8.9%    10.4%   21%     29%
Rate (%)
Cellular
Non-SMS          167     170     172     158     157     144     129     638     666
content
revenues
Cellular SMS     108     109     118     122     110     115     105     387     456
revenues
                                                                                 
Fixed Lines
Subscribers      288     292     295     292     285     281     282     69      292
(Thousands)
ISP Subscriber
Base             632     632     632     632     618     609     594     60      632
(Thousands)
                                                                                 
Number of
Employees                   8,588  7,891  7,230  6,961  6,102   6,068  7,891
(FTE)
                                                                                 

^11 See first page for definitions. Including the results of 012 Smile from
March 2011

Contact:

Mr. Ziv Leitman, +972-54-7814951
Chief Financial Officer
investors@orange.co.il
or
Ms. Yaffa Cohen-Ifrah, +972-54-9099039
Head of Investor Relations
Yaffa.cohenifrah@orange.co.il
 
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