PARTNER COMMUNICATIONS : REPORTS FOURTH QUARTER AND ANNUAL 2018 RESULTS

PARTNER COMMUNICATIONS REPORTS

FOURTH QUARTER AND ANNUAL 2018 RESULTS1

ANNUAL ADJUSTED EBITDA2 TOTALED NIS 722 MILLION

ANNUAL PROFIT TOTALED NIS 56 MILLION

PARTNER'S CEO, ISAAC BENBENISTI, NOTED: "PARTNER TV IS THE FASTEST GROWING

TV SERVICE IN ISRAEL, WITH A TV SUBSCRIBER BASE OF 140 THOUSAND

SUBSCRIBERS AS OF TODAY, AND 'PARTNER FIBER' OPTIC INFRASTRUCTURE HAS REACHED, AS OF TODAY, OVER 350 THOUSAND HOUSEHOLDS ACROSS ISRAEL, NEARLY 20% OF ALL HOUSEHOLDS CONNECTED TO THE INTERNET IN ISRAEL."

NET DEBT2 REMAINS BELOW NIS 1 BILLION WITH NET DEBT TO EBITDA RATIO OF 1.3

2018 Annual Highlights (compared with 2017)

∙Total Revenues: NIS 3,259 million (US$ 870 million), a decrease of NIS 9 million

∙Service Revenues: NIS 2,524 million (US$ 673 million), a decrease of 2%

∙Equipment Revenues: NIS 735 million (US$ 196 million), an increase of 7%

∙Total Operating Expenses (OPEX)2: NIS 1,996 million (US$ 533 million), an increase of 3%

∙Adjusted EBITDA2: NIS 722 million (US$ 193 million), a decrease of 21%

∙Adjusted EBITDA Margin2: 22% of total revenues compared with 28%

∙Profit for the Year: NIS 56 million (US$ 15 million) a decrease of 51%

∙Net Debt: NIS 950 million (US$ 253 million), an increase of NIS 44 million

∙Adjusted Free Cash Flow (before interest)2: NIS 124 million (US$ 33 million), a decrease of NIS 475 million

∙Cellular ARPU: NIS 58 (US$ 15), a decrease of 6%

∙Cellular Subscriber Base3: approximately 2.65 million at year-end, a decrease of 1%

∙TV Subscriber Base: approximately 122 thousand subscribers at year-end, an increase of 79 thousand subscribers (an increase of 184%)

Fourth quarter 2018 highlights (compared with fourth quarter 2017)

∙Total Revenues: NIS 814 million (US$ 217 million), a decrease of 2%

∙Service Revenues: NIS 625 million (US$ 167 million), a decrease of 1%

∙Equipment Revenues: NIS 189 million (US$ 50 million), a decrease of 7%

1The quarterly financial results are unaudited.

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

3As from Q4 2018, M2M subscriptions are included in the post-paid subscriber base on a standardized basis - for more info please see "Cellular Segment Operational Review".

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∙Total Operating Expenses (OPEX): NIS 502 million (US$ 134 million), a decrease of 3%

∙Adjusted EBITDA: NIS 172 million (US$ 46 million), an increase of 9%

∙Adjusted EBITDA Margin: 21% of total revenues compared with 19%

∙Profit for the Period: NIS 19 million (US$ 5 million), an increase of NIS 69 million

∙Net Debt: NIS 950 million (US$ 253 million), an increase of NIS 44 million

∙Adjusted Free Cash Flow (before interest): Negative NIS 22 million (US$ -6 million), a decrease of NIS 85 million

∙Cellular ARPU: NIS 57 (US$ 15), a decrease of 3%

∙Cellular Subscriber Base: approximately 2.65 million at quarter-end, a decrease of 1%

∙TV Subscriber Base: approximately 122 thousand subscribers at quarter-end, an increase of 79 thousand subscribers (an increase of 184%)

Rosh Ha'ayin, Israel, March 27, 2019 - Partner Communications Company Ltd. ("Partner" or

the "Company") (NASDAQ and TASE: PTNR), a leading Israeli communications provider, announced today its results for the quarter and year ended December 31, 2018.

Commenting on the results for the fourth quarter and full year 2018, Mr. Isaac Benbenisti, CEO of Partner noted:

"The 2018 annual results express Partner's strength in the Israeli telecommunications market. In the complex competitive reality, Partner succeeded in ending the fourth quarter with a profit of NIS 19 million and an annual profit of NIS 56 million.

We continue to focus on, among other matters, providing value to the customer, for example through exclusive technologies such as VoLTE and WiFi calling, and investing significant resources on maintaining the customer satisfaction of our existing customer base, in order to preserve our particularly low churn rate.

Partner TV is the fastest growing TV service in Israel with a subscriber base of 140 thousand subscribers as of today, while, in 2018 alone, 79 thousand subscribers were added. Partner TV's advanced interface is best adapted to new viewing habits and has set a new standard in the multi- channel television market in Israel.

Partner's fiber optic infrastructure, Partner Fiber, is growing at the fastest rate in the market. In recent months, we have expanded our deployment in dozens of cities, and today we are already reaching over 350 thousand households with Partner's fiber, nearly 20% of all households connected to the internet in Israel.

In addition, and in light of the challenges facing the companies operating in the telecommunications sector, we succeeded, in cooperation with the employees' representatives and the Histadrut labor union, to reach at the beginning of this month, a new collective agreement that 2

takes care of the employees' welfare, and directly links Partner's success to employee compensation."

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

"During 2018, Partner further consolidated its status as a total service communications provider with impressive growth in the Company's new revenue engines of TV services and fiber optics infrastructure.

We invested significant resources in smart and extensive deployment of our fiber-optic network, while maintaining relatively low levels of debt leverage. We intend to realize to the full the advantage we have over our competitors in network coverage and in our value propositions that combine TV and internet services, in order to increase profitability in the fixed-line segment and in support of our efforts to establish Partner as a leading communications infrastructure company. The new revenue engines are developing rapidly, and serve to strengthen the Company's resilience in light of the unrestrained competition in the Israeli cellular market - competition which was further intensified with the entrance of an additional, sixth cellular operator, and which led to even stronger price erosion than during the preceding year.

The Company intends to deploy a fiber optic network with an extensive and significant coverage of potential households in Israel within three to four years from today, with an expected payback period for the project overall of seven years. CAPEX payments relating to the fiber optic network are expected to remain stable at a level similar to that in 2018.

Profit for the year 2018 was NIS 56 million, a decrease of 51% compared with 2017. Adjusted EBITDA in 2018 totaled NIS 722 million, a decrease of 21% from 2017. Adjusted EBITDA for the cellular segment decreased by 26% mainly reflecting the impact of the decreases in service revenues and in income with respect to the settlement agreement with Orange, which ceased being recognized from the end of the second half of 2017; these decreases were partially offset mainly by the reduction in OPEX. Despite the decrease in profit which resulted from the unrestrained competition in the cellular market from price players, Partner focused on a strategy of providing value to the customer, the unique technological advantages of our network and our customer service, the results of which were reflected by one of the lowest churn rates in the market and an ARPU of NIS 57 for the fourth quarter and NIS 58 for the year 2018.

While total operating expenses (OPEX) increased in 2018 compared to 2017 by NIS 50 million, this was explained principally by increased expenses related to the growth in TV services as well as internet services.

Adjusted EBITDA for the fixed-line segment decreased in 2018 compared to 2017 by 4%, mainly reflecting the increased OPEX related to TV services and internet services, which more than offset the increases in revenues from TV services and internet services and in gross profit from equipment sales.

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The gross profit margin from equipment sales further improved in 2018, from 21% in 2017 to 23% in 2018, together with a continued improvement in the quality of equipment sales as reflected by, among other things, the significant decrease of 42% in credit losses, from NIS 52 million in 2017 to NIS 30 million in 2018.

Adjusted Free Cash Flow (before interest) totaled NIS 124 million in 2018, after the Company's significant investments to support its new revenue engines related to the fiber optics network and TV services; CAPEX payments, including investments in new revenue engines, totaled NIS 502 million in 2018, an increase of 34% from 2017. The Company also made additional payments for deferred expenses - Rights of Use (ROU) totaling NIS 107 million in 2018, compared with NIS 113 million in 2017.

The Company's balance sheet demonstrates its financial strength, with net debt remaining below NIS 1 billion and a net debt to EBITDA ratio of 1.3 at year-end 2018. During 2018 we executed a buy-back of our shares and acquired 6.5 million shares at a total cost of NIS 100 million (including commissions) at an average price of NIS 15.38 per share. Our relatively low level of debt leverage, together with our ability to access additional fund sources through existing future debt issuance commitments, leaves us in a good position to be able to continue to invest in new growth opportunities, as necessary.

In the previous quarter, we announced the first step of our plan to expand the Company's activities to the fintech and finance areas, under the name "Partner Finance". We continue to examine possible activities in the finance arena, both within the Company and through co-operation with external parties."

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	NIS Million			Q3'18			Q4'18			Comments
	Service Revenues		654			625				The decrease resulted from a decrease in cellular service
										revenues as a result of seasonality
	Equipment Revenues			168			189			The increase mainly reflected a change in the product mix
	Total Revenues		822			814
	Gross profit from equipment sales			44			42
	OPEX		504			502
	Adjusted EBITDA			201			172			The decrease mainly reflected the decrease in service
										revenues
										The decrease mainly resulted from the decrease in
	Profit for the Period		26			19				Adjusted EBITDA, partially offset by one-time income as a
										result of an income tax audit
	Capital Expenditures (additions)			111			177			The increase resulted mainly from increased investments in
										the optic fiber network and in IT systems
	Adjusted free cash flow (before									The decrease mainly reflected the decrease in Adjusted
			70			)22)				EBITDA and the larger increase in operating assets and
	interest payments)
										liabilities
	Net Debt			898			950

				Q3'18			Q4'18				Comments
											Increase of 28 thousand subscribers. Excluding the impact
	Cellular Post-Paid Subscribers			2,333			2,3614				of the addition of M2M subscribers, the cellular Post-Paid
	(end of period, thousands)										subscriber base would have decreased by 6 thousand
											subscribers
	Cellular Pre-Paid Subscribers			297			285			Decrease of 12 thousand subscribers
	(end of period, thousands)
	Monthly Average Revenue per			60			57				The decrease mainly reflected seasonality effects
	Cellular User (ARPU) (NIS)
	Quarterly Cellular Churn Rate (%)			8.0%			8.5%				Increase in both Pre-Paid and Post-Paid churn rates
	Key Financial Results
	NIS MILLION (except EPS)									2014			20155	2016			2017*		2018*
	Revenues									4,400			4,111	3,544			3,268		3,259
	Cost of revenues									3,419			3,472	2,924			2,627		2,700
	Gross profit									981			639	620			641		559
	S,G&A and credit losses									631			640	689			465		471
	Income with respect to settlement												61	217			108
	agreement with Orange
	Other income									50			47	45			31		28
	Operating profit									400			107	193			315		116
	Finance costs, net									159			143	105			180		53
	Income tax expenses									79			4	36			21		7
	Profit (Loss) for the year									162			(40)	52			114		56
	Earnings (Loss) per share (basic, NIS)									1.04			(0.26)	0.33			0.70		0.34

4As from Q4 2018, M2M subscriptions are included in the post-paid subscriber base on a standardized basis. This change had the effect of increasing the Post-Paid subscriber base at December 31, 2018, by approximately 34 thousand subscribers. See also 'Cellular Segment Operational Review' section below.

5In Q4 2015, the Company recorded an impairment charge on its fixed-line assets which reduced operating profit by NIS 98 million and profit by NIS 72 million in 2015.

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