PARTNER COMMUNICATIONS : REPORTS THIRD QUARTER 2018 RESULTS1

PARTNER COMMUNICATIONS REPORTS

THIRD QUARTER 2018 RESULTS1

ADJUSTED EBITDA2 TOTALED NIS 201 MILLION

FIXED LINE SEGMENT ADJUSTED EBITDA INCREASED BY 12% COMPARED TO Q3'17

CELLULAR CHURN RATE DECLINED TO 8.0%

PARTNER'S CEO, ISAAC BENBENISTI, NOTED: "THE GROWTH IN HOUSEHOLDS CONNECTED TO PARTNER TV HAS ACCELERATED DURING THE THIRD QUARTER, AND AS OF TODAY, PARTNER TV HAS 118 THOUSAND HOUSEHOLDS CONNECTED TO THE SERVICE. 'PARTNER FIBER' INFRASTRACTURE WHICH WAS LAUNCHED LAST YEAR,

REACHES OVER 250 THOUSAND HOUSEHOLDS ACROSS ISRAEL AS OF TODAY."

Third quarter 2018 highlights (compared with third quarter 2017)

•  Total Revenues: NIS 822 million (US$ 227 million), a decrease of NIS 4 million

•  Service Revenues: NIS 654 million (US$ 180 million), a decrease of 2%

•  Equipment Revenues: NIS 168 million (US$ 46 million), an increase of 5%

•  Total Operating Expenses (OPEX2): NIS 504 million (US$ 139 million), an increase of 6%

•  Adjusted EBITDA: NIS 201 million (US$ 55 million), a decrease of 16%

•  Adjusted EBITDA Margin2: 24% of total revenues compared with 29%

•  Profit for the Period: NIS 26 million (US$ 7 million), a decrease of NIS 28 million

•  Net Debt2: NIS 898 million (US$ 248 million), an increase of NIS 11 million

•  Adjusted Free Cash Flow (before interest) 2: NIS 70 million (US$ 19 million), a decrease of NIS 132 million

•  Cellular ARPU: NIS 60 (US$ 17), a decrease of 6%

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

•  TV Subscriber Base: 106 thousand households at quarter-end, an increase of 92 thousand households

Rosh Ha'ayin, Israel, November 21, 2018 -Partner Communications Company Ltd.

("Partner" or the "Company") (NASDAQ and TASE: PTNR), a leading Israeli communications provider, announced today its results for the quarter ended September 30, 2018.

1 2

The quarterly financial results are unaudited.

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

Commenting on the third quarter 2018 results, Mr. Isaac Benbenisti, CEO of Partner noted:

"The third quarter of 2018 results reflect encouraging figures in the cellular segment as well as the momentum in the Company's new growth engines, TV and fiber optic infrastructure.

In the cellular segment, in the third quarter we added 11 thousand Post-Paid subscribers to our subscriber base, on a net basis, along with growth in ARPU and a decline in churn rate. We are reporting the 13th consecutive quarter of growth in the number of Post-Paid subscribers, who enjoy Partner's advanced network with unique capabilities such as VoLTE and WiFi Calling - which are not offered by our competitors.

The growth in households connected to Partner TV has accelerated during the third quarter, and as of today, Partner TV has 118 thousand households connected to the service. Most of Partner TV's customers choose the service as part of a package, bundling TV and internet services, and some of them are connected to Partner TV using Partner fiber optic infrastructure. In addition, we launched this month a dedicated service enabling multi-channel TV to be viewed on a PC.

Our fiber optics infrastructure, 'Partner Fiber', which was launched last year, has shattered in record time the technological stagnation imposed on the Israeli consumer by the fixed line monopoly, and as of today it reaches over 250 thousand households across Israel. Our deployment proceeds at a rapid pace, and Partner's optic fibers are available to more and more households who can connect to internet service at a speed of up to 1,000 mbps.

The business customer division is expanding as well, and in the third quarter new customers have joined and existing customers services were expanded. This is attributable to Partner's integration capabilities and strategic collaborations with world leading manufacturers.

In addition, as part of the Company's strategy, we continue to examine new potential growth engines, among others, in the fintech and finance industries."

Mr. Tamir Amar, Partner's Chief Financial Officer, commented on 2018 third quarter results:

"The third quarter results reflected the existing trends in the communications market and the progress in the Company's strategy and ongoing projects.

In the cellular segment, Partner recorded a decrease in the churn rate to 8.0% and, for the 13th consecutive quarter, a net increase in Post-Paid subscribers, as well as a net increase of 8 thousand cellular subscribers overall. These results followed the entrance of a new competitor during the second quarter, which resulted in an increase in the churn rate and an intensification of the level of competition in the second quarter 2018. However this effect was significantly moderated during the third quarter.

In the fixed line segment, Adjusted EBITDA increased by 12% in the third quarter compared to the third quarter of 2017, and by 22% compared to the second quarter of 2018. This growth resulted from continued growth in the number of households connected to Partner TV which led to an increase in revenues from internet and TV services.

In addition, we continue to deploy fiber optic infrastructure to residential areas, reaching over 200 thousand households by the end of the third quarter, and over 250 thousand households as of today. The deployment serves as a platform for the daily transfer of customers to our independent infrastructure which is expected to significantly improve the profitability of our internet and TV operations, enables a higher quality TV viewing experience for Partner's customers and provides an enhanced internet service.

The Company's Free Cash Flow totaled NIS 70 million in the third quarter, after taking into account all the Company's investments, including in fiber optics and TV - investments which remain relatively stable despite the increase in fiber optic deployment and the significant increase in the number of Partner's TV households.

We succeeded in maintaining Net Debt at a level below NIS 0.9 billion, while continuing to develop new growth engines and execute our buy-back plan which totaled NIS 67 million during the quarter. Overall, since the Company announced its buy-back plan in May 2018, we have 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."

NIS Million	Q3'18	Q2'18	Comments
Service Revenues	654	620	The increase resulted from an increase in cellular service revenues as a result of seasonality and a one-time provision in Q2'18, as well as growth in fixed line service revenues
Equipment Revenues	168	177	The decline resulted from a decrease in working days due to Jewish holidays in September
Total Revenues	822	797
Gross profit from equipment sales	44	37	The increase resulted from a change in product mix
OPEX	504	492
Adjusted EBITDA	201	172	The increase reflected the increase in service revenues and gross profit from equipment, partially offset by the increase in OPEX
Profit for the Period	26	2	The increase mainly resulted from the increase in Adjusted EBITDA
Capital Expenditures (additions)	111	98
Adjusted free cash flow (before interest payments)	70	55	The increase mainly reflected the increase in Adjusted EBITDA
Net Debt	898	893

Q3'18	Q2'18	Comments
Cellular Post-Paid Subscribers (end of period, thousands)	2,349	2,338*	Increase of 11 thousand subscribers
Cellular Pre-Paid Subscribers (end of period, thousands)	297	300	Decrease of 3 thousand subscribers
Monthly Average Revenue per Cellular User (ARPU) (NIS)	60	57	The increase resulted from seasonality and a one-time provision in Q2 2018
Quarterly Cellular Churn Rate (%)	8.0%	10.1%*	Decrease in both Post-Paid and Pre-Paid churn rates

* See footnote in "Key Financial and Operating Indicators" table below.

Key Financial Results

NIS MILLION (except EPS)	Q3'18	Q3'17	% Change
Revenues	822	826	0%
Cost of revenues	657	625	+5%
Gross profit	165	201	-18%
Operating profit	48	92	-48%
Profit for the period	26	54	-52%
Earnings per share (basic, NIS)	0.16	0.32
Adjusted free cash flow (before interest)	70	202	-65%

Key Operating Indicators

Q3'18	Q3'17	Change
Adjusted EBITDA (NIS million)	201	239	-16%
Adjusted EBITDA (as a % of total revenues)	24%	29%	-5
Cellular Subscribers (end of period, thousands)	2,646	2,677	-31
Quarterly Cellular Churn Rate (%)	8.0%	9.3%	-1.3
Monthly Average Revenue per Cellular User (ARPU) (NIS)	60	64	-4

Partner Consolidated Results

NIS Million	Cellular Segment Q3'18 Change %			Fixed-Line Segment Q3'18 Change %			Elimination Q3'18		Consolidated Q3'18 Change %
Total Revenues	619	652	-5%	245	216	+13%	(42)	(42)	822	826	0%
Service Revenues	476	514	-7%	220	194	+13%	(42)	(42)	654	666	-2%
Equipment Revenues	143	138	+4%	25	22	+14%	-	-	168 160 +5%
Operating Profit	32	74	-57%	16	18	-11%	-	-	48	92	-48%
Adjusted EBITDA	145	189	-23%	56	50	+12%	-	-	201	239	-16%

Financial Review

In Q3 2018, total revenues were NIS 822 million (US$ 227 million), a decrease of NIS 4 million from NIS 826 million in Q3 2017.

Service revenues in Q3 2018 totaled NIS 654 million (US$ 180 million), a decrease of 2% from NIS 666 million in Q3 2017.

Service revenues for the cellular segment in Q3 2018 totaled NIS 476 million (US$ 131 million), a decrease of 7% from NIS 514 million in Q3 2017. The decrease was mainly the result of the continued price erosion of cellular services (both Post-Paid and Pre-Paid) due to the continued competitive market conditions.

Service revenues for the fixed-line segment in Q3 2018 totaled NIS 220 million (US$ 61 million), an increase of 13% from NIS 194 million in Q3 2017. The increase reflected revenues from TV services (which started in Q3 2017) and internet services, which were partially offset principally by the decline in revenues from international calling services.

Equipment revenues in Q3 2018 totaled NIS 168 million (US$ 46 million), an increase of 5% from NIS 160 million in Q3 2017, largely reflecting higher volumes of equipment sales as well as a change in the product mix.

Gross profit from equipment sales in Q3 2018 was NIS 44 million (US$ 12 million), compared with NIS 43 million in Q3 2017, an increase of 2%, mainly reflecting higher sales volumes.

Total operating expenses ('OPEX') totaled NIS 504 million (US$ 139 million) in Q3 2018, an increase of 6% or NIS 27 million from Q3 2017. The increase mainly reflected additional expenses relating to the Company's TV service and the growth in internet services and a nonrecurring reduction in site-rental expenses in Q3 2017, partially offset by a decrease in international calling services expenses. Including depreciation and amortization expenses and other expenses (mainly amortization of employee share based compensation), OPEX in Q3 2018 increased by 5% compared with Q3 2017.

Operating profit for Q3 2018 was NIS 48 million (US$ 13 million), a decrease of 48% compared with NIS 92 million in Q3 2017. See Adjusted EBITDA analysis for each segment below.

Adjusted EBITDA in Q3 2018 totaled NIS 201 million (US$ 55 million), a decrease of 16% from NIS 239 million in Q3 2017. As a percentage of total revenues, Adjusted EBITDA in Q3 2018 was 24% compared with 29% in Q3 2017.

Adjusted EBITDA for the cellular segment was NIS 145 million (US$ 40 million) in Q3 2018, a decrease of 23% from NIS 189 million in Q3 2017, mainly reflecting the decrease in cellular service revenues and a nonrecurring reduction in site-rental expenses in Q3 2017, partially offset by a decline in other cellular OPEX. As a percentage of total cellular segment revenues, Adjusted EBITDA for the cellular segment in Q3 2018 was 23% compared with 29% in Q3 2017.