Cellcom Israel

Company2010
Presentation

June 2010
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, 1969). 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 us, may include projections of our future financial results, our
anticipated growth strategies and anticipated trends in our business. These statements are only predictions based on our
current expectations and projections about future events. There are important factors that could cause our 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 our license, new legislation or decisions by the regulator affecting our operations, the outcome of legal
proceedings to which we are a party, particularly class action lawsuits, our ability to maintain or obtain permits to construct and
operate cell sites, effects of the intensifying competition and other risks and uncertainties detailed from time to time in our filings
with the U.S. Securities and Exchange Commission, including under the caption “Risk Factors” in our most recent Annual Report
for the year ended December 31, 2010 .

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

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Overview
Cellcom Israel ƒ 2010 Snapshot
ƒ Key Financials
and the Market ƒ Market and regulation challenges

Strategy and ƒ Strategy Focus

ƒ Growth drivers
Growth drivers

ƒ 2010 Financial highlights

2010 ƒ Dividend
Financials ƒ Balance Sheet

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 Snapshot 2010 Financials (*)

3.394 M Subscribers
Israel’s Largest Service Revenues +2.2% (a)
>> Data & SMS +26.1%
Cellular Operator
Net Income +9.2% (b)

Improved EBITDA Margin 40.0% (c)

>>
Operating Margin 29.1%(d)
Profitability

Aggressive
>> Paid NIS 1.4 B for 2010 (e)
Dividend Policy

Strong >> DIC of IDB Group holds 48.3% (f)

Shareholders
(*) All figures compared to 2009.
(a) After elimination of one-time effects on results for 2010, total revenues increased 3.8% and total service revenues increased 3.4%.
(b) After elimination of one-time effects on both results for 2010 and 2009, net income for 2010 increased by 14.6%.
(c) After elimination of one-time effects on both results for 2010 and 2009, EBITDA for 2010 increased 6.8% and EBITDA Margin is 40.4%.
(d) After elimination of one-time effects on both results for 2010 and 2009, operating margin for 2010 totaled 29.6%.
(e) Dividend declaration is not guaranteed and is subject to the Company's board of directors’ sole discretion
(f) IDB Group Holdings as of December 31, 2010, IDB Group Holds additional (approx’) 3.4% of voting rights. Does not include additional holdings by indirect subsidiaries of IDB in a non material
amount
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For more information please see reconciliation table for adjusted measures at the end of this presentation
 Continued Growth
Key Financials 2010 / 2009

Total Service Data & SMS CPE

Revenues (1) Revenues (1) Revenues Revenues
+2.8% +2.2% +26.1% +6.8%

EBITDA (2) Operating Operating Net

Income(3) Margin (3) Income (4)
+5.5% +9.6% +1.8 ppts +9.2%

(1) After elimination of one-time effects on results for 2010, total revenues increased 3.8% and total service revenues increased 3.4%.
(2) After elimination of one-time effects on both results for 2010 and 2009, EBITDA for 2010 increased 6.8% and EBITDA Margin is 40.4%.
(3) After elimination of one-time effects on both results for 2010 and 2009, operating income for 2010 increased 11.6% and operating margin increased by 2.1PPt’s.
(4) After elimination of one-time effects on both results for 2010 and 2009, net income for 2010 increased by 14.6%.

For more information please see reconciliation table for adjusted measures at the end of this presentation
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 ƒ Interconnect Rates Reduction
(Implemented in Jan. 2011)

Market ƒ De-facto cancellation of early

termination fees

and ƒ Entrance of Mobile Virtual Network

Operators

Regulation ƒ Full Mobile Operator/ UMTS tender

(National roaming)

Challenges ƒ Partner’s acquisition of 012 Smile

ƒ Additional restrictions on cell sites
building and operating

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Our Strategy
Driving Growth by Meeting Key Trends
FOCUS the ‘Always-On’ ‘Everywhere Consumer’

Focus on Core ƒ Focusing on cellular communications

Competencies ƒ Leveraging the mobile advantage

Leverage Cellular ƒ Focusing on fastest growing segment – Data & SMS

Growth Drivers ƒ Offering mobile Internet access at a premium price

Targeting new synergetic areas

Identify
ƒ Leveraging fiber optic cables
Synergetic ƒ Offering landline telephony to business customers
Areas ƒ Entry into certain financial services
including an innovative "mobile wallet"
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Continued
growth Increase in
Subscriber Base

Subscribers (000’) 3G Subscribers

3,394
3,292 3.1% 1,140

3%
997 14.

2009 2010 2009 2010

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Main Growth
Drivers Data & Content Revenues
Cellcom Data Revenues 26.1% increase in Data &
(incl. SMS) M NIS SMS Revenues
34%
(1)
2010 Vs 2009
Data & SMS Revenues
(1)
% of Service Revenues 33%

19.0%

15.4%
1,112
1%
882 26.
11.9%

2008 2009 2010 2009 2010

(1) Source: Merrill Lynch Global Wireless Matrix Q4’10

(2) After elimination of one-time effects on results for 2010, Data and SMS revenues as % of total revenues was 18.8%.
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For more information please see reconciliation table for adjusted measures at the end of this presentation
2010 Financial
Highlight Continued Growth
1,112
1%
5,732 2.2% 5,860 882 26.
Service
Revenues Data & SMS
(M’NIS) (1) Revenues
(M’NIS)

2009 2010
2009 2010

6,483 6,662
2.8%
CPE Total
802
Revenues Revenues
751 6.8% (M’NIS) (M’NIS) (1)

2009 2010 2009 2010

(1) After elimination of one-time effects on results for 2010, total revenues increased 3.8% and total service revenues increased 3.4%.

For more information please see reconciliation table for adjusted measures at the end of this presentation
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 2010 Financial
Highlight Improved Profit & Margins
2 9. 1%
27. 3% Margin EBITDA (3)
1,938 Operating
1,768 9.6% Income (1)

40 . 0 %
Margin
39. 0 %

2009 2010
2,667
2,529 5.5 %

19. 4%
18. 2 % Margin

Net Income (2)

1,291
1,182 9.2%

2009 2010 2009 2010

(1) After elimination of one-time effects on both results for 2010 and 2009, operating income for 2010 increased 11.6% to a total of NIS1,989 million.
(2) After elimination of one-time effects on both results for 2010 and 2009, net income for 2010 increased by 14.6%, to a total of NIS1,320 million.
(3) After elimination of one-time effects on both results for 2010 and 2009, EBITDA for 2010 increased 6.8%, a total of NIS 2,718 million and EBITDA Margin is 40.4%.
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For more information please see reconciliation table for adjusted measures at the end of this presentation
 2010 Financial
Increase in Total Minutes and in MOU,
Highlight with stable ARPU
335 MOU (1)
331 1.2% Total Minutes (B’)

13.4
2009 2010
12.8 4.6%
ARPU

144 144

2009 2010
2009 2010 `

(1) Calculated as MOU multiplied by average number of subscribers

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 2010 Financial
Highlight Strong and Stable Cash Flow

Free Cash Flow (M NIS) (1) Operating Cash Flow (MNIS)

2,380
4%
2,080 14.
1,645
1,518 8.4%

2009 2010 2009 2010

(1) After elimination of NIS 154 million in invested debentures for 2010 and NIS 212 million invested in 2009.
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 High Dividend
Distribution
(1)
Dividend Yield*

4.0% 3.9%
3.0% 3.2% 3.0%
2.7% 2.9%
2.6%
2.2%

Q408 Q109 Q209 Q309 Q409 Q110 Q210 Q310 Q410

The company's BOD declared NIS 3.05 per share, (~$0.86/share)

total of approx. NIS 303 million (~$85 million ) for Q4 2010

* Calculated By Dividend declared for the quarter divided by average stock price for the same period

(1) A dividend declaration is not 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, 2010 on Form 20-F, under “Item 8 - Financial Information - Dividend Policy”.

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Debt Structure as of December 31st, 2010
Market Values (MNIS)

Series Yield to
Amount Coupon Duration Linkage
Name Maturity(1)
Series A 538 5.00% 0.75 CPI Linked 0.5%
Series B 1,052 5.30% 3.68 CPI Linked 1.9%
Series C 201 4.60% 1.14 CPI Linked 0.6%
Series D 1,672 5.19% 4.09 CPI Linked 2.0%
Series E 789 6.25% 3.19 Fixed 4.8%
Total 4252

Duration Linkage
short, 17% Fixed, 19%
CPI Linked,
long, 83% 81%

(1) Yield as of December 31, 2010 15

 Balance Sheet
Snapshot as of December 31st, 2010
Assets (M NIS ) Liabilities and Shareholders’ Equity (M NIS)

Cash and cash equivalents (1) 937 Debentures current maturities 348
Trade Receivables & Others, net 1,542 Trade Payables & Accrued Expenses 716

Inventory 104 Other current liabilities 595

Total Current Assets 2,583 Total Current Liabilities 1,659

Long – term receivables and Debits 597 Debentures 3,913

Property, plant and equipment, Net 2,063 Deferred Taxes & Other 83

Intangible Assets, Net 753

Total Long-term Assets 3,413 Total Long-term Liabilities 3,996
Shareholders’ Equity 341

Total Assets 5,996 Total Liabilities & 5,996

Shareholders’ Equity

Last twelve month leverage 1. 25x, (Net Debt / LTM EBITDA) (2)

Source: Financial Reports

Shareholders’ Equity 341 M. NIS (Retained earnings 361 M. NIS)
(1) Including current investments and derivatives
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(2) Last twelve month leverage defined as Net Debt divided by LTM EBITDA.
One Time Effects
Adjustments
Recurring Cost of Gross Operating Finance Income
2010 Revenues Revenues Revenues Profit Profit Incomes Tax Net Profit

Refund (66) (66) (66) (66) (17) (50)

Frequencies Fees (15) 15 15 (12) 7 21

Total (66) (66) (15) (51) (51) (12) (10) (29)

Recurring Cost of Gross Operating Finance Income

2009 Revenues Revenues Revenues Profit Profit Incomes Tax Net Profit

One Time Provision (41) 41

Frequencies Fees 15 (15) (15) (4) (11)

Total 15 (15) (15) (45) 30

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 ƒ Largest Israeli Cellular Operator
ƒ Future Potential Given

Summary Growth Drivers

ƒ Strong Cash Flow and
High Dividends (a)
ƒ Winning Team

(a) dividend declaration is not guaranteed and is subject to the Company's board of directors’ sole discretion

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(a) dividend declaration is not guaranteed and is subject to the Company's board of directors’ sole discretion
Contact Us

Yaacov Heen
Chief Financial Officer

E-mail: investors@Cellcom.co.il
Tel : + 972 52 9989755
Fax: + 972 52 9989700

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