Cellcom Israel 1 FORWARD LOOKING STATEMENTS The following - PowerPoint PPT Presentation

Cellcom Israel 1

FORWARD LOOKING STATEMENTS The following information contains, or may be deemed to contain forward-looking statements (as defined in the U.S. Private Securities Litigation Reform Act of 1995 and the Israeli Securities Law, 1968). In some cases, you can identify these statements by forward-looking words such as “ may, ” “ might, ” “ will, ” “ should, ” “ expect, ” “ plan, ” “ anticipate, ” “ believe, ” “ estimate, ” “ predict, ” “ potential ” or “ continue, ” the negative of these terms and other comparable terminology. These forward-looking statements, which are subject to risks, uncertainties and assumptions about us, may include projections of our future financial results, our anticipated growth strategies and anticipated trends in our business. These statements are only predictions based on our current expectations and projections about future events. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements. Factors that could cause such differences include, but are not limited to: changes to the terms of our license, new legislation or decisions by the regulator affecting our operations, the outcome of legal proceedings to which we are a party, particularly class action lawsuits, our ability to maintain or obtain permits to construct and operate cell sites, and other risks and uncertainties detailed from time to time in our filings with the U.S. Securities and Exchange Commission, including under the caption “ Risk Factors ” in our Annual Report for the year ended December 31, 2018. Although we believe the expectations reflected in the forward-looking statements contained herein are reasonable, we cannot guarantee future results, level of activity, performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. We assume no duty to update any of these forward-looking statements after the date hereof to conform our prior statements to actual results or revised expectations, except as otherwise required by law. 2

Full End-To-End Service Communications Group (1) Appx. 2.8 million  27% Market  Leading brand in  Mobile subs share Israel ’ s mobile The largest cellular market Mobile (1) provider in Israel  Fixed line  International Appx. 269k  219k TV subs  (1) telephony calls Broadband subs (12% market share) Leading the TV Fixed line Residential revolution in Israel with OTT TV service  Cyber security  Hosting services Fixed line  Integration services  Cloud services Business  Transmission  IOT 3 (1) As of Q4 ’ 18 based on companies ’ reports and Company ’ s estimation

Cellcom Israel Strategy  from a cellular  Optimization of  New Growth  cost structure company to a Engines comprehensive telecom group 4

From A cellular company To a Telecommunications Group 5

Cellular Segment Maintaining Market Leadership  Sales of bundled packages of cellular + fixed line products. The first and only operator in Israel to offer quad play  Successful marketing of complete communication package increases our total income per household even as cellular prices decrease  Upsale of data packages  Sales of VAS products (cyber security, streaming music, backup, etc.) 6

TV Service Reaching 12% Market Share  Launched new TV service in December 2014  Hybrid solution of DTT linear TV plus OTT TV (VOD + channels)  Over 10,000 VOD assets for unlimited usage  Highly competitive price – NIS 99 Attractive Quad and Triple play offers  Multi screen strategy (IOS ,Android smart tv, set top boxes, Apple tv)  Cutting edge technology: full catch up and cloud PVR  Advanced intuitive user experience 7

Offering The Top Channels viewers really Want All the sports Current events The leading series from The leading studios The world ’ s leading children ’ s channels Entertainment, leisure, science and nature Cellcom channels 8

Fast Growth in The TV Market Cellcom tv subscribers since launch (Dec 2014) Thousands 219 206 195 184 170 154 137 124 111 99 87 74 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 9

Continued Growth in Broadband (1) 40% of wholesale market 269 259 248 235 222 206 189 173 156 146 136 120 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 10 (1) According to bezeq ’ s reports for Q3 ’ 18

Israel Internet infrastructure is lagging behind The reasons: • Duopoly in the infrastructure segment created a non-competitive market • There is no real incentive to invest in infrastructure Mb/sec (1) Internet Speed Israel ranks 70th in the world Israel (1) Mean download speed according to Cable 2018 report published on M-Lab site 11

Cellcom Israel ’ s opportunity  Unfulfilled need of high-speed internet  High market prices  Low Internet speed  Opportunity to change market shares 12

(1) Investment in IBC  Cellcom entered an MOU with the Israeli Electric Company, IBC and the other shareholders and main creditors of IBC for investment in IBC.  Cellcom and IIF entered partnership agreements for the purchase of 70% of IBC's share capital, through equal co-investment for Appx. M ’ Nis 100. An additional 30% will be held by the Israel Electric Company  IBC and IEC entered into an agreement updating IBC's existing right of use and services agreement for IBC's fiber-optic network when deployed over IEC's infrastructure (1) The transaction is conditional to final regulatory approvals. There is no certainty that the transaction will be completed. For full information, see the Company's Immediate Report of March 13, 2019. 13

IBC will revolutionize Internet infrastructure (1) in Israel  IBC has the exclusive right to deploy an optical infrastructure on the IEC infrastructure  IBC has a significant advantage in deployment costs in areas with high electricity infrastructure Households reach target  High performance capabilities of IEC Cellcom Israel + IBC (Thousand) 1,200  Reducing the need for deployment Above 900 permits Above 500  There is an existing deployment to about 150,000 households After 3 Years After 5 Years After 10 Years (1) The transaction is conditional to final regulatory approvals. There is no certainty that the transaction will be completed. For full information, see the Company's Immediate Report of March 13, 2019. 14

Benefits for Cellcom Israel  Integrates with Cellcom Israel ’ s strategy – leading the revolution in the fixed line market  Another product in the communications products basket that Cellcom Israel offers  Providing higher quality TV services  Providing new and advanced services  Significant savings in the amounts paid for Bezeq's Internet infrastructure and improved profitability in the fixed-line segment 15

IRU Agreement The Company undertakes to purchase from IBC 10-15% percentage of IBC's fiber optics 'home pass', as shall be deployed by IBC in the next 15 years. The IRU agreement is expected to have a gradual positive effect on the Company's results of operations and free cash flow in the coming years:  Decrease the Company's expenses for usage of Bezeq's and Hot's infrastructure  Decrease the Company's independent investments in fiber-optic deployment to residential areas,  The Company and IIF further entered a term sheet for the sale of the Company's independent fiber-optic infrastructure in residential areas to (1) IBC (1) The transaction is conditional to final regulatory approvals. There is no certainty that the transaction will be completed. For full information, see the Company's Immediate Report of March 13, 2019. 16

Aggressive Cost Reduction  Reduction of head count FTE Positions 7,254  launch of a new voluntary retirement plan that will be another layer in our ongoing expenses reduction process 3,392  Dealer commissions reduction  Reduction of advertising and sales promotion expenses SG&A (M ’ Nis)  IT systems and building maintenance expenses reduction 1,676 927  Warranty and repair services expense reduction  Reduction in ‘ walk in center ’ branches and office space 17

(1) 2018 Key Financial Summary M ’ Nis 2017 2018 YoY % Total Revenues 3,871 3,688 -4.7% Service Revenues 2,919 2,784 -4.6% Equipment Revenues 952 904 -5.0% Adjusted EBITDA 853 660 -22.6% Net Income (loss) 113 -64 N.A. Free Cash Flow 325 181 -21.9% (1) All data should be reviewed in conjunction with the Company's press release and financial report for the Fourth quarter of 2018 18

(1) Q4 2018 Key Financial Summary M ’ Nis Q4 ’ 17 Q4 ’ 18 YoY % Total Revenues 975 918 -5.8% Service Revenues 712 677 -4.9% Equipment Revenues 263 241 -8.3% Adjusted EBITDA 189 163 -13.8% Net Income (loss) 10 -35 N.A. Free Cash Flow 77 7 -90.9% (1) All data should be reviewed in conjunction with the Company's press release and financial report for the Fourth quarter of 2018 19

Substantial Reduction of Financial Debt M ’ NIS Financial Debt, Net 4,553 3,842 2,951 2,747 2,547 2,553 2,264 (1) Based on company reports for the relevant years 20