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CellcomIsrael

2020

2

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, 2019.

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.

This document does not constitute an offer to sell, or a solicitation of an offer to purchase, any securities. Any

securities referred to herein have not been and will not be registered under the U.S. Securities Act of 1933, as

amended (the “Securities Act”), and may not be offered or sold within the United States absent registration or an

applicable exemption from, or in a transaction not subject to, the registration requirements of the Securities Act.

There is no intention to register any securities referred to herein in the United States or to make a public offering of

the securities in the United States.

FORWARDLOOKING STATEMENTS

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Full End-To-End Service Communications Group

Mobile

Fixed lineResidential

Fixed lineBusiness

Appx. 2.7 million Mobile subs

26% Market share

Leading brand in Israel’s mobile market

Appx. 278k Broadband subs

258k TV subs (14% market share)

Fixed line telephony

Optical fibers

International calls

Cyber security

Cloud services

Transmission

Hosting services

Integration services

Leading the TV revolution in Israel with OTT TV service

The largest cellular provider in Israel

(1)

(1)

IOT

(1)

(1) As of Q4’19 based on companies’ reports and Company’s estimation

4

CellcomStrengths

Largest Cellular operator in Israel, with 26% market share

Cellular Network sharing agreements with two MNO’s

Leading the OTT TV revolution in Israel, with 14% TV market share

Fiber infrastructure using IRU agreement with IBC

(1)

(1) As of Q4’19 based on companies’ reports and Company’s estimation

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Cellular Segment Sales of bundled packages of cellular + fixed line products.

The first and only operator in Israel to offer quad play

Successful marketing of complete communications

packages increases our total income per household even as

cellular prices decrease

Network sharing agreements with two MNO’s help reducing

opex and capex

Sales of VAS products (cyber security, streaming music,

backup, etc.)

Maintaining Market Leadership

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Golan TelecomPurchase

In March 2020, Cellcom entered an agreement for the purchase of

Golan Telecom's shares. The transaction is subject to certain

conditions, including the receipt of regulatory approvals

Total purchase price is NIS 590 million and additional payments

The sum of NIS 590 shall be paid in cash in two installments:

NIS 413 million upon completion of the transaction

NIS 177 million within 3 years from completion thereof

The Company will issue and deposit 8.2 million shares of the

Company with a trustee. The Escrowed Shares may be sold in

order to finance the deferred payment including upon an

acceleration event

(1) The transaction includes standard and customary conditions and representations and is subject to the completion of due diligence by the Company without negative finding having an adverse material effect over the value of the Company in comparison to the information provided prior to signing of the MOU, receipt of regulatory approvals and material third parties' approval and absence of material adverse change to Golan Telecom's condition (as defined in the MOU).

(1)

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Golan TelecomSnapshot2019

Entered the Market in May 2012

Apx. 927K subscribers

29% Annual churn rate

NIS 530 million revenues

Apx. NIS 48 ARPU

(1) Based on Electra Q4’19 reports

(1)

8

2.7 0.9

CellcomIsrael

Golan

27% 9%

2G, 3G & 4GNetworks

A highly complementary combination, with strong synergies

3.6

Consolidated Pro-forma

36%

2G, 3G & 4G

Mobile Sub.Market Share

(1)

Subscribers (m)

(1)

Cellcom Israel & GolanHighly Complementary combination

(1) Based on company and Electra Q4’19 reports

(2) Golan provides 2G service using Cellcom Israel’s infrastructure . 3G & 4G services are provided over the companies shred

network

3G & 4G(2)

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Potentials Soft Synergies• unify overlapping activities• Generate efficiencies in property,

logistics and procurement• Roaming costs

Optional Cost synergies

• Handsets, value added services, repair services

Optional New offering of mobile services

• Access to new households – an opportunity to increase fixed line penetration (using wholesale market)

Fixed line servicescross- selling

(1)

(1) Golan doesn't sell cell phones

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Hybrid solution of DTT linear TV plus OTT TV (VOD + channels)

Advanced intuitive user experience

Over 10,000 VOD assets for unlimited usage

Highly competitive price Attractive Quad and Triple play offers

Multi screen strategy (IOS ,Android smart tv, set top boxes, Apple tv)

Partnership with Netflix and Amazon prime

Leading the TV revolution in Israel with OTT TV service

Cellcom tvReaching 14% Market Share

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Offering The Top ChannelsViewers Really Want

All the sports

Current events

The leading seriesFrom The leading

studios

The world’s leading children’s channels

Entertainment, leisure,

science and nature

Cellcom channels

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Growth in TV and Broadband Subscribers

Broadband Subscribers

TV Subscribers

ThousandsThousands

94

156

222

269 278

1 1 1 1 1

63

111

170

219

258

1 1 1 1 1

Based on company reports

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IBCLarge scale deployment in short time

Exclusive right to deploy an optical infrastructure on the IEC infrastructure

Significant advantage in deployment costs in areas with high electricity infrastructure

High performance capabilities of IEC

Reducing the need for deployment permits

Existing deployment to over 300,000 Home pass

(1) On July 31, 2019, the Company and Israel Infrastructure Fund's indirect investment in IBC, and the Company's sale of independent fiber- opticinfrastructure in residential areas to IBC, were both completed. For additional details see the Company's quarterly report on Form 6-K dated 15.8.2019

(2) Until 2043

(1)

(2)

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IRU Agreement

High return on investment IRU main points:

Fiber to the home right of use for appx. 25 years

IRU payments per household, paid over 9 years with interest

Annual maintenance fee

IRU benefits for Cellcom:

Reducing the Company's investments in fiber deployment and positively impacting the Company's cash flow

Savings in cash flow and expenses for access and traffic payments to Bezeq and HOT

1515

IBC Households Reach(Thousand)

Cellcom connected households (15% out of IBC Households reach)

18013511375Wholesale

annual expenses saving (M’NIS)

140105885965 Nis

15111395 370 Nis

173130108 80 Nis

184138115 85 Nis

Expected savings in cash flow and wholesale expenses

75

113

135

180

500

750

900

1,200

Wholesale Average Cost per

household

Cellcom connected households

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Cellcom Business Solutions

Handsets

Internet Security Cloud services Transmission

Hosting Services

Integration services

Telephony

International communication

IOT

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Cellcom Smart CityOffers end-to-end solutions

The ability to connect things in a smart way that will lead to efficiency, business growth and life quality improvement.

Combination of various solutions including:

Energyefficiency

Waste management

Sensors of environmental

protection

Water management

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Financial Overview

1,215 1,258

1 1

1,730 1,679

1 1

1

Service RevenuesMitigating cellular revenues erosion effect with fixed line revenues growth

M’NIS

Fixed Line Service RevenuesCellular Service RevenuesM’NIS

Based on company reports

Adjusted EBITDA and Operating Profit

687

940

1 1

101

24

1 1

M’NIS

Adjusted EBITDA Operating ProfitM’NIS

(1) Please see "Use of Non-IFRS financial measures" section the company’s annual report dated March 23, 2020.(2) Adjusted EBITDA figures from 2019 include impact of adoption of IFRS 16. For more details see the company’s annual report dated March 23, 2020.(3) 2018 EBITDA includes an expense for an employee voluntary retirement plan in the amount of approximately NIS 26 million, 2019 EBITDA includes an expense for a new employee voluntary retirement plan in the amount of approximately NIS 45 million

Based on company reports

665

IFRS16

(1,2,3)

Capex

181

391

1 1

1

Capex and Free Cash Flow

593 557

1 1

M’NIS

Free Cash FlowM’NIS

Based on company reports

(1) Please see "Use of Non-IFRS financial measures" section the company’s annual report dated March 23, 2020.(2) Free cash flow for 2019 includes an amount of approx. NIS 181 million from sale of independent fiber optic infrastructure of the company in residential areas to IBC

(2)

(1)

2.7472.547 2.553

2.264

1.897

1 1 1 1 1

Net DebtB’NIS

Reduction of Financial Debt

Based on company reports

(1) Net Debt defined as credit and loans from banks and others, debentures and interest payable, net of cash and cash equivalents and current investments in tradable securities.

(1)

3

1,478

1,045

194

Cash 31.12.19 Repayments2020-2021

Conservative Financial Policy

10589

7257 41

27

14519 526476

518 518

368

255

123 123

1 3

Interest Principal

M’NIS

Cash vs. Debt repayment Debt Repayment Schedule

B’NIS

(1)

2020-2021

(1)

(1) As of December 31, 2019

Based on company reports

1,239

Comprehensive

Restructuring Plan

September 2019

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The plan goals, with a target to achieve them by the end of 2020

(1) Excluding special and unusual items

1. Return to positive net income

2. Reduce the Company’s net debt to EBITDA ratio (excluding IFRS16

ramifications) to below 3.00

3. Prepare the Company to better cope with market conditions, the intense

competition and future investments

The Plan includes the following major components and target timetable:

(1)

(1)

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Cutting expensesGenerating higher free cash flow

(1) To be executed by the end of 2020

Annual reduction of appx. NIS 100-150 million from Q3 2019

(annual run rate) opex Level

Substantial reduction in manpower

Reducing payments to suppliers

Reduction of landline wholesale access fees

(1)

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Reducing CapexGenerating higher free cash flow

(1) To be executed by the end of 2020, w/o new frequencies related capex

Annual capex reduction to NIS 450-500 million level

Reducing payments to suppliers

Lowering various engineering and IT investments

Stopping all fiber optic enrolment investments in residential

neighborhoods which was taken over by IBC

(1)

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Strengthening our balance sheet and lowering our net debt

(1) Specific timing and structure to be determined in accordance with the evolvement of the Plan(2) This document does not constitute an offer to sell, or a solicitation of an offer to purchase, any securities. For additional details see

the Company's quarterly report dated November 27, 2019.(3) To be carried out by management, at its discretion, at such timing, amounts and structure, according to market conditions.

Capital Raising

Capital raising of appx. NIS 400 million

To be executed prior to 2019 year-end and in the form of an equity offering

Debt reduction

Open market repurchases of debentures up to NIS 150 million

Factoring

Factoring of customers' end-user equipment of appx. NIS 100-150 million

Presently under review due to operational complexity and related costs

Execution of the Plan may entail significant one-time expenses. Those are not included in the Plan

components above

(1)

(2)

(3)

3.32

2.89

1 1 Q4'20

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Reducing our leverage

(1) EBITDA without IFRS16 ramifications

Net Debt / EBITDA(1)

Below 3.00

Reduce the Company’s net debt to EBITDA ratio (excluding IFRS16 ramifications) to below 3.00

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Contact us Shlomi Fruhling Chief Financial Officer

Elad LevyInvestors Relations Manager

Investors website: investors.cellcom.co.ilE-mail: investors@Cellcom.co.ilTel : + 972 52 9989735