PARTNER COMMUNICATIONS REPORTS FIRST QUARTER 2022 RESULTS[1]

QUARTERLY ADJUSTED EBITDA² TOTALED NIS 257 MILLION

NET DEBT² TOTALED NIS 720 MILLION

QUARTERLY CELLULAR SUBSCRIBER GROWTH TOTALED 40 THOUSAND

PARTNER'S FIBER-OPTIC SUBSCRIBER BASE TOTALS 243 THOUSAND AS OF TODAY

 THE NUMBER OF HOUSEHOLDS IN BUILDINGS CONNECTED TO PARTNER'S FIBER-OPTIC INFRASTRUCTURE TOTALS 807 THOUSAND AS OF TODAY 

ROSH HA'AYIN, Israel, May 24, 2022 /PRNewswire/ --

First quarter 2022 highlights (compared with first quarter 2021)

• Total Revenues: NIS 854 million (US$ 269 million), an increase of 3%
• Service Revenues: NIS 690 million (US$ 217 million), an increase of 8%
• Equipment Revenues: NIS 164 million (US$ 52 million), a decrease of 15%
• Total Operating Expenses (OPEX)²: NIS 476 million (US$ 150 million), a decrease of 1%
• Adjusted EBITDA: NIS 257 million (US$ 81 million), an increase of 23%
• Profit for the Period: NIS 39 million (US$ 12 million), an increase of NIS 34 million
• Adjusted Free Cash Flow (before interest)²: NIS 25 million (US$ 8 million), an increase of NIS 6 million
• Cellular ARPU: NIS 48 (US$ 15), unchanged
• Cellular Subscriber Base: approximately 3.06 million at quarter-end, an increase of 6%
• Fiber-Optic Subscriber Base: 233 thousand subscribers at quarter-end, an increase of 78 thousand since Q1 2021, and an increase of 21 thousand in the quarter
• Homes Connected (HC) to Partner's Fiber-Optic Infrastructure: 770 thousand at quarter-end, an increase of 256 thousand since Q1 2021, and an increase of 70 thousand in the quarter
• Infrastructure-Based Internet Subscriber Base: 387 thousand subscribers at quarter-end, an increase of 48 thousand since Q1 2021, and an increase of 13 thousand in the quarter
• TV Subscriber Base³: 225 thousand subscribers at quarter-end, a decrease of 9 thousand since Q1 2021, and a decrease of one thousand in the quarter

Partner Communications Company Ltd. ("Partner" or the "Company") (NASDAQ: PTNR) (TASE: PTNR), a leading Israeli communications provider, announced today its results for the quarter ended March 31, 2022.

Commenting on the results for the first quarter 2022, Mr. Avi Zvi, CEO of Partner, noted:

"Partner continued with its positive financial momentum and started 2022 with excellent results despite the competitive market in which the Company operates. The improvement in the financial and operational measures is due to the work and commitment of the Company's dedicated employees, and to the clear strategy which was outlined by management over the last year.

With 807 thousand households connected to the fiber-optic network, as of today, Partner has become, this year, a national infrastructure player in the fixed-line segment as well, with an impressive fiber-optic rollout rate and the signing of significant deals which will benefit the Company's future, including with Tamares Telecom and FREETV.

Partner continues to lead 5G in Israel with a high rate of cellular subscriber base growth, with consistent addition of new subscribers at the same time as churn rates continue to fall. These outcomes reflect our significant investment in our customers and in making our processes fairer and simpler. In TV, we have returned to our original strategy of a 'Super Aggregator' and we offer today to the customer a focused and flexible product that provides the freedom to choose what to watch and what to pay for.

This is the fourth quarterly financial report since I took office as Partner's CEO. The report demonstrates that the business activities that were undertaken in the past year, are bringing about a continual and stable improvement in the Company's results, as reflected, among other things, in the 23% growth in Adjusted EBITDA compared to last year.

The acquisition of Partner's controlling stake and the appointment of new members of the Board of Directors, together with the Company's capital structure, position the Company to fully realize the strategy outlined in the past year and its transformation from a service company into a service and infrastructure company."

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

"The first quarter of 2022 demonstrated the Company's ability to combine subscriber and revenue growth with improvement in profitability. The cellular segment achieved service revenue growth for a fourth consecutive quarter together with higher profitability than was achieved in the previous and corresponding quarter last year. In the fixed-line segment, fiber-optic subscriber growth continued, a trend that was reflected in the continued growth of the segment's service revenues. The fixed-line segment Adjusted EBITDA increased by 29% compared to the corresponding quarter last year, together with an improvement in the profitability margin to 28% compared with 22% in the corresponding quarter of 2021.

Our cellular subscriber base increased in the quarter by 40 thousand subscribers, of which 37 thousand were Post-Paid subscribers. The cellular churn rate in the first quarter of 2022 totaled 7.0%. Excluding the churn of Ministry of Education subscribers who joined for limited periods, churn rate totaled 6.7%, compared to 6.9% in the corresponding quarter last year. ARPU in the first quarter remained stable at NIS 48 for the fifth consecutive quarter.

In the fixed-line segment, the number of Homes Connected within buildings connected to our fiber-optic infrastructure reached 770 thousand at the end of first quarter of 2022, an increase of 70 thousand in the quarter. The increase in fiber-optic subscribers continued and even achieved a record high for quarterly growth, as the fiber-optic subscriber base increased by 21 thousand in the quarter, compared to increases of 20 thousand and 19 thousand in the previous two quarters, respectively. Partner's fiber-optic subscriber base totaled 233 thousand at the end of the quarter, reflecting a 30% penetration rate from potential customers in connected buildings, unchanged from the rate at the end of the previous quarter and the corresponding quarter last year.  Regarding TV, the number of subscribers totaled 225 thousand at the end of the quarter.

Adjusted EBITDA in the first quarter of 2022 totaled NIS 257 million, an increase of 23% compared to NIS 209 million in the corresponding quarter last year.

In the first quarter of 2022, the recovery trend in roaming service revenues that was seen in the fourth quarter of 2021 continued. Looking ahead, the Company expects this trend to continue, and roaming service revenues in the second quarter are expected to be even higher than those in the first quarter mainly due to seasonality effects.

Adjusted Free Cash Flow (before interest and including lease payments) for the quarter totaled NIS 23 million. CAPEX payments totaled NIS 170 million. Net debt was NIS 720 million at the end of the quarter, compared with NIS 639 million at the end of the corresponding quarter last year, an increase of NIS 81 million. The Company's net debt to Adjusted EBITDA ratio stood at 0.7 at the end of the quarter, compared to a ratio of 0.8 in the previous quarter and the corresponding quarter last year."

Financial Review

In Q1 2022, total revenues were NIS 854 million (US$ 269 million), an increase of 3% from NIS 833 million in Q1 2021.

Service revenues in Q1 2022 totaled NIS 690 million (US$ 217 million), an increase of 8% from NIS 639 million in Q1 2021.

Service revenues for the cellular segment in Q1 2022 totaled NIS 443 million (US$ 139 million), an increase of 7% from NIS 413 million in Q1 2021. The increase was mainly the result of higher roaming service revenues due to the lower negative impact of COVID-19 on roaming service revenues compared to Q1 2021, and growth of the cellular subscriber base, partially offset by the continued price erosion, although to a lesser degree than in the past.

Service revenues for the fixed-line segment in Q1 2022 totaled NIS 280 million (US$ 88 million), an increase of 8% from NIS 260 million in Q1 2021. The increase mainly reflected higher revenues from the growth in internet and TV services, which were partially offset by a decline in revenues from international calling services.

Equipment revenues in Q1 2022 totaled NIS 164 million (US$ 52 million), a decrease of 15% from NIS 194 million in Q1 2021, mainly reflecting a decrease in the volume of equipment sales to wholesale customers in the cellular segment, and a decrease in sales in the fixed-line segment, largely reflecting the Company's decision in the final quarter of 2021 to move towards a leasing model of internet routers to private customers instead of a sales model.

Gross profit from equipment sales in Q1 2022 was NIS 33 million (US$ 10 million), compared with NIS 42 million in Q1 2021, a decrease of 21%, mainly reflecting the decrease in wholesale sales in the cellular segment and the decrease in fixed-line sales.

Total operating expenses ('OPEX') totaled NIS 476 million (US$ 150 million) in Q1 2022, a decrease of 1% or NIS 5 million from Q1 2021, mainly reflecting the decrease in an expense line-item provision, as well as decreases in international telephony expenses and in logistics expenses, which were partially offset by an increase in content expenses. Including depreciation and amortization expenses and other expenses (mainly amortization of employee share based compensation), OPEX in Q1 2022 remained unchanged compared with Q1 2021.

Operating profit for Q1 2022 was NIS 72 million (US$ 23 million), an increase of 157% compared with NIS 28 million in Q1 2021.

Adjusted EBITDA in Q1 2022 totaled NIS 257 million (US$ 81 million), an increase of 23% from NIS 209 million in Q1 2021. As a percentage of total revenues, Adjusted EBITDA in Q1 2022 was 30% compared with 25% in Q1 2021.

Adjusted EBITDA for the cellular segment was NIS 172 million (US$ 54 million) in Q1 2022, an increase of 20% from NIS 143 million in Q1 2021, largely reflecting the increase in revenues as described above, and the decrease in the operating expenses including the provision decrease and the decrease in logistics expenses. As a percentage of total cellular segment revenues, Adjusted EBITDA for the cellular segment was 29% in Q1 2022, compared with 25% in Q1 2021.

Adjusted EBITDA for the fixed-line segment was NIS 85 million (US$ 27 million) in Q1 2022, an increase of 29% from NIS 66 million in Q1 2021, mainly reflecting the increase in fixed-line segment service revenues which was partially offset by a decrease in gross profit from equipment sales due to the cessation of sales of internet routers, as described above. As a percentage of total fixed-line segment revenues, Adjusted EBITDA for the fixed-line segment was 28% in Q1 2022, compared with 22% in Q1 2021.

Finance costs, net in Q1 2022 were NIS 18 million (US$ 6 million), a decrease of 5% compared with NIS 19 million in Q1 2021.

Income tax expenses in Q1 2022 were NIS 15 million (US$ 5 million), an increase of 275% compared with NIS 4 million in Q1 2021, mainly due to the increase in operating profit.

Profit in Q1 2022 was NIS 39 million (US$ 12 million), an increase of NIS 34 million compared with profit of NIS 5 million in Q1 2021.

Based on the weighted average number of shares outstanding during Q1 2022, basic earnings per share or ADS, was NIS 0.21 (US$ 0.07) compared with basic earnings per share or ADS, of NIS 0.03 in Q1 2021.

Cellular Segment Operational Review

At the end of Q1 2022, the Company's cellular subscriber base (including mobile data, 012 Mobile subscribers and M2M subscriptions) was approximately 3.06 million, including approximately 2.71 million Post-Paid subscribers or 88% of the base, and 355 thousand Pre-Paid subscribers, or 12% of the subscriber base.

During the first quarter of 2022, the cellular subscriber base increased, net, by 40 thousand subscribers. The Post-Paid subscriber base increased, net, by 37 thousand subscribers and the Pre-Paid subscriber base increased, net, by 3 thousand subscribers. The subscriber base of data packages and voice packages for the Ministry of Education (MOE) remained unchanged at 75 thousand, due to the extension of contracts for a number of subscribers for further limited periods.

Total cellular market share (based on the number of subscribers) at the end of Q1 2022 was estimated to be approximately 28%, compared with 28% at the end of Q4 2021 and 27% at the end of Q1 2021.

The quarterly churn rate for cellular subscribers in Q1 2022 was 7.0%, compared with 7.9% in Q4 2021 and 6.8% in Q1 2021. Excluding data and voice packages for the Ministry of Education, the churn rate in Q1 2022 was 6.7% compared with 7.3% in Q4 2021 and 6.9% in Q1 2021.

The monthly Average Revenue per User ("ARPU") for cellular subscribers in Q1 2022 was NIS 48 (US$ 15), unchanged from Q1 2021. This stability mainly reflected the increase in roaming services revenues which was offset by the continued price erosion, although to a lesser degree than in the past, and by a decrease in interconnect contribution to ARPU.

Fixed-Line Segment Operational Review

At the end of Q1 2022:

• The Company's fiber-optic subscriber base was 233 thousand subscribers, an increase, net, of 21 thousand subscribers during the first quarter of 2022.
• The Company's infrastructure-based internet subscriber base was 387 thousand subscribers, an increase, net, of 13 thousand subscribers during the first quarter of 2022.
• Households in buildings connected to our fiber-optic infrastructure (HC) totaled 770 thousand, an increase of 70 thousand during the first quarter of 2022.
• The Company's TV subscriber base totaled 225 thousand subscribers, a decrease, net, of 1 thousand subscribers during the first quarter of 2022.

Funding and Investing Review

In Q1 2022, Adjusted Free Cash Flow (including lease payments) totaled NIS 25 million (US$ 8 million), an increase of 32% compared with NIS 19 million in Q1 2021.

Cash generated from operating activities totaled NIS 237 million (US$ 75 million) in Q1 2022, an increase of 14% from NIS 208 million in Q1 2021.

Lease payments (principal and interest), recorded in cash flows from financing activities under IFRS 16, totaled NIS 42 million (US$ 13 million) in Q1 2022, an increase of 2% from NIS 41 million in Q1 2021.

Cash capital expenditures (CAPEX payments), as represented by cash flows used for the acquisition of property and equipment and intangible assets, were NIS 170 million (US$ 54 million) in Q1 2022, an increase of 14% from NIS 149 million in Q1 2021.

The level of net debt at the end of Q1 2022 amounted to NIS 720 million (US$ 227 million), compared with NIS 639 million at the end of Q1 2021, an increase of NIS 81 million.

Regulatory Developments

Removal of competitive barriers in "Kosher Line" cellular services 

Currently, the terms under which cellular services are provided to the ultra-orthodox segment in Israel are established in agreements with a single kosher authorization entity (The Rabbinical Committee for Communications). Under the terms of these agreements, kosher lines, among other things, have no access to the internet, cannot receive or send text messages, can only operate on handsets whose features have been limited, may only use certain number ranges and may only be ported-out to operators that have been approved by the kosher authorization entity.

On May 1, 2022, following a consultation process, the Ministry of Communications ("MoC") published a decision regarding the removal of competitive barriers in "Kosher Line" cellular services. According to the Minister's decision:

A.         As from July 31, 2022, a cellular licensee will not be able to reject a port-out request due to the subscriber being assigned to a particular tariff plan;

B.         As from November 1, 2022, a cellular licensee will be required to allow subscribers to switch to any plan it offers to its subscribers, regardless of the phone number assigned to the subscriber or the type of handset in the subscriber's possession. In addition, a cellular licensee will be required to offer a subscriber who explicitly requests it a tariff plan in such a way that the service will be provided only using a handset whose features have been restricted or blocked for a service or an application at the request of a subscriber or group of subscribers, provided it offers the same plan using handsets in which no such restrictions have been made. The Company is preparing for the implementation of the decision and is studying the implications for its operations. 

Results of the first annual incentive tender for the deployment of FTTH networks 

On March 7, 2022 the MoC published the results of its first annual incentive tender for the rollout of FTTH (fiber to the home) networks in non-economically feasible areas where Bezeq has decided not to deploy its FTTH network. According to the MoC's announcement Partner will be obliged to deploy its FTTH network to approximately 12,000 households in the incentive areas. According to the terms of the tender, the final grant of the financial incentive for deployment to these households is dependent upon a number of terms and conditions.

Implementation of MoC's decision regarding a reform in the structure of the Internet Market

On March 22, 2022, the Minister amended Bezeq's license allowing it to market a unified product (comprised of both infrastructure and ISP components) to household subscribers and stipulating that from April 3, 2022 onwards, all new subscribers (and any existing subscribers who wish to alter their existing service plans) may only be offered a unified product. This amendment does not apply to the business sector, where the split between the infrastructure services and ISP service shall remain.

At this stage, the Company is unable to evaluate the impact of the decision on the Company's business, among other reasons, in view of the dependence on the determination of the KPIs and the compensation mechanisms and their enforcement by the Ministry of Communications.

License amendment regarding "Cross Ownership limitations" and "Israeli holdings and holdings of founding shareholders or their approved substitutes" 

On April 10, 2022 the Ministry of Communications amended the Company MRT license and authorized the Minister of Communications to allow an Interested Party in a licensee who is a mutual fund, insurance company, investment company or pension fund to hold: (a)  up to 10% of the means of control in a competing MRT operator under certain conditions (instead of holdings at a rate of up to 5% before the license amendment) without having to receive the Minister of Communications' approval, and (b) up to  25% of the means of control of a competing MRT licensee,  under certain conditions, with the Minister's approval, if he believes that this will not harm competition in the cellular segment (instead of holdings at a rate of up to 10% before the license amendment). As part of this amendment to the license, the Ministry clarified in the license section titled "Israeli holdings and holdings of founding shareholders or their successors" that holdings of "founding shareholders or their successors" will not include anyone who is an "Israeli entity" in the event that the relevant licensee was instructed under section 13 of the Communications Law, 1982.

Conference Call Details

Partner will host a conference call to discuss its financial results on Tuesday, May 24, 2022 at 11.00 a.m. Eastern Time / 6.00 p.m. Israel Time.

Please dial the following numbers (at least 10 minutes before the scheduled time) in order to participate:

International: +972.3.918.0687
North America toll-free: +1.888.281.1167
A live webcast of the call will also be available on Partner's Investors Relations website at:  
http://www.partner.co.il/en/Investors-Relations/lobby 

If you are unavailable to join live, the replay of the call will be available from May 24, 2022 until June 7, 2022, at the following numbers:

International: +972.3.925.5921
North America toll-free: +1.888.254.7270

In addition, the archived webcast of the call will be available on Partner's Investor Relations website at the above address for approximately three months.

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 "estimate", "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 communicates our belief regarding (i) the manner in which the agreements will benefit the Company's future; (ii) the opportunity to fully realize our strategy as a result of the recent acquisition of the Company's controlling stake and our capital structure and (iii) continuing growth trend for roaming revenue. In addition, all statements other than statements of historical fact included in this press release regarding our future performance 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, including in particular (i) the severity and duration of the impact on our business of the Covid-19 health crisis, (ii) unexpected technical or commercial issues which may arise as we continue to deploy and expand the use of our fiber optic infrastructure; (iii) unexpected technical or financial constraints which undermine the pursuit of such strategy, and (iv) a stagnation or reduction in our customers' foreign travel patterns which reduces growth in demand for roaming services.  In light of the current unreliability of predictions as to the ultimate severity and duration of the Covid-19 health crisis, as well as the specific regulatory and business risks facing our business, future results may differ materially from those currently anticipated. For further information regarding risks, uncertainties and assumptions about Partner, trends in the Israeli telecommunications industry in general, the impact of 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 immediate 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 quarterly financial results presented in this press release are unaudited financial results.

The results were prepared in accordance with IFRS, other than the non-GAAP financial measures presented in the section "Use of Non-GAAP Financial Measures".

The financial information is presented in NIS millions (unless otherwise stated) and the figures presented are rounded accordingly. The convenience translations of the New Israeli Shekel (NIS) figures into US Dollars were made at the rate of exchange prevailing at March 31, 2022: US $1.00 equals NIS 3.176. The translations were made purely for the convenience of the reader. 

Use of Non-GAAP Financial Measures

The following non-GAAP measures are used in this report. These measures are not financial measures under IFRS and may not be comparable to other similarly titled measures for other companies. Further, the measures may not be indicative of the Company's historic operating results nor are meant to be predictive of potential future results.

About Partner Communications

Partner Communications Company Ltd. is a leading Israeli provider of telecommunications services (cellular, fixed-line telephony, internet services and TV services). 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: http://www.partner.co.il/en/Investors-Relations/lobby

Contacts:

*    Net of treasury shares.  
** Including restricted shares in amount of 1,349,119 and 990,208 as of and  December 31, 2021 and March 31, 2022, respectively, held by a trustee under the Company's Equity Incentive Plan, such shares may become outstanding upon completion of vesting conditions.

*   Representing an amount of less than 1 million.

(1) Mainly amortization of employee share based compensation. (2) Adjusted EBITDA as reviewed by the CODM represents Earnings Before Interest (finance costs, net), Taxes, Depreciation and Amortization (including amortization of intangible assets, deferred expenses-right of use and impairment charges) and Other expenses (mainly amortization of share based compensation). Adjusted EBITDA is not a financial measure under IFRS and may not be comparable to other similarly titled measures for 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 Amortization includes amortization of deferred expenses – right of use and amortization of employee share based compensation and impairment charges.  (3) Operating expenses include selling and marketing expenses and general and administrative expenses.

*   Representing an amount of less than 1 million.

                  

*   Representing an amount of less than 1 million.

At March 31, 2022 and 2021, trade and other payables include NIS 170 million ($54 million) and NIS 131 million, respectively, in respect of acquisition of intangible assets and property and equipment; payments in respect thereof are presented in cash flows from investing activities.

These balances are recognized in the cash flow statements upon payment.

*    Representing an amount of less than 1 million.

*    Representing an amount of less than 1 million.

(1)  Mainly amortization of employee share based compensation and other adjustments.

Key Financial and Operating Indicators (unaudited) *

* See footnote 2 regarding use of non-GAAP measures.
** In Q2'21, the Company removed from its TV subscriber base approximately 21,000 subscribers who had joined at various different times and had remained in trial periods of over six months without charge or usage

Disclosure for notes holders as of March 31, 2022

Information regarding the notes series issued by the Company, in million NIS

(1)  In April 2019, the Company issued in a private placement 2 series of untradeable option warrants that were exercisable for the Company's Series G debentures. The exercise period of the first series is between July 1, 2019 and May 31, 2020 and of the second series is between July 1, 2020 and May 31, 2021. The Series G debentures that were allotted upon the exercise of an option warrant were identical in all their rights to the Company's Series G debentures immediately upon their allotment, and are entitled to any payment of interest or other benefit, the effective date of which is due after the allotment date. The debentures that were allotted as a result of the exercise of option warrants were registered on the TASE. The total amount received by the Company on the allotment date of the option warrants is NIS 37 million. For additional details see the Company's press release dated April 17, 2019. Following exercise of option warrants from the first series, the Company issued Series G Notes in a total principal amount of NIS 225 million. Following exercise of option warrants from the second series, the Company issued Series G Notes in a total principal amount of NIS 101 million. The issuance in May 2021 was the final exercise of option warrants from the second series.
(2)  Regarding Series F Notes, Series G Notes, Series H Notes and borrowing P, borrowing Q and borrowing R the Company is required to comply with a financial covenant that the ratio of Net Debt to Adjusted EBITDA shall not exceed 5. Compliance will be examined and reported on a quarterly basis. For the purpose of the covenant, Adjusted EBITDA is calculated as the sum total for the last 12 month period, excluding adjustable one-time items. As of March 31, 2022, the ratio of Net Debt to Adjusted EBITDA was 0.8. Additional stipulations mainly include: Shareholders' equity shall not decrease below NIS 400 million and no dividends will be declared if shareholders' equity will be below NIS 650 million regarding Series F notes, borrowing P and borrowing Q. Shareholders' equity shall not decrease below NIS 600 million and no dividends will be declared if shareholders' equity will be below NIS 750 million regarding Series G notes and borrowing R. Shareholders' equity shall not decrease below NIS 700 million and no dividends will be declared if shareholders' equity will be below NIS 850 million regarding Series H notes. The Company shall not create floating liens subject to certain terms. The Company has the right for early redemption under certain conditions. With respect to notes payable series F, series G and series H: the Company shall pay additional annual interest of 0.5% in the case of a two- notch downgrade in the Notes rating and an additional annual interest of 0.25% for each further single-notch downgrade, up to a maximum additional interest of 1%; the Company shall pay additional annual interest of 0.25% during a period in which there is a breach of the financial covenant; debt rating will not decrease below BBB- for a certain period. In any case, the total maximum additional interest for Series F, Series G and Series H, shall not exceed 1.25%, 1% or 1.25%, respectively. For more information see the Company's Annual Report on Form 20-F for the year ended December 31, 2021.

    In the reporting period, the Company was in compliance with all financial covenants and obligations and no cause for early repayment occurred.

*    On these dates additional Notes of the series were issued. The information in the table refers to the full series.

Disclosure for Notes holders as of March 31, 2022 (cont.)

Notes Rating Details*

(1) In August 2021, S&P Maalot reaffirmed the Company's rating of "ilA+/Stable".

(2) For details regarding the rating of the notes see the S&P Maalot reports dated August 11, 2021.

* A securities rating is not a recommendation to buy, sell or hold securities. Ratings may be subject to suspension, revision or withdrawal at any time, and each rating      should be evaluated independently of any other rating

Summary of Financial Undertakings (according to repayment dates) as of March 31, 2022

a.  Notes issued to the public by the Company and held by the public, excluding such notes held by the Company's parent company, by a controlling shareholder, by companies controlled by them, or by companies controlled by the Company, based on the Company's "Solo" financial data (in thousand NIS).

b.  Private notes and other non-bank credit, excluding such notes held by the Company's parent company, by a controlling shareholder, by companies controlled by them, or by companies controlled by the Company, based on the Company's "Solo" financial data – None.

c.  Credit from banks in Israel based on the Company's "Solo" financial data (in thousand NIS).

Summary of Financial Undertakings (according to repayment dates) as of March 31, 2022 (cont.)

d.  Credit from banks abroad based on the Company's "Solo" financial data – None.
e.  Total of sections a - d above, total credit from banks, non-bank credit and notes based on the Company's "Solo" financial data (in thousand NIS).

f.  Off-balance sheet Credit exposure based on the Company's "Solo" financial data (in thousand NIS) – 50,000 (Guarantees on behalf of a joint arrangement, without expiration date).
g.  Off-balance sheet Credit exposure of all the Company's consolidated companies, excluding companies that are reporting corporations and excluding the Company's data presented in section f above - None.
h.  Total balances of the credit from banks, non-bank credit and notes of all the consolidated companies, excluding companies that are reporting corporations and excluding Company's data presented in sections a - d above - None.
i.  Total balances of credit granted to the Company by the parent company or a controlling shareholder and balances of notes offered by the Company held by the parent company or the controlling shareholder - None.
j.  Total balances of credit granted to the Company by companies held by the parent company or the controlling shareholder, which are not controlled by the Company, and balances of notes offered by the Company held by companies held by the parent company or the controlling shareholder, which are not controlled by the Company – None.
k.  Total balances of credit granted to the Company by consolidated companies and balances of notes offered by the Company held by the consolidated companies - None.

¹ The quarterly financial results are unaudited.
²  For the definition of this and other Non-GAAP financial measures, see "Use of Non-GAAP Financial Measures" in this press release.
³ In the second quarter of 2021, the Company removed from its TV subscriber base approximately 21 thousand subscribers who had joined the company at various times and had remained in trial periods of over six months without charge or usage.

SOURCE Partner Communications Company Ltd.