Cellcom Israel Announces Second Quarter 2017 Results

NETANYA, Israel, August 4, 2017 Second Quarter 2017 Highlights (compared to second quarter of 2016):

    --  Total Revenues totaled NIS 962 million ($275 million) compared to NIS
        1,029 million ($294 million) in the second quarter last year, a decrease
        of 6.5%
    --  Service revenues totaled NIS 731 million ($209 million) compared to NIS
        782 million ($224 million) in the second quarter last year, a decrease
        of 6.5%
    --  Operating income totaled NIS 102 million ($29 million) compared to NIS
        104 million ($30 million) in the second quarter last year, a decrease of
        1.9%
    --  Net income totaled NIS 45 million ($13 million) compared to NIS 44
        million ($13 million) in the second quarter last year, an increase of
        2.3%
    --  Net income margin 4.7%, an increase from 4.3% in the second quarter last
        year
    --  EBITDA(1) totaled NIS 237 million ($68 million) compared to NIS 238
        million ($68 million) in the second quarter last year, a decrease of
        0.4%
    --  EBITDA margin 24.6%, an increase from 23.1% in the second quarter last
        year
    --  Net cash from operating activities totaled NIS 278 million ($80 million)
        compared to NIS 204 million ($58 million) in the second quarter last
        year, an increase of 36.3%
    --  Free cash flow(1) totaled NIS 77 million ($22 million) compared to NIS
        103 million ($29 million) in the second quarter last year, a decrease of
        25.2%
    --  Cellular subscriber base totaled approximately 2.779 million subscribers
        (at the end of June 2017)

([1]) Please see "Use of Non-IFRS financial measures" section in this press release.

Nir Sztern, the Company's Chief Executive Officer, referred to the results of the second quarter of 2017:

"The results of the second quarter of 2017 reflect an improvement in the financial parameters compared to the previous quarter, in a period of intense competition. In the current quarter, net income increased to NIS 45 million, compared with NIS 26 million in the previous quarter, and revenues were stable and amounting to NIS 962 million, compared to NIS 959 million in the previous quarter. In addition, in the current quarter, EBITDA amounted to NIS 237 million, compared to NIS 201 million in the previous quarter.

Again in this quarter we continued to present rapid growth in the fixed-line worlds that solidify our position as a communications group. The net increase in television households was approximately 13,000 and the net increase in wholesale market households was approximately 16,000. The addition of content from the prestigious HBO content provider to the Cellcom tv service and the launching of the Quattro package in the previous quarter, were received by our customers as significant value proposals, solidifying their choice of us and reinforcing our strategy."

Shlomi Fruhling, Chief Financial Officer, said:

The second quarter of 2017 was characterized by continued growth in the fixed-line segment and continued competition in the cellular field. The network sharing agreement with Golan came into force as of the beginning of the second quarter of 2017. According to the terms of the agreement, part of the consideration is recognized as revenues and part is recognized as a reduction of operation costs. In addition, revenues from the agreement are now divided between the cellular and fixed-line segments.

Service revenues from the cellular segment decreased by 5.5% compared to the previous quarter. The decrease resulted from the implementation of the network sharing agreement with Golan and was partly offset by an increase in revenues from customers mainly as a result of seasonality. Excluding the effect of the classification of the consideration according to the network sharing agreement with Golan on the cellular segment revenues, the cellular ARPU increased by NIS 0.8 compared to the previous quarter. The service revenues in the fixed-line segment increased by 4.7% compared to the previous quarter. This increase resulted mainly from revenues from fixed-line communications services provided under the network sharing agreement with Golan, as well as increase in revenues from internet and TV services. The EBITDA of the fixed-line segment increased by 88.1% compared to the previous quarter. The increase resulted from increase in the segment revenues, the recognition of a gain of approximately NIS 10 million from the sale of the Group's holdings in Internet Rimon Israel 2009 Ltd and from decrease in the operating expenses of the segment.

Free cash flow for the second quarter of 2017 totaled NIS 77 million, a 16.7% increase compared to the previous quarter. The increase in free cash flow resulted from higher receipts from customers which was partly offset by higher capital expenditures in fixed assets and intangible assets in the current quarter.

The Company's Board of Directors decided not to distribute a dividend for the second quarter of 2017, given the continued intensified competition in the market and its effect on the Company's operating results and in order to further strengthen the Company's balance sheet. The Board of Directors will re-evaluate its decision as market conditions develop, and taking into consideration the Company's needs."

Cellcom Israel Ltd. (NYSE: CEL; TASE: CEL) ("Cellcom Israel" or the "Company" or the "Group") announced today its financial results for the second quarter of 2017.

The Company reported that revenues for the second quarter of 2017 totaled NIS 962 million ($275 million); EBITDA for the second quarter of 2017 totaled NIS 237 million ($68 million), or 24.6% of total revenues; net income for the second quarter of 2017 totaled NIS 45 million ($13 million). Basic earnings per share for the second quarter of 2017 totaled NIS 0.45 ($0.13).

Main Consolidated Financial Results:


                         Q2/2017           Q2/2016  Change%   Q2/2017     Q2/2016
                         -------           -------   ------    -------     -------

               NIS million        US$ million
                                 (convenience
                                 translation)
                     ----------- ------------

     Total
     revenues                962              1,029    (6.5%)        275          294
     --------                ---              -----     -----         ---          ---

     Operating
     Income                  102                104    (1.9%)         29           30
     ---------               ---                ---     -----         ---          ---

     Net
     Income                   45                 44      2.3%         13           13
     ------                  ---                ---       ---         ---          ---

     Free
     cash
     flow                     77                103   (25.2%)         22           29
     ----                    ---                ---    ------         ---          ---

    EBITDA                   237                238    (0.4%)         68           68
    ------                   ---                ---     -----         ---          ---

     EBITDA,
     as
     percent
     of
     total
     revenues              24.6%             23.1%     6.5%
     ========               ====               ====       ===

Main Financial Data by Operating Segments:


                Cellular (*)    Fixed-line (**)    Consolidation        Consolidated results
                                                    adjustments

                                                       (***)
                                                       ====

    NIS million    Q2'17             Q2'16            Change                   Q2'17            Q2'16           Change            Q2'17        Q2'16         Q2'17               Q2'16                Change

                                                         %                                                         %                                                                                    %
                                                        ---                                                       ---

    Total
     revenues               673                784              (14.2%)                    331             294             12.6%        (42)         (49)                962                1,029                (6.5%)
    ---------               ---                ---               ------                     ---             ---              ----          ---           ---                 ---                -----                 -----

    Service
     revenues               481                567              (15.2%)                    292             264             10.6%        (42)         (49)                731                  782                (6.5%)
    ---------               ---                ---               ------                     ---             ---              ----          ---           ---                 ---                  ---                 -----

    Equipment
     revenues               192                217              (11.5%)                     39              30             30.0%           -            -                231                  247                (6.5%)
    ---------               ---                ---               ------                     ---             ---              ----          ---          ---                ---                  ---                 -----

    EBITDA                  158                181              (12.7%)                     79              57             38.6%           -            -                237                  238                (0.4%)
    ------                  ---                ---               ------                     ---             ---              ----          ---          ---                ---                  ---                 -----

    EBITDA, as            23.5%             23.1%                1.7%                  23.9%          19.4%            23.2%                                       24.6%               23.1%                 6.5%
    percent of
     total
    revenues
    ========

(*) The segment includes the cellular communications services, end user cellular equipment and supplemental services.
(**) The segment includes landline telephony services, internet infrastructure and connectivity services, television services, end user fixed-line equipment and supplemental services.
(***) Include cancellation of inter-segment revenues between "Cellular" and "Fixed-line" segments.

Financial Review (second quarter of 2017 compared to second quarter of 2016):

Revenues for the second quarter of 2017 decreased 6.5% totaling NIS 962 million ($275 million), compared to NIS 1,029 million ($294 million) in the second quarter last year. The decrease in revenues is attributed to a 6.5% decrease in service revenues and a 6.5% decrease in equipment revenues.

Service revenues totaled NIS 731 million ($209 million) in the second quarter of 2017, a 6.5% decrease from NIS 782 million ($224 million) in the second quarter last year.

Service revenues in the cellular segment totaled NIS 481 million ($138 million) in the second quarter of 2017, a 15.2% decrease from NIS 567 million ($162 million) in the second quarter last year. This decrease resulted from the gap between the national roaming services revenues in the second quarter of 2016 and the revenues for rights of use in cellular networks according to the network sharing agreement with Golan which came into force as the beginning of the second quarter of 2017 and from a decrease in cellular service revenues. The decrease in cellular services revenues resulted from the ongoing erosion in the prices of these services and churn of customers as a result of the competition in the cellular market.

Service revenues in the fixed-line segment totaled NIS 292 million ($84 million) in the second quarter of 2017, a 10.6% increase from NIS 264 million ($76 million) in the second quarter last year. This increase resulted mainly from fixed-line communications services provided according to the network sharing agreement with Golan which came into force as the beginning of the second quarter of 2017 as well as increase in revenues from internet and TV services.

Equipment revenues totaled NIS 231 million ($66 million) in the second quarter of 2017, a 6.5% decrease compared to NIS 247 million ($71 million) in the second quarter last year. This decrease resulted mainly from a decrease in the amount of end user equipment sold in the cellular segment. This decrease was partially offset by an increase in equipment sales in the fixed-line segment.

Cost of revenues for the second quarter of 2017 totaled NIS 665 million ($190 million), compared to NIS 666 million ($191 million) in the second quarter of 2016, a 0.2% decrease. This decrease resulted mainly from Golan's participation in operating costs according to the network sharing agreement which came into force as of the beginning of the second quarter of 2017. The decrease was partially offset by an increase in costs of TV services content and in costs related to internet services in the fixed-line segment.

Gross profit for the second quarter of 2017 decreased 18.2% to NIS 297 million ($85 million), compared to NIS 363 million ($104 million) in the second quarter of 2016. Gross profit margin for the second quarter of 2017 amounted to 30.9%, down from 35.3% in the second quarter of 2016.

Selling, Marketing, General and Administrative Expenses ("SG&A Expenses") for the second quarter of 2017 decreased 15.5% to NIS 207 million ($59 million), compared to NIS 245 million ($70 million) in the second quarter of 2016. This decrease is primarily a result of a decrease in salaries and commissions expenses due to capitalization of part of the customer acquisition costs as a result of early adoption of a new International Financial Reporting Standard (IFRS 15) since the first quarter of 2017. The effect of the adoption of the standard on the second quarter of 2017 expenses is in a total amount of NIS 20 million ($6 million). In addition, the decrease in expenses resulted from the Company's continuous efforts to reduce ongoing operating expenses.

Other income for the second quarter of 2017 totaled NIS 12 million ($3 million), compared with other expenses of NIS 14 million ($4 million) in the second quarter of 2016. Other income for the second quarter of 2017 mainly include a gain from the sale of Internet Rimon Israel 2009 Ltd., an indirect subsidiary of the Company, in the amount of approximately NIS 10 million ($3 million), compared to an expense for employee voluntary retirement plan in the amount of approximately NIS 13 million ($4 million) in the second quarter of 2016.

Operating income for the second quarter of 2017 decreased by 1.9% to NIS 102 million ($29 million) from NIS 104 million ($30 million) in the second quarter of 2016.

EBITDA for the second quarter of 2017 decreased by 0.4% totaling NIS 237 million ($68 million) compared to NIS 238 million ($68 million) in the second quarter of 2016. EBITDA as a percent of revenues for the second quarter of 2017 totaled 24.6%, up from 23.1% in the second quarter of 2016.

Cellular segment EBITDA for the second quarter of 2017 totaled NIS 158 million ($45 million), compared to NIS 181 million ($52 million) in the second quarter last year, a decrease of 12.7%, which resulted mainly from the gap between national roaming services revenues in the second quarter of 2016 and the revenues for rights of use in cellular networks according to the network sharing agreement with Golan which came into force as the beginning of the second quarter of 2017and from the ongoing erosion in the service revenues. The decrease was partially offset by a decrease in selling and marketing expenses due to the capitalization of part of the customer acquisition costs as a result of early adoption of a new International Financial Reporting Standard (IFRS15) since the first quarter of 2017. Fixed-line segment EBITDA for the second quarter of 2017 totaled NIS 79 million ($23 million), compared to NIS 57 million ($16 million) in the second quarter last year, a 38.6% increase, mainly as a result of a decrease in operating expenses and an increase in revenues from fixed-line communications services provided according to the network sharing agreement with Golan as well as a gain from the sale of Internet Rimon Israel 2009 Ltd., an indirect subsidiary of the Company.

Financing expenses, net for the second quarter of 2017 were similar to the second quarter of 2016 and totaled NIS 44 million ($12 million).

Net Income for the second quarter of 2017 totaled NIS 45 million ($13 million), compared to NIS 44 million ($13 million) in the second quarter of 2016, an increase of 2.3%.

Basic earnings per share for the second quarter of 2017 totaled NIS 0.45 ($0.13), compared to NIS 0.43 ($0.12) in the second quarter last year.

OPERATING REVIEW

MAIN PERFORMANCE INDICATORS - Cellular segment:


                                    Q2/2017 Q2/2016  Change (%)
                                    ------- -------   ---------

    Cellular subscribers at the end   2,779    2,812             (1.2%)
    of period (in thousands)
    -----------------------

    Churn Rate for cellular           10.8%   10.6%              1.9%
    subscribers (in %)
    -----------------

    Monthly cellular ARPU (in NIS)     57.0     66.0            (13.6%)
    -----------------------------      ----     ----             ------

Cellular subscriber base - at the end of the second quarter of 2017 the Company had approximately 2.779 million cellular subscribers. During the second quarter of 2017 the Company's cellular subscriber base decreased by approximately 13,000 net cellular subscribers.

Cellular Churn Rate for the second quarter of 2017 totaled to 10.8%, compared to 10.6% in the second quarter last year.

The monthly cellular Average Revenue per User ("ARPU") for the second quarter of 2017 totaled NIS 57.0 ($16.3), compared to NIS 66.0 ($18.9) in the second quarter last year. The decrease in ARPU resulted from the gap between national roaming services revenues in the second quarter of 2016 and the revenues for rights of use in cellular networks according to the network sharing agreement with Golan which came into force as of the beginning of the second quarter of 2017 and from the ongoing erosion in the prices of cellular services, resulting from the intense competition in the cellular market.

MAIN PERFORMANCE INDICATORS - FIXED-LINE SEGMENT:


                                    Q2/2017 Q2/2016  Change (%)
                                    ------- -------  ---------

    Internet infrastructure field-      189      136            39.0%
    households at the end of period
    (in thousands)
    -------------

    TV  field-  households at the       137       87            57.5%
    end of period  (in thousands)
    ============================

In the second quarter of 2017, the Company's households base in respect of the internet infrastructure field increased by approximately 16,000 net households, and the Company's households base in the TV field increased by 13,000 net households.

FINANCING AND INVESTMENT REVIEW

Cash Flow

Free cash flow for the second quarter of 2017 totaled NIS 77 million ($22 million), compared to NIS 103 million ($29 million) in the second quarter of 2016, a 25.2% decrease. The decrease in free cash flow, resulted mainly from higher cash capital expenditures in fixed assets and intangible assets in the second quarter of 2017 compared to the second quarter of 2016, which was partly offset by decrease in payments to end user equipment suppliers in the cellular segment.

Total Equity

Total Equity as of June 30, 2017 amounted to NIS 1,398 million ($400 million) primarily consisting of undistributed accumulated retained earnings of the Company.

Cash Capital Expenditures in Fixed Assets and Intangible Assets

During the second quarter of 2017, the Company invested NIS 191 million ($55 million) in fixed assets and intangible assets (including, among others, investments in the Company's communications networks, information systems, software and TV set-top boxes and capitalization of part of the customer acquisition costs as a result of early adoption of a new International Financial Reporting Standard (IFRS 15) since the first quarter of 2017), compared to NIS 102 million ($29 million) in the second quarter 2016.

Dividend

On August 4, 2017, the Company's Board of Directors decided not to declare a cash dividend for the second quarter of 2017. In making its decision, the board of directors considered the Company's dividend policy and business status and decided not to distribute a dividend at this time, given the intensified competition and its adverse effect on the Company's results of operations, and in order to strengthen the Company's balance sheet. The board of directors will re-evaluate its decision in future quarters. No future dividend declaration is guaranteed and is subject to the Company's board of directors' sole discretion, as detailed in the Company's annual report for the year ended December 31, 2016 on Form 20-F dated March 20, 2017, or the 2016 Annual Report, under "Item 8 - Financial Information - A. Consolidated Statements and Other Financial Information - Dividend Policy".

Debentures

For information regarding a summary of the Company's financial liabilities and details regarding the Company's outstanding debentures as of June 30, 2017, see "Disclosure for Debenture Holders" as well as section "other developments during the second quarter of 2017 and subsequent to the end of the reporting period- Debt Raising- Private Debentures Placement" in this press release.

Loans from Financial Institutions

According to a loan agreement entered by the Company and two financial institutions in May 2015, in June 2017 the second loan under the agreement in a principal amount of NIS 200 million was provided to the Company. The loan is without linkage and the principal amount bears an annual fixed interest of 5.1%, and will be paid in four equal annual payments on June 30 of each calendar year commencing June 30, 2019 through and including June 30, 2022. The interest will be paid in ten semi-annual installments on June 30 and December 31, of each calendar year commencing December 31, 2017 through and including June 30, 2022.

For details regarding the fulfillment of financial covenants included in the loan agreements, which are identical to those included in the Company's Debentures Series F through K, see comment no.1 to the table of "Aggregation of the information regarding the debenture series issued by the Company" under "Disclosure for Debenture Holders" section in this press release. For additional details regarding the loans see the Company's 2016 Annual Report, under "Item 5B. Liquidity and Capital Resources - Other Credit Facilities".

OTHER DEVELOPMENTS DURING THE SECOND QUARTER OF 2017 AND SUBSEQUENT TO THE END OF THE REPORTING PERIOD

Regulation

Wholesale Market

In June 2017, the Ministry of Communications published the maximum tariffs for Hot Telecom L.P., or Hot, wholesale internet infrastructure services (after a petition filed by Hot against the Ministry of Communications in February 2017, claiming the Ministry of Communications was required to hold another hearing prior to setting maximum tariffs, was dismissed). Due to disagreements with Hot as to the implementation of the service (which await resolution by the Ministry of Communications), it is unclear when the service - which was to be offered by Hot as of February 2015 - will be offered. The maximum tariffs set are higher than those set for Bezeq the Israeli Telecommunications Company Ltd., or Bezeq, the other wholesale internet service provider.

In addition, in June 2017, the Ministry of Communications published regulations setting Bezeq's resale telephony service to be provided by Bezeq as of July 2017, as a temporary 14 month alternative for wholesale landline telephony service. In addition, the Ministry of Communications resolved that Bezeq's obligation to offer wholesale telephony service, which was to be offered by Bezeq as of May 2015, will be postponed until the lapse of said resale telephony service period. The resolution further notes that the Ministry of Communications will consider the resale telephony service as a permanent replacement of the telephony wholesale service. The tariffs set for the resale telephony service are substantially higher than those set for Bezeq's telephony wholesale service. The Ministry of Communications is holding a public hearing in relation to the aforementioned tariffs, to be applied retroactively after its conclusion.

For additional details see the Company's annual report for 2016 under "Item 3. Key Information - D. Risk Factors - Risks Related to our Business - We face intense competition in all aspects of our business" and "Item 4. Information on the Company - B. Business Overview -Competition - Fixed-line Segment - Internet infrastructure and ISP business", "- Landline telephony" and "- Government Regulation - Fixed-line Segment - Wholesale landline market".

Cellular License Amendment

In July 2017, following the previously reported amendment to the Company's cellular license in relation to the requirement that Israeli citizens and residents from among the Company's founding shareholders hold at least 5% of the Company's outstanding shares and other means of control, as of July 2017, the Israeli Ministry of Communications amended the Company's cellular license so as to postpone the application of such requirement until October 31, 2017.

For additional details see the Company's Annual Report for 2016 under "Item 3. Key Information - D. Risk Factors - Risks Related to our Business - There are certain restrictions in our licenses relating to the ownership of our shares" and "Item 4. Information on the Company - B. Business Overview - Government Regulations - Cellular Segment - Our Cellular License".

Change in Independent Auditors

In July 2017, Kesselman & Kesselman, or PwC Israel, one of the Company's joint independent registered public accounting firms, concluded serving as the Company's joint independent registered public accounting firm. Somekh Chaikin, a member of KPMG International, the Company's other joint independent registered public accounting firm, will continue to serve as the Company's sole independent registered public accounting firm.

PwC Israel's audit reports on the consolidated financial statements for the fiscal year ended December 31, 2016 of Cellcom Israel Ltd. did not contain an adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope or accounting principle. During the Company's fiscal year ended December 31, 2016 and the subsequent interim period through March 31, 2017, there were no disagreements between the Company and PwC Israel on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to PwC Israel's satisfaction, would have caused PwC Israel to make reference to the matters in their reports on the Company's consolidated financial statements for such year.During the Company's fiscal year ended December 31, 2016 and the subsequent interim period through March 31, 2017, there have been no reportable events (as defined in S-K 304(a)(1)(v)).

Debt Raising

Private Debentures Placement

In June 2017, the Company entered into an agreement with certain Israeli institutional investors, according to which the Company irrevocably undertook to issue to the institutional investors, and the institutional investors irrevocably undertook to purchase from the Company, NIS 220 million aggregate principal amount of additional debentures of the existing series K debentures (which are listed on the Tel Aviv Stock Exchange, or TASE), on July 1, 2018, or the Agreed Date.

The price was set at NIS 1.011 for each Series K debenture (which bear a stated interest rate of 3.55% per annum) of NIS 1 principal amount, or a total consideration of approximately NIS 222 million, reflecting an effective interest yield of 3.6% per annum. The Company is required to pay a certain commitment fee to the institutional investors. In case the debentures' rating on the Agreed Date shall be il/(A-) or below, the price shall be reduced to NIS 1.001 for each Series K debenture of NIS 1 principal amount.

The closing of the issuance will be subject to certain customary conditions, including: the receipt of the TASE's approval, the absence of any event of default under the series K debentures indenture, the Company having an Israeli shelf prospectus in force, and satisfaction of the conditions set out in the series K debentures indenture for the issuance of additional K debentures (meaning, aside from the no events of default condition detailed above, that the issuance of additional debentures itself will not cause a rating downgrade compared to the rating prior to such issuance, and that the Company meets the financial covenants applicable to the series K debentures on the date of such issuance and thereafter). In June 2017, the TASE granted the Company the said requisite approval.

In relation to the said offering, the Company's rating agency reaffirmed the current rating of ilA+/stable for the Company and its debentures.

The offering described in this press release was made only in Israel and only to residents of Israel. The said debentures will not be registered under the U.S. Securities Act of 1933 and will not be offered or sold in the United States. This press release shall not constitute an offer to sell or the solicitation of an offer to buy any securities.

Loan Agreement

In June 2017, the Company entered into a loan agreement with an Israeli bank that provided the Company a similar loan in August 2015 (the "Lender" and the "2015 Loan Agreement", respectively), according to which the Lender has agreed, subject to certain customary conditions, to provide the Company a deferred loan in a principal amount of NIS 150 million, unlinked, which will be provided to the Company in March 2019, and will bear an annual fixed interest of 4%. The loan's principal amount will be payable in four equal annual payments on March 31 of each of the years 2021 through and including 2024 and the interest will be payable in ten semi-annual installments on March 31 and September 30 of each calendar year commencing September 30,2019 through and including March 31, 2024. Until the provision of the loan, the Company is required to pay the Lender a commitment fee.

The agreement includes similar terms and obligations to those included in the Company's August 2015 loan agreement and applies the right to demand immediate repayment of either or both agreements due to certain events of default under either agreement.

For additional details regarding the Company's existing debentures and existing loan agreements, including the August 2015 loan agreement, see the Company's 2016 Annual Report under "Item 5B. Liquidity and Capital Resources - Debt Service - Public Debentures" and "-Other Credit Facilities" and the Company's current report on Form 6-K dated June 1, 2017.

Sale of Indirect Subsidiary of the company

In June 2017, the previously reported sale of 013 Netvision Ltd. (the Company's wholly owned indirect subsidiary) holdings in Internet Rimon Israel 2009 Ltd. was completed.

For additional details see the Company's current report on Form 6-K dated May 24, 2017 under "Other developments during the first quarter of 2017 and subsequent to the end of the reporting period - Sale of Indirect Subsidiary".

Changes in Management- Vice President of Business Customers

In July 2017, Ms. Keren Shtevy notified the Company of her resignation from her position as the Company's vice president of business customers, and will be leaving the Company on August 15, 2017, after 19 years of successful and extensive tenure in 013 Netvision Ltd. and the Company. The Company's board of directors has nominated Mr. Nadav Amsalem as the Company's vice president of business customers, effective July 20, 2017.

Nadav Amsalem has served as head of the strategic customers department in the Company's business customers division, in charge of the major corporate business customers from 2014. From 2011 to 2014, he served as the director of strategic landline customers and major business customers sector. Mr. Amsalem has been a member of the Company's business customer's division since 2006.

IDB

In May 2017, IDB Development Corporation Ltd., or IDB, the Company's indirect controlling shareholder, announced in connection to the Concentration Law (according to which IDB and Discount Investment Corporation Ltd., or DIC, may not retain control over the Company beyond December 2019 so long as the Company is a third layer company in their pyramidal structure), that after reviewing possible ways to deal with this restriction, IDB is proposing to sell its holdings in DIC to a private company controlled by IDB's controlling shareholder. There can be no assurance of how or when this would occur, if at all.

For information about the Concentration Law, see the Company's 2016 Annual Report, under "Item 3.D - legislation in Israel affecting corporate conglomerates could adversely affect us."

CONFERENCE CALL DETAILS

The Company will be hosting a conference call regarding its results for the second quarter of 2017 on Tuesday, August 8, 2017 at 09:00 am ET, 06:00 am PT, 14:00 UK time, 16:00 Israel time. On the call, management will review and discuss the results, and will be available to answer questions. To participate, please either access the live webcast on the Company's website, or call one of the following teleconferencing numbers below. Please begin placing your calls at least 10 minutes before the conference call commences. If you are unable to connect using the toll-free numbers, please try the international dial-in number.

US Dial-in Number: 1 866 652 8972 UK Dial-in Number: 0 808 101 2717
Israel Dial-in Number: 03 918 0608 International Dial-in Number: +972 3 918 0608
at: 09:00 am Eastern Time; 06:00 am Pacific Time; 14:00 UK Time; 16:00 Israel Time

To access the live webcast of the conference call, please access the investor relations section of Cellcom Israel's website: www.cellcom.co.il. After the call, a replay of the call will be available under the same investor relations section.

About Cellcom Israel

Cellcom Israel Ltd., established in 1994, is the largest Israeli cellular provider; Cellcom Israel provides its approximately 2.779 million cellular subscribers (as at June 30, 2017) with a broad range of value added services including cellular telephony, roaming services for tourists in Israel and for its subscribers abroad and additional services in the areas of music, video, mobile office etc., based on Cellcom Israel's technologically advanced infrastructure. The Company operates an LTE 4 generation network and an HSPA 3.5 Generation network enabling advanced high speed broadband multimedia services, in addition to GSM/GPRS/EDGE networks. Cellcom Israel offers Israel's broadest and largest customer service infrastructure including telephone customer service centers, retail stores, and service and sale centers, distributed nationwide. Through its broad customer service network Cellcom Israel offers technical support, account information, direct to the door parcel delivery services, internet and fax services, dedicated centers for hearing impaired, etc. Cellcom Israel further provides OTT TV services (as of December 2014), internet infrastructure (as of February 2015) and connectivity services and international calling services, as well as landline telephone communications services in Israel, in addition to data communications services. Cellcom Israel's shares are traded both on the New York Stock Exchange (CEL) and the Tel Aviv Stock Exchange (CEL). For additional information please visit the Company's website http://investors.cellcom.co.il.

Forward-Looking Statements

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 the Company, may include projections of the Company's future financial results, its anticipated growth strategies and anticipated trends in its business. These statements are only predictions based on the Company's current expectations and projections about future events. There are important factors that could cause the Company's 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 the Company's license, new legislation or decisions by the regulator affecting the Company's operations, new competition and changes in the competitive environment, the outcome of legal proceedings to which the Company is a party, particularly class action lawsuits, the Company's ability to maintain or obtain permits to construct and operate cell sites, and other risks and uncertainties detailed from time to time in the Company's filings with the U.S. Securities and Exchange Commission, including under the caption "Risk Factors" in its Annual Report for the year ended December 31, 2016.

Although the Company believes the expectations reflected in the forward-looking statements contained herein are reasonable, it cannot guarantee future results, level of activity, performance or achievements. Moreover, neither the Company nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. The Company assumes no duty to update any of these forward-looking statements after the date hereof to conform its prior statements to actual results or revised expectations, except as otherwise required by law.

The Company prepares its financial statements in accordance with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board (IASB). Unless noted specifically otherwise, the dollar denominated figures were converted to US$ using a convenience translation based on the New Israeli Shekel (NIS)/US$ exchange rate of NIS 3.496 = US$ 1 as published by the Bank of Israel for June 30, 2017.

Use of non-IFRS financial measures

EBITDA is a non-IFRS measure and is defined as income before financing income (expenses), net; other income (expenses), net (excluding expenses related to employee voluntary retirement plans and gain (loss) due to sale of subsidiaries); income tax; depreciation and amortization and share based payments. This is an accepted measure in the communications industry. The Company presents this measure as an additional performance measure as the Company believes that it enables us to compare operating performance between periods and companies, net of any potential differences which may result from differences in capital structure, taxes, age of fixed assets and related depreciation expenses. EBITDA should not be considered in isolation, or as a substitute for operating income, any other performance measures, or cash flow data, which were prepared in accordance with Generally Accepted Accounting Principles as measures of profitability or liquidity. EBITDA does not take into account debt service requirements, or other commitments, including capital expenditures, and therefore, does not necessarily indicate the amounts that may be available for the Company's use. In addition, EBITDA as presented by the Company may not be comparable to similarly titled measures reported by other companies, due to differences in the way these measures are calculated. See the reconciliation of net income to EBITDA under "Reconciliation of Non-IFRS Measures" in the press release.

Free cash flow is a non-IFRS measure and is defined as the net cash provided by operating activities (including the effect of exchange rate fluctuations on cash and cash equivalents) excluding a loan to Golan Telecom, minus the net cash used in investing activities excluding short-term investment in tradable debentures and deposits and proceeds from sales of such debentures (including interest received in relation to such debentures) and deposits. See "Reconciliation of Non-IFRS Measures" below.


    Company Contact         Investor Relations Contact

    Shlomi Fruhling         Ehud Helft

    Chief Financial Officer GK Investor & Public Relations

    investors@cellcom.co.il cellcom@GKIR.com

    Tel: +972 52 998 9735   Tel: +1 617 418 3096
    ---------------------   --------------------

Financial Tables Follow



                                                                               Cellcom Israel Ltd.

                                                                            (An Israeli Corporation)


    Condensed Consolidated Interim Statements of Financial Position
    ---------------------------------------------------------------


                                                                                                        Convenience

                                                                                                        translation

                                                                                                     into US dollar

                                                                   June 30,            June 30,            June 30,              December 31,

                                                                       2016                 2017                 2017                       2016
                                                                       ----                 ----                 ----                       ----

                                                         NIS millions            US$ millions                       NIS millions
                                                         ------------            ------------                       ------------


    Assets

    Cash and cash equivalents                                           982                  785                  225                      1,240

    Current investments,
     including derivatives                                              284                  360                  103                        284

    Trade receivables                                                 1,327                1,263                  361                      1,325

    Current tax assets                                                    -                  52                   15                         25

    Other receivables                                                    68                   88                   25                         61

    Inventory                                                            63                   61                   18                         64
                                                                        ---                  ---                  ---                        ---


    Total current assets                                              2,724                2,609                  747                      2,999
                                                                      -----                -----                  ---                      -----


    Trade and other receivables                                         813                  915                  262                        796

    Property, plant and
     equipment, net                                                   1,682                1,619                  463                      1,659

    Intangible assets and
     others, net                                                      1,206                1,228                  351                      1,207

    Deferred tax assets                                                   6                    1                    -                         1
                                                                        ---                  ---                  ---                       ---


    Total non- current assets                                         3,707                3,763                1,076                      3,663
                                                                      -----                -----                -----                      -----


    Total assets                                                      6,431                6,372                1,823                      6,662
                                                                      =====                =====                =====                      =====


    Liabilities

    Current maturities of
     debentures and of loans                                            861                  792                  227                        863

       from financial institutions

    Trade payables and accrued
     expenses                                                           638                  622                  178                        675

    Current tax liabilities                                              49                    2                    1                          -

    Provisions                                                          115                  108                   31                        108

    Other payables, including
     derivatives                                                        299                  264                   75                        279
                                                                        ---                  ---                  ---                        ---


    Total current liabilities                                         1,962                1,788                  512                      1,925
                                                                      -----                -----                  ---                      -----


    Long-term loans from
     financial institutions                                             200                  462                  132                        340

    Debentures                                                        2,796                2,524                  722                      2,866

    Provisions                                                           30                   19                    5                         30

    Other long-term liabilities                                          29                   32                    9                         31

    Liability for employee
     rights upon retirement,
     net                                                                 12                   12                    4                         12

    Deferred tax liabilities                                            112                  137                   39                        118
                                                                        ---                  ---                  ---                        ---


    Total non- current
     liabilities                                                      3,179                3,186                  911                      3,397
                                                                      -----                -----                  ---                      -----


    Total liabilities                                                 5,141                4,974                1,423                      5,322
                                                                      -----                -----                -----                      -----


    Equity attributable to
     owners of the Company

    Share capital                                                         1                    1                    -                         1

    Cash flow hedge reserve                                             (2)                 (1)                   -                       (1)

    Retained earnings                                                 1,275                1,394                  399                      1,322


    Non-controlling interest                                             16                    4                    1                         18
                                                                        ---                  ---                  ---                        ---


    Total equity                                                      1,290                1,398                  400                      1,340
                                                                      -----                -----                  ---                      -----


    Total liabilities and
     equity                                                           6,431                6,372                1,823                      6,662
                                                                      =====                =====                =====                      =====



                                                                                                                     Cellcom Israel Ltd.

                                                                                                                   (An Israeli Corporation)


    Condensed Consolidated Interim Statements of Income
    ---------------------------------------------------


                                                                                                               Convenience                                                                                                               Convenience

                                                                                                               translation                                                                                                               translation

                                                                                                            into US dollar                                                                                                            into US dollar

                                            For the six 

      months ended For the six 

    months ended
      June                    For the three 

    months ended   For the three 

    months ended
      June
                                                      June 30,                                         30,                                June 30,                                            30,                        For the year
                                                                                                                                                                                                   ended 
    December 31,


                                                                    2016                               2017                                             2017                                   2016                                2017                     2017          2016
                                                                    ----                               ----                                             ----                                   ----                                ----                     ----          ----

                                                   NIS millions                                US$millions                            NIS millions                                   US$millions                       NIS millions
                                                   ------------                                -----------                            ------------                                   -----------                       ------------


    Revenues                                                       2,051                              1,921                                              549                                  1,029                                 962                      275         4,027

    Cost of revenues                                             (1,336)                           (1,330)                                           (380)                                 (666)                              (665)                   (190)      (2,702)
                                                                  ------                             ------                                             ----                                   ----                                ----                     ----        ------


    Gross profit                                                     715                                591                                              169                                    363                                 297                       85         1,325


    Selling and
     marketing                                                     (291)                             (226)                                            (65)                                 (143)                              (112)                    (32)        (574)
        expenses

    General and
     administrative                                                (205)                             (208)                                            (59)                                 (102)                               (95)                    (27)        (420)
        expenses

    Other income
     (expenses), net                                                (14)                                12                                                3                                   (14)                                 12                        3          (21)
                                                                     ---                                ---                                              ---                                    ---                                 ---                      ---           ---


    Operating profit                                                 205                                169                                               48                                    104                                 102                       29           310


    Financing income                                                  28                                 26                                                8                                     16                                  14                        4            46

    Financing expenses                                              (96)                             (101)                                            (29)                                  (60)                               (58)                    (16)        (196)
                                                                     ---                               ----                                              ---                                    ---                                 ---                      ---          ----

    Financing expenses,
     net                                                            (68)                              (75)                                            (21)                                  (44)                               (44)                    (12)        (150)


    Profit before taxes
     on                                                              137                                 94                                               27                                     60                                  58                       17           160
    income


    Taxes on income                                                 (34)                              (23)                                             (7)                                  (16)                               (13)                     (4)         (10)
                                                                     ---                                ---                                              ---                                    ---                                 ---                      ---           ---

    Profit for the
     period                                                          103                                 71                                               20                                     44                                  45                       13           150
                                                                     ===                                ===                                              ===                                    ===                                 ===                      ===           ===

    Attributable to:

       Owners of the
        Company                                                      102                                 70                                               20                                     44                                  45                       13           148

       Non-controlling
        interests                                                      1                                  1                                                -                                     -                                  -                       -            2
                                                                     ---                                ---                                              ---                                   ---                                ---                     ---          ---

    Profit for the
     period                                                          103                                 71                                               20                                     44                                  45                       13           150
                                                                     ===                                ===                                              ===                                    ===                                 ===                      ===           ===


    Earnings per share

    Basic earnings per
     share                                                          1.01                               0.70                                             0.20                                   0.43                                0.45                     0.13          1.47
        (in NIS)
                                                                                                                                                                                                                                                                     ===


    Diluted earnings per
     share                                                          1.01                               0.69                                             0.20                                   0.43                                0.45                     0.13          1.47
        (in NIS)
                                                                                                                                                                                                                                                                     ===


    Weighted-average
     number of shares
     used in the
     calculation of
     basic earnings per
     share (in shares)                                       100,604,578                        100,605,503                                      100,605,503                            100,604,578                         100,606,203              100,606,203   100,604,578
                                                             ===========                        ===========                                      ===========                            ===========                         ===========              ===========   ===========


    Weighted-average
     number of shares
     used in the
     calculation of
     diluted earnings
     per share (in
     shares)                                                 100,604,578                        101,340,873                                      101,340,873                            100,705,952                         101,265,547              101,265,547   100,698,306
                                                             ===========                        ===========                                      ===========                            ===========                         ===========              ===========   ===========


                                                                                                                     Cellcom Israel Ltd.

                                                                                                                  (An Israeli Corporation)


    Condensed Consolidated Interim Statements of Cash Flows
    -------------------------------------------------------


                                                                                                         Convenience                                                                                                      Convenience

                                                                                                         translation                                                                                                      translation

                                                                                                      into US dollar                                                                                                   into US dollar

                                             For the six                                     For the                    For the three      For the three 

    months ended
      June
                                             months ended                                                               months ended                                       30,
                                               
    June 30,                                                                  
    June 30,                                               For the 

     year ended
    December 31,
                                                            six months ended 
     June 30,



                                                     2016                                        2017                              2017                                      2016                                   2017                   2017        2016
                                                     ----                                        ----                              ----                                      ----                                   ----                   ----        ----

                                            NIS millions                                US$ millions                    NIS millions                               US$millions                          NIS millions
                                            ------------                                ------------                    ------------                               -----------                          ------------


    Cash flows from operating activities

    Profit for the period                             103                                          71                                20                                        44                                     45                     13         150

    Adjustments for:

    Depreciation and
     amortization                                     267                                         269                                77                                       132                                    136                     39         534

    Share based payments                                3                                           2                                 1                                         1                                      1                      -          6

    Loss (gain) on sale
     of property,                                       3                                         (2)                              (1)                                        2                                    (2)                   (1)         10

       plant and equipment

    Gain on sale of
     shares in a                                        -                                       (10)                              (3)                                        -                                  (10)                   (3)          -

       consolidated company

    Income tax expenses                                34                                          23                                 7                                        16                                     13                      4          10

    Financing expenses,
     net                                               68                                          75                                21                                        44                                     44                     12         150


    Changes in operating assets and
    liabilities:

    Change in inventory                                22                                           3                                 1                                        15                                      6                      2          21

    Change in trade
     receivables                                     (75)                                        104                                30                                      (17)                                    44                     13        (28)

       (including long-term
        amounts)

    Change in other
     receivables                                       15                                       (166)                             (47)                                     (17)                                  (14)                   (3)        (5)

       (including long-term
        amounts)

    Changes in trade
     payables,                                         30                                          25                                 7                                        28                                     36                     10           -

       accrued expenses and
        provisions

    Change in other
     liabilities                                       23                                        (13)                              (4)                                     (15)                                   (7)                   (2)         20

       (including long-term
        amounts)

    Income tax paid                                  (50)                                       (26)                              (7)                                     (29)                                  (14)                   (4)       (88)

    Income tax received                                 -                                          -                                -                                        -                                     -                     -          1

    Net cash from
     operating activities                             443                                         355                               102                                       204                                    278                     80         781
                                                      ---                                         ---                               ---                                       ---                                    ---                    ---         ---


    Cash flows from investing activities

    Acquisition of
     property, plant                                (151)                                      (237)                             (67)                                     (83)                                 (144)                  (42)      (295)

       and equipment

    Acquisition of
     intangible assets                               (41)                                       (94)                             (27)                                     (19)                                  (47)                  (13)       (73)

    Change in current
     investments, net                                 (4)                                       (76)                             (22)                                      (3)                                  (77)                  (22)        (9)

    Payments for other                                  -                                        (3)                              (1)                                        -                                   (2)                   (1)          -

       derivative contracts, net

    Proceeds from sale of
     property,                                          1                                           -                                -                                        1                                      -                     -          2

       plant and equipment

    Interest received                                   7                                           8                                 2                                         1                                      4                      1          11

    Proceeds from sale of
     shares in                                          -                                        (8)                              (2)                                        -                                   (8)                   (2)          -
        consolidated company, net of
        cash disposed

    Net cash used in
     investing activities                           (188)                                      (410)                            (117)                                    (103)                                 (274)                  (79)      (364)
                                                     ----                                        ----                              ----                                      ----                                   ----                    ---        ----


                                                                                                                Cellcom Israel Ltd.

                                                                                                              (An Israeli Corporation)


    Condensed Consolidated Interim Statements of Cash Flows (cont'd)
    ---------------------------------------------------------------


                                                                                                           Convenience                                                                                                Convenience

                                                                                                           translation                                                                                                translation

                                                                                                        into US dollar                                                                                             into US dollar

                                             For the six             For the six 

    months ended
      June                    For the three   For the three 

    months ended
      June
                                             months ended                                          30,                     months ended                                    30,
                                               
    June 30,                                                                    
    June 30,                                                               For the year
                                                                                                                                                                                ended 
    December 31,



                                                     2016                                          2017                              2017                                   2016                                2017                  2017        2016
                                                     ----                                          ----                              ----                                   ----                                ----                  ----        ----

                                            NIS millions                                  US$ millions                    NIS millions                            US$millions                       NIS millions
                                            ------------                                  ------------                    ------------                            -----------                       ------------


    Cash flows from financing activities

    Payments for
     derivative
     contracts, net                                   (6)                                            -                                -                                     -                                  -                    -       (13)

    Long term loans
     from financial
     institutions                                     200                                           200                                57                                    200                                 200                    57         340

    Repayment of
     debentures                                     (385)                                        (514)                            (147)                                     -                                  -                    -      (732)

    Proceeds from
     issuance of
     debentures, net                                  250                                             -                                -                                     -                                  -                    -        653
           of issuance costs

    Dividend paid                                     (1)                                            -                                -                                     -                                  -                    -        (1)

    Interest paid                                    (92)                                         (86)                             (25)                                     -                                (8)                  (2)      (185)
                                                      ---                                           ---                               ---                                    ---                                ---                   ---        ----


    Net cash from
     (used in)
     financing                                       (34)                                        (400)                            (115)                                   200                                 192                    55          62
    activities
                                                                                                                                                                                                                                             ---


    Changes in cash
     and cash
     equivalents                                      221                                         (455)                            (130)                                   301                                 196                    56         479


    Cash and cash
     equivalents as at
     the                                              761                                         1,240                               355                                    681                                 589                   169         761
    beginning of the period
                                                                                                                                                                                                                                             ---


    Cash and cash
     equivalents as at
     the end                                          982                                           785                               225                                    982                                 785                   225       1,240
    of the period
                                                                                                                                                                                                                                             ===


                                                            Cellcom Israel Ltd.

                                                         (An Israeli Corporation)


    Reconciliation for Non-IFRS Measures
    ------------------------------------


    EBITDA


    The following is a reconciliation of net income to EBITDA:


                                                                                Three-month period ended            Year ended

                                                                                   June 30,               December 31,
                                                                                   --------               ------------

                                                                                   2016       2017             Convenience                       2016

                                                                                                           translation

                                                                                                         into US dollar

                                                                                                                              2017
                                                                                              ---                                               ---

                                                                                 NIS millions             US$ millions               NIS millions
                                                                                 ------------             ------------               ------------

    Profit for the period.......................                                     44         45                                  13             150

    Taxes on income..........................                                        16         13                                   4              10

    Financing income.........................                                      (16)      (14)                                (4)           (46)

    Financing expenses......................                                         60         58                                  16             196

    Other expenses (income)(*).........                                               1        (2)                                  -              8

    Depreciation and amortization......                                             132        136                                  39             534

    Share based payments................                                              1          1                                   -              6
                                                                                    ---        ---                                 ---            ---

    EBITDA.........................................                                 238        237                                  68             858
                                                                                    ===        ===                                 ===             ===


    (*) Excluding gain from the sale of Internet Rimon Israel 2009 Ltd, an indirect subsidiary
    of the Company in the second quarter of 2017 and expenses related to employee voluntary
    retirement plan in the second quarter of 2016.


    Free cash flow


    The following table shows the calculation of free cash flow:


                                                                               Three-month period ended            Year ended

                                                                                    June 30,                December 31,
                                                                                    --------                ------------

                                                                                  2016       2017             Convenience                       2016

                                                                                                          translation

                                                                                                        into US dollar

                                                                                                                             2017
                                                                                             ---                                               ---

                                                                                NIS millions             US$ millions               NIS millions
                                                                                ------------             ------------               ------------

    Cash flows from operating                                                      204        278                                  80             781
        activities(*).................................

    Cash flows from investing                                                    (103)     (274)                               (79)          (364)
        activities.....................................

    Sale of short-term tradable                                                      2         73                                  21             (1)
        debentures and deposits (**).....
                                                                                                                                               ---

    Free cash flow..............................                                   103         77                                  22             416
                                                                                   ===        ===                                 ===             ===


    (*) Including the effects of exchange rate fluctuations in cash and cash equivalents.

    (**) Net of interest received in relation to tradable debentures.


                                                                  Cellcom Israel Ltd.

                                                               (An Israeli Corporation)


    Key financial and operating indicators
    --------------------------------------


    NIS millions unless                    Q1-2016       Q2-2016                Q3-2016         Q4-2016         Q1-2017         Q2-2017         FY-2016
    otherwise stated
    ----------------                                                                                                                                      ---


    Cellular service revenues                        559                   567              534              502              509              481            2,162

    Fixed-line service revenues                      264                   264              276              267              279              292            1,071


    Cellular equipment revenues                      219                   217              195              205              183              192              836

    Fixed-line equipment revenues                     29                    30               39               60               37               39              158


    Consolidation adjustments                       (49)                 (49)            (52)            (50)            (49)            (42)           (200)
    -------------------------                        ---                   ---              ---              ---              ---              ---             ----

    Total revenues                                 1,022                 1,029              992              984              959              962            4,027


    Cellular EBITDA                                  178                   181              149              117              159              158              625

    Fixed-line EBITDA                                 60                    57               60               56               42               79              233
    -----------------                                ---                   ---              ---              ---              ---              ---              ---

    Total EBITDA                                     238                   238              209              173              201              237              858


    Operating profit                                 101                   104               73               32               67              102              310

    Financing expenses, net                           24                    44               42               40               31               44              150

    Profit for the period                             59                    44               33               14               26               45              150


    Free cash flow                                   149                   103               81               83               66               77              416


    Cellular subscribers at the end                2,813                 2,812            2,822            2,801            2,792            2,779            2,801
    of period (in 000's)

    Monthly cellular ARPU (in NIS)                  65.2                  66.0             62.8             59.3             60.2             57.0             63.3

    Churn rate for cellular                        11.1%                10.6%           10.5%           10.4%           12.0%           10.8%           42.4%
    subscribers (%)


    Cellcom Israel Ltd.


    Disclosure for debenture holders as of June 30, 2017
    ----------------------------------------------------


    Aggregation of the information regarding the debenture series issued by the Company (1), in million NIS
    -------------------------------------------------------------------------------------------------------


    Series                                                                                                    Original Issuance Date   Principal on the Date of   As of 30.06.2017                                               As of 04.08.2017                        Interest Rate (fixed)    Principal
                                                                                                                                               Issuance                                                                                                                                                     Repayment Dates        Interest Repayment Dates (3)    Linkage                Trustee

                                                                                                                                                                                                                                                                                                                                                                              Contact Details
    ---                                                                                                                                                                                                                                                                                                                                                  ---                    ---------------

    Principal                                                                                               Linked Principal Balance  Interest Accumulated in Books    Debenture Balance Value in
                                                                                                                                                                     Books (2)                 Market Value             Principal Balance on Trade   Linked Principal Balance   From                    To

    Balance on Trade
    ----------------                                                                                                                                                                                                                                                                                 ---

    D                                                                                                                        07/10/07    2,423.075         299.602         350.377         18.134         368.511      368.480           0.000           0.000                       5.19%   01.07.13                01.07.17                July-1                        Linked to CPI             Hermetic Trust (1975) Ltd.
     (7)(8)**                                                                                                                                                                                                                                                                                                                                                                                Meirav Ofer Oren. 113
                                                                                                                                                                                                                                                                                                                                                                                             Hayarkon St., Tel Aviv.
                                                                                                                                                                                                                                                                                                                                                                                             Tel: 03-5274867.

                                                                                                            03/02/08*

                                                                                                            06/04/09*

                                                                                                            30/03/11*

                                                                                                            18/08/11*
    ---                                                                                                     ---------

    F                                                                                                                        20/03/12      714.802         643.322         661.999         14.663         676.662      695.238         643.322         657.329                       4.60%   05.01.17                05.01.20                January-5                     Linked to CPI             Strauss Lazar Trust Company
     (4)(5)(6)                                                                                                                                                                                                                                                                                                                                                                               (1992) Ltd. Ori Lazar. 17
     **                                                                                                                                                                                                                                                                                                                                                                                      Yizhak Sadeh St., Tel Aviv.
                                                                                                                                                                                                                                                                                                                                                                                             Tel: 03-6237777.

                                                                                                                                                                                                                                                                                                                                   and July-5
    ---                                                                                                                                                                                                                                                                                                                        ---                                                                                    ---

    G                                                                                                                        20/03/12      285.198         228.158         228.297          7.690         235.987      240.342         228.158         228.271                       6.99%   05.01.17                05.01.19                January-5                     Not linked                Strauss Lazar Trust Company
     (4)(5)(6)                                                                                                                                                                                                                                                                                                                                                                               (1992) Ltd. Ori Lazar. 17
                                                                                                                                                                                                                                                                                                                                                                                             Yizhak Sadeh St., Tel Aviv.
                                                                                                                                                                                                                                                                                                                                                                                             Tel: 03-6237777.

                                                                                                                                                                                                                                                                                                                                   and July-5
    ---                                                                                                                                                                                                                                                                                                                        ---                                                                                    ---

    H                                                                                                                        08/07/14      949.624         949.624         836.073          9.066         845.139      970.136         949.624         838.132                       1.98%   05.07.18                05.07.24                January-5                     Linked to CPI             Mishmeret Trust Company Ltd.
     (4)(5)(7)**                                                                                                                                                                                                                                                                                                                                                                             Rami Sebty. 48 Menachem
                                                                                                                                                                                                                                                                                                                                                                                             Begin Rd. Tel Aviv. Tel:
                                                                                                                                                                                                                                                                                                                                                                                             03-6374355.

                                                                                                            03/02/15*                                                                                                                                                                                                                and July-5

                                                                                                            11/02/15*
    ---                                                                                                     ---------

    I                                                                                                                        08/07/14      804.010         804.010         757.083         16.050         773.133      871.306         804.010         757.783                       4.14%   05.07.18                05.07.25                January-5                     Not linked                Mishmeret Trust Company Ltd.
     (4)(5)(7)**                                                                                                                                                                                                                                                                                                                                                                             Rami Sebty. 48 Menachem
                                                                                                                                                                                                                                                                                                                                                                                             Begin Rd. Tel Aviv. Tel:
                                                                                                                                                                                                                                                                                                                                                                                             03-6374355.

                                                                                                            03/02/15*                                                                                                                                                                                                                and July-5

                                                                                                            11/02/15*

                                                                                                            30/03/16*
    ---                                                                                                     ---------

    J                                                                                                                        26/09/16      103.267         103.267         102.697          1.225         103.922      107.367         103.267         102.292                       2.45%   05.07.21                05.07.26                January-5 and July-5          Linked to CPI             Mishmeret Trust Company Ltd.
     (4)(5)                                                                                                                                                                                                                                                                                                                                                                                  Rami Sebty. 48 Menachem
                                                                                                                                                                                                                                                                                                                                                                                             Begin Rd. Tel Aviv. Tel:
                                                                                                                                                                                                                                                                                                                                                                                             03-6374355.
    -------                                                                                                                  --------      -------        -------        -------         -----        -------     -------        -------        -------                       ----                --------                --------            --------------------          -------------   ----------------------------

    K                                                                                                                        26/09/16      303.971         303.971         301.033          5.203         306.236      316.525         303.971         301.017                       3.55%   05.07.21                05.07.26                January-5 and July-5          Not linked                Mishmeret Trust Company Ltd.
     (4)(5)**                                                                                                                                                                                                                                                                                                                                                                                Rami Sebty. 48 Menachem
                                                                                                                                                                                                                                                                                                                                                                                             Begin Rd. Tel Aviv. Tel:
                                                                                                                                                                                                                                                                                                                                                                                             03-6374355.
    ---------                                                                                                                --------      -------        -------        -------         -----        -------     -------        -------        -------                       ----                --------                --------            --------------------             ----------   ----------------------------

    Total                                                                                                                              5,583.947       3,331.954       3,237.559         72.031       3,309.590    3,569.394       3,032.352       2,884.824
    -----                                                                                                                              ---------       ---------       ---------         ------       ---------    ---------       ---------       ---------

Comments:

(1) In the reporting period, the Company fulfilled all terms of the debentures. The Company also fulfilled all terms of the Indentures and loan agreements. Debentures Series F through K and loan agreements financial covenants - as of June 30, 2017 the net leverage (net debt to EBITDA excluding one time events ratio- see definition in the Company's annual report for the year ended December 31, 2016 on Form 20-F, under "Item 5. Operating and Financial Review and Prospects - B. Liquidity and Capital Resources - Debt Service- Public Debentures") was 3.24. In the reporting period, no cause for early repayment occurred. (2) Including interest accumulated in the books. (3) Semi annual payments, excluding Series D debentures in which the payments are annual. (4) Regarding debenture Series F through K and loan agreements, the Company undertook not to create any pledge on its assets, as long as debentures or loans are not fully repaid, subject to certain exclusions. (5) Regarding debenture Series F through K and loan agreements, the Company has the right for early redemption under certain terms (see the Company's annual report for the year ended December 31, 2016 on Form 20-F, under "Item 5. Operating and Financial Review and Prospects- B. Liquidity and Capital Resources - Debt Service- Public Debentures" and "-Other Credit Facilities" and this report under "- Other developments during the second quarter of 2017 and subsequent to the end of the reporting period - Debt raising". (6) Regarding debenture Series F and G - in June 2013, following a second decrease of the Company's debenture rating since their issuance, the annual interest rate has been increased by 0.25% to 4.60% and 6.99%, respectively, beginning July 5, 2013. (7) In February 2016, pursuant to an exchange offer of the Company's Series H and I debentures for a portion of the Company's outstanding Series D and E debentures, respectively, the Company exchanged approximately NIS 555 million principal amount of Series D debentures with approximately NIS 844 million principal amount of Series H debentures, and approximately NIS 272 million principal amount of Series E debentures with approximately NIS 335 million principal amount of Series I debentures. Series D and E debentures were fully repaid in July 2017 (after the end of the reporting period) and in January 2017, respectively. (8) On July 5, 2017, after the end of the reporting period, the Company repaid principal payments of approximately NIS 350 million of Series D debentures, and Series D debentures was fully repaid.

(*) On these dates additional debentures of the series were issued, the information in the table refers to the full series.

(**) As of June 30, 2017, debentures Series D, F, H, I and K are material, which represent 5% or more of the total liabilities of the Company, as presented in the financial statements.

Cellcom Israel Ltd.

Disclosure for debenture holders as of June 30, 2017 (cont.)

Debentures Rating Details*


              Rating assigned upon        Recent date of rating as of    Additional ratings
                                                                                                     issuance of the Series    04.08.2017                     between original
                                                                                                                                                              issuance and the
                                                                                                                                                              recent date of
                                                                                                                                                              rating as of
    Series Rating Company              Rating as of 30.06.2017 (1)    Rating as of 04.08.2017                                                                 04.08.2017 (2)
    ------            --------------      --------------------------        -----------------------     ----------------------   --------------------------- ------------------

           Rating
           ------

                1/2008, 10/2008, 3/2009,
                                                                                                                                                               9/2010, 8/2011, 1/2012,
                                                                                                                                                                       3/2012, 5/2012,
                                                                                                                                                                      11/2012, 6/2013,
                                                                                                                                                                       6/2014, 8/2014,
                                                                                                                                                                      01/2015, 9/2015,
                                                                                                                                                                      3/2016, 08/2016,
    D      S&P Maalot                  A+                             A+                            AA-                                             06/2017                    06/2017  AA-, AA,AA-,

                                                                                                                                                                                        A+ (2)
    ---                                                                                                                                                                                 -----

    F      S&P Maalot                  A+                             A+                            AA                                              06/2017   5/2012, 11/2012, 6/2013,
                                                                                                                                                               6/2014, 8/2014, 1/2015,
                                                                                                                                                                       9/2015, 3/2016,
                                                                                                                                                                      08/2016, 06/2017  AA,AA-,A+ (2)
    ---                   ----------                             ---                            ---                       ---                       -------   ------------------------  ------------

    G      S&P Maalot                  A+                             A+                            AA                                              06/2017   5/2012, 11/2012, 6/2013,
                                                                                                                                                               6/2014, 8/2014, 1/2015,
                                                                                                                                                                       9/2015, 3/2016,
                                                                                                                                                                      08/2016, 06/2017  AA,AA-,A+ (2)
    ---                   ----------                             ---                            ---                       ---                       -------   ------------------------  ------------

    H      S&P Maalot                  A+                             A+                            A+                                              06/2017    6/2014, 8/2014, 1/2015,
                                                                                                                                                                       9/2015, 3/2016,
                                                                                                                                                                      08/2016, 06/2017  A+ (2)
    ---                   ----------                             ---                            ---                       ---                       -------   ------------------------  -----

    I      S&P Maalot                  A+                             A+                            A+                                              06/2017    6/2014, 8/2014, 1/2015,
                                                                                                                                                                       9/2015, 3/2016,
                                                                                                                                                                      08/2016, 06/2017  A+ (2)
    ---                   ----------                             ---                            ---                       ---                       -------            ---------------- -----

    J      S&P Maalot                  A+                             A+                            A+                                              06/2017           08/2016, 06/2017  A+ (2)
    ---    ----------                  ---                            ---                           ---                                             -------           ----------------  -----

    K      S&P Maalot                  A+                             A+                            A+                                              06/2017           08/2016, 06/2017  A+ (2)
    ---    ----------                  ---                            ---                           ---                                             -------           ----------------  -----

(1) In June 2017, S&P Maalot affirmed the Company's rating of "ilA+/stable".

(2) In October 2008, S&P Maalot issued a notice that the AA- rating for debentures issued by the Company is in the process of recheck with stable implications (Credit Watch Stable). This process was withdrawn upon assignment of AA rating in March 2009. In August 2011, S&P Maalot issued a notice that the AA rating for debentures issued by the Company is in the process of recheck with negative implications (Credit Watch Negative). In May 2012, S&P Maalot updated the Company's rating from an "ilAA/negative" to an "ilAA-/negative". In November 2012, S&P Maalot affirmed the Company's rating of "ilAA-/negative". In June 2013, S&P Maalot updated the Company's rating from an "ilAA-/negative" to an "ilA+/stable". In June 2014, August 2014, January 2015, September 2015, March 2016, August 2016 and June 2017, S&P Maalot affirmed the Company's rating of "ilA+/stable". For details regarding the rating of the debentures see the S&P Maalot report dated June 1, 2017.

* A securities rating is not a recommendation to buy, sell or hold securities. Ratings may be subject to suspension, revision or withdrawal at any time, and each rating should be evaluated independently of any other rating.

Cellcom Israel Ltd.

Summary of Financial Undertakings (according to repayment dates) as of June 30, 2017

a. Debentures issued to the public by the Company and held by the public, excluding such debentures held by the Company's parent company, by a controlling shareholder, by companies controlled by them, or by companies controlled by the Company, based on the Company's "Solo" financial data (in thousand NIS).


                               Principal payments           Gross interest

                                                          payments (without

                                                             deduction of

                                                                 tax)
                                                                 ---

             ILS
            linked       ILS not                 Euro         Dollar           Other
              to
             CPI
                        linked to

                           CPI
    ---                    ---

     First
     year            568,913       141,894              -                    -         - 129,437
     -----

     Second
     year            332,963       165,416              -                    -         -  88,506
     ------

     Third
     year            332,963        80,279              -                    -         -  66,877
     -----

     Fourth
     year            113,151        80,279              -                    -         -  51,199
     ------

     Fifth
     year
     and
     on              705,087       862,011              -                    -         - 124,113
     -----

    Total          2,053,077     1,329,879              -                    -         - 460,132
    -----          ---------     ---------            ---                  ---       --- -------

b. Private debentures and other non-bank credit, excluding such debentures held by the Company's parent company, by a controlling shareholder, by companies controlled by them, or by companies controlled by the Company, based on the Company's "Solo" financial data (in thousand NIS).


                       Principal payments         Gross interest
                                                payments (without
                                                   deduction of
                                                       tax)
                                                       ---

               ILS
              linked  ILS not            Euro        Dollar       Other
             to CPI  linked to
                        CPI
    ---                 ---

    First year                    -      78,000                 -         -   - 26,260
    ----------

    Second
     year                         -     128,000                 -         -   - 22,588
    ------

    Third year                    -     128,000                 -         -   - 16,389
    ----------

    Fourth
     year                         -     128,000                 -         -   - 10,130
    ------

    Fifth year
     and on                       -      78,000                 -         -   -  3,922
    ----------

    Total                         -     540,000                 -         -   - 79,289
    -----                       ---     -------               ---       --- --- ------

c. Credit from banks in Israel based on the Company's "Solo" financial data (in thousand NIS) - None.
d. Credit from banks abroad based on the Company's "Solo" financial data (in thousand NIS) - None.

Cellcom Israel Ltd.

Summary of Financial Undertakings (according to repayment dates) as of June 30, 2017 (cont.)

e. Total of sections a - d above, total credit from banks, non-bank credit and debentures based on the Company's "Solo" financial data (in thousand NIS).


                               Principal payments          Gross interest
                                                              payments
                                                              (without
                                                            deduction of
                                                                tax)
                                                                ---

             ILS
            linked         ILS not                Euro          Dollar        Other
              to
             CPI        linked to
                           CPI
    ---                    ---

     First
     year            568,913       219,894               -                  -         - 155,697
     -----

     Second
     year            332,963       293,416               -                  -         - 111,094
     ------

     Third
     year            332,963       208,279               -                  -         -  83,266
     -----

     Fourth
     year            113,151       208,279               -                  -         -  61,329
     ------

     Fifth
     year
     and
     on              705,087       940,011               -                  -         - 128,035
     -----

    Total          2,053,077     1,869,879               -                  -         - 539,421
    -----          ---------     ---------             ---                ---       --- -------

f. Out of the balance sheet Credit exposure based on the Company's "Solo" financial data - None.
g. Out of the balance sheet Credit exposure of all the Company's consolidated companies, excluding companies that are reporting corporations and excluding the Company's data presented in section f above (in thousand NIS) - None.
h. Total balances of the credit from banks, non-bank credit and debentures of all the consolidated companies, excluding companies that are reporting corporations and excluding Company's data presented in sections a - d above (in thousand NIS) - None.
i. Total balances of credit granted to the Company by the parent company or a controlling shareholder and balances of debentures offered by the Company held by the parent company or the controlling shareholder (in thousand NIS) - None.
j. Total balances of credit granted to the Company by companies held by the parent company or the controlling shareholder, which are not controlled by the Company, and balances of debentures offered by the Company held by companies held by the parent company or the controlling shareholder, which are not controlled by the Company (in thousand NIS).


                               Principal payments          Gross interest
                                                              payments
                                                              (without
                                                            deduction of
                                                                tax)
                                                                ---

           ILS linked      ILS not                Euro          Dollar        Other
             to CPI       linked to
                             CPI
    ---                    ---

     First
     year              1,810         705                 -                  -         -   524
     -----

     Second
     year              1,343         544                 -                  -         -   374
     ------

     Third
     year              1,343         122                 -                  -         -   301
     -----

     Fourth
     year                803         122                 -                  -         -   258
     ------

     Fifth
     year
     and
     on                6,347       4,767                 -                  -         -   864
     -----

    Total             11,646       6,260                 -                  -         - 2,321
    -----             ------       -----               ---                ---       --- -----

k. Total balances of credit granted to the Company by consolidated companies and balances of debentures offered by the Company held by the consolidated companies (in thousand NIS) - None.

View original content:http://www.prnewswire.com/news-releases/cellcom-israel-announces-second-quarter-2017-results-300500002.html

SOURCE Cellcom Israel Ltd.