CellcomIsrael

1

Mobile

Appx. 2.8 million Mobile subs

26% Market share

Leading brand in Israel’s mobile market

Fixed lineResidential

Appx. 248k Broadband subs

195k TV subs (11% market share)

Fixed line telephony

International calls

Fixed lineBusiness

Cyber security

Cloud services

Transmission

Hosting services

Integration services

2

Leading the TV revolution in Israel with OTT TV service

The largest cellular provider in Israel

(1) As of Q2’18 based on companies’ reports and Company’s estimation

Full End-To-End Service Communications Group

(1)

(1)

IOT

3

from a cellular company to a comprehensive telecom group

Optimization of cost structure

New Growth Engines

StrategyCellcom Israel

4

A cellular companyFrom

To a

TelecommunicationsGroup

5

Sales of bundled packages of cellular + fixed line productsThe 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.)

Cellular SegmentMaintaining Market Leadership

6

Cellular Network Sharing Agreements

The company signed a network hosting and sharing agreementwith Golan Telecom (Israeli MNO) which came into effect at thebeginning of Q2- 2017

The Golan agreement is for a minimum of 10 years with averageannual payments of approx. M’NIS 210-220 per year, starting withlower annual payments and increasing over time

The company entered an additional hosting and sharing agreementwith Xfone (New Israeli MNO) which entered the cellular market inApril 2018. The agreement (for the period of no less than 5 years)contains minimum annual payments, ranging between approx. M’NIS20 in the first year and M’NIS 110 in the fifth year*

* After the fifth year of the agreement, the payment mechanism between the parties changes

7

TV Service Reaching 11% Market Share in TV in Three Years

Launched new TV service in December 2014

Highly competitive price – NIS 99 Attractive Quad and Triple play offers

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

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

Cutting edge technology: full catch up and cloud PVR

Over 10,000 VOD assets for unlimited usage

Advanced intuitive user experience

8

Offering The Top Channels viewers

All the sports

really Want

Current events

The world’s leading children’s channels

Entertainment, leisure, science and nature

Cellcom channels

The leading seriesfrom The leading studios

9

Thousands

Fast Growth in The TV Market Cellcom tv subscribers since launch (Dec 2014)

3750

6374

8799

111124

137154

170184

195

Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18

40% of wholesale market

10

Continued Growth in Broadband

32

7094

120136 146 156

173189

206222 235 248

Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18

(1) According to bezeq’s reports for Q1’18

(1)

11

Israel Internet infrastructure is lagging behind

Israel

(1) Mean download speed according to Cable 2018 report published on M-Lab site

Mb/sec

Internet SpeedIsrael ranks 70th in the world

The reasons:

• Duopoly in the infrastructure segment created a non-competitive market

• There is no real incentive to invest in infrastructure

(1)

12

Cellcom Israel’s opportunity

Unfulfilled need of high-speed internet

High market prices

Low Internet speed

Opportunity to change market shares

13

IBC has the exclusive right to deploy an optical infrastructure on the IECinfrastructure

IBC has a significant advantage in deployment costs in areas with highelectricity infrastructure

IBC owned by Cellcom Israel will revolutionize Internet infrastructure in Israel

High performance capabilities of IEC

Reducing the need for deploymentpermits

There is an existing deployment toabout 150,000 households

Households reach targetCellcom Israel + IBC

(Thousand)

(1) The transaction is conditional on entering into final agreements and regulatory approvals. There is no certainty that the transaction will be completed. For full information, see the Company's

Immediate Report of dated August 8, 2018.

(1)

500

900

1,200

After 3 Years After 5 Years After 10 Years

Above

Above

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

IBC – The transaction

Cellcom Israel will hold 70% of IBC shares for approx. NIS 100

million

An additional 30% will be held by the Israel Electric Company

Cellcom Israel reached agreements with the Israel Electric company

regarding the rates of the works (deployment on the electricity

network infrastructure) as the main contractor

(1) The transaction is conditional on entering into final agreements and regulatory approvals. There is no certainty that the transaction will be completed. For full information, see the Company's

Immediate Report of August 8, 2018.

(1)

16

Reduction of head count

launch of a new voluntary retirement plan that will be another layer in our ongoing expenses reduction process

Dealer commissions reduction

Reduction of advertising and sales promotion expenses

IT systems and building maintenance expenses reduction

Warranty and repair services expense reduction

Reduction in ‘walk in center’ branches and office space

FTE Positions

SG&A(M’Nis)

Aggressive Cost Reduction

7,254

3,358

2011 2017

1,676

905

2011 2017

17

IOT as a

Growth EngineIOT – The Internet Of ThingsThe ability to connect things in a smart way that will lead to efficiency, business growth and life quality improvement

18

Smart CitySolution

The

Cellcom

Combination of various solutions including :

Energyefficiency

Waste management

Sensors of environmental

protection

Water management

19

Own communications network

Integration

Information security

Extensive knowledge and experience inproviding various solutions

Collaboration with leading vendorsSecurity

End equipment and sensors

Communication

PlatformAnalysis

Services and applications

Cellcom Israel “Smart City”offers end-to-end solutions

20

Winning Strategic Tendors of IoT

(1) In cooperation with Team 3 Protection Systems Ltd

20

The Home Front Command Tender of IDF(1)- Turning The Old Shelters in Israel into “Smart Shelters”

Management & Control systems

(100 local authorities)

Public announcement

system for delivering messages

Remote locking & Opening of the

shelter

WiFiConnection

Command & Control System

Endpoints Existing SystemUpgrade

The first tender in Israel, which is a complete “Smart City” in The City of Tel – Aviv – jaffa

21

Q2 2018 Key Financial Summary(1)

M’Nis Q2’17 Q2’18 YoY %

Total Revenues 962 927 -3.6%

Service Revenues 731 694 -5.1%

Equipment Revenues 231 233 +0.9%

EBITDA 237 133 -43.9%

Net Income (loss) 45 (37) N.A.

Free Cash Flow 77 56 -27.3%

(1) All data should be reviewed in conjunction with the Company's press release and financial report for the Second quarter of 2018

22

Substantial Reduction of Financial Debt

M’NIS

4,553

3,842

2,9512,747

2,547 2,553

2012 2013 2014 2015 2016 2017

Financial Debt, Net

(1) Based on company reports for the relevant years

23

Shlomi Fruhling Chief Financial Officer

Elad LevyInvestors Relations Manager

E-mail: investors@Cellcom.co.ilTel : + 972 52 9989735Fax: + 972 52 9989700

Contact us