Partner Communications Reports First Quarter 2007 Results

Partner Communications Company Ltd. ("Partner") (Nasdaq:PTNR)(LSE:PCCD)(TASE:PTNR), a leading Israeli mobile communications operator, today announced its results for the first quarter of 2007. Partner reported revenues of NIS 1.4 billion (US$ 341 million) in Q1 2007, EBITDA of NIS 455 million (US$ 109 million), the equivalent of 32.1% of total revenue, and net income of NIS 196 million (US$ 47 million). Commenting on the results, Partner’s CEO, David Avner, said: "the first quarter of 2007 was yet another good quarter for Partner. We are pleased to report that the number of 3G subscribers reached 333,000 at quarter end, more than 12% of our 2.7 million customer base. These customers enjoy a wide and continuously expanding range of 3G services and handsets. Our subscribers can also benefit from our introduction of HSDPA capabilities in most populated areas around the country, enabling a unique high-speed wireless Internet access experience. We view our expanding 3G services as an important growth engine for Partner.” "The assets built by the Company in recent years, that make it a leading cellular company in Israel, continued to strengthen. We expect that our core strengths as providers of superb network quality, excellent customer service, the strongest telecom brand and the most advanced data and content services, will enable us to continue to grow our subscriber base and drive value for our shareholders. These assets will also be instrumental when we broaden the portfolio of services we offer our customers. With the transmission and fixed line telephony licenses now awarded to us, we are well on our way to offering customers a wide range of superb telecom services." Q1 2007 vs. Q1 2006   Q1 2006 Q1 2007 Change Revenues (NIS millions) 1,326.6  1,417.8  6.9% Operating Profit (NIS millions) 273.5  301.1  10.1% Net Income (NIS millions) 160.4  195.8  22.1% Cash flow from operating activities net of investing activities (NIS millions)   68.4    241.1    252.5% EBITDA* (NIS millions) 438.6  454.9  3.7% Subscribers (thousands) 2,560  2,703  5.6% Estimated Market Share (%) 32  32  -  Quarterly Churn Rate (%) 4.2  4.4  0.2  Average Monthly Usage per Subscriber (minutes) 301  323  7.3% Average Monthly Revenue per Subscriber (NIS)   152    153    0.7% * See "Use of Non-GAAP Financial Measures” below. Financial Review Partner’s Q1 2007 revenues totaled NIS 1,417.8 million (US$ 341.2 million), an increase of 6.9% from NIS 1,326.6 million in Q1 2006, and a decrease of 1.9% from NIS 1,445.1 million in Q4 2006. The increase compared with Q1 2006 was driven primarily by the increase in service revenues of 6.3% from NIS 1,184.2 million in Q1 2006 to NIS 1,258.3 million (US$ 302.8 million) in Q1 2007. Compared with Q4 2006, service revenues decreased in Q1 2007 by 1.9% from NIS 1,282.2 million. The increase in service revenues from Q1 2006 derived principally from the larger subscriber base and increased minutes of use, offset by the impact of two regulatory measures: firstly, by the impact of the mandated additional reduction in interconnection tariffs which went into effect on March 1st, 2007, as part of the Ministry of Communications' program of mandated gradual reductions from 2005 to 2008; secondly, by a new voicemail regulation that obligates cellular and fixed telephony operators to provide, as of January 2007, a two-second announcement that the call is being directed to voicemail, in all local calls made to our subscribers and directed to voicemail. According to the new regulation calls directed to the voicemail are charged from one second after the announcement is made. We expect that this will result in a revenue reduction of approximately NIS 60 million in 2007. Equipment revenues increased by 12.0% from NIS 142.4 million in Q1 2006 to NIS 159.5 million (US$ 38.4 million) in Q1 2007, due largely to an increase in the number and proportion of 3G handset sales, but decreased by 2.1% from NIS 162.9 million in Q4 2006. Content and data revenues in Q1 2007 accounted for 10.6% of total revenues and 12.0% of service revenues, up from 9.0% of total revenues and 10.1% of service revenues in Q1 2006, and up from 10.1% of total revenues and 11.4% of service revenues in Q4 2006. Non-SMS data and content revenues increased by 21.1% compared with Q1 2006. The cost of service revenues was NIS 758.4 million (US$ 182.5 million) in Q1 2007, an increase of 1.8% from NIS 744.7 million in Q1 2006 but a decrease of 2.0% from NIS 774.1 million in Q4 2006. The increase compared with Q1 2006 was primarily due to higher variable airtime costs resulting from the growth in airtime usage, offset by lower depreciation, lower royalties and efficiency measures taken by the Company. The decrease compared with Q4 2006 is due principally to lower variable airtime costs. The cost of equipment revenues in Q1 2007 totaled NIS 213.4 million (US$ 51.4 million) representing an increase of 2.9% from NIS 207.4 million in Q1 2006, but a decrease of 4.9% from NIS 224.4 million in Q4 2006. Gross profit from services was NIS 499.9 million (US$ 120.3 million) in Q1 2007, an increase of 13.7% from NIS 439.5 million in Q1 2006 and a decrease of 1.6% from NIS 508.1 million in Q4 2006. Gross loss on equipment in Q1 2007 was NIS 53.9 million (US$ 13.0 million), a decrease of 17.1% from NIS 65.0 million in Q1 2006 and a decrease of 12.4% from NIS 61.5 million in Q4 2006. Overall, gross profit increased in Q1 2007 by 19.1% from NIS 374.5 million in Q1 2006 to 446.0 million (US$ 107.3 million) and was approximately equal to gross profit in Q4 2006 of NIS 446.6 million. Largely reflecting differences in quarter-by-quarter campaign scheduling, Q1 2007 saw an increase in selling, marketing, general and administration expenses of 43.5% from NIS 100.9 million in Q1 2006 to NIS 144.9 million (US$ 34.9 million). Compared with Q4 2006, expenses increased by 9.1% from NIS 132.7 million. Operating profit overall was NIS 301.1 million (US$ 72.5 million) in Q1 2007, a 10.1% increase from NIS 273.5 million in Q1 2006 and a 4.1% decrease from NIS 313.9 million in Q4 2006. Quarterly EBITDA increased by 3.7% from NIS 438.6 million in Q1 2006 to NIS 454.9 million (US$ 109.5 million) in Q1 2007 and decreased by 1.5% from NIS 461.6 million in Q4 2006. On a revenue basis, EBITDA was the equivalent of 32.1% of total revenues in Q1 2007, compared with 33.1% in Q1 2006 and 31.9% in Q4 2006. Q1 2007 financial expenses totaled NIS 19.6 million (US$ 4.7 million), decreasing by 49.2% from NIS 38.6 million in Q1 2006 and by 10.5% from NIS 21.9 million in Q4 2006. The decrease compared with Q1 2006 largely reflected lower interest expenses, resulting from the lower CPI level, whereas the decrease compared with Q4 2006 is driven primarily by the stronger Shekel, which reduced foreign currency exchange expenses. Net income in Q1 2007 was NIS 195.8 million (US$ 47.1 million), representing an increase of 22.1% from NIS 160.4 million in Q1 2006 and an increase of 20.2% from NIS 163.0 million in Q4 2006. Basic earnings per share or ADS, based on the average number of shares outstanding during the quarter, was NIS 1.26 (30 US cents) in Q1 2007, up 20.0% from NIS 1.05 in Q1 2006, and up by 18.9% from NIS 1.06 in Q4 2006. Funding and Investing Review Cash flows generated from operating activities, net of cash flows from investing activities, totaled NIS 241.1 million (US$ 58.0 million) in Q1 2007, compared with NIS 68.4 million in Q1 2006, an increase of 252.5%, and compared with NIS 163.6 million in Q4 2006, an increase of 47.4%. Both increases were due primarily to an increase in cash flows from operating activities, due to a change in payment terms to suppliers, offset by an increase in the level of investment in fixed assets. Net investment in fixed assets in Q1 2007 was NIS 85.5 million (US$ 20.6 million), up 26.4% from NIS 67.7 million in Q1 2006 but down 58.8% from NIS 207.5 million in Q4 2006. The Board of Directors has approved the distribution of a cash dividend for Q1 2007 of NIS 0.51 per share (approximately NIS 80 million or US$ 19 million) to shareholders and ADS holders on record as of June 5th, 2007. The dividend will be paid on June 18th, 2007. Operational Review In Q1 2007, approximately 35,000 net active subscribers joined the Company, compared with approximately 31,000 in Q1 2006. The active subscriber base at quarter-end was approximately 2,703,000, including approximately 626,000 business subscribers (23% of the base), 1,294,000 postpaid private subscribers (48% of the base) and 783,000 prepaid subscribers (29% of the base). Approximately 333,000 of the subscribers were 3G network subscribed as of end of Q1 2007. Total market share at quarter-end Q1 2007 is estimated at 32%. The quarterly churn rate in Q1 2007 increased from 4.2% in Q1 2006 and 4.0% in Q4 2006 to 4.4%, with both increases being attributable to higher prepaid churn. Q1 2007 average monthly usage per subscriber (MOU) was 323 minutes, an increase of 7.3% from 301 in Q1 2006 and an increase of 2.2% from 316 in Q4 2006. ARPU in Q1 2007 was approximately NIS 153 (US$ 36.8), an increase of 0.7% from NIS 152 in Q1 2006 and a decrease of 3.8% from NIS 159 in Q4 2006. Commenting on the Company's results, Mr. Emanuel Avner, Partner's Chief Financial Officer said, "We are pleased with the performance this quarter. Service revenue growth has been solid, despite the introduction of two significant regulatory measures that have negatively impacted revenues. Our net income growth is also very encouraging." Outlook and Guidance Emanuel Avner, Partner's Chief Financial Officer, said: "Our quarterly results and future prospects support the annual guidance for 2007 which we gave in the press release of January 31st 2007.” Conference Call Details Partner Communications will hold a conference call to discuss the company’s first-quarter results on Monday, May 7th, 2007, at 17:00 Israel local time (10AM EST). This conference call will be broadcast live over the Internet and can be accessed by all interested parties through our investor relations web site at http://www.investors.partner.co.il. To listen to the broadcast, please go to the web site at least 15 minutes prior to the start of the call to register, download and install any necessary audio software. For those unable to listen to the live broadcast, an archive of the call will be available via the Internet (at the same location as the live broadcast) shortly after the call ends, and until midnight of May 14th, 2007. About Partner Communications Partner Communications Company Ltd. (Partner) is a leading Israeli mobile communications operator providing GSM / GPRS / UMTS / HSDPA services and wire free applications under the orange™ brand. The Company provides quality service and a range of features to 2.703 million subscribers in Israel (as of March 31, 2007). The Company launched its 3G service in 2004. Partner’s ADSs are quoted on The Nasdaq Global Select Market™ and on the Tel Aviv Stock Exchange under the symbol PTNR. The shares are also traded on the London Stock Exchange under the symbol PCCD. Partner is a subsidiary of Hutchison Telecommunications International Limited (Hutchison Telecom). Hutchison Telecom is a leading listed telecommunications operator (SEHK: 2332; NYSE: HTX) focusing on dynamic markets. It currently offers mobile and fixed-line telecommunication services in Hong Kong, and operates or is rolling out mobile telecommunication services in India, Israel, Macau, Thailand, Sri Lanka, Ghana, Indonesia and Vietnam. For more information about Partner, see www.investors.partner.co.il Note: This press release includes forward-looking statements within the meaning of Section 27A of the US Securities Act of 1933, as amended, Section 21E of the US Securities Exchange Act of 1934, as amended, and the safe harbor provisions of the US Private Securities Litigation Reform Act of 1995. We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are subject to risks, uncertainties and assumptions about Partner. Words such as "believe,” "anticipate,” "expect,” "intend,” "seek,” "will,” "plan,” "could,” "may,” "project,” "goal,” "target” and similar expressions often identify forward-looking statements but are not the only way we identify these statements. All statements other than statements of historical fact included in this press release regarding our future performance (including our outlook and guidance for 2007), plans to increase revenues or margins or preserve or expand market share in existing or new markets, reduce expenses and any statements regarding other future events or our future prospects, are forward-looking statements. Because such statements involve risks and uncertainties, actual results may differ materially from the results currently expected. Factors that could cause such differences include, but are not limited to: the effects of the high degree of regulation in the telecommunications market in which we operate; regulatory developments relating to tariffs, including interconnect tariffs; the difficulties associated with obtaining all permits required for building and operating of antenna sites; the requirement to indemnify planning committees in respect of claims made against them relating to the depreciation of property values or to alleged health damage resulting from antenna sites; alleged health risks related to antenna sites and use of telecommunication devices; the effects of vigorous competition in the market in which we operate and for more valuable customers, which may decrease prices charged, increase churn and change our customer mix, profitability and average revenue per user, and the response of competitors to industry and regulatory developments; uncertainties about the degree of growth in the number of consumers in Israel using wireless personal communications services and the growth in the Israeli population; the risks associated with the implementation of a third generation (3G) network and business strategy, including risks relating to the operations of new systems and technologies, potential unanticipated costs, uncertainties regarding the adequacy of suppliers on whom we must rely to provide both network and consumer equipment and consumer acceptance of the products and services to be offered, and the risk that the use of internet search engines by our 3G customers will be restricted; the risks associated with technological requirements, technology substitution and changes and other technological developments; the impact of existing and new competitors in the market in which we compete, including competitors that may offer less expensive products and services, desirable or innovative products, technological substitutes, or have extensive resources or better financing; regulatory developments related to the implementation of number portability; fluctuations in foreign exchange rates; the possibility of the market in which we compete being impacted by changes in political, economic or other factors, such as monetary policy, legal and regulatory changes or other external factors over which we have no control; the availability and cost of capital and the consequences of increased leverage; and the results of litigation filed or that may be filed against us, as well as the risks discussed in Risk Factors, Information on the Company and Operating and Financial Review and Prospects in form 20-F filed with the SEC on May 18, 2006. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this report might not occur. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The financial results presented in this press release are preliminary un-audited financial results. The results were prepared in accordance with U.S. GAAP, other than EBITDA which is a non-GAAP financial measure The convenience translations of the Nominal New Israeli Shekel (NIS) figures into US Dollars were made at the rate of exchange prevailing at March 31st, 2007: US $1.00 equals NIS 4.155. The translations were made purely for the convenience of the reader. Use of Non-GAAP Financial Measure: Earnings before interest, taxes, depreciation, amortization, exceptional items and capitalization of intangible assets ('EBITDA') is presented because it is a measure commonly used in the telecommunications industry and is presented solely in order to improve the understanding of the Company's operating results and to provide further perspective on these results. Our management uses EBITDA as a basis for measuring our core operating performance and comparing such performance to that of prior periods and to the performance of our competitors. EBITDA, however, should not be considered as an alternative to operating income or net income for the year as an indicator of the operating performance of the Company. Similarly, EBITDA should not be considered as an alternative to cash flows from operating activities as a measure of liquidity. EBITDA is not a measure of financial performance under generally accepted accounting principles and may not be comparable to other similarly titled measures for other companies. EBITDA may not be indicative of the historic operating results of the Company; nor is it meant to be predictive of potential future results. Reconciliation between our net cash flow from operating activities and EBIDTA is presented in the attached summary financial results. PARTNER COMMUNICATIONS COMPANY LTD. (An Israeli Corporation) CONDENSED CONSOLIDATED BALANCE SHEETS   New Israeli shekels Convenience translation into U.S. dollars March 31, December 31, March 31, December 31, 2007  2006  2007  2006  (Unaudited) (Audited) (Unaudited) (Audited) In thousands Assets CURRENT ASSETS: Cash and cash equivalents 261,017  77,547  62,820  18,664  Accounts receivable: Trade 973,172  964,309  234,217  232,084  Other 71,923  65,533  17,310  15,772  Inventories 130,401  126,466  31,384  30,437  Deferred income taxes 43,074  40,495  10,367  9,746  Total current assets 1,479,587  1,274,350  356,098  306,703  INVESTMENTS AND LONG-TERM RECEIVABLES: Accounts receivable - trade 313,095  274,608  75,354  66,091  Funds in respect of employee rights upon retirement 83,200  80,881  20,024  19,466  396,295  355,489  95,378  85,557  FIXED ASSETS, net of accumulated depreciation and amortization 1,711,542  1,747,459  411,923  420,567  LICENSE, DEFERRED CHARGES AND OTHER INTANGIBLE ASSETS, net of accumulated amortization 1,224,164  1,247,084  294,624  300,141  DEFERRED INCOME TAXES 75,678  76,139  18,214  18,325  Total assets 4,887,266  4,700,521  1,176,237  1,131,293  New Israeli shekels Convenience translation into U.S. dollars March 31, December 31, March 31, December 31, 2007  2006  2007  2006  (Unaudited) (Audited) (Unaudited) (Audited) In thousands Liabilities and shareholders’ equity CURRENT LIABILITIES: Current maturities of long-term liabilities 44,034  40,184  10,598  9,671  Accounts payable and accruals: Trade 768,779  690,424  185,024  166,167  Other 256,207  281,403  61,662  67,726  Parent group - trade 15,067  15,830  3,626  3,810  Dividend payable 101,043    24,318    Total current liabilities 1,185,130  1,027,841  285,228  247,374  LONG-TERM LIABILITIES: Bank loans, net of current maturities 261,381  272,508  62,908  65,586  Notes payable 2,007,578  2,016,378  483,172  485,290  Liability for employee rights upon retirement 115,932  113,380  27,902  27,288  Other liabilities 18,947  15,947  4,560  3,837  Total long-term liabilities 2,403,838  2,418,213  578,542  582,001  COMMITMENTS AND CONTINGENT LIABILITIES         Total liabilities 3,588,968  3,446,054  863,770  829,375  SHAREHOLDERS’ EQUITY: Share capital - ordinary shares of NIS 0.01 par value: authorized - December 31, 2006 and March 2007 - 235,000,000 shares; issued and outstanding - December 31, 2006 - 154,516,217 shares and March 31, 2007 - 156,187,677 shares 1,562  1,545  376  372  Capital surplus 2,500,383  2,452,682  601,777  590,297  Accumulated deficit (1,203,647) (1,199,760) (289,686) (288,751) Total shareholders’ equity 1,298,298  1,254,467  312,467  301,918  4,887,266  4,700,521  1,176,237  1,131,293  PARTNER COMMUNICATIONS COMPANY LTD. (An Israeli Corporation) CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS   New Israeli shekels Convenience translation intoU.S. dollars 3 month period endedMarch 31, 3 month period ended March 31, 2007  2006  2007  (Unaudited) In thousands (except per share data) REVENUES - net: Services 1,258,315  1,184,208  302,844  Equipment 159,469  142,436  38,380  1,417,784  1,326,644  341,224  COST OF REVENUES: Services 758,445  744,749  182,537  Equipment 213,370  207,428  51,353  971,815  952,177  233,890  GROSS PROFIT 445,969  374,467  107,334  SELLING AND MARKETING EXPENSES 93,539  57,250  22,512  GENERAL AND ADMINISTRATIVE EXPENSES 51,329  43,682  12,354  144,868  100,932  34,866  OPERATING PROFIT 301,101  273,535  72,468  FINANCIAL EXPENSES, net 19,618  38,629  4,722  INCOME BEFORE TAXES ON INCOME 281,483  234,906  67,746  TAXES ON INCOME 85,634  75,501  20,610  INCOME BEFORE CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLES 195,849  159,405  47,136  CUMULATIVE EFFECT, AT BEGINNING OF YEAR, OF A CHANGE IN ACCOUNTING PRINCIPLES   1,012    NET INCOME FOR THE YEAR 195,849  160,417  47,136  EARNINGS PER SHARE ("EPS”): Basic: Before cumulative effect 1.26  1.04  0.30  Cumulative effect   0.01    1.26  1.05  0.30  Diluted: Before cumulative effect 1.25  1.04  0.30  Cumulative effect   0.01    1.25  1.05  0.30  WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING: Basic 155,573,108  152,818,983  155,573,108  Diluted 156,881,429  153,409,410  156,881,429  PARTNER COMMUNICATIONS COMPANY LTD. (An Israeli Corporation) CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS   New Israeli shekels Convenience translation intoU.S. dollars 3 month period endedMarch 31, 3 month period endedMarch 31, 2007  2006  2007  (Unaudited) In thousands (except per share data) CASH FLOWS FROM OPERATING ACTIVITIES: Net income for the period 195,849  160,417  47,136  Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 151,092  161,435  36,364  Amortization of deferred compensation related to employee stock option grants, net 4,826  6,621  1,161  Liability for employee rights upon retirement 2,552  2,610  614  Accrued interest and exchange and linkage differences on long-term liabilities (9,348) 2,805  (2,250) Deferred income taxes (2,118) 29,665  (510) Capital loss on sale of fixed assets 964  232  Cumulative effect, at beginning of year, of a change in accounting principles (1,012) Changes in operating assets and liabilities: Increase in accounts receivable: Trade (47,350) (78,038) (11,394) Other (8,568) (10,354) (2,062) Increase (decrease) in accounts payable and accruals: Related parties (763) 196  (184) Trade 126,468  (122,056) 30,437  Other (25,196) (47,782) (6,064) Decrease (increase) in inventories (3,935) 57,201  (947) Increase in asset retirement obligations 114  682  27  Net cash provided by operating activities 384,587  162,390  92,560  CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of fixed assets (140,462) (92,500) (33,806) Purchase of license (700) (168) Funds in respect of employee rights upon retirement (2,319) (1,485) (558) Net cash used in investing activities (143,481) (93,985) (34,532) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from exercise of stock options granted to employees 42,892  8,964  10,323  Dividend paid (98,693) (11,086) (23,753) Repayment of capital lease (2,250) (1,221) (542) Windfall tax benefit in respect of exercise of options granted to employees 2,178  524  Capital lease received 7,416  1,785  Repayment of long term bank loans (9,179) (59,953) (2,209) Net cash used in financing activities (57,636) (63,296) (13,872) INCREASE IN CASH AND CASH EQUIVALENTS 183,470  5,109  44,156  CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 77,547  4,008  18,664  CASH AND CASH EQUIVALENTS AT END OF YEAR 261,017  9,117  62,820  At March 31, 2007, trade payables include NIS 154 million ($ 37 million) (unaudited) in respect of acquisition of fixed assets. At March 31, 2007, dividend payable of approximately NIS 101 million ($ 24 million) (unaudited) is outstanding. These balances are recognized in the cash flow statements upon payment. PARTNER COMMUNICATIONS COMPANY LTD. (An Israeli Corporation) RECONCILIATION BETWEEN OPERATING CASH FLOWS AND EBITDA   New Israeli shekels   Convenience translation into U.S. dollars 3 Month Period Ended March 31, 3 Month Period Ended March 31, 2007  2006  2007  (Unaudited) In thousands Net cash provided by operating activities 384,587  162,390  92,560    Liability for employee rights upon retirement (2,552) (2,610) (614) Accrued interest and exchange and linkage differences on long-term liabilities 9,348  (2,805) 2,250  Increase in accounts receivable: Trade 47,350  78,038  11,396  Other (excluding tax provision) 96,220  56,190  23,158  Decrease (increase) in accounts payable and accruals: Trade (126,468) 122,056  (30,438) Shareholder – current account 763  (196) 184  Other 25,196  47,782  6,064  Decrease in inventories 3,935  (57,201) 947  Decrease in Assets Retirement Obligation (114) (682) (27) Financial Expenses 16,637  35,607  4,004  EBITDA 454,902  438,569  109,484  * The convenience translation of the New Israeli Shekel (NIS) figures into US dollars was made at the exchange prevailing at March 31, 2007 : US $1.00 equals 4.155 NIS. ** Financial expenses excluding any charge for the amortization of pre-launch financial costs. PARTNER COMMUNICATIONS COMPANY LTD. (An Israeli Corporation)   New Israeli shekels 3 month period ended March 31, June 30, September 30, December 31, March 31, 2006  2006  2006  2006  2007  (Unaudited) In thousands Revenues - net 1,326,644  1,372,945  1,461,989  1,445,133  1,417,784  Cost of Revenues 952,177  941,914  1,004,637  998,539  971,815  Gross Profit 374,467  431,031  457,352  446,594  445,969  Selling and Marketing Expenses 57,250  75,579  84,124  90,639  93,539  General and Administrative Expenses 43,682  43,963  53,717  42,098  51,329  100,932  119,542  137,841  132,737  144,868  Operating Profit 273,535  311,489  319,511  313,857  301,101  Financial Expenses - net 38,629  61,176  44,710  21,927  19,618  Income Before Taxes on Income 234,906  250,313  274,801  291,930  281,483  Taxes on Income 75,501  76,076  90,148  128,950  85,634  Income Before Cumulative Effect of a Change in Accounting Principles 159,405  174,237  184, 653  162,980  195,849  Cumulative Effect, at the Beginning of the Year, of a Change in Accounting Principles 1,012  Net Income for the Period 160,417  174,237  184,653  162,980  195,849  PARTNER COMMUNICATIONS COMPANY LTD. (An Israeli Corporation) SUMMARY OPERATING DATA               Q1 2006   Q1 2007 Subscribers (in thousands)   2,560    2,703  Estimated share of total Israeli mobile telephone subscribers   32%   32% Churn rate in quarter   4.2%   4.4% Average monthly usage in quarter per subscriber (minutes)   301    323  Average monthly revenue in year per subscriber, including in-roaming revenue (NIS)   152    153