Partner Communications Reports 2007 Annual and Q4 Results

2007 Annual Highlights (compared with 2006)

-- Total revenues: NIS 6.1 billion (US$ 1.6 billion), an increase
of 9.0%

-- Operating Profit: NIS 1.4 billion (US$ 365 million), an
increase of 15.3%

-- Net Income: NIS 940 million (US$ 244 million), an increase of
37.7%

-- EBITDA(1): NIS 2.0 billion (US$ 524 million), an increase of
8.9%

-- EBITDA Margin(2): 33.0% of total revenues, no change from
33.0%

-- Subscriber Base: 192,000 net additions in 2007, subscriber
base of 2.86 million, including 633,000 3G subscribers

Q4 2007 Highlights (compared with Q4 2006)

-- Total revenues: NIS 1.6 billion (US$ 423 million), an increase
of 12.6%

-- Operating Profit: NIS 347 million (US$ 90 million), an
increase of 10.4%

-- Net Income: NIS 302 million (US$ 79 million), an increase of
85.2%

-- EBITDA(1): NIS 501 million (US$ 130 million), an increase of
8.6%

-- EBITDA Margin(3): 30.8% of total revenues, down from 31.9%

-- Subscriber Base: 65,000 net additions

-- Dividend Declared: NIS 320 million dividend payment for the
fourth quarter, fulfilling an 80% of annual net income payout
ratio

(1) See "Use of Non-GAAP Financial Measures" below (p16)

(2) Equivalent to 37.8% of service revenues in 2007

(3) Equivalent to 36.8% of service revenues in Q4 2007

Key Financial Results:

-0-
*T
NIS ´000 2003 2004 2005 2006 2007
------------------------------ --------- --------- --------- ---------
Revenues 4,467,719 5,140,737 5,122,939 5,606,711 6,113,644
Cost of revenues 3,136,456 3,615,014 3,766,352 3,897,267 4,103,076
--------- --------- --------- --------- ---------
Gross profit 1,331,263 1,525,723 1,356,587 1,709,444 2,010,568
SG&A 476,395 506,377 453,681 491,052 606,048
--------- --------- --------- --------- ---------
Operating profit 854,868 1,019,346 902,906 1,218,392 1,404,520
Other expenses 3,530 - - - -
Financial expenses 321,710 260,545 345,448 166,442 126,317
--------- --------- --------- --------- ---------
Tax expenses (tax
benefit) (633,022) 287,248 202,898 370,675 338,417
Cumulative effect of
a change in
accounting
principles - - - 1,012 -
Net income for the
period 1,162,650 471,553 354,560 682,287 939,786
========= ========= ========= ========= =========
Cash flow from
operating activities
net of investing
activities 654,723 599,186 459,632 774,783 916,195
------------------------------ --------- --------- --------- ---------

------------------------------ --------- --------- --------- ---------
NIS ´000 Q4 2006 Q1 2007 Q2 2007 Q3 2007 Q4 2007
------------------------------ --------- --------- --------- ---------
Revenues 1,445,133 1,417,784 1,467,489 1,601,002 1,627,369
Cost of revenues 998,539 971,815 965,520 1,073,507 1,092,234
--------- --------- --------- --------- ---------
Gross profit 446,594 445,969 501,969 527,495 535,135
SG&A 132,737 144,868 134,747 137,798 188,635
--------- --------- --------- --------- ---------
Operating profit 313,857 301,101 367,222 389,697 346,500
Financial Expenses 21,927 19,618 39,460 73,768 -6,529
--------- --------- --------- --------- ---------
Tax expenses 128,950 85,634 99,635 101,974 51,174
Net income for period 162,980 195,849 228,127 213,955 301,855
========= ========= ========= ========= =========
Cash flow from
operating activities
net of investing
activities 163,579 241,106 234,261 135,292 305,536
------------------------------ --------- --------- --------- ---------
*T

Key Operating Indicators:

-0-
*T
2002 2003 2004 2005 2006 2007
---------------------------------------- ----- ----- ----- ----- -----
EBITDA (NIS millions) 1,052 1,380 1,576 1,569 1,850 2,015
EBITDA as a percentage of total
revenues 26.0% 30.9% 30.7% 30.6% 33.0% 33.0%
Subscribers (thousands) 1,837 2,103 2,340 2,529 2,668 2,860
Estimated Market Share (%) 29% 31% 32% 32% 32% 32%
Annual Churn Rate (%) 10.9% 13.6% 12.0% 13.6% 15.6% 15.0%
Average Monthly Usage per
Subscriber (minutes) 280 277 286 294 311 336
Average Monthly Revenue per
Subscriber (NIS) 183 171 170 156 158 158
---------------------------------------- ----- ----- ----- ----- -----
*T

Partner Communications Company Ltd. ("Partner" or "the Company")
(Nasdaq:PTNR)(LSE:PCCD)(TASE:PTNR), a leading Israeli mobile
communications operator, today announced its results for the year and
quarter ended December 31st, 2007.

Commenting on the 2007 annual results, Partner´s CEO, Mr. David
Avner, said: "I am very pleased with Partner´s 2007 excellent
financial and operational results. 2007 was a record year for Partner;
and we exceeded our objectives in all financial and operational
dimensions. We have added over 192,000 customers to our subscriber
base, most of whom high-quality post-paid customers, of whom 65,000
joined in the last quarter. Our leadership in 3.5G continues to
strengthen, and approximately one third of our post-paid subscriber
base is already benefiting from the wide range of 3G services and
advanced handsets we offer, enabling us to generate more than NIS 670
million revenues from data and content in 2007 (including SMS
messages), we believe the highest content revenues in the Israeli
cellular market."

Mr. Avner added: "Our brand - orange(TM) - was re-elected for the
fifth consecutive year as the leading telecom brand in Israel. We
launched in 2007 innovative new applications and services such as ICQ,
Messenger and more than 90 TV channels. We also demonstrated our
values of fairness and simplicity by introducing a unique marketing
campaign that helped our customers to optimize their tariff plans
based on their usage patterns. Partner´s success is the result of our
continued focus on satisfying our customers´ needs, ensuring a
high-standard customer service, together with a high-quality network
and a wide variety of data services.

The major event in Israel´s cellular industry was the introduction
in December 2007 of number portability. The introduction of number
portability requires us to invest additional resources in order to
reach out to new subscribers and to ensure the continued satisfaction
of Partner´s existing subscribers. We believe that the net impact of
number portability has been positive to date, and as of January 31st,
2008, more than 6,000 post-paid net additions had joined Partner
bringing their number from their original operator together with them.
The attraction of Partner´s brand was also strongly reflected in the
number of net adds in the last quarter. I am certain that this is only
the beginning and that Partner will benefit further from number
portability."

Mr. Avner also said: "Our strategic goals for 2008 will include
focusing on efficiency, as demonstrated in the transaction with
Ericsson, and establishing the platform for our non-cellular activity.
I am confident in Partner´s employees´ ability to continue delivering
value to our shareholders and to leverage the assets we have built
over the years."

Financial Review

In 2007 Partner achieved total net revenues of NIS 6,113.6 million
(US$ 1,589.6 million), an increase of 9.0% from NIS 5,606.7 million in
2006. Revenues for Q4 2007 were NIS 1,627.4 million (US$ 423.1
million), a 12.6 % increase from NIS 1,445.1 million in Q4 2006.

Annual service revenues totalled NIS 5,328.7 million (US$ 1,385.5
million) in 2007, representing an increase of 6.0% from NIS 5,027.3
million in 2006. Service revenues in Q4 2007 increased by 6.2% to NIS
1,361.8 million (US$ 354.1 million) from NIS 1,282.2 million in Q4
2006. Both the annual and quarterly increases were driven primarily by
subscriber base growth, an increase in the weight of post-paid
subscribers in our subscriber base, higher average minutes of use, as
well as an increase in content and data revenues, partially offset by
a decrease in average revenue per minute.

Total network minutes in 2007 increased by 14% compared with 2006,
resulting mainly from an expanding subscriber base, which grew by
approximately 7.2% in 2007, as well as from higher minutes of use per
subscriber. The effect of this increase on revenues was partially
offset by an 11% dilution in the average tariff per minute (including
incoming calls). The dilution was a result of competitive market
pressures, the increase in the weight of business subscribers in our
total customer base and regulatory intervention including the
reduction of approximately 10% in interconnect tariffs which went into
effect on March 1st, 2007 and the regulation restricting our ability
to charge for calls directed to voice mail which went into effect
January 1st, 2007.

Data and content revenues excluding SMS messages, totalled NIS
425.3 million (US$ 110.6 million) in 2007, accounting for 8.0% of
service revenues, up from NIS 316.1 million, representing 6.3% of
service revenues, in 2006(1). For Q4 2007, data and content revenues
excluding SMS messages accounted for 10.1% of service revenues,
compared with 6.8% of service revenues in Q4 2006(1).

Revenues from SMS message services totalled NIS 253.7 million (US$
66.0 million) in 2007, accounting for 4.8% of service revenues, up
from NIS 192.5 million, representing 3.8% of service revenues, in
2006(1). For Q4 2007, revenues from SMS message services accounted for
4.7% of service revenues, compared with 4.2% of service revenues in Q4
2006(1).

(1) The changes in data and content revenues for 2006 and Q4 2006
is the result of a reclassification of revenues.

Annual gross profit from services in 2007 was NIS 2,227.2 million
(US$ 579.1 million), an increase of 14.7% from NIS 1,941.8 million in
2006. Q4 2007 gross profit from service revenues was NIS 575.5 million
(US$ 149.6 million), a 13.3% increase from NIS 508.1 million in Q4
2006. The annual increase reflects the higher service revenues, offset
by a 0.5% increase in the cost of service revenues from NIS 3,085.5
million in 2006 to NIS 3,101.6 million (US$ 806.4 million) in 2007.
The increase was primarily driven by higher variable airtime and
content costs resulting from the growth in airtime and content usage,
offset by lower costs resulting from efficiency measures taken by the
Company, lower depreciation, lower royalties and the lower
interconnect tariff. For Q4 2007, the higher service revenues were
offset by an increase in the cost of service revenues of 1.6%, from
NIS 774.1 million in Q4 2006 to NIS 786.2 million (US$ 204.4 million),
the increase again being primarily due to higher variable airtime and
content costs resulting from the growth in airtime and content usage.

Equipment revenues in 2007 totalled NIS 784.9 million (US$ 204.1
million), representing an increase of 35.5% from NIS 579.4 million in
2006. For Q4 2007 only, equipment revenues increased by 63.0% to NIS
265.6 million (US$ 69.1 million) from NIS 162.9 million in Q4 2006.
The annual increase was caused by increases both in the average
revenue per sale, reflecting the higher proportion of more advanced
and higher cost 3G handset sales to new and upgrading subscribers, as
well as in the total number of handset sales to new and upgrading
subscribers. Compared with Q4 2006 the increase primarily reflects the
higher number of sales to both new and upgrading subscribers resulting
from recruitment and retention activities related to the introduction
of number portability on December 2nd, 2007.

Gross loss on equipment decreased in 2007 by 6.8% from NIS 232.4
million to NIS 216.6 million (US$ 56.3 million). Compared with Q4
2006, the gross loss on equipment in Q4 2007 decreased by 34.3% from
NIS 61.5 million to NIS 40.4 million (US$ 10.5 million). The annual
decrease is explained primarily by the increase in the average revenue
per handset sold. The quarterly decrease resulted from an increase in
the use of more competitive airtime rate plan tariffs that offer lower
subsidies, as well as from a decrease in the average cost of handsets
sold.

Overall, 2007 gross profit was NIS 2,010.6 million (US$ 522.8
million), representing a 17.6% increase from NIS 1,709.4 million in
2006. For Q4 2007 gross profit was NIS 535.1 million
(US$ 139.1 million), up 19.8% from NIS 446.6 million in Q4 2006.

Selling, marketing, general and administration (SG&A) expenses
totalled NIS 606.0 million (US$ 157.6 million) in 2007, an increase of
23.4% from NIS 491.1 million in 2006. SG&A expenses for Q4 2007
increased by 42.1% from NIS 132.7 million in Q4 2006 to NIS 188.6
million (US$ 49.0 million). Both the annual and quarterly increases
are largely related to the additional costs of growing the subscriber
base, including higher distribution and commission expenses, and
larger provisions for doubtful accounts from receivables on handset
sales and service revenues. In addition, the annual increase includes
the impact of a one time retirement bonus payment paid to the
Company´s founding chief executive officer, Mr. Amikam Cohen, of
approximately NIS 15 million, as well as payments to additional
retiring senior executives. The quarterly increase also reflects
additional costs related to promotional campaigns associated with the
introduction of number portability in December 2007.

Overall, in 2007 the Company recorded an operating profit of NIS
1,404.5 million (US$ 365.2 million), representing an increase of 15.3%
from NIS 1,218.4 million in 2006. Operating profit in Q4 2007 was NIS
346.5 million (US$ 90.1 million), an increase of 10.4% from
NIS 313.9 million in Q4 2006.

Annual EBITDA in 2007 totalled NIS 2,014.7 million (US$ 523.8
million), up by 8.9% from NIS 1,850.1 million in 2006. In service
revenue terms, the EBITDA margin was 37.8% in 2007, up from 36.8% in
2006. As a percentage of total revenues, the EBITDA margin in 2007 was
33.0%, no change from 33.0% in 2006. This reflects the substantial
annual increase in equipment revenues of NIS 206 million. Q4 2007
quarterly EBITDA was NIS 501.3 million (US$ 130.3 million), an
increase of 8.6% from NIS 461.7 million in Q4 2006. In service revenue
terms, the EBITDA margin was 36.8% in Q4 2007, up from 36.0% in Q4
2006. As a percentage of total revenues, the EBITDA margin in Q4 2007
was 30.8%, down from 31.9% in Q4 2006. The decrease also reflects the
quarterly increase in equipment revenues of NIS 103 million which
resulted from recruitment and retention activities related to the
introduction of number portability on December 2nd, 2007.

Financial expenses decreased in 2007 by 24.1%, from NIS 166.4
million in 2006 to NIS 126.3 million (US$ 32.8 million). For Q4 2007
the Company recorded a financial profit (negative expense) of NIS 6.5
million, compared with expenses of NIS 21.9 million in Q4 2006. The
annual and quarterly decreases are primarily attributable to lower
financial and coverage expenses and due to currency fluctuations,
offset by expenses resulting from the higher CPI level.

Following the ruling of the Israeli Supreme Court, in November
2006 in the matter of Paz Gas Marketing Company Ltd. that overturned
certain rules regarding the recognition of financing expenses, the
Company set aside a provision for taxes that reached approximately NIS
55 million as of September 30th, 2007. This provision was an estimate
of the additional tax expense that could result from the possibility
that part of the financing expenses accrued in the years 2005 to 2007
in respect of financial debt, which is attributable, inter alia, to
the financing of a repurchase of Company shares, would not be
recognized as an expense for tax purposes. In October 2007, the
Israeli Supreme Court issued two new rulings readdressing the same
issue. In the light of these new rulings, the Company has decided to
reduce its tax provisions in Q4 2007 by NIS 48 million.

Taking into account this reduction in tax provisions, total tax
expenses for 2007 were NIS 338.4 million (US$ 88.0 million), a
decrease of 8.7% from NIS 370.7 million in 2006. The decrease also
reflects the lower Israeli corporate tax rate in 2007 of 29% compared
with 31% in 2006.

Net income in 2007 was NIS 939.8 million (US$ 244.4 million) and
earnings of NIS 5.96 (US$ 1.55) per diluted share, representing a
37.7% increase from NIS 682.3 million (earnings of NIS 4.41 per
diluted share), in 2006. Q4 2007 net income was NIS 301.9 million (US$
78.5 million), up 85.2% from NIS 163.0 million in Q4 2006.

Funding and Investing Review

Cash flows generated from operating activities in 2007, net of
cash flows from investing activities, were NIS 916.2 million
(US$ 238.2 million), an increase of 18.3% from NIS 774.8 million in
2006. The increase was primarily due to an increase in cash flows from
operating activities, offset by an increase in the level of investment
in fixed assets. Cash flows from operating activities increased by
19.0% from NIS 1,223.5 million in 2006 to NIS 1,456.3 million (US$
378.6 million) in 2007, whilst cash flows from investing activities
increased by 20.4% from NIS 448.7 million in 2006, to NIS 540.1
million (US$ 140.4 million) in 2007.

For Q4 2007 cash flows generated from operating activities, net of
cash flows from investing activities, also increased by 86.8% from NIS
163.6 million in Q4 2006 to NIS 305.5 million (US$ 79.4 million),
primarily reflecting a 66.1% increase in cash flows from operating
activities.

On December 20th, 2007 the Company entered into an agreement with
LM Ericsson Israel Ltd., for the replacement of third party vendors of
the existing Company´s 3G equipment and the expansion of the 3G
network, and for the support and maintenance of the Ericsson elements
in the Company´s network. The major driver for the agreement is the
expected decrease of the network maintenance and expansion costs. As a
result of the agreement, Ericsson will become the sole vendor for the
Company´s 3G network. The transaction will result in depreciation
acceleration of the replaced equipment, throughout the replacement
period which will end at the latest by Q3 2011. The net depreciated
fixed assets of the replaced equipment were approximately NIS 132
million as of December 31st, 2007. Most of the accelerated
depreciation is expected to be recorded during 2008, resulting in
additional depreciation expenses of approximately NIS 70 million in
2008.

Operational Review

In 2007, approximately 192,000 net active subscribers joined the
Company, compared with approximately 139,000 in 2006, including 65,000
net additions in Q4 2007. The business sector accounted for
approximately 51% of annual net new active subscribers, and post-paid
private subscribers for approximately 43% of annual net new active
subscribers. At the end of December 2007, the Company´s active
subscriber base was approximately 2,860,000, including approximately
703,000 business subscribers or 24.6% of the base, approximately
1,365,000 post-paid private subscribers, or 47.7% of the base, and
approximately 792,000 prepaid subscribers, or 27.7% of the base. 2007
year-end market share is estimated be unchanged from 2006 at around
32%.

The Company added approximately 357,000 subscribers to its 3G
network in 2007, and its 3G subscriber base reached approximately
633,000 by year-end.

Beginning in January 2008 the Company adopted a more conservative
and rigorous policy for recognizing prepaid subscribers. The aim of
the new policy is to ensure that purchased prepaid SIM cards are only
recognized in the subscriber base after the prepaid SIM cards are
actually used by the prepaid subscribers. The change reduces the
reported prepaid subscriber base by approximately 60,000 subscribers
from January 2008 and will be fully reflected in the operational
parameters of Q1 2008.

The annual churn rate in 2007 was 15.0%, a decrease from 15.6% in
2006, despite an increase in churn in the prepaid sector. Quarterly
churn was unchanged in Q4 2007 at 4.0% compared with Q4 2006 despite
an increase in the churn of prepaid subscribers and the introduction
of number portability.

2007 average monthly usage per subscriber (MOU) was 336 minutes,
an increase of 8% compared with 311 minutes in 2006. For Q4 2007
alone, MOU was 345 minutes compared with 316 minutes in Q4 2006. 2007
annual average monthly revenue per subscriber (ARPU) was NIS 158 (US$
41), unchanged from 2006. For Q4 2007, ARPU was NIS 157 (US$ 41), down
from NIS 159 in Q4 2006.

Dividend Policy and Buyback Plan

Pursuant to the dividend policy adopted by the Board for 2007, the
Board approved the distribution of a cash dividend for Q4 2007 in the
amount of NIS 2.02 (approximately US$ 0.53) per share, totalling
approximately NIS 320 million (US$ 83 million), payable on March 6th,
2008 to shareholders and ADS holders of record on February 20th, 2008.
The total dividend amount for 2007 will be approximately NIS 752
million (US$ 196 million), representing approximately 80% of the
annual net income.

In respect of 2008, the Board reaffirmed the existing dividend
policy which targets for an 80% payout ratio of annual net income. The
Board has also approved a share buy-back plan throughout 2008, in an
amount of up to NIS 600 million.

Other

The Board approved the delisting of its depositary shares from the
London Stock Exchange ("LSE"). There have been no trades in Partner´s
ADS executed on the LSE since 2005 and the directors are of the view
that such a secondary listing is of no future benefit to shareholders
or the Company.

Partner´s depositary receipts will continue to be listed on the
NASDAQ Global Select Market and the Company´s shares will continue to
be listed on the Tel Aviv Stock Exchange hence the Company does not
anticipate that delisting from the LSE will adversely affect its
shareholders. The delisting will proceed through a notification
process, and is expected to become effective about 20 working days
subsequent to the notification.

Outlook and Guidance

Commenting on the Company´s results, Mr. Emanuel Avner, Partner´s
Chief Financial Officer said: "The results this year demonstrate
Partner´s continued ability to grow cash flow year-on-year. Our
financial structure remains solid, and our dividend yield is
impressive. We believe that the expected buy-back programme for 2008
that was approved today by the Board once exercised would be an
additional means of return to our shareholders."

Commenting on the Company´s outlook, Mr. Emanuel Avner, Partner´s
Chief Financial Officer said: "Our ability to add 65,000 high-quality
subscribers in the quarter that number portability was introduced
increases confidence in our expectation that we will continue to grow
our subscriber base compared with 2007, even given the highly
penetrated and competitive environment, though at a lower rate than in
2007. We also expect total revenues to continue to grow in 2008 though
at a lower rate than in 2007. Barring any further adverse material
regulatory decisions, we also expect annual EBITDA growth in 2008,
again at a lower rate than in 2007."

Conference Call Details

Partner Communications will hold a conference call to discuss the
company´s 2007 full-year and fourth-quarter results on Wednesday,
February 6th, 2008, at 17:00 Israel local time (10AM EST). This
conference call will be broadcast live over the Internet and can be
accessed by all interested parties through our investor relations web
site at http://www.orange.co.il/investor_site/.

To listen to the broadcast, please go to the web site at least 15
minutes prior to the start of the call to register, download and
install any necessary audio software. For those unable to listen to
the live broadcast, an archive of the call will be available via the
Internet (at the same location as the live broadcast) shortly after
the call ends, and until midnight of February 13th, 2008.

About Partner Communications

Partner Communications Company Ltd. ("Partner") is a leading
Israeli mobile communications operator providing GSM / GPRS / UMTS /
HSDPA services and wire free applications under the orange(TM) brand.
The Company provides quality service and a range of features to 2.86
million subscribers in Israel (as of December 31st, 2007). Partner´s
ADSs are quoted on the NASDAQ Global Select Market(TM) and the London
Stock Exchange. Its shares are also traded on the Tel Aviv Stock
Exchange (NASDAQ and TASE: PTNR; LSE: PCCD).

Partner is a subsidiary of Hutchison Telecommunications
International Limited ("Hutchison Telecom"), a leading global provider
of telecommunications services. Hutchison Telecom currently offers
mobile and fixed line telecommunications services in Hong Kong, and
operates mobile telecommunications services in Israel, Macau,
Thailand, Sri Lanka, Ghana, Vietnam and Indonesia. It was the first
provider of 3G mobile services in Hong Kong and Israel and operates
brands including "Hutch", "3" and "orange". Hutchison Telecom, a
subsidiary of Hutchison Whampoa Limited, is a listed company with
American Depositary Shares quoted on the New York Stock Exchange under
the ticker "HTX" and shares listed on the Stock Exchange of Hong Kong
under the stock code "2332". For more information about Hutchison
Telecom, see www.htil.com.

For more information about Partner, see
http://www.orange.co.il/investor_site/

Note: 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. We have based these forward-looking
statements on our current expectations and projections about future
events. These forward-looking statements are subject to risks,
uncertainties and assumptions about Partner.

Words such as "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. All statements other
than statements of historical fact included in this press release
regarding our future performance (including our outlook and guidance
for 2008), plans to increase revenues or margins or preserve or expand
market share in existing or new markets, reduce expenses and any
statements regarding other future events or our future prospects, are
forward-looking statements.

Because such statements involve risks and uncertainties, actual
results may differ materially from the results currently expected.
Factors that could cause such differences include, but are not limited
to:

-- the effects of the high degree of regulation in the
telecommunications market in which we operate;

-- regulatory developments related to the implementation of
number portability;

-- regulatory developments relating to tariffs, including
interconnect tariffs, roaming charges, and SMS tariffs;

-- the difficulties associated with obtaining all permits
required for building and operating of antenna sites;

-- the requirement to indemnify planning committees in respect of
claims made against them relating to the depreciation of
property values or to alleged health damage resulting from
antenna sites;

-- the effects of vigorous competition in the market in which we
operate and for more valuable customers, which may decrease
prices charged, increase churn and change our customer mix,
profitability and average revenue per user, and the response
of competitors to industry and regulatory developments;

-- regulatory developments which permit the Ministry of
Communications to require us to offer our network
infrastructure to other operators, which may lower the entry
barrier for new competitors;

-- uncertainties about the degree of growth in the number of
consumers in Israel using wireless personal communications
services and the growth in the Israeli population;

-- the risks associated with the implementation of a third
generation (3G) network and business strategy, including risks
relating to the operations of new systems and technologies,
potential unanticipated costs,

-- uncertainties regarding the adequacy of suppliers on whom we
must rely to provide both network and consumer equipment and
consumer acceptance of the products and services to be
offered, and the risk that the use of internet search engines
by our 3G customers will be restricted;

-- the results of litigation filed or that may be filed against
us;

-- the risk that, following a possible rearrangement of spectrum,
we may lose some of our frequencies or we may be allocated
spectrum of inferior quality;

-- the risks associated with technological requirements,
technology substitution and changes and other technological
developments;

-- alleged health risks related to antenna sites and use of
telecommunication devices;

-- the impact of existing and new competitors in the market in
which we compete, including competitors that may offer less
expensive products and services, desirable or innovative
products, technological substitutes, or have extensive
resources or better financing;

-- fluctuations in foreign exchange rates;

-- the possibility of the market in which we compete being
impacted by changes in political, economic or other factors,
such as monetary policy, legal and regulatory changes or other
external factors over which we have no control; and

-- the availability and cost of capital and the consequences of
increased leverage.

as well as the risks discussed in Risk Factors, Information on the
Company and Operating and Financial Review and Prospects in form 20-F
filed with the SEC on June 12th, 2007. In light of these risks,
uncertainties and assumptions, the forward-looking events discussed in
this report might not occur.

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 financial results presented in this press release are
preliminary un-audited financial results.

The results were prepared in accordance with U.S. GAAP, other than
EBITDA which is a non-GAAP financial measure.

The convenience translations of the Nominal New Israeli Shekel
(NIS) figures into US Dollars were made at the rate of exchange
prevailing at December 31st, 2007: US $1.00 equals NIS 3.846. The
translations were made purely for the convenience of the reader.

Use of Non-GAAP Financial Measure:

Earnings before interest, taxes, depreciation, amortization,
exceptional items and capitalization of intangible assets (´EBITDA´)
is presented because it is a measure commonly used in the
telecommunications industry and is presented solely in order to
improve the understanding of the Company´s operating results and to
provide further perspective on these results. Our management uses
EBITDA as a basis for measuring our core operating performance and
comparing such performance to that of prior periods and to the
performance of our competitors. EBITDA, however, should not be
considered as an alternative to operating income or net income for the
year as an indicator of the operating performance of the Company.
Similarly, EBITDA should not be considered as an alternative to cash
flows from operating activities as a measure of liquidity. EBITDA is
not a measure of financial performance under generally accepted
accounting principles and may not be comparable to other similarly
titled measures for other companies. EBITDA may not be indicative of
the historic operating results of the Company; nor is it meant to be
predictive of potential future results.

Reconciliation between our net cash flow from operating activities
and EBIDTA is presented in the attached summary financial results.

-0-
*T
PARTNER COMMUNICATIONS COMPANY LTD.
(An Israeli Corporation)
CONSOLIDATED BALANCE SHEETS

December 31
--------------------------------
2006 2007 2007
--------------------------------
Convenience
translation
into U.S.
New Israeli shekels dollars
--------------------------------
(Audited) (Unaudited)
--------------------------------
In thousands
--------------------------------

Assets
CURRENT ASSETS:
Cash and cash equivalents 77,547 148,096 38,507
Accounts receivable:
Trade 964,309 1,120,842 291,431
Other 65,533 55,273 14,371
Inventories 126,466 143,022 37,187
Deferred income taxes 40,495 46,089 11,984
--------------------------------
Total current assets 1,274,350 1,513,322 393,480
--------------------------------
INVESTMENTS AND LONG-TERM RECEIVABLES:
Accounts receivable - trade 274,608 446,899 116,198
Funds in respect of employee rights
upon retirement 80,881 88,522 23,017
--------------------------------
355,489 535,421 139,215
--------------------------------
FIXED ASSETS, net of accumulated
depreciation and amortization 1,747,459 1,734,964 451,108
--------------------------------
LICENSE, DEFERRED CHARGES AND OTHER
INTANGIBLE ASSETS, net of accumulated
amortization 1,247,084 1,153,926 300,033
--------------------------------
DEFERRED INCOME TAXES 76,139 93,745 24,375
--------------------------------
Total assets 4,700,521 5,031,378 1,308,211
================================
*T

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*T
December 31
----------------------------------
2006 2007 2007
----------------------------------
Convenience
translation
into U.S.
New Israeli shekels dollars
----------------------------------
(Audited) (Unaudited)
----------------------------------
In thousands
----------------------------------

Liabilities and shareholders´ equity
CURRENT LIABILITIES:
Current maturities of long-term
liabilities 40,184 28,280 7,353
Accounts payable and accruals:
Trade 690,424 749,623 194,910
Other 281,403 375,510 97,637
Parent group - trade 15,830 3,405 885
----------------------------------
Total current liabilities 1,027,841 1,156,818 300,785
----------------------------------
LONG-TERM LIABILITIES:
Bank loans, net of current
maturities 272,508
Notes payable 2,016,378 2,072,636 538,907
Liability for employee rights upon
retirement 113,380 131,960 34,311
Other liabilities 15,947 14,492 3,768
----------------------------------
Total long-term liabilities 2,418,213 2,219,088 576,986
----------------------------------
COMMITMENTS AND CONTINGENT
LIABILITIES
----------------------------------
Total liabilities 3,446,054 3,375,906 877,771
----------------------------------
SHAREHOLDERS´ EQUITY
Share capital - ordinary shares of
NIS 0.01 par
value: authorized - December
31, 2006 and 2007 -
235,000,000 shares; issued and
outstanding -
December 31, 2006 - 154,516,217
shares and
December 31, 2007 - 157,320,770
shares 1,545 1,573 409
Capital surplus 2,452,682 2,544,943 661,712
Accumulated deficit (1,199,760) (891,044) (231,681)
----------------------------------
Total shareholders´ equity 1,254,467 1,655,472 430,440
----------------------------------
4,700,521 5,031,378 1,308,211
==================================
*T

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*T
PARTNER COMMUNICATIONS COMPANY LTD.
(An Israeli Corporation)
CONSOLIDATED STATEMENTS OF OPERATIONS

Year ended December 31
------------------------------------------------
2005 2006 2007 2007
------------------------------------------------
Convenience
translation
into U.S.
New Israeli shekels dollars
------------------------------------------------
(Audited) (Unaudited)
------------------------------------------------
In thousands (except per share data)
------------------------------------------------

REVENUES - net:
Services 4,619,932 5,027,310 5,328,739 1,385,527
Equipment 503,007 579,401 784,905 204,083
------------------------------------------------
5,122,939 5,606,711 6,113,644 1,589,610
COST OF REVENUES:
Services 3,022,480 3,085,507 3,101,588 806,445
Equipment 743,872 811,760 1,001,488 260,397
------------------------------------------------
3,766,352 3,897,267 4,103,076 1,066,842
------------------------------------------------
GROSS PROFIT 1,356,587 1,709,444 2,010,568 522,768
------------------------------------------------
SELLING AND MARKETING
EXPENSES 272,900 307,592 370,183 96,251
GENERAL AND
ADMINISTRATIVE
EXPENSES 180,781 183,460 235,865 61,327
------------------------------------------------
453,681 491,052 606,048 157,578
------------------------------------------------
OPERATING PROFIT 902,906 1,218,392 1,404,520 365,190
FINANCIAL EXPENSES,
net 345,448 166,442 126,317 32,844
------------------------------------------------
INCOME BEFORE TAXES ON
INCOME 557,458 1,051,950 1,278,203 332,346
TAXES ON INCOME 202,898 370,675 338,417 87,992
------------------------------------------------
INCOME BEFORE
CUMULATIVE EFFECT OF
A CHANGE IN
ACCOUNTING PRINCIPLES 354,560 681,275 939,786 244,354
CUMULATIVE EFFECT, AT
BEGINNING OF YEAR, OF
A CHANGE IN
ACCOUNTING
PRINCIPLES, net of
tax 1,012
------------------------------------------------
NET INCOME FOR THE
YEAR 354,560 682,287 939,786 244,354
================================================
EARNINGS PER SHARE
("EPS"):
Basic:
Before cumulative
effect 2.19 4.43 6.01 1.56
Cumulative
effect 0.01
------------------------------------------------
2.19 4.44 6.01 1.56
================================================
Diluted:
Before cumulative
effect 2.17 4.40 5.96 1.55
Cumulative
effect 0.01
------------------------------------------------
2.17 4.41 5.96 1.55
================================================
WEIGHTED AVERAGE
NUMBER OF
SHARES OUTSTANDING:
Basic 161,711,125 153,633,758 156,414,684 156,414,684
================================================
Diluted 163,617,272 154,677,685 157,787,009 157,787,009
================================================
*T

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*T
PARTNER COMMUNICATIONS COMPANY LTD.
(An Israeli Corporation)
CONSOLIDATED STATEMENTS OF CASH FLOWS

Year ended December 31
--------------------------------------------
2005 2006 2007 2007
--------------------------------------------
Convenience
translation
into U.S.
New Israeli shekels dollars
--------------------------------------------
(Audited) (Unaudited)
--------------------------------------------
In thousands
--------------------------------------------

CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income for the year 354,560 682,287 939,786 244,354
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Depreciation and
amortization 683,503 622,434 603,425 156,897
Employee share-based
compensation expenses 10,353 20,957 16,752 4,356
Liability for employee
rights upon
retirement 9,430 11,142 18,580 4,831
Deferred income taxes 198,079 35,231 (23,200) (6,032)
Income tax benefit in
respect of exercise
of options granted to
employees 4,820
Accrued interest,
exchange and linkage
differences on
(erosion of) long-
term liabilities 108,411 (4,646) 59,980 15,595
Amount carried to
deferred charges (13,820)
Capital loss on sale
and disposal of fixed
assets 493 274 1,267 329
Cumulative effect, at
beginning of year, of
a change in
accounting principles (1,012)
Changes in operating
asset and liability
items:
Decrease (increase) in
accounts receivable:
Trade (262,262) (254,748) (328,824) (85,496)
Other (26,970) 30,952 10,260 2,668
Increase (decrease)
in accounts payable
and accruals:
Trade 112,857 (58,568) 100,817 26,213
Other (75,884) 49,923 85,885 22,331
Parent group - trade 10,513 5,317 (12,425) (3,231)
Increase (decrease) in
asset retirement
obligations (92) 1,069 528 137
Decrease (increase) in
inventories (107,667) 82,857 (16,556) (4,305)
--------------------------------------------
Net cash provided by
operating activities 1,006,324 1,223,469 1,456,275 378,647
--------------------------------------------

CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchase of fixed assets (498,851) (344,206) (531,782) (138,268)
Acquisition of optic
fibers activity (71,125)
Proceeds from sale of
fixed assets 16 73 43 11
Purchase of additional
spectrum (41,542) (27,690)
Payments in respect of
land line license (300) (700) (182)
Funds in respect of
employee rights upon
retirement (6,315) (5,438) (7,641) (1,986)
--------------------------------------------
Net cash used in
investing activities (546,692) (448,686) (540,080) (140,425)
--------------------------------------------

CASH FLOWS FROM FINANCING
ACTIVITIES:
Repayment of capital
lease (1,893) (3,620) (8,532) (2,218)
Repurchase of company´s
shares (including
purchase cost of NIS
17,591,000) (1,091,841)
Issuance of notes
payable under a
prospectus, net of
issuance costs 1,929,223
Redemption of notes
payable (793,100)
Proceeds from exercise
of stock options
granted to employees 37,153 44,332 75,537 19,640
Windfall tax benefit in
respect of exercise of
options granted to
employees 643 1,167 303
Dividend paid (41,773) (352,444) (624,015) (162,250)
Long-term bank loans
received 359,000
Repayment of long-term
bank loans (857,004) (390,155) (289,803) (75,351)
--------------------------------------------
Net cash used in
financing activities (460,235) (701,244) (845,646) (219,876)
--------------------------------------------
INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS (603) 73,539 70,549 18,344
CASH AND CASH EQUIVALENTS
AT
BEGINNING OF YEAR 4,611 4,008 77,547 20,163
--------------------------------------------
CASH AND CASH EQUIVALENTS
AT END OF YEAR 4,008 77,547 148,096 38,507
============================================
SUPPLEMENTARY DISCLOSURE
OF CASH FLOW INFORMATION
- cash paid during the
year:
Interest 235,854 149,728 99,560 25,886
============================================
Income taxes (net of
refund of approximately
NIS 74 million) 30,840 317,099 301,554 78,407
============================================
*T

Supplementary information on investing and financing activities
not involving cash flows

At December 31, 2005, 2006 and 2007, trade payables include NIS
90.3 million, NIS 201.8 million and NIS 160 million ($ 42 million),
respectively, in respect of acquisition of fixed assets. In addition,
at December 31, 2005 trade payables included NIS 27.7 million in
respect of acquisition of additional spectrum.

At December 31, 2007, tax withholding related to dividend of
approximately NIS 7 million is outstanding.

At December 31, 2005, dividend payable of approximately NIS 45
million was outstanding.

During 2005 and 2007, the Company has undertaken a capital lease
with respect to fixed assets in the amount of NIS 15.8 million and NIS
7.4 million ($2 million), respectively.

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

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*T
PARTNER COMMUNICATIONS COMPANY LTD.
(An Israeli Corporation)
RECONCILIATION BETWEEN OPERATING CASH FLOWS AND EBITDA

Convenience
translation
New Israeli into U.S.
shekels dollars
--------------------------------
2006 2007 2007
--------------------------------
(Unaudited)
--------------------------------
In thousands
--------------------------------

Net cash provided by operating
activities 1,223,469 1,456275 378,647
Liability for employee rights upon
retirement (11,142) (18,580) (4,831)
Accrued interest and exchange and
linkage differences on long-term
liabilities 4,646 (59,980) (15,595)
Amount carried to differed charges
Increase in accounts receivable:
Trade 254,748 328,824 85,496
Other 304,492 (10,260) (2,668)
Decrease (increase) in accounts
payable and accruals:
Trade 58,568 (100,817) (26,213)
Other (49,923) 275,732 71,693
Related parties (5,317) 12,425 3,231
Increase (decrease) in inventories (82,857) 16,556 4,305
Decrease (increase) in Assets
Retirement Obligation (1,069) (528) (137)
Financial Expenses 154,492 115,021 29,907
--------------------------------
EBITDA 1,850,107 2,014,668 523,835
--------------------------------
*T

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*T
PARTNER COMMUNICATIONS COMPANY LTD.
(An Israeli Corporation)
Summary Operating Data

2005 2006 2007
----------------------------------------------------------------------
Subscribers (in thousands) 2,529 2,668 2,860
----------------------------------------------------------------------
Estimated share of total Israeli mobile telephone
subscribers 32% 32% 32%
----------------------------------------------------------------------
Churn rate in year 13.6% 15.6% 15.0%
----------------------------------------------------------------------
Average monthly usage in year per subscriber
(minutes) 294 311 336
----------------------------------------------------------------------
Average monthly revenue in year per subscriber,
including in-roaming revenue (NIS) 156 158 158
----------------------------------------------------------------------
*T

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*T
Q4 Q4
2006 2007
----------------------------------------------------------------------
Subscribers (in thousands) 2,668 2,860
----------------------------------------------------------------------
Estimated share of total Israeli mobile telephone
subscribers 32% 32%
----------------------------------------------------------------------
Churn rate in quarter 4.0% 4.0%
----------------------------------------------------------------------
Average monthly usage in quarter per subscriber (minutes) 316 345
----------------------------------------------------------------------
Average monthly revenue in year per subscriber, including
in-roaming revenue (NIS) 159 157
----------------------------------------------------------------------
*T