Partner Communications Reports First Quarter 2014 Results1

  Partner Communications Reports First Quarter 2014 Results1

               ADJUSTED EBITDA INCREASED BY NIS 6 MILLION (2%)

             PROFIT FOR THE PERIOD TOTALED NIS 52 MILLION, UP 68%

       NET DEBT TOTALED NIS 2.8 BILLION, A DECREASE OF NIS 773 MILLION

First Quarter 2014 Highlights (compared with first quarter 2013)

  *Total Revenues: NIS 1,103 million (US$ 316 million), a decrease of 4%
  *Service Revenues: NIS 876 million (US$ 251 million), a decrease of 9%
  *Equipment Revenues: NIS 227 million (US$ 65 million), an increase 24%
  *Operating Expenses (OPEX)^2 including cost of equipment sold: NIS 843
    million (US$242million), a decrease of 6%
  *Operating Expenses (OPEX)^2: NIS 661 million (US $190 million), a decrease
    of 8%
  *Adjusted EBITDA^3: NIS 274 million (US$ 79 million), an increase of 2%
  *Adjusted EBITDA Margin: 25% of total revenues compared with 23%
  *Profit for the Period: NIS 52 million (US$ 15 million), an increase of 68%
  *Net Debt^4: NIS 2,849 million (US$ 817 million), a decrease of NIS 773
    million
  *Free Cash Flow (before interest)^5: NIS 145 million (US$ 42 million), a
    decrease of 29%
  *Cellular ARPU: NIS 77 (US$ 22), a decrease of 6%
  *Cellular Subscriber Base: approximately 2.94 million at quarter-end,
    similar to the first quarter of 2013

Business Wire

ROSH HA’AYIN, Israel -- May 14, 2014

Partner Communications Company Ltd. (“Partner” or the “Company”) (NASDAQ and
TASE: PTNR), a leading Israeli communications operator, announced today its
results for the quarter ended March 31, 2014.

Commenting on the quarterly results, Mr. Haim Romano, Partner's CEO, noted:
“The results of the first quarter of 2014 reflect the successful
implementation of our strategic plan. Despite the intensified competition and
price erosion which negatively affected our service revenues, we recorded this
quarter an increase in adjusted EBITDA compared to the same quarter last year,
for the first time since the fourth quarter of 2010. The improvement resulted
from adapting our cost structure to our challenging business reality, as well
as the activity of our Retail Division which contributed to the growth in
equipment sales.

We continue to invest in the most advanced 4G network in Israel and other
innovative technologies, investments which have totaled more than NIS 1
billion in the past two years. Partner is currently the only cellular operator
in Israel that is ready to launch a 4G network. Subject to the Ministry of
Communications' approval, the public in Israel will be able to enjoy the most
advanced 4G technology using the 5 MHz frequency previously allocated to the
Company. In addition, we expect to receive an additional allocation of
frequencies from the Ministry of Communications that will enable us to offer
the full service possible on 4G and 4G advanced networks.

We proved that it is possible to upgrade our customer service concurrently
with implementing operational efficiency measures. Our activities to improve
our quality of service were recognized in the recent customer complaints
report published by the Ministry of Communications and in a report published
by the Israeli Consumer Council, relating to 2013, which show that Partner had
the fewest customer complaints and the fewest justified complaints in relation
to its subscriber base and in comparison to other cellular companies. These
reports, together with other surveys, conducted both internally and by
independent third parties, attest to Partner's leadership position with
respect to quality of service in the cellular market in Israel.

This quarter we added approximately 4,000 Post-Paid subscribers to our
cellular subscriber base. It is the fourth consecutive quarter in which we
have recorded an increase in our Post-Paid subscriber base.

This quarter, the Company was ranked in a BDI COFACE survey for the tenth
consecutive year as the "best company to work for" in the cellular market, a
survey that is based, among other things, on an employee survey. This survey
reflects our employees' satisfaction and trust in the Company. In the past two
years the Company has faced a complicated business reality which included
efficiency measures and a reduction in workforce; however, despite all these
we continued to nurture and invest in our unique corporate culture which
places the employee in the center.

In the near future, the Ministry of Communications is also expected to
announce its decision with respect to the fixed-line wholesale market, a
decision which will likely have a material impact on our plans to expand our
offering to our customers and to the general public, to include television.

We expect to receive during the next quarters the required regulatory
approvals for our network sharing agreement with Hot Mobile, although the full
impact of the agreement on our financial results will only begin in 2015.”

In conclusion, Mr. Romano commented: “Partner's financial strength, which
enabled us to reduce our debt by an additional NIS 100 million since the
beginning of 2014, and the loyalty of our customers and employees drive our
ability to lead and succeed in a competitive market. We will continue to
invest in our principal assets: our customers and employees, and to create
value for our shareholders.”

Mr. Ziv Leitman, Partner's Chief Financial Officer commented on the quarterly
results as compared to the previous quarter:

“During the first quarter of 2014, competition in the cellular market further
intensified, which resulted in a sequential decline in revenues; however, at
the same time, the Company continued to adjust its cost structure and
implement operational efficiency measures which, among other things, led to a
decrease of NIS14million in operating expenses (excluding cost of equipment
sold and depreciation & amortization expenses) compared with the fourth
quarter of 2013.

The cellular subscriber churn rate during the first quarter of 2014 increased
to 11.6% from 10.7% in the previous quarter, as a result of the intensified
competition mentioned above. This is the second consecutive quarter of an
increase in the churn rate following three quarters of declines.

ARPU in the first quarter of 2014 totaled NIS 77, decreasing by NIS 4 compared
with the previous quarter. The decline in ARPU resulted primarily from
continued price erosion of cellular services, a result of the intensified
competition, as well as fewer work days during the quarter and seasonal
effects.

Revenues from equipment sales in the first quarter of the year grew by 11%
compared with the previous quarter, primarily resulting from an increase in
sales of tablets and the commercial efforts of the recently established Retail
Division. Gross profit from equipment sales in the first quarter of 2014
increased by NIS 26 million, primarily due to sourcing activities and the
commercial policies of the Retail Division.

Adjusted EBITDA decreased by NIS 8 million in the first quarter of 2014
compared with the previous quarter, largely a result of the decline in
cellular service revenues, partially offset by the increase in gross profit
from equipment sales and the decline in operating expenses.

Finance costs, net, in this quarter decreased from the previous quarter by NIS
14 million, mainly due to a decline in CPI linkage expenses and the one-time
bank loans repayment fee of NIS 8 million which was recorded in the previous
quarter, partially offset by lower gains from foreign exchange movements.

Profit in the first quarter of 2014 increased to NIS 52 million compared with
NIS 46 million in the previous quarter, mainly due to the decline in finance
costs, net, partially offset by the decline in Adjusted EBITDA.

Free cash flow (after interest payments) in the first quarter totaled NIS 139
million, compared with NIS 209 million in the fourth quarter of 2013. The
decrease in free cash flow mainly reflected changes in operating working
capital which decreased by NIS 43 million this quarter compared with a
decrease of NIS105million in the previous quarter.

As of March 31, 2014, net debt amounted to approximately NIS 2.8billion. In
April 2014, the Company made an early repayment of bank loans totaling NIS
100million (whose original repayment schedule was as follows: NIS 25 million
in 2014, 2015, 2016, and 2017) at a one-time prepayment cost of NIS 6 million
which will be recorded in the second quarter of 2014. Since January 2013, the
Company has made early repayments of loans in the total amount of NIS 717
million.”

Key Financial Results^6 (unaudited)

NIS MILLION (except EPS)          Q1'14  Q1'13  % Change
Revenues                          1,103  1,144  -4%
Cost of revenues                   849     901     -6%
Gross profit                       254     243     +5%
Operating profit                   99      95      +4%
Profit for the period              52      31      +68%
Earnings per share (basic, NIS)    0.33    0.20    +65%
Free cash flow (before interest)  145    203    -29%

Key Operating Indicators:

                                                  Q1'14  Q1'13  Change
Adjusted EBITDA (NIS million)                      274    268    +2%
Adjusted EBITDA as a percentage of total revenues   25%     23%     +2
Cellular Subscribers (end of period, thousands)     2,936   2,932   +4
Quarterly Cellular Churn Rate (%)                   11.6%   10.4%   +1.2
Monthly Average Revenue per Cellular User          77     82     -6%
(ARPU) (NIS)

Partner Consolidated Results (unaudited)

            Cellular Segment         Fixed Line Segment       Elimination     Consolidated
NIS         Q1’14  Q1’13  Change   Q1’14  Q1’13  Change   Q1’14  Q1’13   Q1’14  Q1’13  Change
Million                       %                          %                                            %
Total         900    900    0%         254    290    -12%       (51)   (46)      1,103  1,144  -4%
Revenues
Service       680     724     -6%        247     283     -13%       (51)    (46)      876     961     -9%
Revenues
Equipment     220     176     +25%       7       7       0%         -       -         227     183     +24%
Revenues
Operating     63      52      +21%       36      43      -16%       -       -         99      95      +4%
Profit
Adjusted    199    186    +7%      75     82     -9%      -      -       274    268    +2%
EBITDA

Financial Review (Consolidated)

In Q1 2014, total revenues were NIS 1,103 million (US$ 316 million), a
decrease of 4% from NIS1,144 million in Q1 2013.

Service revenues in Q1 2014 totaled NIS 876 million (US$ 251 million), a
decrease of 9% from NIS 961 million in Q1 2013.

Service revenues for the cellular segment in Q1 2014 were NIS 680 million (US$
195 million), a decrease of 6% from NIS 724 million in Q1 2013. The decrease
was mainly the result of the continued price erosion of Post-Paid and Pre-Paid
cellular services due to the intensified competitive environment.

Service revenues for the fixed line segment totaled NIS 247 million (US$ 71
million) in Q1 2014, a decrease of 13% compared with NIS 283 million in Q1
2013. The decrease mainly reflected price erosion in fixed line services
including local calls, long distance calls and internet services.

Equipment revenues in Q1 2014 totaled NIS 227 million (US$ 65 million), an
increase of 24% compared with NIS 183 million in Q1 2013. The growth was
attributable to both an increase in the average unit price and in the number
of unit sales.

Gross profit from equipment sales in Q1 2014 was NIS 45 million (US$ 13
million), compared with NIS 4 million in Q1 2013. The increase resulted
primarily from improved profit margins, as well as the sale in Q1 2013 of
subsidized handsets to large corporate customers that did not meet the
capitalization criteria.

Operating expenses (‘OPEX’, including cost of service revenues, selling,
marketing and administrative expenses and excluding depreciation and
amortization) totaled NIS 661 million (US$190 million) in Q1 2014, a decrease
of 8% or NIS 59 million from Q1 2013. The decrease largely reflected the
efficiency measures undertaken as well as lower interconnect expenses due in
part to the reduction in the fixed line termination (interconnect) charge by
approximately 60% in December 2013. Including depreciation and amortization
expenses, OPEX in Q1 2014 decreased by 6% compared with Q1 2013.

Adjusted EBITDA in Q1 2014 totaled NIS 274 million (US$ 79 million), an
increase of 2% from NIS268 million in Q1 2013.

Adjusted EBITDA for the cellular segment was NIS 199 million (US$ 57 million)
in Q1 2014, increasing by 7% from NIS 186 million in Q1 2013, reflecting the
impact of lower operating expenses and higher gross profit from equipment
sales, partially offset by the decrease in service revenues. As a percentage
of total cellular revenues, Adjusted EBITDA for the cellular segment in Q1
2014 was 22%, slightly higher than 21% in Q1 2013.

Adjusted EBITDA for the fixed line segment decreased by 9% from NIS 82 million
in Q1 2013 to NIS 75 million (US$ 22 million) in Q1 2014, reflecting the
decline in service revenues partially offset by lower operating costs. As a
percentage of total fixed line revenues, Adjusted EBITDA for the fixed line
segment in Q1 2014 was 30%, compared with 28% in Q1 2013.

Operating profit for Q1 2014 was NIS 99 million (US$ 28 million), an increase
of 4% compared with operating profit in Q1 2013 of NIS 95 million.

Finance costs, net in Q1 2014 were NIS 24 million (US$ 7 million), a decrease
of 51%, compared with NIS 49 million in Q1 2013. The decrease was mainly a
result of lower CPI (consumer price index) linked interest expenses due to the
lower CPI level, as well as lower interest expenses resulting from the lower
level of average debt (see Funding and Investing Review below).

Profit in Q1 2014 was NIS 52 million (US$ 15 million), an increase of 68%
compared with profit in Q1 2013 of NIS 31 million. The increase in profit
resulted from improved Adjusted EBITDA and lower finance costs, net.

Based on the weighted average number of shares outstanding during Q1 2014,
basic earnings per share or ADS, was NIS 0.33 (US$ 0.10), an increase of 65%
compared to NIS 0.20 in Q12013.

The effective tax rate for Q1 2014 was 31%, compared with 33% in Q1 2013. The
decrease in the effective tax rate was mainly due to the lower percentage of
unrecognized expenses than in the comparable quarter last year, due to the
increase in profit before tax.

Cellular Segment Operational Review

At the end of the first quarter 2014, the Company's cellular subscriber base
(including mobile data and 012Mobile subscribers) was approximately 2.94
million including approximately 2.14million Post-Paid subscribers or 73% of
the base, and approximately 799 thousand Pre-Paid subscribers, or 27% of the
subscriber base.

During the first quarter of 2014, the cellular subscriber base declined by
approximately 20,000 subscribers. In contrast to the Pre-Paid subscriber base
which decreased by approximately 24,000, largely reflecting seasonal trends,
the Post-Paid subscriber base increased by approximately 4,000.

The quarterly churn rate for cellular subscribers in Q1 2014 increased to
11.6%, compared with 10.4% in Q1 2013 and 10.7% in Q4 2013, with the increase
reflecting the intensified competition in the cellular market.

Total cellular market share (based on the number of subscribers) at the end of
Q1 2014 was estimated to be approximately 29%, unchanged from year-end 2013.

The monthly Average Revenue per User (“ARPU”) for cellular subscribers in Q1
2014 was NIS77 (US$ 22), a decrease of 6% from NIS 82 in Q1 2013 and a
decrease of 5% from NIS81 in Q4 2013. The decrease in ARPU compared to the
parallel quarter mainly reflected the continued price erosion due to the
intensified competition in the market, as described above. The sequential
decrease in ARPU also resulted from the continued price erosion, as well as
from fewer work days during the quarter and seasonal effects.

Funding and Investing Review

In Q1 2014, cash flow generated from operating activities before interest
payments, net of cash flow used for investing activities ("Free Cash Flow"),
totaled NIS 145 million (US$42million), a decrease of 29% from NIS203
million in Q1 2013.

Cash generated from operations decreased by 23% to NIS 259 million (US$ 74
million) in Q1 2014 from NIS 336 million in Q1 2013. This was mainly explained
by changes in operating working capital movements, partially offset by the
increase in profit. The decrease in operating working capital in Q1 2014 was
NIS 43 million compared with a decrease of NIS 120 million in Q1 2013.

The level of cash capital expenditures in fixed assets (Capex) including
intangible assets but excluding capitalized subscriber acquisition and
retention costs, net, was NIS 113 million (US$32million) in Q1 2014, a
decrease of 13% from NIS 130 million in Q1 2013.

The level of net debt at the end of Q1 2014 amounted to NIS 2,849 million (US$
817 million), compared with NIS 3,622 million at the end of Q1 2013, a
decrease of NIS 773 million.

Regulatory Developments

1. Ministry of Communications Hearings

a) Schejter Committee

The Minister of Communications appointed Prof. Amit Schejter to head a
committee tasked with drafting recommendations regarding the regulation of
audio visual content transmitted over the internet and the introduction of new
service providers. Partner filed its written position with the committee on
April 24, 2014. The committee's recommendations are expected to be submitted
to the Minister by August 2014. If the committee will recommend and the
Minister of Communications will adopt its recommendation, according to which
the regulatory regime that currently applies to the traditional broadcasters
will be applied also to new competitors, such as the Company, then we may not
be able to enter this market and to successfully launch our TV services.

b) Network Neutrality

On February 10, 2014, the Communications Law was amended so that its "Network
Neutrality" rules are now broadened to apply to all operators in the
telecommunications field and not only cellular operators and those engaged in
the import, distribution, sale or maintenance of terminal equipment.

For further information, see the Company's 2013 Annual Report - "Item 3D. Key
Information - Risk Factors - 3D.1 RISKS RELATING TO THE REGULATION OF OUR
INDUSTRY - 3D.1c - Other regulatory developments may have a negative impact on
the Company’s business and results of operation" and "Item 4 - Information on
the Company - 4B. Business Overview - 4B.13 Regulation - 4B.13d Regulatory
Developments - 4B.13d - viii - Network Neutrality".

2. Ministry of Communications Decisions

Following a hearing held by the Ministry of Communications, effective March
31, 2014, the mobile radio telephone (MRT) licenses of all cellular operators
in Israel were amended so that as a default, access to cellular internet
services outside Israel shall be blocked, unless the subscriber has requested
access to such services, has purchased a roaming services package or has
extended his existing package.

For further information, see the Company's 2013 Annual Report - "Item 4 -
Information on the Company - 4B. Business Overview - 4B.13 - Regulation -
4B.13d Regulatory Developments - 4B.13d - i - New Roaming Regulation".

Conference Call Details

Partner will hold a conference call on Wednesday, May 14, 2014 at 10.00 a.m.
Eastern Time / 5.00p.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:
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

The replay of the call will be available from  May 14, 2014 until May 21,
2014. The archived webcast will be available on the website.

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. In particular, this press release contains forward-looking
statements regarding the anticipated offering by the Company of 4G services,
and expected changes in the regulatory environment. In addition, 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 recent and future regulatory actions (specifically, whether the
regulatory changes will occur and what their impact on Partner will be), as
well as consumer habits and preferences in cellular telephone usage, trends in
the Israeli telecommunications industry in general, and the impact of global
economic conditions. Future results may differ materially from those
anticipated herein. 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
current 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 financial results presented in this press release are unaudited financial
results.

The results were prepared in accordance with IFRS, other than Adjusted EBITDA
and free cash flow, 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 New Israeli Shekel (NIS) figures into US
Dollars were made at the rate of exchange prevailing at March 31, 2014: US
$1.00 equals NIS 3.487. The translations were made purely for the convenience
of the reader.

Use of Non-GAAP Financial Measures:

‘Adjusted EBITDA’ represents earnings before interest (finance costs, net),
taxes, depreciation, amortization (including amortization of intangible
assets, deferred expenses-right of use, and share based compensation expenses)
and impairment charges, as a measure of operating profit. Adjusted EBITDA is
not a financial measure under IFRS and may not be comparable to other
similarly titled measures provided by other companies. Adjusted EBITDA may not
be indicative of the Company’s historic operating results nor is it meant to
be predictive of potential future results. Adjusted EBITDA is presented solely
to enhance the understanding of our operating results. We use the term
“Adjusted EBITDA” to highlight the fact that amortization includes
amortization of deferred expenses – right of use and employee share-based
compensation expenses, but Adjusted EBITDA is fully comparable to EBITDA
information which has been previously provided by Partner for prior periods.
Reconciliation between our net cash flow from operating activities and
Adjusted 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 and the 012 Smile brand. 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). For more information about
Partner, see: www.orange.co.il/en/Investors-Relations/lobby/

^1  The financial results presented in this press release are unaudited.

^2  Operating expenses include cost of service revenues, and selling,
marketing & administrative expenses, and exclude depreciation and amortization
and impairment charges.

^3  For definition of Adjusted EBITDA measure, see “Use of Non-GAAP Financial
Measures” on page 11 below.

^4  Total long term indebtedness including current maturities less cash and
cash equivalents.

^5  Cash flows from operating activities before interest payments, net of cash
flows used for investment activities.

^6 See also definitions on page 1.

                     PARTNER COMMUNICATIONS COMPANY LTD.

                           (An Israeli Corporation)

       INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

                                                              Convenience
                               New Israeli Shekels         translation into
                                                              U.S. Dollars
                                 March 31,    December 31,   March 31,
                                 2014          2013           2014
                                 (Unaudited)   (Audited)      (Unaudited)
                                 In millions
CURRENT ASSETS
Cash and cash equivalents        620           481            178
Trade receivables                1,000         1,051          287
Other receivables and            50            45             14
prepaid expenses
Deferred expenses – right of     28            28             8
use
Inventories                      96            93             28
Income tax receivable            4             3              1
Derivative financial             1             2              *
instruments
                                 1,799         1,703          516
                                                              
NON CURRENT ASSETS
Trade Receivables                310           289            89
Deferred expenses – right of     113           118            33
use
Property and equipment           1,730         1,791          496
Licenses and other               1,141         1,167          327
intangible assets
Goodwill                         407           407            117
Prepaid expenses                 5                            1
Deferred income tax asset        14            12             4
                                 3,720         3,784          1,067
                                                              
TOTAL ASSETS                     5,519         5,487          1,583

* Representing an amount less than 1 million

                     PARTNER COMMUNICATIONS COMPANY LTD.

                           (An Israeli Corporation)

       INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

                                                              Convenience
                                New Israeli Shekels         translation into
                                                              U.S. Dollars
                                 March 31,    December 31,   March 31,
                                 2014          2013           2014
                                 (Unaudited)   (Audited)      (Unaudited)
                                 In millions
CURRENT LIABILITIES
Current maturities of notes      333           334            95
payable and bank borrowings
Trade payables                   719           761            206
Payables in respect of           98            98             28
employees
Other payables (mainly           65            45             19
institutions)
Deferred revenues                38            37             11
Provisions                       73            67             21
Income tax payable               38            31             11
Derivative financial             *             1              *
instruments
                                 1,364         1,374          391
                                                              
NON CURRENT LIABILITIES
Notes payable                    2,032         2,038          583
Bank borrowings                  1,104         1,109          317
Liability for employee rights    43            45             12
upon retirement, net
Dismantling and restoring        32            31             9
sites obligation
Other non-current liabilities    16            16             5
Deferred tax liability                        *              
                                 3,227         3,239          926
                                                              
TOTAL LIABILITIES                4,591         4,613          1,317
                                                              
EQUITY
Share capital - ordinary
shares of NIS 0.01

par value: authorized -
December 31, 2013                2             2              1

and March 31, 2014 -
235,000,000 shares;

issued and outstanding -
December 31, 2013 –
**155,687,002 shares
March 31, 2014 – **155,687,002
shares
Capital surplus                  1,100         1,100          315
Accumulated retained earnings    177           123            51
Treasury shares, at cost -
December 31, 2013
                                 (351)         (351)          (101)
and March 31, 2014 - 4,467,990
shares
TOTAL EQUITY                     928           874            266
TOTAL LIABILITIES AND EQUITY     5,519         5,487          1,583

* Representing an amount less than 1 million

** Net of treasury shares

                     PARTNER COMMUNICATIONS COMPANY LTD.

                           (An Israeli Corporation)

             INTERIM CONDENSED CONSOLIDATED STATEMENTS OF INCOME

                                                              Convenience
                                New Israeli Shekels        translation into
                                                              U.S. Dollars
                                  3 months ended March 31,
                                  2014         2013          2014
                                  (Unaudited)   (Unaudited)   (Unaudited)
                                  In millions (except per share data)
Revenues, net                     1,103         1,144         316
Cost of revenues                  849           901           243
Gross profit                      254           243           73
                                                              
Selling and marketing             117           118           34
expenses
General and administrative        52            53            15
expenses
Other income, net                 14            23            4
Operating profit                  99            95            28
Finance income                    12            3             3
Finance expenses                  36            52            10
Finance costs, net                24            49            7
Profit before income tax          75            46            21
Income tax expenses               23            15            6
Profit for the period             52            31            15
                                                              
Earnings per share
Basic                             0.33          0.20          0.10
Diluted                           0.33          0.20          0.10

                     PARTNER COMMUNICATIONS COMPANY LTD.

                           (An Israeli Corporation)

                  INTERIM CONDENSED CONSOLIDATED STATEMENTS

                           OF COMPREHENSIVE INCOME

                                                              Convenience
                               New Israeli Shekels        translation into
                                                              U.S. Dollars
                                  3 months ended March 31,
                                  2014         2013          2014
                                  (Unaudited)   (Unaudited)   (Unaudited)
                                  In millions
Profit for the period             52            31            15
Other comprehensive income
for the                           -             -             -

period, net of income taxes
                                                              
TOTAL COMPREHENSIVE INCOME        52            31            15
FOR THE PERIOD

                     PARTNER COMMUNICATIONS COMPANY LTD.

                           (An Israeli Corporation)

                             SEGMENT INFORMATION

                           New Israeli Shekels
                            Three months ended March 31, 2014
                            In millions (Unaudited)
                            Cellular  Fixed-line  Elimination  Consolidated
                            segment    segment
Segment revenue –           673        203                        876
Services
Inter-segment revenue –     7          44           (51)
Services
Segment revenue –           220        7                         227
Equipment
Total revenues              900        254          (51)          1,103
                                                                  
Segment cost of revenues    496        171                        667
- Services
Inter-segment cost of       43         8            (51)
revenues- Services
Segment cost of revenues    176        6                         182
- Equipment
Cost of revenues            715        185          (51)          849
Gross profit                185        69                         254
                                                                  
Operating expenses          136        33                         169
Other income, net           14         *                          14
Operating profit            63         36                         99
Adjustments to
presentation of Adjusted
EBITDA
–Depreciation and           135        39                         174
amortization
–Other (1)                  1          *                          1
Adjusted EBITDA (2)         199        75                         274
Reconciliation of
Adjusted EBITDA to profit
before income tax
- Depreciation and                                                (174)
amortization
- Finance costs, net                                              (24)
- Other (1)                                                       (1)
Profit before income tax                                          75

* Representing an amount less than 1 million.

                     PARTNER COMMUNICATIONS COMPANY LTD.

                           (An Israeli Corporation)

                             SEGMENT INFORMATION

                                                             
                            New Israeli Shekels
                            Three months ended March 31, 2013
                            In millions (Unaudited)
                            Cellular   Fixed-line   Elimination   Consolidated
                            segment    segment
Segment revenue –           717        244                        961
Services
Inter-segment revenue –     7          39           (46)
Services
Segment revenue –           176        7                         183
Equipment
Total revenues              900        290          (46)          1,144
                                                                  
Segment cost of revenues    528        194                        722
– Services
Inter-segment cost of       39         7            (46)
revenues- Services
Segment cost of revenues    172        7                         179
- Equipment
Cost of revenues            739        208          (46)          901
Gross profit                161        82                         243
                                                                  
Operating expenses          132        39                         171
Other income, net           23                                   23
Operating profit            52         43                         95
Adjustments to
presentation of Adjusted
EBITDA
–Depreciation and           132        39                         171
amortization
–Other (1)                  2                                    2
Adjusted EBITDA (2)         186        82                         268
Reconciliation of
Adjusted EBITDA to profit
before income tax
- Depreciation and                                                (171)
amortization
- Finance costs, net                                              (49)
- Other (1)                                                       (2)
Profit before income tax                                          46

(1) Mainly employee share based compensation expenses.

(2) Adjusted EBITDA as reviewed by the CODM, represents Earnings Before
Interest (finance costs, net), Taxes, Depreciation, Amortization (including
amortization of intangible assets, deferred expenses-right of use, and share
based compensation expenses) and impairment charges, as a measure of segment
profit. Adjusted EBITDA is not a financial measure under IFRS and may not be
comparable to other similarly titled measures in 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
Amortizationincludesamortization of deferred expenses – right of use and
employee share based compensation expenses; it is fully comparable to EBITDA
information which has been previously provided by Partner for prior periods.

                     PARTNER COMMUNICATIONS COMPANY LTD.

                           (An Israeli Corporation)

           INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                              Convenience
                                 New Israeli Shekels        translation into
                                                              U.S. Dollars
                                  3 months ended
                                  March 31,
                                  2014         2013          2014
                                  (Unaudited)   (Unaudited)   (Unaudited)
                                  In millions
CASH FLOWS FROM OPERATING
ACTIVITIES:
Cash generated from operations    278           322           80
(Appendix)
Income tax received (paid)        (19)          14            5
Net cash provided by operating    259           336           75
activities
CASH FLOWS FROM INVESTING
ACTIVITIES:
Acquisition of property and       (83)          (98)          (24)
equipment
Acquisition of intangible         (31)          (35)          (9)
assets
Interest received                 1             2             *
Proceeds from (payments for)
derivative                        (1)           (2)           *
financial instruments, net
Net cash used in investing        (114)         (133)         (33)
activities


CASH FLOWS FROM FINANCING
ACTIVITIES:
Repayment of finance lease                      (1)
Interest paid                     (6)           (11)          (2)
Net cash used in financing        (6)           (12)          (2)
activities
INCREASE IN CASH AND CASH         139           191           40
EQUIVALENTS
CASH AND CASH EQUIVALENTS AT      481           548           138
BEGINNING OF PERIOD
CASH AND CASH EQUIVALENTS AT      620           739           178
END OF PERIOD

                     PARTNER COMMUNICATIONS COMPANY LTD.

                           (An Israeli Corporation)

           INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Appendix – Cash generated from operations and supplemental information

                                                              Convenience
                                 New Israeli Shekels        translation into
                                                              U.S. Dollars
                                  3 months ended
                                  March 31,
                                  2014         2013          2014
                                  (Unaudited)   (Unaudited)   (Unaudited)
                                  In millions
                                                   
Cash generated from operations:
Profit for the period             52                  31      15
Adjustments for:
Depreciation and amortization     165                 164     47
Amortization of deferred          9                   7       3
expenses - Right of use
Employee share based              1                   2       *
compensation expenses
Liability for employee rights     (2)                 (2)     (1)
upon retirement, net
Finance costs (income), net       (12)                3       (3)
Gain (loss) from change in fair
value of
                                  *                   (1)     *
derivative financial
instruments
Interest paid                     6                   11      2
Interest received                 (1)                 (2)     (*)
Deferred income taxes             (2)                 3       (1)
Income tax paid (received)        19                  (14)    5
Changes in operating assets and
liabilities:
Decrease (increase) in accounts
receivable:
Trade                             30                  147     9
Other                             (10)                (10)    (3)
Increase (decrease) in accounts
payable and accruals:
Trade                             (5)                 (10)    (1)
Other payables                    21                  26      6
Provisions                        6                   3       2
Deferred revenue                  1                   (2)     *
Increase in deferred expenses -   (4)                 (4)     (1)
Right of use
Current income tax liability      7                   25      2
Increase in inventories           (3)                 (55)    (1)
Cash generated from operations    278                 322     80

*Representing an amount less than 1 million

At March 31, 2014 and 2013, trade and other payables include NIS 187 million
($54 million) and NIS229 million, respectively, in respect of acquisition of
intangible assets and property and equipment.

                     PARTNER COMMUNICATIONS COMPANY LTD.

                           (An Israeli Corporation)

       RECONCILIATION BETWEEN OPERATING CASH FLOWS AND ADJUSTED EBITDA

                                                              Convenience
                                 New Israeli shekels        translation into
                                                              U.S. Dollars*
                                  3 months ended March 31,
                                  2014         2013          2014
                                  (Unaudited)   (Unaudited)   (Unaudited)
                                  In millions
                                                              
Net cash provided by operating    259           336           74
activities
                                                              
Liability for employee rights     2             2             1
upon retirement
Accrued interest and exchange
and linkage differences on        8             (10)          3
long-term liabilities
Increase (decrease) in accounts
receivable:
Trade                             (30)          (147)         (9)
Other, including derivative       13            16            4
financial instruments
Decrease (increase) in accounts
payable and accruals:
Trade                             5             10            1
Other                             (28)          (29)          (8)
Income tax paid (received)        19            (14)          5
Increase in inventories           3             55            1
Financial expenses**              23            49            7
Adjusted EBITDA                   274           268           79

* The convenience translation of the New Israeli Shekel (NIS) figures into US
dollars was made at the exchange prevailing at March 31, 2014: US $1.00 equals
3.487 NIS.

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

Key Financial and Operating Indicators (unaudited)^7

NIS M unless     Q1'     Q2'     Q3'     Q4'     Q1'     Q2'     Q3'     Q4'     Q1'
otherwise       12     12     12     12     13     13     13     13     14       2012   2013
stated
Cellular
Segment          963     949     892     788     724     726     738     719     680         3,592   2,907
Service
Revenues
Cellular
Segment          323     207     157     209     176     171     160     196     220         896     703
Equipment
Revenues
Fixed Line
Segment          320     300     296     294     283     277     267     258     247         1,210   1,085
Service
Revenues
Fixed Line
Segment          7       8       8       13      7       9       7       9       7           36      32
Equipment
Revenues
Reconciliation
for              -42     -36     -38     -46     -46     -53     -54     -55     -51         -162    -208
consolidation
Total Revenues   1,571   1,428   1,315   1,258   1,144   1,130   1,118   1,127   1,103       5,572   4,519
Gross Profit
from Equipment   42      33      16      22      4       9       10      19      45          113     42
Sales
Operating        248     245     217     155     95      102     109     103     99          865     409
Profit
Cellular
Segment          363     367     328     256     186     198     201     199     199         1,314   784
Adjusted
EBITDA
Fixed Line
Segment          75      56      73      84      82      82      83      83      75          288     330
Adjusted
EBITDA
Total Adjusted   438     423     401     340     268     280     284     282     274         1,602   1,114
EBITDA
Adjusted
EBITDA Margin    28%     30%     30%     27%     23%     25%     25%     25%     25%         29%     25%
(%)
OPEX             872     853     793     744     720     700     696     675     661         3,262   2,791
Finance costs,   55      73      68      38      49      71      53      38      24          234     211
net
Profit (Loss)    146     120     110     102     31      20      38      46      52          478     135
Total Dividend   -       160     -       -       -       -       -       -       -           160     -
Declared
Capital          133     113     125     121     130     122     116     107     113         492     475
Expenditures^8
Free Cash Flow   223     313     375     323     203     287     273     278     145         1,234   1,041
Free Cash Flow   199     270     310     255     192     193     266     209     139         1,034   860
After Interest
Net Debt         4,450   4,209   4,072   3,812   3,622   3,446   3,208   3,000   2,849       3,812   3,000
Cellular
Subscriber       3,147   3,098   3,042   2,976   2,932   2,921   2,950   2,956   2,936       2,976   2,956
Base
(Thousands)
Post-Paid
Subscriber       2,253   2,198   2,145   2,102   2,102   2,103   2,127   2,133   2,137       2,102   2,133
Base
(Thousands)
Pre-Paid
Subscriber       894     900     897     874     830     818     823     823     799         874     823
Base
(Thousands)
Cellular ARPU    101     101     97      87      82      83      84      81      77          97      83
(NIS)
Cellular Churn   8.0%    8.9%    10.4%   10.9%   10.4%   9.4%    8.8%    10.7%   11.6%       38%     39%
Rate (%)
Number of
Employees       7,230  6,961  6,102  5,396  4,772  4,377  4,153  4,045  3,826    5,396  4,045
(FTE)

^7 See first page for definitions. The annual results are audited.

^8 Cash capital expenditures in fixed assets including intangible assets but
excluding capitalized subscriber acquisition and retention cost, net.

Contact:

Partner Communications
Contacts:
Mr. Ziv Leitman, Tel: +972-54-781-4951
Chief Financial Officer
or
Ms. Elana Holzman, Tel: +972-54-781-4383
Head of Investor Relations
E-mail: investors@orange.co.il
 
Press spacebar to pause and continue. Press esc to stop.