BEZEQ GROUP REPORTS SECOND QUARTER 2017 FINANCIAL RESULTS Tel Aviv, Israel - August 24, 2017 - Bezeq - The Israel Telecommunication Corp., Ltd. (TASE: BEZQ), Israel's leading telecommunications provider, today announced its financial results for the three months ended June 30, 2017. Details regarding the investor conference call and webcast to be held today are included later in this press release. David Granot, Bezeq's Acting Chairman, stated, "Our financial results for the second quarter of 2017 reflect the solid foundations the Group is based upon, which are the results of our strategies of continued investment in state-of-the-art infrastructure, and quality differentiation in services and product innovation. We have weathered through the recent events surrounding Bezeq and the increasing competition across all operating segments. These strategies are at the heart of all Group companies, and will continue to be the basis for our efforts to maintain our position as the leading telecom group in Israel." Bezeq Group Results (Consolidated) Revenues in the second quarter of 2017 were NIS 2.46 billion, compared to NIS 2.51 billion in the same quarter of 2016, a decrease of 1.9%. The decrease was due to lower revenues in Bezeq Fixed- Line, Pelephone and yes, partially offset by an increase in revenues in Bezeq International. Salary expenses in the second quarter of 2017 were NIS 494 million, compared to NIS 495 million in the same quarter of 2016, a decrease of 0.2%. Operating expenses in the second quarter of 2017 were NIS 973 million, compared to NIS 972 million in the same quarter of 2016, an increase of 0.1%. Other operating income, net in the second quarter of 2017 amounted to NIS 1 million compared to NIS 12 million in the same quarter of 2016. The decrease in other operating income was due to timing differences in the sale of real estate at Bezeq Fixed-Line in the second quarter of 2017. Depreciation expenses in the second quarter of 2017 were NIS 424 million, compared to NIS 440 million in the same quarter of 2016, a decrease of 3.6%. The decrease in depreciation expenses was primarily due to a reduction in depreciation expenses at Bezeq Fixed-Line as well as a reduction in the amortization of excess costs recorded in connection with the increase to a controlling stake in yes. Operating profit in the second quarter of 2017 was NIS 573 million compared to NIS 616 million in the same quarter of 2016, a decrease of 7.0%. EBITDA in the second quarter of 2017 was NIS 997 million (EBITDA margin of 40.5%) compared to NIS 1.06 billion (EBITDA margin of 42.1%) in the same quarter of 2016, a decrease of 5.6%. Financing expenses in the second quarter of 2017 were NIS 102 million compared to NIS 105 million in the same quarter of 2016, a decrease of 2.9%. The decrease in financing expenses was primarily due a decrease in the estimated second contingent consideration in relation to the acquisition of yes of NIS 84 million. This amount was partially offset by an update in the estimated fair value of advanced payments made by the Company to Eurocom DBS of NIS 57 million, increased financing expenses at yes as well as financing expenses of NIS 13 million recognized in connection with the exchange of yes debentures for Bezeq Fixed-Line debentures. Tax expenses in the second quarter of 2017 were NIS 111 million compared to NIS 133 million in the same quarter of 2016, a decrease of 16.5%. The decrease in tax expenses was due a decrease in taxable income as well as a reduction in corporate tax rates from 25% to 24% in 2017. Net profit in the second quarter of 2017 was NIS 358 million compared to NIS 377 million in the same quarter of 2016, a decrease of 5.0%. Cash flow from operating activities in the second quarter of 2017 was NIS 875 million compared to NIS 870 million in the same quarter of 2016, an increase of 0.6%. Payments for investments (Capex) in the second quarter of 2017 was NIS 406 million compared to NIS 387 million in the same quarter of 2016, an increase of 4.9%. Free cash flow in the second quarter of 2017 was NIS 487 million compared to NIS 539 million in the same quarter of 2016, a decrease of 9.6%. The decrease in free cash flow was primarily due to timing differences resulting in a decrease in proceeds from the sale of real estate of NIS 38 million. Net financial debt of the Group was NIS 9.65 billion as of June 30, 2017 compared to NIS 9.25 billion as of June 30, 2016. As of June 30, 2017, the Group's net financial debt to EBITDA ratio was 2.43, compared to 2.24 as of June 30, 2016. Dividend Announcement

In accordance with the Company's dividend policy, the Board of Directors recommended the distribution of 100% of net profits for the first half of 2017 as a cash dividend of NIS 708 million (approximately NIS 0.26 per share) to shareholders. The semi-annual dividend, which is subject to shareholder approval, would be payable on October 16, 2017. The ex-dividend date is October 1, 2017.

2017 Outlook

Based on the information available to the Group today, below is the Bezeq Group's outlook for 2017, as published in the Company's annual report as of December 31, 2016:

Net profit attributable to shareholders: Approximately NIS 1.4 billion EBITDA: Approximately NIS 4.0 billion

Free cash flow: Approximately NIS 2.0 billion

The Company's forecasts detailed above are forward-looking information, as defined in the Securities Law, and are based on assessments, assumptions and expectations of the Company, including the following:

  1. The forecasts do not include the effects, insofar as there are any, of a provision for the early retirement of employees and/or the signing of a collective labor agreement, the realization of Company rights in the real estate property "Sakia" or the cancellation of the Group's corporate/structural separation including the effects of the merger with yes.

  2. The forecasts are based, among other factors, on the Group's assessments concerning the competition in the communications market and the regulation of the industry, as well as the economic situation in Israel, and consequently, the Group's ability to implement its plans for 2017. In addition, the forecasts include the positive effect of the early adoption of accounting standard IFRS 15, beginning January 1, 2017, on EBITDA in the amount of NIS 120-160 million and on net profits in the amount of NIS 60-90 million. Actual results may differ from those assessments, taking into account changes in the above mentioned factors and in the business conditions as well as in the impact of regulatory decisions, technological changes, developments in the communications market, and realization of risk factors detailed in the Group's periodic report for the year 2016.

Bezeq The Israel Telecommunication Corporation Ltd. published this content on 24 August 2017 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 24 August 2017 07:12:05 UTC.

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