B Communication

Investor Presentation • Nov 30, 2021

November 30 th , 2021

Bezeq Group Business Strategy

This presentation was prepared by Bezeq - The Israel Telecommunication Corp., Ltd ("Bezeq") in relation to its strategy as published today by Bezeq ("strategy" and "presentation," respectively). The information contained in the presentation is not exhaustive and does not include all information about Bezeq and its activities or the risk factors involved in its activities, nor does it replace information contained in the periodic or immediate reports published by Bezeq. In order to obtain a complete picture of Bezeq and its activities, as well as the risk factors involved in its activities, one should review all of Bezeq's public reports, including periodic and immediate reports published by the Company. The information contained in this presentation is based, inter alia, on information known to Bezeq's management at the time of its preparation, including data and publications that were not examined by Bezeq's management independently, and for which Bezeq is not responsible, even if they believe are reasonable. This presentation includes forward-looking information, within the description of the Securities Law of 1968, including forecasts, objectives, business strategy, assessments, ambitions and estimates, both regarding Bezeq's activities, and of those companies it holds and the markets in which they operate, as well as any other information related to future events or matters whose realization is uncertain and beyond Bezeq's control ("forward-looking information"). Although Bezeq believes that its forward-looking information in this presentation is based on reasonable estimates, it is subject to certain risks and uncertainties. Forward-looking information is inherently subject to risks of non-realization and is uncertain, and Bezeq does not in any way guarantee that its assessments, expectations, aspirations and objectives will be realized in practice.

Accordingly, the forward-looking information should not be construed as a promise that it will materialize. Realization and/or other changes in forward-looking information depends on factors that are not necessarily known in advance, or under Bezeq's control, including risk factors and the nature of its activity, developments in the general environment and external factors and regulation affecting its activities and other factors. Readers of this presentation are warned that results and achievements of the Bezeq Group in the future may differ materially from those presented in the forward-looking information presented in this presentation. Bezeq's Board of Directors may implement from time-to-time changes to the strategy, as it deems appropriate, including changes in factors that may affect it. Bezeq does not warrant that it will update or change its forecasts, assessments, ambitions or any other information contained in this presentation, nor will it update this presentation to the extent that this is not required by law. The presentation should not be seen as an offer to purchase or sell Bezeq securities, or an invitation to receive such offers.

Disclaimer

From defense to growth

In Summary

Fiber as growth engine

Establishment of a leading ICT company

yes as a 'triple-play' growth engine to accelerate fiber growth

Business portfolio diversification to create additional growth sources

5G as revenue growth driver Maintain balanced capital structure and return to dividend distribution

Bezeq is leading the fiber revolution in Israel. Within the next few years, most Israeli homes will have access to fiber

The merger of Bezeq international's consumer division with yes' TV business is expected to enable marketing of a TV and Internet bundle whilst migrating yes into Full IP

Pelephone is leading the 5G revolution in Israel and within the next few years most of its subscriber base is expected to move to 5G, while increasing data usage and contributing to ARPU growth

Bezeq International's ICT division will become an independent company focused on the growing areas of the ICT market: migration to the public cloud and cyber security services

The group will identify opportunities for entry into new adjacent areas which are relevant to its core capabilities

The group strives to return to dividend distribution while maintaining an optimal leverage and credit rating within the AA group

Creation of significant growth engines while continuing streamlining process ⁴

The Group is in the midst of technological transition in all key sectors which will serve as basis for future growth

Advanced fiber optic network deployment

Revenue and ARPU growth

• Expansion of fiber subscriber base reaching approx. 2M homes passed as a strong growth foundation
• Continued leadership and growth in the business segment through broad and diverse value proposition
• A 'triple-play' offering by yes and full migration to IPTV will support subscriber base growth and reduction of Opex and Capex
• Deployment of 5G is expected to contribute to Pelephone's subscriber base growth and ARPU
• Establishment of ICT company and acquisitions in growth areas - public cloud and cyber
• Integration and promotion of ESG-relevant initiatives as an integral part of business strategy
• Adjusted EBITDA growth
• FCF growth as compared to 2021
• Maintaining high liquidity and credit rating in the AA group to allow resilience in times of uncertainty

The group's mid-term ambitions

The Telecom Market Major Trends

The telecom market is undergoing significant changes as a result of technological developments, changes in consumer behavior and evolving regulation

Consumer behavior changes

• Demand for data is growing
• Digital media-based consumption and the strengthening of social networks
• Omni-channel
• Constant increase in media consumption and mobile data

Technology changes

• Investment in infrastructure (5G, fiber)
• Digital transformation
• M2M, IoT
• Convergence between technologies

All of these lead to a growing demand for advanced communications infrastructure

Source: www.ericsson.com/en/mobility-report/dataforecasts/mobile-traffic-forecast

Demand for communications and data services is growing

Telecom companies are enablers for growth in data usage therefore are significant in the technological and business environment

Introduction to the Israeli Economy

Source: OECD

The rapid population growth in Israel supports higher sustainable growth relative to developed countries

Israel's population has grown at a rate of more than three times the OECD according to CBS forecasts. Growth is expected to continue at an average annual rate of 1.8% through 2035

Private consumption in Israel is growing more rapidly than the OECD average

The Israeli economy exhibits strong macroeconomic performance and fiscal resilience

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Israel's economy continues to grow faster than most of the world's developed economies

Group vision

Bezeq Group - the largest and leading communications group in Israel, will lead and promote the digital revolution in Israel, through advanced infrastructure and services for consumers and businesses, while striving for operational excellence and continuous improvement in business results

Group structure

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Current situation

Group structure

*The Company's Board of Directors decided to spin-off the ICT operations from Bezeq International into a new company wholly-owned by Bezeq and to merge Bezeq International's consumer activities into yes

Bezeq Group Senior Management

Gil Sharon Chairman of the Board of Directors

Dudu Mizrahi

CEO of Bezeq

Tobi Fischbein

CFO of Bezeq Group

Ran Guron CEO of yes, Pelephone and Bezq International Date of Appointment: 8.2020 Date of Appointment: 9.2018 Date of Appointment: 1.2019 Date of Appointment: 4.2021

Mr. Sharon has over 28 years' experience in diverse senior positions in the telecommunications industry, among others, as Pelephone's CEO for 10 years, and until recently as Chairman and CEO of Golan Telecom.

Mr. Sharon holds a master's degree in business administration from Tel Aviv University, and a bachelor's degree in economics and business administration from the Hebrew University of Jerusalem.

From 2017-2018 Mr. Mizrahi served as Deputy CEO and CFO of Tnuva.

Prior to that, he served as CFO of Partner Communications.

From 2012-2016, Mr. Mizrahi served as Deputy CEO and CFO of the Bezeq Group.

Prior to that, he acted as VP Economics of Bezeq, and in total worked for approx. 20 years at Bezeq.

Ran Guron has over 20 years of experience in the communications market, of which more than a decade in the Bezeq Group. Since 2015, he has served as CEO of Pelephone and since 2018, he has also served as CEO of yes and as CEO of Bezeq International.

In previous years, he was Deputy CEO and VP of Marketing at Bezeq, and also served as VP of Marketing at various communications companies.

Guron holds a BA degree in economics and business administration, and an MBA degree, both from the Hebrew University.

During the years 2017-2021, Mr. Fischbein served as CFO at MAX (formerly Leumi Card) and from 2011- 2016 as CFO at Tadiran Group Ltd.

Mr. Fischbein returned to Bezeq after serving as Head of the Finance & Capital Markets Dept from 2007-2011.

Mr. Fischbein holds a master's degree in Public Administration in International Development (MPA/ID) from Harvard University as well as MA and BA degrees in Economics from Tel Aviv University.

Bezeq Group Select Financial Data

Group Revenue and EBITDA

(1) After adjusting for other operating expenses/income, net, one-time losses/gains from impairment/increase in value of assets and stock-based compensation * LTM - Last twelve months published, as of Sept. 30th 2021

A moderate decline in revenue over the past few years, indications of an increase in 2021

Stable EBITDA over the last few years

Development of key performance indicators in the main areas of activity

The Group's financial debt over time

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Outlook: Stable

Strong financial profile, reflected in high and stable credit ratings

Conservative liquidity policy

A decrease of approx. 30% in gross and net debt

S&P Global Ma'alot

Bezeq is the largest communications group in Israel and has a significant presence in all segments of the market (NIS billions, LTM*)

* LTM – Last 12 months ending June 30th 2021. Data according to company reports and publications. HOT data based on Altice financial reports, conversion from EUR to NIS based on average exchange rate of 3.96.

And is perceived as such in the eyes of consumers

Image perception of media companies

* Bezeq's adjusted EBITDA is calculated as EBITDA less lease payments and after adjusting for other operating expenses/income, net, one-time losses/gains from impairment/increase in value of assets and stock-based compensation Source: Company reports with certain adjustments by Bezeq in order to present uniform data for the last 12 months ended June 30 th 2021

The Bezeq Group also shows strong financial performance when benchmarked against international peers

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Adjusted EBITDA* Margin Net Debt to Adjusted EBITDA* ROCE - Return on Capital Employed

** Net loss in 2020 as a result of accounting impairment

Bezeq Group Business Strategy

Strategic Pillars

Bezeq International's consumer division merged with yes, which will offer 'triple-play' bundles combining Internet and TV

Pelephone will leverage the transition to 5G to increase revenue and ARPU

Bezeq International's ICT Division will become a new growth-oriented ICT company

Focus on development of infrastructure and growth engines

Bezeq's growth strategy focuses on a number of key arenas

ICT services for businesses

Arena Strategic direction Growth engine Communication, data and content services for households Business telecom services Cellular services Investing and focusing efforts on growth and strengthening competitive position by offering a wide range of services and increasing household penetration Maintaining and strengthening the leading position in the arena through value-added offering to customers, based on quality service and advanced products striving to increase revenues and improve profits Fiber optics as the arena's main growth driver Reliable broadband transmission and a wide portfolio of advanced services 5G growth Transition from defense to growth

Maintaining and strengthening the competitive position, while

Invest in building capabilities that will enable significant growth

as base for revenue and ARPU

Organic growth alongside focused acquisitions to strengthen and complement capabilities

The foundation: Strive for operational excellence, while promoting digital transformation and continued cost-base streamlining

Communication, data and content services for households

Investing and focusing efforts on growth and strengthening competitive position by offering a wide range of services and increasing household penetration

Communications, data and content services for households - main strategy

Investing and focusing efforts on growth and strengthening competitive position by offering a wide range of services and increasing household penetration

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• Adoption of customer-centric (household) focus, as opposed to product-based

• Increasing total income from household and making the Bezeq Group "the gateway" to the home through a wide range of services, strengthening customer loyalty and reducing churn

• Fiber optics and yes' content will be key tools for recruiting/retaining customers, expanding the portfolio of services and increasing revenue

• The merger of Bezeq International and yes is expected to generate an effective marketing and sales arm to promote Group services focused on fiber and TV bundle

• The Group will operate in the arena both via Bezeq Fixed-line and via yes in order to enhance penetration and growth while maximizing capabilities, until the removal of structural separation

Communication, data and content services for households

Until recently, Israel was significantly behind other OECD countries in deployment of fiber optics

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Communication, data and content services for households

In the past year, Bezeq accelerated its fiber deployment and will end 2021 with over one million homes passed and a high level of awareness of the service

In the past year the 'roadblock' has been lifted and accelerated deployment is underway

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Communication, data and content services for households

Households with access to Bezeq's fiber infrastructure

Bezeq Group benefits from yes' leading and highest quality content in the Israeli TV market

Premium product - the highest quality and widest IPTV in Israel

Leading product for the basic segment

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Communication, data and content services for households

In parallel – the merger of Bezeq International and yes will create a unified company focused on household's communications needs

• Following the Competition Authority's approval, for the first time, yes will be able to market a 'triple-play' bundle combining Bezeq's Internet infrastructure with yes' high quality content
• The combination with Internet services is expected to enhance yes' migration to full-IP TV services – in turn allowing for significant savings in satellite and set-top box costs
• yes' strong value proposition is bearing fruit as reflected in lower churn rates and improved cash flows

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Communication, data and content services for households

Business telecom services

Maintaining and strengthening the leading position in the arena through value-added offering to customers, based on quality service and advanced products

• The business focus increasing the total income from the business through a wide range of services
• Maintaining high-quality services
• Continue to strengthen relationship with corporate customers
• Focusing on growth in SMB segment (50-500 employees), by expanding the product portfolio
• Take advantage of businesses transition to the public cloud as growth engine for Bezeq services
• Emphasis on services and technical support quality
• Collaboration with new ICT company as allowed by structural separation constraints in order to maximize capabilities

Maintaining and strengthening the leading position in the arena through value-added offering to customers, based on quality service and advanced products

Business telecom services

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services Business telecom services – main strategy

• Wide range of services based on Bezeq's quality infrastructrure
• Bezeq to strengthen its leading position in the business sector based on the most advanced and high-quality communication network, in addition to value-added services such as cloud, digital, equipment and more.
• As of 2020, Bezeq's market share is approx. 80% of transmission and data communications services **

Bezeq is a leader in the business sector and continues to grow through advanced and high-quality business services

Bezeq revenues from data services for businesses (NIS m)

* LTM - last 12 months published, as of Sept. 30th 2021

** Source: Telecom market revenue summary report for 2020, Ministry of Communications 37

Business telecom services

Cellular services

Maintaining and strengthening the competitive position, while striving to increase revenues and improve profits

• Continued growth in consumer segment through optimal value proposition that combines fast and advanced network with quality services

• Continued deployment of the fastest 5G network in Israel as growth engine, both by upgrading existing subscribers and contributing to ARPU, and by recruiting new subscribers and adding services

• In the corporate segment – maintain competitive position through good customer relationships, quality services and continued expansion of business services

• Leverage advanced 5G capabilities to create future growth engines such as private networks for business, IoT, robotics applications, automation, smart transportation and more

Cellular services - main strategy

Maintaining and strengthening the competitive position, while striving to increase revenues and improve profits

Cellular ARPU international benchmark

Average monthly cellular revenue per user (ARPU) in different countries, 2019 Adjusted to PPP, in USD

Sources: Ministry of Communications based on Analysis Mason

The move to 5G is expected to contribute to ARPU

% of 5G subscribers from total postpaid subscribers

Currently, 5G packages are sold for approx. NIS 8.5 more than average 4G packages

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Current Mid-term

Cellular services

As well as a recovery of roaming revenues

Recovery in the volume of international travel holds the potential for a NIS 3-4 increase in ARPU due to roaming activity

• Global Aviation Industry Recovery Forecast:
  • (Global RPKs, trillions per year)

ICT services for businesses

Investment in building capabilities that will enable significant growth

• The business ICT market is enjoying a growth trend "fueled" by the transition of services and platforms to the cloud, creating opportunity for expansion in the field
• Transforming Bezeq International's ICT operations into an independent entity will enable management focus and resources allocation to achieve growth in the arena
• Investment in order to build capabilities and strengthen competitive position, both through development and recruitment of professional personnel and through acquisition of companies in adjacent/complementary fields, as well as collaborations with partners from Israel and abroad
• This initiative has the potential to unlock significant 'hidden' value

ICT services for businesses – main strategy

Investment in building capabilities that will enable significant growth

The IT market in Israel is a large market with accelerated growth in recent years

The IT market in Israel - 2021

Services

ICT services for businesses

Source: STKI

• Providing a variety of products, consulting and implementation services that support the transition of organizations to the cloud
• Leverage the accelerating trend of moving to the cloud in Israel by many companies and the effects of the 'Nimbus' project

Cloud

Providing a wide variety of solutions in information and cyber security - from planning to executing projects in order to build information security infrastructure for companies as well as provision of managed services

Information and cyber security

• Strengthening and expanding the supply of data centers - Establishment of another DC in cooperation with an international company (ServerFarm)
• Expanding the range of services and maximizing revenue per MW

Data Center

• Strengthening capabilities and utilizing Bezeq's built-in infrastructure advantages (connectivity, network, security) as allowed by structural separation constraints
• Position new ICT company as leading player aiming at strategic projects

Integration

ICT revenues are currently ~ NIS 600 million per year, the goal is to reach revenues of ~ NIS 1 billion per year, among other through M&A, with 5-6% operating margin

The 'New World' in ICT

Traditional core services

The emerging ICT arenas - data center, cloud and cyber - will be the main growth engines for the new company

ICT services for businesses

Accelerated growth is expected in public cloud and data centers in light of the Nimbus project and the entry of international players

The entry of international firms Nimbus Project

• The project deals with the establishment of cloud infrastructures that will be used by government ministries and trust units (including the IDF and the police) on public cloud platforms. The accompanying requirement for the project is the establishment of a local Cloud Region (cloud computing farm) in Israel
• The project is expected to attract massive investments in infrastructure and includes a number of tenders - for cloud providers (won by Amazon and Google) and a variety of related services
• The decision to establish 'Region' in Israel is also significant for the business sector, it will allow for a significant increase in the use of cloud computing by organizations that have been held back due to the inherent risks caused by the use of cloud services outside Israel

The accelerated development of the server farm sector is expected to generate demand for cloud services, integration and accelerate the use of communication networks

ICT services for businesses

Beyond business initiatives, the group is working on improving foundations which will support mid-term growth

The group will continue to strive for operational excellence, by expanding the digital transformation, streamlining the cost base and improvingmarket response times and flexibility

Continued implementation of operational synergieswithin subsidiaries, while merging and consolidating sales and logistics systems

Strive to remove structural separation, which will enable the realization of additional synergies

Significant streamlining executed in recent years at subsidiaries and are expected to continue in the coming years as well

A decrease of about 1,400 employees since the beginning of 2018

A decrease of approximately NIS 174 million since the beginning of 2018

In the medium term the goal is to continue streamlining with a further reduction of ~500 employees starting in 2022

Additional strategic moves - diversification

The Group will formulate investment and acquisition strategy to identify opportunities to increase shareholders' returns

The Group will seek investment opportunities in areas adjacent and complementary to the Group's activities and competitive capabilities

Investment and acquisition initiatives will allow for higher shareholder returns through entrance into areas with higher growth than the Group's core and legacy activities

Portfolio diversification will allow for risk diversification and reduce impact of regulatory risks

Summary of mid-term ambitions

KPIs – Communications, data and content services for households

KPIs - Cellular services

Continued subscriber growth combined with expectation for ARPU improvement

Optimal cash flow and capital management

Create value for shareholders while maintaining credit rating within the AA group

CAPEX level that enables long-term growth

Debt and coverage ratios levels that enable to maintain credit rating within the AA group

Complementary investments and acquisitions as needed

Dividend distribution that contributes to shareholders' returns, while maintaining financial strength and Group stability

The Group aims to maintain its high credit rating within the AA group

While aligning debt repayments to cash flow generation capabilities and maintaining significant liquidity alongside a return to dividend distributions

Summary of mid-term ambitions

Return to dividend distribution while maintaining credit ratings within the AA group

Temporary CapEx increase in the coming years for the accelerated deployment of fiber, followed by return to multi-year average

Continued growth in adjusted EBITDA and increase in FCF as compared to 2021

ESG

• MSCI

Bezeq aspires to be one of the leading companies in ESG

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Publishing of corporate responsibility report for 2019 and review for 2020

Improvement in the group's rating:

What has been done so far?

• MSCI Increase from BB to BBB
• Bloomberg

From a 16.5 mark in 2018 to a 39.1 mark in 2019

פרסום דוח אחריות תאגידית לשנת 2019ופרסום סקירה לשנת 2020 שיפור בדירוג החברה: פריסת תשתיתסיבים אופטיים לכ -80%ממשקי הביתעד שנת 2026,המסעיים לקידום המהפכה הדיגיטליתבישראל וקירוב הפריפריהלמרכז Deployment of fiber optic network to approx. 80% of households by 2026, contributing to advancing the digital revolution and connecting periphery with central areas

מה עשינו עד כה? יעדי אחריות תאגידית ESG– ESG – corporate responsibility targets

פרסום עדכון למדיניות זכויות אדם המשך שיפור הציון בחברות הדירוג השונות (MSCI, Sustainalytics, ISS, Bloomberg, VE) Continued improvement in ratings with different agencies (e.g. MSCI, Sustainalytics, ISS, Bloomberg, VE)

• הורדתפליטות גזי חממה • Greenhouse gas emission reduction
• עלייה מBB -לBBB- הפחתה בצריכתאנרגיה • Reduction in energy consumption
• Bloomberg עלייה מציון 16.5בשנת 2018לציון 39.1בשנת 2019 פרויקטיםלהגדלת הגיוון התעסוקתי • Dedicated projects to increase occupational diversity

Publishing of human rights policy update

Summary

5G as revenue growth driver

Establishment of a leading ICT company

Business portfolio diversification to create additional growth sources

Creation of significant growth engines while continuing streamlining process

Fiber as growth engine

yes as a 'triple-play' growth engine to accelerate fiber growth

Maintain balanced capital structure and return to dividend distribution