Partner Communications Announces the Reduction of the Royalty Rates Paid to the State in 2012 and Their Abolishment as of 2013

Partner Communications Company Ltd.

announces that following the approval of the Israeli Parliament's finance committee on July 10, 2012, the regulations that regulate the royalty rates that apply to general licensees for the provision of mobile radio telephone services using the cellular method (MRT), general licensees for the provision of domestic fixed-line telecommunication services (domestic fixed-line operators, including exclusive domestic fixed-line operators) and general licensees for the provision of international long distance (ILD) services, were amended on August 1, 2012. Following the amendment of the regulations, the rates of the royalties paid to the state by the Partner Group shall be reduced in 2012 and shall be abolished as of 2013 onwards. The total royalties paid to the state by the Partner Group with respect to the first quarter of 2012 is in the amount of approximately NIS 20 million. The reduction in the royalty rates is as follows: (A) With respect to Cellular Communications Services: (1) The royalty rate for the year 2012 shall be 2.5% from the beginning of the year until May 23, 2012, 1% from May 24, 2012 until July 31, 2012 and 0.292% for the remainder of the year, provided that the annual royalty rate for the year 2012 shall be 1.3%. This royalty rate is reduced compared with the previous arrangement according to which the royalty rate was 2.5% from the beginning of the year until May 23, 2012 and 1% for the remainder of the year; (2) The royalty rate as of the year 2013 onwards shall be 0% (instead of 1% for the same period).