Partner Communications Reports First Quarter 2006 Results; Company Announces Dividend Policy of 60% Payout Ratio for 2006

Partner Communications Company Ltd.
(NASDAQ:PTNR)(TASE:PTNR)(LSE:PCCD), a leading Israeli mobile
communications operator, today announced its results for the first
quarter of 2006. Partner reported Q1 2006 revenues of NIS 1,326.6
million (US$ 284.4 million), EBITDA of NIS 438.6 million (US$ 94.0
million), equivalent to 33.1% of total revenue, and net income of NIS
160.4 million (US$ 34.4 million).
Commenting on the results, Partner's CEO, Amikam Cohen, said: "In
the first quarter of 2006, Partner has once again delivered an
excellent performance. Service revenues have grown strongly and the
Company's subscriber base continues to expand. We are well positioned
for this year's challenges, including the impact of the approximate 7
per cent reduction in voice interconnection tariffs and 49 per cent
reduction in SMS interconnection tariffs which took place in March
2006, as well as the additional operating and marketing challenges
associated with the 3G network. Partner's 3G subscriber base already
stands at over 130,000, and we expect 3G subscriber growth to be
higher in the coming quarters, establishing a solid foundation for
future revenue growth."

Q1 2005 vs. Q1 2006 Comparison

-0-
*T
Q1 2005 Q1 2006 Change
Revenues (NIS millions) 1,260.5 1,326.6 5.3%
EBITDA (NIS millions) 400.6 438.6 9.5%
Operating Profit (NIS millions) 236.8 273.5 15.5%
Net Income (NIS millions) 124.5 160.4 28.9%
Cash flow from operating activities net of
investing activities (NIS millions) 81.8 68.4 -16.3%
Subscribers (thousands) 2,372 2,560 7.9%
Estimated Market Share (%) 32 32 -
Quarterly Churn Rate (%) 3.9 4.2 7.7%
Average Monthly Usage per Subscriber (minutes) 288 301 4.5%
Average Monthly Revenue per Subscriber (NIS) 157 152 -3.2%
----------------------------------------------------------------------
*T

Financial Review

Revenues in Q1 2006 totaled NIS 1,326.6 million (US$ 284.4
million), up 5.3% from NIS 1,260.5 million in Q1 2005 and also up 5.3%
from NIS 1,259.3 million in Q4 2005. The increase compared with both
Q1 2005 and Q4 2005 was driven primarily by growth in service revenues
by 4.6% from NIS 1,132.4 million in Q1 2005 to NIS 1,184.2 million in
Q1 2006, and by 4.5% from NIS 1,132.9 million in Q4 2005. Both
increases derived from a larger subscriber base, increased minutes of
use and restructured tariffs and rate plans. Revenues from equipment
in Q1 2006 were NIS 142.4 million (US$ 30.3 million), up by 11.2% from
NIS 128.0 million in Q1 2005 and up by 12.7% from NIS 126.4 million in
Q4 2005.
Content and data revenues for Q1 2006 accounted for 9.0% of total
revenues or 10.1% of service revenues, up from 7.5% of total revenues
or 8.4% of service revenues in Q1 2005, despite the 49% reduction in
SMS interconnection tariffs in March 2006, and up from 8.8% of total
revenues or 9.7% of service revenues in Q4 2005. Compared with Q1
2005, non-SMS data and content revenues increased in Q1 2006 by 51.8%.
Despite the growth in service revenues, the cost of revenues
related to services increased by only 0.2% from NIS 743.3 million in
Q1 2005 to NIS 744.7 million (US$ 159.6 million) in Q1 2006, and
decreased by 1.6% from NIS 756.8 million in Q4 2005, reflecting the
Company's cost-cutting measures and the reduction in inter-carrier
termination rates, offset by higher 3G network expenses related to the
Company's 3G network.
The cost of revenues related to equipment increased by 14.3% to
NIS 207.4 million (US$ 44.5 million) in Q1 2006 from NIS 181.5 million
in Q1 2005, due principally to an increase in the average cost of
handsets sold, reflecting the higher proportion of 3G handsets sold
compared with 2G handsets. Compared with Q4 2005, the cost of revenues
related to equipment increased by 19.6% from NIS 173.4 million in Q4
2005, due to an increase in the number and average cost of handsets
sold.
Gross profit on services increased by 12.9% from NIS 389.1 million
in Q1 2005 to NIS 439.5 million (US$ 94.2 million) in Q1 2006, and
increased by 16.8% from NIS 376.1 million in Q4 2005. Gross loss on
equipment increased by 21.6% from NIS 53.4 million in Q1 2005 to NIS
65.0 million (US$ 13.9 million) in Q1 2006, the increase being
primarily due to the higher proportion of 3G handsets sold compared
with 2G handsets, and increased by 38.1% from NIS 47.0 million in Q4
2005.
Overall, gross profit in Q1 2006 was NIS 374.5 million (US$ 80.3
million), the equivalent of 28.2% of total revenues, up 11.6% from NIS
335.6 million in Q1 2005 and up 13.8% from NIS 329.0 million in Q4
2005.
Largely a result of quarter-by-quarter scheduling, selling and
marketing expenses in Q1 2006 decreased by 26.6% from NIS 78.0 million
in Q4 2005 to NIS 57.3 million (US$ 12.3 million). Compared with Q1
2005, selling and marketing expenses were approximately equal to NIS
57.4 million in Q1 2005.
In Q1 2006, general and administrative expenses were NIS 43.7
million (US$ 9.4 million), an increase of 5.2% from NIS 41.5 million
in Q1 2005 but a decrease of 8.7% from NIS 47.8 million in Q4 2005.
Overall, operating profit was NIS 273.5 million (US$ 58.6 million)
in Q1 2006, representing an increase of 15.5% from NIS 236.8 million
in Q1 2005, and an increase of 34.6% from NIS 203.2 million in Q4
2005. Quarterly EBITDA increased by 9.5% from NIS 400.6 million in Q1
2005 to NIS 438.6 million (US$ 94.0 million) in Q1 2006, and increased
by 20.3% from NIS 364.5 million in Q4 2005. In revenue terms, EBITDA
was 33.1% of revenues in Q1 2006, up from 31.8% in Q1 2005 and 28.9%
in Q4 2005. As a percentage of service revenues, EBITDA was 37.0%, up
from 35.4% in Q1 2005 and up from 32.2% in Q4 2005.
Financial expenses in Q1 2006 were NIS 38.6 million (US$ 8.3
million), down 24.0% from NIS 50.9 million in Q1 2005, and down 38.7%
from NIS 63.0 million in Q4 2005. Compared with Q1 2005, the decrease
primarily reflects lower interest charges resulting from the
refinancing of the Company's long term debt into lower cost CPI linked
shekel-denominated debt. Compared with Q4 2005, the decrease is
primarily due to the lower CPI level in Q1 2006.
Q1 2006 net income was NIS 160.4 million (US$ 34.4 million),
representing an increase of 28.9% from NIS 124.5 million in Q1 2005,
and an increase of 92.6% from NIS 83.3 million in Q4 2005.
Basic earnings per share or ADS, based on the average number of
shares outstanding during the quarter, were NIS 1.05 (22 US cents) in
Q1 2006, up 54.4% from NIS 0.68 in Q1 2005 resulting from the 28.9%
increase in net income and the lower average shares outstanding
following the share repurchase in 2005. Compared with Q4 2005, basic
earnings per share or ADS were up 90.9% in Q1 2006 from NIS 0.55 in Q4
2005. Fully diluted earnings per share or ADS in Q1 2006 were also NIS
1.05 (22 US cents), up from NIS 0.67 in Q1 2005 and from NIS 0.54 in
Q4 2005.

Funding and Investing Review

Cash flows generated from operating activities, net of cash flows
from investing activities, in Q1 2006 totaled NIS 68.4 million (US$
14.7 million), compared with NIS 81.8 million in Q1 2005, a decrease
of 16.3%, and compared with NIS 199.0 million in Q4 2005, a decrease
of 65.6%. The decrease from Q1 2005 was primarily due to a decrease in
cash flows from operating activities, offset by a decrease in the
level of investment in fixed assets. The decrease from Q4 2005
incorporated both a decrease in cash flows from operating activities
and an increase in the level of investment in fixed assets, the
decrease in cash flows are primarily attributable to timing effects of
payments to suppliers including suppliers of fixed assets, and
interest charges.
Net investment in fixed assets in Q1 2006 totaled NIS 67.7 million
(US$ 14.5 million), down from NIS 186.3 million in Q1 2005 and from
NIS 83.9 million in Q4 2005, reflecting the substantial completion of
the 3G network build out in 2005.

Operational Review

Approximately 31,000 net active subscribers joined the Company in
Q1 2006 compared with approximately 32,000 in Q1 2005 and
approximately 49,000 in Q4 2005. The quarterly churn rate in Q1 2006
increased to 4.2% from 3.9% in Q1 2005 and from 3.1% in Q4 2005,
resulting primarily from an increase in inactive prepaid subscribers.
At the end of March 2006, the Company's active subscriber base was
approximately 2,560,000, consisting of approximately 532,000 business
subscribers or 21% of the base, approximately 1,266,000 postpaid
private subscribers, or 49% of the base, and approximately 762,000
prepaid subscribers, or 30% of the base. Of the Company's subscriber
base at the end of Q1 2006, approximately 130,000 were 3G subscribers.
We estimate our total market share at the end of Q1 2006 to have been
around 32%.
The average monthly usage per subscriber in Q1 2006 was
approximately 301 minutes per month, an increase of 4.5% compared with
288 minutes in Q1 2005 and 4.5% compared with 288 minutes in Q4 2005.
ARPU in Q1 2006 was approximately NIS 152 (US$ 33), a decrease of 3.2%
from NIS 157 in Q1 2005, primarily a result of the reduction in
interconnection tariffs, but an increase of 2.8% from NIS 148 in Q4
2005.
Commenting on the Company's results, Mr. Alan Gelman, Partner's
Chief Financial Officer said: "Partner Communications has delivered a
very strong performance this quarter, with service revenue growth of
4.6% and improvements in all the key earnings margins. The results
clearly support the 2006 annual guidance provided on February 1st,
2006."

Outlook and Guidance

Commenting on the Company's outlook, Mr. Gelman said: "In view of
the prospects for further positive cash flow generation, we are today
recommending to the Board to adopt a dividend policy targeting a
payout ratio of 60% of net income over 2006. The policy reflects our
full confidence that the Company can continue to return cash to
shareholders whilst at the same time continue to grow our business.
For Q1 2006, the Board of Directors has approved the distribution
of an interim quarterly cash dividend of NIS 0.45 per share
(approximately NIS 70 million or US$ 15 million) to shareholders on
record as of June 6th, 2006"

Conference Call Details

Partner Communications will hold a conference call to discuss the
company's first-quarter results on Monday, May 15, 2006, at 18:00
Israel local time (11AM 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.investors.partner.co.il.
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 May 22, 2006.

About Partner Communications

Partner Communications Company Ltd. (Partner) is a leading Israeli
mobile communications operator providing GSM/ GPRS/ UMTS services and
wire free applications under the orange(TM) brand. The Company
commenced full commercial operations in January 1999 and, through its
network, provides quality service and a range of features to 2.560
million subscribers in Israel. Partner subscribers can use roaming
services in 163 destinations using 353 GSM networks. The Company
launched its 3G service in 2004. Partner's ADSs are quoted on NASDAQ
under the symbol PTNR and on the London Stock Exchange under the
symbol PCCD. Its shares are quoted on the Tel Aviv Stock Exchange
under the symbol PTNR.
Partner is a subsidiary of Hutchison Telecommunications
International Limited (Hutchison Telecom). Hutchison Telecom is a
leading listed telecommunications operator (SEHK: 2332; NYSE: HTX)
focusing on dynamic markets. It currently offers mobile and fixed-line
telecommunication services in Hong Kong, and operates or is rolling
out mobile telecommunication services in India, Israel, Macau,
Thailand, Sri Lanka, Ghana, Indonesia and Vietnam.
For more information about Partner, see
www.investors.partner.co.il

Note: This report 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 annual report,
including the statements in the sections of this annual report
entitled "Item 3D. Key Information - Risk Factors," "Item 4.
Information on the Company" and "Item 5". Operating and Financial
Review and Prospects" and located elsewhere in this annual report
regarding our future performance, 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 relating to tariffs, including
interconnect 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 damages resulting from
antenna sites;

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

-- 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;

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

-- 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;

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

-- 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;

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

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

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 May 15, 2005. 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.
These financial results were prepared in accordance with U.S.
GAAP.
The convenience translations of the Nominal New Israeli Shekel
(NIS) figures into US Dollars were made at the rate of exchange
prevailing at March 31st, 2006: US $1.00 equals NIS 4.665. The
translations were made purely for the convenience of the reader.
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. EBITDA, however, should
not be considered as an alternative to operating income or 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 cash flows from operating activities
and EBIDTA is presented in the attached summary financial results.

PARTNER COMMUNICATIONS COMPANY LTD.

(An Israeli Corporation)

CONDENSED CONSOLIDATED BALANCE SHEETS

-0-
*T
New Israeli shekels Convenience
translation into
U.S. dollars
----------------------------------------
March 31, December March 31, December
31, 31,
2006 2005 2006 2005
----------------------------------------
(Unaudited)(Audited)(Unaudited)(Audited)
----------------------------------------
In thousands
----------------------------------------
A s s e t s
CURRENT ASSETS:
Cash and cash equivalents 9,117 4,008 1,954 859
Accounts receivable:
Trade 819,646 795,156 175,701 170,451
Other 107,482 97,128 23,040 20,821
Inventories 152,122 209,323 32,609 44,871
Deferred income taxes 37,216 65,361 7,978 14,011
------------------------------------
T o t a l current assets 1,125,583 1,170,976 241,282 251,013
------------------------------------
INVESTMENTS AND LONG-TERM
RECEIVABLES:
Accounts receivables - trade 242,561 189,013 51,996 40,517
Funds in respect of employee
rights upon
retirement 76,928 75,443 16,490 16,172
------------------------------------
319,489 264,456 68,486 56,689
------------------------------------
FIXED ASSETS, net of accumulated
depreciation and amortization 1,700,745 1,768,895 364,576 379,184
------------------------------------
LICENSE AND DEFERRED CHARGES,
net of amortization 1,298,290 1,321,167 278,304 283,208
------------------------------------
DEFERRED INCOME TAXES 84,984 86,505 18,217 18,543
------------------------------------
4,529,091 4,611,999 970,865 988,637
====================================
*T

-0-
*T
New Israeli shekels Convenience
translation into
U.S. dollars
----------------------------------------
March 31, December March 31, December
31, 31,
2006 2005 2006 2005
----------------------------------------
(Unaudited)(Audited)(Unaudited)(Audited)
----------------------------------------
In thousands
----------------------------------------
Liabilities and
shareholders' equity
CURRENT LIABILITIES:
Current maturities of long-
term liabilities 35,824 34,464 7,679 7,388
Accounts payable and
accruals:
Trade 521,272 665,542 111,741 142,667
Other 183,698 231,480 39,378 49,619
Related party - trade 10,709 10,513 2,296 2,254
Dividend payable 133,354 44,996 28,586 9,645
----------------------------------------
T o t a l current
liabilities 884,857 986,995 189,680 211,573
----------------------------------------
LONG-TERM LIABILITIES:
Bank loans, net of current
maturities 605,132 665,974 129,717 142,760
Notes payable 2,024,216 2,022,257 433,916 433,496
Liability for employee
rights upon retirement 104,848 102,238 22,475 21,916
Other liabilities 19,141 19,184 4,103 4,112
----------------------------------------
T o t a l long-term
liabilities 2,753,337 2,809,653 590,211 602,284
----------------------------------------
T o t a l liabilities 3,638,194 3,796,648 779,891 813,857
----------------------------------------
SHAREHOLDERS' EQUITY:
Share capital - ordinary
shares of NIS 0.01 par
value: authorized -
December 31, 2005 and
March 31, 2006 -
235,000,000 shares;
issued and outstanding -
December 31,
2005 - 152,528,288 shares
and March 31,
2006 - 153,035,489
shares 1,530 1,525 328 327
Receivable in respect of
shares issued (94) (20)
Capital surplus 2,403,087 2,388,425 515,131 511,988
Accumulated deficit (1,513,626)(1,574,599)(324,465)(337,535)
----------------------------------------
T o t a l
shareholders' equity 890,897 815,351 190,974 174,780
----------------------------------------
4,529,091 4,611,999 970,865 988,637
========================================
*T

PARTNER COMMUNICATIONS COMPANY LTD.

(An Israeli Corporation)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

-0-
*T
New Convenience
Israeli translation
shekels into U.S.
dollars

3 month 3 month
period period
ended ended
March 31, March 31,

2006 2005 2006

(Unaudited)
------------------------------------
In thousands (except
per share data)
------------------------------------
REVENUES - net:
Services 1,184,208 1,132,425 253,850
Equipment 142,436 128,043 30,532
------------------------------------
1,326,644 1,260,468 284,382
------------------------------------
COST OF REVENUES:
Services 744,749 743,333 159,646
Equipment 207,428 181,492 44,465
------------------------------------
952,177 924,825 204,111
------------------------------------

GROSS PROFIT 374,467 335,643 80,271
SELLING AND MARKETING EXPENSES 57,250 57,363 12,272
GENERAL AND ADMINISTRATIVE
EXPENSES 43,682 41,510 9,363
------------------------------------
OPERATING PROFIT 273,535 236,770 58,636
FINANCIAL EXPENSES - net 38,629 50,854 8,281
------------------------------------
INCOME BEFORE TAXES ON INCOME 234,906 185,916 50,355
TAXES ON INCOME 75,501 61,423 16,185
------------------------------------
INCOME BEFORE CUMULATIVE EFFECT
OF A CHANGE IN ACCOUNTING
PRINCIPLES 159,405 124,493 34,170
CUMULATIVE EFFECT, AT BEGINNING OF
YEAR, OF A CHANGE IN
ACCOUNTING
PRINCIPLES 1,012 217
------------------------------------
NET INCOME FOR THE PERIOD 160,417 124,493 34,387
====================================
EARNINGS PER SHARE ("EPS") :
Basic:
Before cumulative effect 1.04 0.68 0.22
Cumulative effect 0.01 *
------------------------------------
1.05 0.68 0.22
====================================
Diluted
Before cumulative effect 1.04 0.67 0.22
Cumulative effect 0.01 *
------------------------------------
1.05 0.67 0.22
====================================
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING:
Basic 152,818,983 184,288,908 152,818,983
====================================
Diluted 153,409,410 186,367,557 153,409,410
====================================
*T

*Representing an amount less than $0.01

PARTNER COMMUNICATIONS COMPANY LTD.

(An Israeli Corporation)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

-0-
*T
Convenience
translation
into
New Israeli U.S.
shekels dollars
-----------------------------
3 month
period
3 month period ended
ended March 31, March 31,

2006 2005 2006
-----------------------------
(Unaudited)
-----------------------------
In thousands
-----------------------------
CASH FLOWS FROM OPERATING ACTIVITIES: 160,417 124,493 34,387
Net income for the period
Adjustments to reconcile net income to
net cash provided
by operating activities:
Depreciation and amortization 161,435 161,861 34,605
Amortization of deferred compensation
related to
employee stock option grants, net 6,621 4,008 1,419
Liability for employee rights upon
retirement 2,610 2,193 559
Accrued interest and exchange and
linkage differences
on long-term liabilities 2,805 8,209 601
Deferred income taxes 29,665 59,269 6,359
Income tax benefit in respect of
exercise of option granted to
Employees 2,154
Capital loss on sale of fixed assets 56
Cumulative effect, at beginning of year
, of a change in
accounting principles (1,012) (217)
Changes in operating assets and
liabilities:
Increase in accounts receivable:
Trade (78,038) (42,639) (16,728)
Other (10,354) (10,462) (2,219)
Increase (decrease) in accounts payable
and accruals:
Related Parties 196 42
Trade (122,056) 5,206 (26,164)
Other (47,782) (81,307) (10,243)
Decrease in inventories 57,201 12,572 12,262
Increase in asset retirement
obligations 682 130 146
-----------------------------
Net cash provided by operating activities 162,390 245,743 34,809
-----------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets (92,500)(162,307) (19,829)
Proceeds from sale of fixed assets 13
Funds in respect of employee rights upon
retirement (1,485) (1,697) (318)
-----------------------------
Net cash used in investing activities (93,985)(163,991) (20,147)
-----------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options
granted to employees 8,964 17,793 1,922
Dividend paid (11,086) (2,376)
Repayment of capital lease (1,221) (262)
Repayment of long term bank loans (59,953) (99,560) (12,851)
-----------------------------
Net cash used in financing activities (63,296) (81,767) (13,567)
-----------------------------
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 5,109 (15) 1,095
CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD 4,008 4,611 859
-----------------------------
CASH AND CASH EQUIVALENTS AT END OF
PERIOD 9,117 4,596 1,954
=============================
*T

At March 31, 2006, trade payables include NIS 68 million ($
15million) (unaudited) and NIS 30 million ($6 million) (unaudited) in
respect of acquisition of fixed assets and additional spectrum,
respectively.
At March 31, 2006, dividend payable of approximately NIS 133
million ($29 million) (unaudited) is outstanding.
These balances will be given recognition in these statements upon
payment.

PARTNER COMMUNICATIONS COMPANY LTD.

(An Israeli Corporation)

RECONCILIATION BETWEEN OPERATING CASH FLOWS
AND EBITDA

-0-
*T
Convenience
translation
into
New Israeli shekels U.S. dollars
--------------------------------
3 Month Period Ended 3 Month
March 31, Period
Ended
March 31,
--------------------------------
2006 2005 2006
--------------------------------
(Unaudited)
--------------------------------
In thousands
--------------------------------
Net cash provided by operating
activities 162,390 245,743 34,810

Liability for employee rights upon
retirement (2,610) (2,193) (559)
Accrued interest and exchange and
linkage differences on long-term
liabilities (2,805) (8,209) (601)
Increase in accounts receivable:
Trade 78,038 42,639 16,728
Other (excluding tax
provision) 56,190 10,462 12,045
Decrease (increase) in accounts
payable and accruals:
Trade 122,056 (5,206) 26,164
Shareholder - current
account (196) (42)
Other 47,782 81,307 10,243
Decrease in inventories (57,201) (12,572) 12,262))
Decrease in Assets Retirement
Obligation (682) (130) 146))
Financial Expenses 35,607 48,798 7,633
_______ ________ ________
EBITDA 438,569 400,639 94,013
_______ ________ _______
*T

* The convenience translation of the New Israeli Shekel (NIS)
figures into US dollars was made at the exchange prevailing at March
31, 2006 : US $1.00 equals 4.665 NIS.
** Financial expenses excluding any charge for the amortization of
pre-launch financial costs.

PARTNER COMMUNICATIONS COMPANY LTD.
(An Israeli Corporation)

-0-
*T
New Israeli shekels
-----------------------------------------------
3 month period ended
-----------------------------------------------
March 31, June 30, September
30,
2005 2005 2005
-----------------------------------------------
(Unaudited)
-----------------------------------------------
In thousands
-----------------------------------------------

REVENUES - net 1,260,468 1,250,875 1,352,322
COST OF REVENUES 924,825 887,474 1,023,828
------------------------------------------
GROSS PROFIT 335,643 363,401 328,494
SELLING AND
MARKETING
EXPENSES 57,363 65,442 72,105
GENERAL AND
ADMINISTRATIVE
EXPENSES 41,510 46,203 45,222
------------------------------------------
OPERATING PROFIT 236,770 251,756 211,167
FINANCIAL
EXPENSES - net 50,854 82,826 148,782
_______ _______ _________
INCOME BEFORE
TAXES ON INCOME 185,916 168,930 62,385
TAXES ON INCOME 61,423 53,096 31,441
------------------------------------------
INCOME BEFORE CUMULATIVE
EFFECT OF A CHANGE IN
ACCOUNTING PRINCIPLES
CUMULATIVE EFFECT, AT THE
BEGINNING OF THE YEAR,
OF A CHANGE IN
ACCOUNTING PRINCIPLES
NET INCOME FOR THE
PERIOD 124,493 115,834 30,944
==========================================

New Israeli shekels
-----------------------------------------------
3 month period ended
-----------------------------------------------
December March
31, 31,
2005 2006
-----------------------------------------------
(Unaudited)
-----------------------------------------------
In thousands
-----------------------------------------------

REVENUES - net 1,259,274 1,326,644
COST OF REVENUES 930,225 952,177
------------------------------
GROSS PROFIT 329,049 374,467
SELLING AND
MARKETING
EXPENSES 77,990 57,250
GENERAL AND
ADMINISTRATIVE
EXPENSES 47,846 43,682
------------------------------
OPERATING PROFIT 203,213 273,535
FINANCIAL
EXPENSES - net 62,986 38,629
________ _________
INCOME BEFORE
TAXES ON INCOME 140,227 234,906
TAXES ON INCOME 56,938 75,501
------------------------------
INCOME BEFORE CUMULATIVE
EFFECT OF A CHANGE IN
ACCOUNTING PRINCIPLES 159,405
CUMULATIVE EFFECT, AT THE
BEGINNING OF THE YEAR,
OF A CHANGE IN
ACCOUNTING PRINCIPLES 1,012
---------------
NET INCOME FOR THE
PERIOD 83,289 160,417
==============================
*T

PARTNER COMMUNICATIONS COMPANY LTD.

(An Israeli Corporation)

Summary Operating Data

-0-
*T
Q1 2005 Q1 2006
----------------------------------------------------------------------
Subscribers (in thousands) 2,372 2,560
----------------------------------------------------------------------
Estimated share of total Israeli mobile
telephone subscribers 32% 32%
----------------------------------------------------------------------
Churn rate in quarter 3.9% 4.2%
----------------------------------------------------------------------
Average monthly usage in quarter per subscriber
(minutes) 288 301
----------------------------------------------------------------------
Average monthly revenue in year per subscriber,
including in-roaming revenue (NIS) 157 152
----------------------------------------------------------------------
Number of 2G operational base stations (in
parenthesis number of micro sites out of total
number of base stations) 2,233 (709) 2,270 (709)
----------------------------------------------------------------------
Number of employees (full-time equivalent) 3,113 3,365
----------------------------------------------------------------------
*T