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Cellcom Israel Ltd. — Interim / Quarterly Report 2026
May 20, 2026
6724_rns_2026-05-20_311d5051-e7ba-45d7-94b4-554e7bbc1b4b.pdf
Interim / Quarterly Report
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This is an unofficial AI generated translation of the official Hebrew version and has no binding force. The only binding version is the official Hebrew version. For more information, please review the legal disclaimer. .
Cellcom Israel Ltd.
Quarterly Report for the Period
Ending March 31, 2026
Table of Contents
Chapter A
Changes and innovations that occurred in the Company's business during and after the report period in matters to be described in the Periodic report
Chapter B
Board of Directors' Report on the State of the Company's Affairs
Chapter C
Financial Statements as of March 31, 2026
Chapter D
Report on the effectiveness of internal control over financial reporting and disclosure according to Regulation 38C(a) of the Securities Regulations (Periodic and Immediate Reports), 1970
This is an unofficial AI generated translation of the official Hebrew version and has no binding force. The only binding version is the official Hebrew version. For more information, please review the legal disclaimer.
Chapter A
Changes and innovations that occurred in the Company's business during and after the report period in matters to be described in the Periodic report - update to the 2025 Periodic report of Cellcom Israel Ltd. (Reference No: -2026-01-023803) (the "Company" and the "Periodic report", respectively)
1. Section 4.1.4 - Dividend Distribution
Further to the aforementioned section, the Company updates that on April 16, 2026, the Company paid the dividend in the amount of NIS 200 million. For further details, see the Company's immediate report dated March 18, 2026 (Reference No. 2026-01-023789) and a supplementary report thereto dated March 30, 2026 (Reference No. 2026-01-029896), which are hereby included by way of reference.
2. Section 14.5.1(2)a - Frequency Allocation
Further to the aforementioned section regarding the allocation of 2X25 MHz in the 1800 MHz frequency band used by the shared 4G network and the Group's 2G network, of which 2X3 MHz were allocated to the Group in the 4G tender (in 2015) and 2X5 MHz of which were originally allocated to Golan and allocated to the Company upon completion of the acquisition of Golan by the Company, the Company updates that on March 30, 2026, a notice was received from the Ministry of Communications that the aforementioned allocations (2X8 MHz in total) were extended until December 31, 2026, or until the date of allocation of frequency bands to a cellular license holder who wins them by virtue of the decision of the tenders committee appointed for this purpose by the Minister of Communications, whichever is earlier.
3. Section 18.1.5(4) - IRU Purchase Agreement in IBC's Fiber Infrastructure
3.1. Further to the aforementioned section regarding (among other things) a lawsuit filed by the Company in the Tel Aviv-Yafo District Court against I.B.C. Israel Broadband Company (2013) Ltd. ("IBC"), the Company updates that on March 23, 2026, the court gave the effect of a decision to a procedural arrangement submitted by the parties (the "Procedural Arrangement"), which ends the disputes regulated therein for the period of the legal proceedings (until a final judgment).
The following are the main points of the Procedural Arrangement:
3.1.1. The Company will complete the amount of bank guarantees it provided to IBC in the established mechanism (see section 18.1.5(1) of the Periodic report), on the condition that IBC will not forfeit amounts from the bank guarantees in a dispute of interpretation between the parties.
3.1.2. IBC undertakes to avoid sending tax invoices that include, directly and/or indirectly, payments that are in dispute between the parties.
3.1.3. The Company has undertaken to pay IBC on time the current payments (including for Q4, 2025) for infrastructure services for the line package derived from the updated commitment rate (15%, see section 18.1.5(2) of the Periodic report) out of a total of up to approximately 2 million customer premises.
3.1.4. For each additional line that the Company purchases beyond what is stated in section 3.1.3 above, the Company will pay IBC according to a line price in accordance with the IRU agreement, without this being a commitment to any volume or rate (15% or other) out of IBC's total deployment as it actually exists at the time of purchase.
3.1.5. For the lines purchased and/or to be purchased as stated in sections 3.1.3 or 3.1.4 above, IBC undertakes to provide the Company with all services for the additional lines to be purchased as stated, without any additional and/or other condition.
The Procedural Arrangement ends the disputes regulated therein for the period of the legal proceedings (until a final judgment), and nothing stated in it, or not stated in it, shall prejudice any of the parties' claims or rights or constitute an admission of any claim.
3.2. Further to the aforementioned, during April 2026, IBC filed an amended counterclaim against the Company (the "Amended Counterclaim"), in which, among other things, financial relief in the amount of approximately NIS 16.5 million and declaratory reliefs were claimed.
Among the declaratory reliefs as stated, the court was asked to declare that the Company's conduct constitutes a breach of the IRU agreement between the parties, as well as an expected breach of it. As noted in the Amended Counterclaim, based on information in IBC's possession (including information regarding its planned deployment scope), it estimates by way of approximation and in a rough and non-binding assessment that as of the date of filing the original counterclaim (which was filed during November 2025), it is a breach...
expected non-payment of amounts totaling approximately NIS 895 million until the end of the IRU agreement period (this is beyond the amount claimed in the original statement of claim).
It is clarified that the Procedural Arrangement remains in effect for the period of the legal proceedings (until a final judgment). At this stage, the Company is unable to evaluate the results of the aforementioned legal proceeding.
4. Section 19.8 - Financing - Raising Additional Sources
Further to the aforementioned section, in April 2026, the Securities Authority decided to extend the period for offering securities under the Company's shelf prospectus, dated April 18, 2024, by an additional 12 months, i.e., until April 18, 2027.
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Chapter B
Board of Directors' Report on the State of the Corporation
March 31, 2026
5/20/2026 | 4:01:13 PM | v1.2.5
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The Company's Board of Directors is honored to submit the Board of Directors' report on the state of affairs of the Company and its subsidiaries and affiliates ("the Group") for the three-month period ended March 31, 2026 ("the reporting period"). The following review is limited in scope and refers to events and changes that occurred in the state of the Group's affairs during the reporting period, whose impact is material. This report was prepared in accordance with the Securities Regulations (Periodic and Immediate Reports), 1970 ("the Reporting Regulations") and on the assumption that the reader has the Company's Periodic report for 2025 (Reference No.: 2026-01-023803 ("the 2025 Periodic report")).
Chapter A: Board of Directors' Explanations on the Company's Business Position and Operating Results
1. Brief description of the Company, its business and activities during and after the reporting period
1.1. General
The Company was incorporated in Israel in 1994 as a private company under the laws of the State of Israel, under the name Cellcom Israel Ltd. ("the Company"). The Company is a public company whose securities are traded on the Tel Aviv Stock Exchange Ltd.
The Group operates in two fields of activity in the Israeli communications market and also provides electricity supply services to private and business customers in Israel within an additional field of activity, which are reported as reportable segments in the Company's consolidated financial statements. For details, see Note 4 to the Company's interim consolidated financial statements as of March 31, 2026 ("the Financial Statements"):
1.1.1. Cellular Communication Field (the Mobile Segment)
Within this field of activity, the Group provides a wide range of cellular communication services in Israel, by virtue of a license granted to it by the Ministry of Communications. The services include calls, sending and receiving messages (SMS, MMS), internet browsing and data transfer, and associated services. The Group also provides roaming services abroad to its customers and to customers of foreign operators visiting Israel. In addition, the Group sells (primarily through Dynamica) cellular end-user equipment and warranty and repair services for end-user equipment to its customers. Furthermore, the Group provides construction, operation, and maintenance services for the radio network shared by it and Wecom.
1.1.2. Fixed-line Communication Field (the Fixed-line Segment)
Within this field of activity, the Group provides internet services, by virtue of a license granted to it by the Ministry of Communications and as an authorized provider under the Communications Law. These services include internet access service (ISP) and infrastructure service (broadband services, based on IBC's optical fibers; and Bezeq's optical fibers and copper infrastructure within the wholesale market), over-the-top television services ("Cellcom TV" and "Cellcom TV+"), international landline telephony services (ISP services) and domestic landline telephony services (domestic carrier services) and transmission services to business customers (including international transmission services) and to communication operators based on the Group's independent infrastructure and on other operators' infrastructure. In addition, the Group provides other services such as: IOT solutions, integration and maintenance services for information security solutions, and server hosting services. Additionally, the Group sells fixed-line end-user equipment associated with the fixed-line communication field.
1.1.3.
Electricity Supply Field - Within the electricity supply field, the Group provides, through Cellcom Energy (a joint entity held in equal parts by the Company and Meshek Energy - Renewable Energies Ltd.), electricity supply services to private and business customers in Israel (excluding the rural sector), all in accordance with the license for electricity supply without production means held by Cellcom Energy from the Electricity Authority.
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and regulation applicable to the field of electricity supply to private and business customers, including the decisions of the Electricity Authority within the framework of the transition to the market model and the opening of the electricity supply segment to private customers.
1.2. Management Review of the Group's Operating Results for the First Quarter of 2026
The Group ended the current quarter with a net profit of NIS 72 million compared to a net profit of NIS 60 million in the corresponding quarter of 2025, reflecting a 20% increase.
The current quarter was affected by Operation "Lion's Roar" which led to a partial closure of the economy and the closure of the skies. According to the Company's assessment, in the first quarter of 2026, the total impact on the Company's profit (before tax) is approximately NIS 10 million, due to roaming services, end-user equipment sales, and the Company's service centers, with the main impact attributed to roaming services.
Revenues excluding interconnect fees totaled NIS 1,013 million in the current quarter compared to NIS 1,065 million in the corresponding quarter of 2025, reflecting a 4.9% decrease. The decrease stems mainly from a decline in end-user equipment revenues in the mobile segment and from a decline in roaming services due to Operation "Lion's Roar" as mentioned above. The Group's total revenues in the current quarter amounted to approximately NIS 1,013 million compared to a total of approximately NIS 1,112 million in the corresponding quarter of 2025, reflecting a decrease of approximately 8.9%. The decrease stems from the regulatory outline for reducing the interconnect fee rate that began in June 2025, such that, as a rule, there is no transfer of payments for interconnect in relation to call minutes. In addition, the decrease stems from a decline in revenues from end-user equipment in the mobile segment as stated.
Revenues from services in the mobile segment in the current quarter, neutralizing the impact of interconnect fees which decreased as a result of a regulatory change in reducing interconnect fees (see Note 32 E to the financial statements for 2025), totaled NIS 411 million in the mobile segment compared to a total of approximately NIS 409 million in the corresponding quarter of 2025, reflecting a 0.5% growth stemming mainly from an increase in current revenues from cellular packages against a decrease in revenues from roaming services as a result of Operation "Lion's Roar" (see Note 1 B to the financial statements). Total service revenues in the mobile segment amounted to NIS 411 million compared to NIS 455 million in the corresponding quarter last year; the decrease, as stated, stems from the reduction of interconnect fee rates.
Revenues from services in the fixed-line segment in the current quarter totaled approximately NIS 332 million compared to NIS 338 million in the corresponding quarter last year, reflecting a decrease of approximately 1.8%. The decline stems, among other things, from a decrease in revenues from international activity and the cancellation of interconnect fees for domestic operators.
As of March 31, 2026, the Group's cellular subscriber base stands at 3,679 thousand subscribers, a growth rate of 2.1% compared to the corresponding quarter of 2025.
The internet subscriber base reached a total of approximately 389 thousand subscribers, a growth rate of 2.1% compared to the corresponding quarter last year. The fiber subscriber base reached approximately 357 thousand subscribers, representing 92% of the Group's total internet infrastructure subscribers, a growth rate of 6.9% compared to the subscriber base in the corresponding quarter last year.
End-user equipment revenues in the current quarter in the mobile segment totaled NIS 254 million compared to NIS 307 million in the corresponding quarter, reflecting a decrease of approximately 17.3%. The decrease stems, among other things, from the effects of Operation "Lion's Roar" and inventory shortages. In the fixed-line segment, end-user equipment revenues totaled NIS 51 million compared to NIS 47 million in the corresponding quarter last year, an increase of approximately 8.5%. Total end-user equipment revenues amounted to approximately NIS 305 million, a decrease of approximately 13.8% compared to the corresponding quarter of 2025.
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Adjusted EBITDA (see definition of Adjusted EBITDA in Section 4 of this report) in the current quarter totaled approximately NIS 345 million, a decrease of approximately 1.1% compared to the corresponding quarter of 2025. The main decrease stems from a decline in revenues from roaming services as a result of Operation "Lion's Roar", a decrease in other revenues, net, for work performed for payment, and an increase in operating expenses, partly due to timing.
Adjusted EBITDA in the mobile segment in the current quarter totaled approximately NIS 228 million, an increase of approximately 1.8% compared to the corresponding quarter in 2025, mainly as a result of an increase in cellular revenues and an increase in end-user equipment profitability which was offset by a decrease in roaming services as a result of Operation "Lion's Roar".
In the fixed-line segment, Adjusted EBITDA in the current quarter totaled approximately NIS 117 million, a decrease of approximately 6.4% compared to the corresponding quarter in 2025, mainly as a result of other one-time revenues in the corresponding quarter for work performed for payment.
Free Cash Flow (FCF) for the current quarter totaled approximately NIS 115 million compared to approximately NIS 94 million in the corresponding quarter in 2025, an increase of approximately 22.3% resulting mainly from an increase in cash flow from operating activities.
Net financial debt at the end of the current quarter totaled approximately NIS 1,018 million, a decrease of approximately NIS 607 million compared to the net debt at the end of the corresponding quarter of 2025 which totaled NIS 1,625 million. The decrease in debt stems from repayments of BONDS during the period, proceeds from the sale of the Company's holdings in the infrastructure company IBC, and from the free cash flow that contributed to reducing the debt, offset by the dividend distributed.
1.3. Material Events During and After the Reporting Period
A. For details regarding the impact of the security situation in Israel on the Company, see Note 1 B to the financial statements.
B. For details regarding legal proceedings against IBC, see Note 7 B to the financial statements.
C. For details regarding dividend distribution, see Note 8 B to the financial statements.
1.4. Impact of Inflation and Interest Rates on Results During the Period
During the first quarter of 2026, inflation decreased by 0.8%. Additionally, the Bank of Israel set the interest rate in the economy at 4% at the beginning of 2026, compared to 4.25% at the end of 2025.
The following is an assessment of the direct impact of the change in the inflation and interest rate on the Group:
The impact of the change in the inflation rate is on the Company's rent expenses for buildings and cellular sites, most of which are linked to the CPI. According to Company assessments, every 1% increase in the inflation rate will cause an increase in the Group's expenses of approximately NIS 2 million, before tax.
The following is an assessment of the indirect impact of the change in the inflation rate on the Group's results:
In a situation of rising inflation in the economy, there may be increases in the Group's input prices, which could affect the Group's results.
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The following is an assessment of the impact of the change in the market interest rate on the Company:
A change in the interest rate does not materially affect the Company's cost structure directly. However, regarding future debt recycling and/or future debt raising, and/or utilization of credit facilities according to the Company's needs, to the extent that the interest rate environment in the economy is higher, the situation may affect the level of interest rates in such future debt raising and on the Company's financing expenses. The Company has commercial papers ("commercial papers") and credit facilities that are affected by the market interest rate, and therefore every $1\%$ change in the market interest rate will cause an increase/decrease in financing expenses of approximately NIS 2 million per year. For further details regarding the impact of the interest rate on the financial statements as well as the impact of interest rates on the examination for impairment of goodwill, see Note 13 B and Note 22 to the financial statements for 2025.
- Financial Position
| Item | As of March 31 | Board of Directors' Explanations | |
|---|---|---|---|
| 2026 | 2025 | ||
| NIS millions | |||
| Current assets | 1,420 | 1,381 | Mainly as a result of an increase in the cash item stemming from the proceeds from the sale of the Company's holdings in IBC, and cash flow from operating activities which was partially offset as a result of dividend and BONDS payments. |
| Non-current assets | 4,779 | 4,943 | The main decrease stems from the sale of an investment in an associate. |
| Total assets | 6,199 | 6,324 | |
| Current liabilities | 2,165 | 2,062 | Increase due to dividend liability payable (paid after the reporting period). |
| Non-current liabilities | 1,321 | 1,745 | Decrease as a result of a reduction in liability for BONDS. |
| Total liabilities | 3,486 | 3,807 | |
| Equity | 2,713 | 2,517 | Current profits offset by dividend distributed to shareholders. |
| Total liabilities and equity | 6,199 | 6,324 |
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3. Analysis of Activity Results
3.1. Below is an analysis of the Company's activity results for the three-month period ended March 31, 2026, compared to the corresponding period last year:
| Item | 1-3/2026 | 1-3/2025 | Board of Directors' Explanations |
|---|---|---|---|
| NIS millions | |||
| Service revenues | 708 | 758 | The decrease in the mobile segment stems mainly from a decline in revenues from interconnect fees and roaming services which was partially offset by an increase in revenues from cellular services. In the fixed-line segment, a decrease from international activity revenues and interconnect fees from domestic operators. |
| Equipment revenues | 305 | 354 | The decrease is mainly due to a reduction in end-equipment revenues in the mobile segment. |
| Total revenues | 1,013 | 1,112 | |
| Cost of revenues | (640) | (763) | The decrease is mainly from a reduction in interconnect fees, mobile end-equipment costs, and depreciation. |
| Gross profit | 373 | 349 | |
| Gross profit margin of total revenues | 36.8% | 31.4% | |
| Selling and marketing, general and administrative expenses and credit losses | (266) | (258) | An increase in expenses due to sales commissions, depreciation and others. |
| Other income, net | 11 | 19 | The decrease is mainly from a reduction in other income from works for payment. |
| Operating profit | 118 | 110 | |
| Financing expenses, net | (21) | (26) | The decrease stems from a drop in interest expenses resulting from a reduction in debt. |
| Profit before income taxes | 97 | 84 | |
| Income taxes | (25) | (24) | |
| Net profit for the period | 72 | 60 |
3.2. Below is a summary of financial and operational data in a quarterly breakdown (in NIS millions):
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| Financial Data (NIS millions) | Q1'26 | Q4'25 | Q3'25 | Q2'25 | Q1'25 | Q4'24 | Q3'24 | Q2'24 | Q1'24 |
|---|---|---|---|---|---|---|---|---|---|
| Service revenues mobile segment | 411 | 420 | 442 | 413 | 409 | 406 | 417 | 400 | 376 |
| End-equipment revenues mobile segment | 254 | 297 | 241 | 250 | 307 | 281 | 249 | 272 | 283 |
| Financial Data (NIS millions) | Q1'26 | Q4'25 | Q3'25 | Q2'25 | Q1'25 | Q4'24 | Q3'24 | Q2'24 | Q1'24 |
|---|---|---|---|---|---|---|---|---|---|
| Other service revenues mobile segment (until June 30, 2025 includes mainly interconnect)1 | - | - | 2 | 41 | 46 | 47 | 51 | 77 | 91 |
| Total mobile segment revenues | 665 | 717 | 685 | 704 | 762 | 734 | 717 | 749 | 750 |
| Service revenues fixed-line segment | 298 | 302 | 306 | 306 | 304 | 303 | 301 | 297 | 299 |
| Inter-segment service revenues fixed-line segment | 34 | 40 | 33 | 34 | 34 | 34 | 35 | 35 | 35 |
| End-equipment revenues fixed-line segment | 51 | 33 | 43 | 39 | 47 | 59 | 100 | 57 | 88 |
| Total fixed-line segment revenues | 383 | 375 | 382 | 379 | 385 | 396 | 436 | 389 | 422 |
| Adjustments to consolidated | (35) | (40) | (34) | (36) | (35) | (35) | (37) | (38) | (39) |
| Total consolidated revenues | 1,013 | 1,052 | 1,033 | 1,047 | 1,112 | 1,095 | 1,116 | 1,100 | 1,133 |
| Gross profit from end-equipment | 60 | 62 | 57 | 45 | 53 | 51 | 57 | 58 | 60 |
| 2Adjusted EBITDA mobile segment | 228 | 210 | 248 | 229 | 224 | 214 | 223 | 231 | 205 |
| 2Adjusted EBITDA fixed-line segment | 117 | 126 | 121 | 122 | 125 | 140 | 131 | 117 | 97 |
| 2Adjusted EBITDA | 345 | 336 | 369 | 351 | 349 | 354 | 354 | 348 | 302 |
| Operating profit | 118 | 75 | 127 | 117 | 110 | 106 | 110 | 111 | 47 |
| Financing expenses, net | 21 | 20 | 29 | 27 | 26 | 27 | 31 | 35 | 32 |
| Net profit for the period | 72 | 364 | 76 | 64 | 60 | 55 | 56 | 55 | 7 |
1 Interconnect fees - this component refers to interconnect fee rates paid by a mobile operator or a domestic operator or an international operator for call completion on the Group's mobile or fixed-line network, or for transferring an SMS message to the Group's mobile radio telephone network (as of June 15, 2025, generally interconnect payments no longer apply for call minutes). For further details regarding interconnect rates, see Section 22.3.1 in Chapter A of the Periodic report for the year 2025. Starting from the third quarter of 2025, revenues for incoming international calls from abroad to the Company as a mobile radio telephone operator are associated with service revenues mobile segment instead of other service revenues mobile segment.
2 See definition in section 4 below.
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3 Subscriber base data refers to "active" subscribers. For subscriber base purposes, one "subscriber" is one line. The company adds a subscriber to the subscriber base when joining the service. A prepaid subscriber will join the subscriber base only at the time of charging a debit card. A subscriber who ceased to be an "active" subscriber is a subscriber who does not generate revenue and activity in the Cellcom network for six consecutive months. To the best of the company's knowledge, the six-month policy is consistent with the policy adopted by other mobile operators in Israel, but the subscriber counting policy is not identical among the various mobile operators.
4 Chum rate is calculated based on the ratio of cellular subscribers who disconnected from the company's services (whether as a result of active disconnection by the subscriber or disconnection by the Group) and of subscribers who became inactive during the period, to the balance of active subscribers at the beginning of the period.
5 ARPU is calculated by dividing the total average monthly income from cellular services for the period by the average quantity of active subscribers for the period. Income from cellular services includes, among other things, income from roaming services and from hosting and network sharing services and monthly income from repair services, and does not include end-equipment sales. Starting from the beginning of the third quarter of 2025, revenues for incoming international calls from abroad to the company as a mobile radio telephone operator are associated with service revenues mobile segment instead of other service revenues mobile segment.
6 See footnote 1 above.
7 Internet ARPU is calculated as total internet revenues for the period divided by the average internet customer base for the period. Internet revenues are defined as revenues from the internet infrastructure product and the relative portion of internet revenues from the Triple product.
8 Television subscriber count also includes paid users starting from the first quarter of 2026.
9 Subscriber base data refers to "active subscribers".
- 9 - B
3.3 Below are key financial data by operating segments (in NIS millions):
| Mobile | Fixed-line | Electricity | Inter-segment Adjustments | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| 1-3/2026 | 1-3/2025 | % Change | 1-3/2026 | 1-3/2025 | % Change | % Change | 1-3/2025 | 1-3/2026 | 1-3/2026 | 1-3/2025 | |
| Service revenues | 411 | 455 | (9.7%) | 332 | 338 | (1.8%) | 25.6% | 39 | 49 | (84) | (74) |
| End-equipment revenues | 254 | 307 | (17.3%) | 51 | 47 | 8.5% | - | - | - | - | - |
| Total revenues | 665 | 762 | (12.7%) | 383 | 385 | (0.5%) | 25.6% | 39 | 49 | (84) | (74) |
| Operating profit (loss) | 99 | 82 | 20.7% | 19 | 28 | (32.1%) | (100.0%) | (1) | (1) | - | 1 |
| Adjusted EBITDA | 228 | 224 | 1.8% | 117 | 125 | (6.4%) | (100.0%) | (1) | (1) | - | 1 |
| Adjusted EBITDA as a percentage of total revenues | 34.3% | 29.4% | 16.7% | 30.5% | 32.5% | (6.2%) | (100.0%) | (2.6%) | - | - | (1.4%) |
| Mobile | Fixed-line | Electricity | Inter-segment Adjustments | ||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 1-3/2025 | 1-3/2024 | % Change | % Change | 1-3/2024 | 1-3/2025 | % Change | 1-3/2024 | 1-3/2025 | 1-3/2025 | 1-3/2024 | |
| Service revenues | 455 | 467 | (2.6%) | 2.7% | 329 | 338 | 680.0% | 5 | 39 | (74) | (39) |
| End-equipment revenues | 307 | 283 | 8.5% | (46.6%) | 88 | 47 | - | - | - | - | - |
| Total revenues | 762 | 750 | 1.6% | (7.7%) | 417 | 385 | 680.0% | 5 | 39 | (74) | (39) |
| Operating profit (loss) | 82 | 38 | 115.8% | 154.5% | 11 | 28 | (50.0%) | (2) | (1) | 1 | - |
| Adjusted EBITDA | 224 | 205 | 9.3% | 26.3% | 99 | 125 | (50.0%) | (2) | (1) | 1 | - |
| Adjusted EBITDA as a percentage of total revenues | 29.4% | 27.3% | 7.7% | 37.1% | 23.7% | 32.5% | (93.5%) | (40.0%) | (2.6%) | (1.4%) | - |
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4. Financial and Operational Measures (KPIs)
4.1. As of the report date, the Company's management uses financial performance measures that are not based on generally accepted accounting principles (GAAP), to estimate, monitor, and present the financial performance of the Company. These measures are not a substitute for the information included in the Company's financial statements. Below are the details of the measures:
| Measure | Calculation Method / Components | Details of Measure Objectives | Data |
|---|---|---|---|
| Adjusted EBITDA | Represents the net profit before: financing expenses net, taxes, other income (expenses) that are not part of the Company's ongoing operations (including provisions for legal claims included in the other expenses item) depreciation and amortization, profits (losses) from associated companies and share-based payments. Additionally, includes other income (expenses) that are part of the Company's ongoing operations, such as interest income from transactions, credit sales, and additional income in the Company's areas of activity. | The Company presents this measure as an additional performance measure, as it believes it enables a comparison of operational performance between periods and between companies, while neutralizing potential differences resulting from changes in capital structure, taxes, age of fixed assets, and the depreciation expenses for them. Adjusted EBITDA does not take into account debt service needs and other liabilities, including capital investments, and therefore does not necessarily indicate the amounts that will be available for the Company's use. Furthermore, Adjusted EBITDA should not be compared to measures with similar names reported by other companies due to differences in the method of calculating these measures. | See section 4.2 below. |
| Free Cash Flow | Net cash from operating activities plus proceeds from the sale of fixed assets or investment, related to the ordinary course of business, and less cash used for investment activities in fixed assets or other property, and less payments for leases. Free cash flow does not include investments in subsidiaries. | The Company presents this measure as an additional performance measure, as it believes it enables a comparison of the rate of cash generation from operating activities between periods while neutralizing potential differences resulting from changes in capital and debt structure. Free cash flow does not take into account debt service needs and additional financing activities, and therefore does not necessarily indicate the amounts that will be available for the Company's use. Furthermore, free cash flow should not be compared to measures with similar names reported by other companies due to differences in the method of calculating these measures. | See section 4.3 below. |
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4.2. Below are the details of the adjustments between Net Profit and Adjusted EBITDA (in NIS millions):
| For the three-month period ended March 31 | ||
|---|---|---|
| 2026 | 2025 | |
| Net profit for the period | 72 | 60 |
| Income tax expenses | 25 | 24 |
| Financing expenses, net | 21 | 26 |
| Other income | (1) | (1) |
| Depreciation and amortization | 222 | 235 |
| Share-based payment | 6 | 5 |
| Adjusted EBITDA | 345 | 349 |
4.3. Below are the details of the data regarding the Company's free cash flow (in NIS millions):
| For the three-month period ended March 31 | ||
|---|---|---|
| 2026 | 2025 | |
| Net cash from operating activities | 333 | 308 |
| Net cash used for investing activities | (150) | (134) |
| Excluding changes in investment portfolio/deposits * | - | (14) |
| Cash used for leases (principal and interest) (presented in financing activities) | (68) | (67) |
| Effect of exchange rate fluctuations on cash and cash equivalents balances | - | 1 |
| Free Cash Flow | 115 | 94 |
- Changes in deposits / investments that are not part of the Company's free cash flow.
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5. Liquidity
Below are the Board of Directors' explanations for the Company's liquidity situation for the three-month period ended March 31, 2026, relative to the corresponding period last year (in NIS millions):
| Item | 1-3/2026 | 1-3/2025 | Board of Directors' Explanations |
|---|---|---|---|
| Cash and cash equivalents balance at the beginning of the period | 476 | 371 | |
| Cash flow from operating activities | 333 | 308 | Increase in cash-flow generating operating activities as well as improvement in working capital. |
| Cash flow from investing activities | (150) | (134) | Increase as a result of a deposit withdrawal in the corresponding period. |
| Cash flow for financing activities | (359) | (335) | Increase as a result of repayment of BONDS. |
| Effect of exchange rate fluctuations on the balance of cash and cash equivalents | - | 1 | |
| Cash and cash equivalents balance at the end of the period | 300 | 211 |
5.1. As of March 31, 2026, the Company has a working capital deficit of approximately NIS 745 million (consolidated) and a working capital deficit (solo) of approximately NIS 1,078 million. It should be noted that as of March 31, 2026, the Group has unused credit facilities in the amount of approximately NIS 600 million which were not taken into account within the working capital. The working capital deficit results, among other things, from a change in the Company's credit management, which transferred part of its financial liabilities from long-term to short-term for interest-saving considerations. The working capital deficit in the Company's solo report arises from the fact that all of the Company's debt is managed in the Company while part of the positive working capital is in subsidiaries which are wholly owned (100%) by the Company.
5.2. The Board of Directors examined the Company's cash balances, the expected free cash flow for two years from the current report date, the aforementioned credit facilities and their expected renewal, and also assessed the Company's access to future credit sources. Taking into account that part of the Company's debt is short-term due to cost-benefit considerations in a high-interest market environment, the Company's Board of Directors determined that despite the working capital deficit as of March 31, 2026, there is no liquidity problem in the Company, and therefore no warning signs as defined in Regulation 10(b)(14) of the Report Regulations exist.
B - 13
6. Sources of Financing
6.1. The Company finances its operations primarily through cash flow from operating activities, the issuance of securities and loans from financial and/or institutional entities.
6.2. Details regarding outstanding certificates of indebtedness and credit facilities of the Company as of March 31, 2026, are attached as an appendix to this Board of Directors' report.
6.3. There have been no material changes in the credit days received by the Company from its suppliers and the credit days given by the Company to its customers relative to what was described in the Periodic report for the year 2025.
6.4. As of the report date, the Company complies with all financial covenants, conditions, and additional obligations set forth in the trust deeds for the certificates of indebtedness it issued as detailed in the appendix to this Board of Directors' report.
May 20, 2026
Mr. Yuval Cohen
Chairman of the Board of Directors
Mr. Eli Eldadi
Company CEO
5/25/2026 | 4:01:17 PM | v1.2.5
Appendix - Details regarding outstanding debt certificates as of the date of the report
- Details regarding outstanding debt certificates as of the date of the report:
| Series (**) | Issue Date | Par Value at Issue Date (in NIS millions) | Par Value for March 31, 2026 (in NIS millions) | Par Value for March 31, 2026, including linkage (in NIS millions) | Accrued interest amount (in NIS millions) | Balance in the financial statements for March 31, 2026 (in NIS millions) | Market Value (in NIS millions) | Interest Type | Principal Payment Dates | Interest Payment Dates1 | Linkage Conditions | Is it Convertible | Right to Early Redemption |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Series J | September 25, 2016 | 103.267 | 20.653 | 24.555 | 0.140 | 24.687 | 24.858 | Annual interest at a rate of 2.45% | On July 5 of the years 2021 to 2026 (inclusive) | On January 5 and July 5 of each year from 2017 to 2026 (inclusive) | Linked (Principal and Interest) to the Consumer Price Index | No | Subject to certain conditions |
| Series K | September 25, 2016; July 1, 2018; December 10, 2018 | 710.634 | 142.127 | 142.127 | 1.175 | 143.252 | 142.823 | Annual interest at a rate of 3.55% | On July 5 of the years 2021 to 2026 (inclusive) | On January 5 and July 5 of each year from 2017 to 2026 (inclusive) | No linkage | No | Subject to certain conditions |
| Series 12' 2,3,4,5 | January 24, 2018; December 10, 2018; May 12, 2020; December 1, 2020; July 2022 | 1,235.937 | 531.991 | 531.991 | 3.097 | 526.328 | 522.309 | Annual interest at a rate of 2.50% | On January 5 of the years 2023 to 2028 (inclusive) | On January 5 of each year from 2019 to 2028 (inclusive) | No linkage | No | Subject to certain conditions |
| Series 13' 6,7 | September 8, 2022; November 26, 2024* | 494.915 | 420.678 | 420.678 | 4.634 | 422.072 | 427.913 | Annual interest at a rate of 4.73% | On January 5 of the years 2025 to 2030 (inclusive) | On January 5 and July 5 of each year from 2023 to January 2030 (inclusive) | No linkage | No | Subject to certain conditions |
| Total | 2,544.753 | 1,115.449 | 1,119.351 | 9.046 | 1,116.339 | 1,117.903 |
(*) On these dates, the BONDS series was expanded. The information in the table refers to the full series.
B-15
(**) As of March 31, 2026, the company's BONDS (Series K, L, and M) are material and constitute more than $5\%$ of the total liabilities of the company as presented in the financial statements. Furthermore, as of March 31, 2026, the net debt to Adjusted EBITDA ratio of the company stood at 0.73, including the total interest accrued in the books. During the report period, no cause for early redemption occurred.
- Semi-annual payments, except for BONDS (Series 12') which has an annual payment.
- In December 2019, the company performed a buyback of the company's BONDS (Series 12') in a total amount of approximately NIS 10 million.
- In May 2020, the company issued BONDS (Series 12') in a par value of approximately NIS 222 million.
- In December 2020, the company issued BONDS (Series 12') in a par value of approximately NIS 400 million.
- In July 2022, the company expanded an existing series of BONDS (Series 12') in a par value of NIS 105 million.
- In September 2022, the company issued BONDS (Series 13') in a par value of approximately NIS 395 million.
- In November 2024, the company expanded BONDS (Series 13'), by way of a private placement, in a par value of approximately NIS 100 million.
2. Details regarding the Trustee:
| Series | Trust Company Name | Name of Person in Charge of the Debt Certificate | Contact Method | Address for Delivery of Documents |
|---|---|---|---|---|
| Series J | Mishmeret Trust Services Company Ltd. | CPA Ram Sabti | Email: [email protected] Tel: 03-6374354 | 48 Derech Menachem Begin St., Tel Aviv, 6618001 |
| Series K | Mishmeret Trust Services Company Ltd. | CPA Ram Sabti | Email: [email protected] Tel: 03-6374354 | 48 Derech Menachem Begin St., Tel Aviv, 6618001 |
| Series L | Strauss Lazer, Trust Company (1992) Ltd. | CPA Ori Lazer | Email: [email protected] Tel: 03-6237777 | 94 Yigal Alon St., Tel Aviv, 6789139 |
| Series M | Strauss Lazer, Trust Company (1992) Ltd. | CPA Ori Lazer | Email: [email protected] Tel: 03-6237777 | 94 Yigal Alon St., Tel Aviv, 6789139 |
1 The net debt to Adjusted EBITDA ratio is the ratio between the company's net debt and Adjusted EBITDA for a period of 12 consecutive months, excluding one-time events. For this purpose, "net debt" is defined as credit and loans from banking corporations and from financial institutions engaged in providing credit, as well as liabilities for BONDS, less cash and cash equivalents, deposits (excluding restricted deposits against bank guarantees) and current investments in marketable securities. "Adjusted EBITDA" - see definition in Section 4.1 above.
B-16
- Details regarding rating of debt certificates and commercial papers:
| Series | Rating Company Name | Rating at Issue Date | Rating for the Report Date | Additional ratings between issue date and report date | Details regarding rating company's intention to change the rating |
|---|---|---|---|---|---|
| Rating Dates(1) | |||||
| Series J | Maalot | A+ | AA- | 08/2016, 06/2017, 01/2018, 06/2018, 08/2018, 12/2018, 03/2019, 08/2019, 05/2020, 08/2020, 11/2020, 08/2021, 08/2022, 08/2023, 11/2023, 08/2024, 08/2025(1) | In August 2025, Maalot updated the company rating outlook from iIA+ with a stable outlook to iAA- with a stable outlook. |
| Series K | Maalot | A+ | AA- | 08/2016, 06/2017, 01/2018, 06/2018, 08/2018, 12/2018, 03/2019, 08/2019, 05/2020, 08/2020, 11/2020, 08/2021, 08/2022, 08/2023, 11/2023, 08/2024, 08/2025(1) | |
| Series L | Maalot | A+ | AA- | 01/2018, 06/2018, 08/2018, 12/2018, 03/2019, 08/2019, 05/2020, 08/2020, 11/2020, 08/2021, 07/2022, 08/2022, 08/2023, 11/2023, 08/2024, 08/2025(1) | |
| Series M | Maalot | A | AA- | 08/2022, 09/2022, 08/2023, 11/2023, 08/2024, 11/2024, 08/2025(1) | |
| CP 1 | Maalot | A-1 | A-1+ | 01/2024, 08/2024, 08/2025(1) |
(1) In the months of June 2014, August 2014, January 2015, September 2015, March 2016, August 2016, June 2017, January 2018, June 2018, August 2018, and December 2018, Maalot reaffirmed the company rating of A+ with a stable outlook. In March 2019, Maalot updated the company rating outlook from A+ with a stable outlook to A+ with a negative outlook. In August 2019, Maalot updated the company rating from A+ with a negative outlook to A with a negative outlook. In May 2020, August 2020, and November 2020, Maalot reaffirmed the company rating of A with a negative outlook. In August 2021, Maalot updated the company rating outlook from A with a negative outlook to A with a stable outlook. In August 2022, Maalot updated the company rating outlook from A with a stable outlook to A with a positive outlook. In September 2022, Maalot reaffirmed the company rating of A with a positive outlook. In August 2023, Maalot updated the company rating outlook from iIA/with a positive outlook to iIA+/with a stable outlook. In November 2023, Maalot reaffirmed the company rating of A+ with a stable outlook. In January 2024, Maalot first rated a short-term commercial paper of the company with a rating of iIA-1. In August 2024, Maalot reaffirmed the company rating outlook from iIA+/with a stable outlook. In November 2024, Maalot rated the expansion of BONDS 13 with an 'iIA+' rating. In August 2025, Maalot updated the rating outlook from iIA+ with a stable outlook to iAA- with a stable outlook and updated the rating outlook of the short-term commercial paper from A-1 to A-1+.
B-17
4. Additional Obligations in the Debt Certificates and Credit Facilities:
4.1. The company's BONDS (Series J to M) are not secured and include, in addition to standard terms and obligations, the following obligations:
A.
Obligation not to create liens (Negative Pledge), subject to certain exceptions. Failure to comply with this obligation will be considered a cause for immediate repayment.
B. Obligation not to distribute more than 95% of the profits fit for distribution according to the Companies Law ("Profits"); provided that (1) if the company's net debt to EBITDA ratio exceeds 3.5:1, the company will not distribute more than 85% of the profits; (2) if the company's net debt to EBITDA ratio exceeds 4:1, the company will not distribute more than 70% of the profits; and (3) if the company's net debt to EBITDA ratio exceeds 5:1, or 4.5:1 for four consecutive quarters, and/or if the company's equity falls below NIS 700 million for two consecutive quarters (Series 13' only), the company will not distribute dividends.
C. Obligation to rate the BONDS through a rating company (as far as it is within the company's control).
D. In Series J to K, a drop of two notches from the initial rating will result in interest compensation at a rate of 0.25%, and every additional rating downgrade will result in an additional interest compensation of 0.25%, up to a maximum compensation of 1%. In Series L, a drop of two notches from the initial rating will result in interest compensation at a rate of 0.5%, and every additional rating downgrade will result in an additional interest compensation of 0.25%, up to a maximum compensation of 1%. In Series M, a drop of one notch from the initial rating will result in interest compensation at a rate of 0.25%, and every additional rating downgrade will result in an additional interest compensation of 0.25%, up to a maximum compensation of 1%.
E. The company's obligation not to issue additional BONDS of any of the series if the company does not meet financial covenants or if such issuance would cause a decrease in the BONDS rating.
4.2. In addition, the company's BONDS include events of breach, including:
A. Acceleration of other debt of the company for immediate repayment (Cross Default) by a lender who is not a supplier (in BONDS (Series 13') only - by a banking entity and/or institutional financial entity), except in relation to debt totaling NIS 150 million or less. Such debt acceleration restriction shall not apply to a Cross Default caused by another series of the company's BONDS.
B. A case in which the company ceases to operate in the field of mobile communications and/or ceases to hold its MRT license for a period exceeding 60 days.
C. Suspension of trading of the BONDS on the Tel Aviv Stock Exchange for a period exceeding 45 days.
D. Executing a distribution that does not comply with the company's obligation regarding the restrictions on profit distribution.
E. Lack of rating for the BONDS for a period exceeding 60 days.
F. A request or court order for stay of proceedings against the company or the filing of a request for a creditors' arrangement.
5/20/2026 | 4:01:18 PM | v1.2.5
B - 18
G. Sale of a material part of the company's assets or merger (subject to certain exceptions).
H. Failure to publish financial statements on time.
I. Net debt to Adjusted EBITDA ratio exceeding 5:1, or exceeding 4.5:1 for four consecutive quarters.
J. If the company's equity falls below NIS 700 million for two consecutive quarters (Series 13 only).
K. Non-compliance with the company's undertaking regarding a Negative Pledge.
L. Material deterioration in the company's business compared to its condition at the time of issuance of the BONDS, and the existence of a real concern that the company will not be able to repay the BONDS on time.
M. Existence of a real concern that the company will not meet its material obligations to the BONDS holders.
N. Inclusion of a note in the company's financial statements regarding concern for the company's continued existence as a "going concern" for a period of two consecutive quarters.
O. Violation of the company's obligations regarding the issuance of additional BONDS.
4.3. The company's credit facilities generally include events of default similar to those specified in section 4.2 above. In addition, the commercial papers issued by the company include some of the events of default in a manner similar to that mentioned in section 4.2 above.
Cellcom Israel Ltd.
Condensed Interim Consolidated Financial Statements
As of March 31, 2026
(Unaudited)
Condensed Interim Consolidated Financial Statements as of March 31, 2026
Cellcom Israel Ltd.
Table of Contents
| Page | |
|---|---|
| Review Report of the Independent Auditor | 2 |
| Condensed Interim Consolidated Statements of Financial Position | 3 |
| Condensed Interim Consolidated Statements of Profit or Loss | 4 |
| Condensed Interim Consolidated Statements of Comprehensive Income | 5 |
| Condensed Interim Consolidated Statements of Changes in Equity | 6 |
| Condensed Interim Consolidated Statements of Cash Flows | 7 |
| Page | |
|---|---|
| Notes to the Condensed Interim Consolidated Financial Statements | 9 |
Kost Forer Gabbay & Kasierer
Tel. +972-3-6232525
144 Menachem Begin Road,
ey.com
Tel-Aviv 6492102
Review Report of the Independent Auditor To the Shareholders of Cellcom Israel Ltd.
Introduction
We have reviewed the accompanying financial information of Cellcom Israel Ltd. and its subsidiaries (hereinafter - the Company), which includes the Condensed Consolidated Statement of Financial Position as of March 31, 2026, and the Condensed Consolidated Statements of Profit or Loss, Comprehensive Income, Changes in Equity, and Cash Flows for the three-month period then ended. The Board of Directors and Management are responsible for the preparation and presentation of financial information for this interim period in accordance with International Accounting Standard 34 - IAS "Interim Financial Reporting", and they are also responsible for the preparation of financial information for this interim period according to Chapter D of the Securities Regulations (Periodic and Immediate Reports), 1970. Our responsibility is to express a conclusion on the financial information for this interim period based on our review.
Scope of Review
We conducted our review in accordance with Review Standard (Israel) 2410 of the Institute of Certified Public Accountants in Israel - "Review of Interim Financial Information Performed by the Independent Auditor of the Entity". A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards in Israel and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the above financial information is not prepared, in all material respects, in accordance with International Accounting Standard 34 IAS.
In addition to the above in the previous paragraph, based on our review, nothing has come to our attention that causes us to believe that the above financial information does not comply, in all material respects, with the disclosure requirements under Chapter D of the Securities Regulations (Periodic and Immediate Reports), 1970.
Tel-Aviv,
May 20, 2026
Kost Forer Gabbay & Kasierer
Accountants
5/20/2026 | 4:01:19 PM | v1.2.5
Cellcom Israel Ltd.
Condensed Consolidated Interim Statements of Financial Position
| March 31 | December 31 | ||
|---|---|---|---|
| 2026 | 2025 | 2025 | |
| (Unaudited) | (Unaudited) | (Audited) | |
| NIS millions | |||
| Current Assets | |||
| Cash and cash equivalents | 300 | 211 | 476 |
| Deposits | 11 | 11 | 11 |
| Trade receivables | 841 | 866 | 838 |
| Current tax assets | - | 4 | 1 |
| Other receivables and debit balances, including derivatives | 69 | 51 | 82 |
| Deferred expenses - rights of use | 104 | 97 | 104 |
| Inventory | 95 | 141 | 104 |
| 1,420 | 1,381 | 1,616 | |
| Non-current Assets | |||
| Trade and other receivables | 208 | 212 | 208 |
| Deferred expenses - rights of use | 389 | 370 | 383 |
| Property, plant and equipment, net | 1,514 | 1,555 | 1,537 |
| Intangible and other assets, net | 2,072 | 2,102 | 2,084 |
| Investments in entities accounted for using the equity method, net | - | 114 | - |
| Right-of-use assets, net | 593 | 586 | 620 |
| Deferred tax assets | 3 | 4 | 3 |
| 4,779 | 4,943 | 4,835 | |
| 6,199 | 6,324 | 6,451 | |
| Current Liabilities | |||
| Current maturities of BONDS | 502 | 522 | 412 |
| Short-term credit | 200 | 208 | 200 |
| Current tax liabilities | 83 | 8 | 63 |
| Current maturities of lease liabilities | 168 | 180 | 181 |
| Trade payables and accrued expenses | 680 | 778 | 713 |
| Provisions | 93 | 95 | 90 |
| Other payables and credit balances, including derivatives | 439 | 271 | 276 |
| 2,165 | 2,062 | 1,935 |
| March 31 | December 31 | ||
|---|---|---|---|
| 2026 | 2025 | 2025 | |
| (Unaudited) | (Unaudited) | (Audited) | |
| NIS millions | |||
| Non-current Liabilities | |||
| BONDS | 605 | 1,102 | 942 |
| Long-term lease liabilities | 450 | 437 | 474 |
| Provisions | 28 | 25 | 28 |
| Other long-term liabilities | 11 | 4 | 11 |
| Excess of losses over investment in entity accounted for using the equity method | 9 | - | 9 |
| Liability for employee termination benefits, net | 14 | 13 | 14 |
| Deferred tax liabilities | 204 | 164 | 203 |
| 1,321 | 1,745 | 1,681 | |
| 3,486 | 3,807 | 3,616 | |
| Equity | |||
| Total Equity | 2,713 | 2,517 | 2,835 |
| 6,199 | 6,324 | 6,451 |
The accompanying notes to the condensed interim financial statements are an integral part thereof.
Yuval Cohen
Chairman of the Board
Eli Adadi
CEO
Gadi Attias
CFO
May 20, 2026
Date of approval of the financial statements
Condensed Consolidated Interim Statements of Profit or Loss
Cellcom Israel Ltd.
| For the three-month period ended March 31 | For the year ended December 31 | ||
|---|---|---|---|
| 2026 | 2025 | 2025 | |
| (Unaudited) | (Audited) | ||
| NIS millions | |||
| Revenues from sales and services | 1,013 | 1,112 | 4,244 |
| Cost of sales and services | (640) | (763) | (2,793) |
| Gross Profit | 373 | 349 | 1,451 |
| Selling and marketing expenses | (188) | (181) | (763) |
| General and administrative expenses | (76) | (73) | (292) |
| Credit losses | (2) | (4) | (11) |
| For the three-month period ended March 31 | For the year ended December 31 | ||
|---|---|---|---|
| 2026 | 2025 | 2025 | |
| (Unaudited) | (Audited) | ||
| NIS millions | |||
| Other income, net | 11 | 19 | 44 |
| Profit from regular operations | 118 | 110 | 429 |
| Financing income | 2 | 4 | 24 |
| Financing expenses | (23) | (30) | (126) |
| Financing expenses, net | (21) | (26) | (102) |
| Profit from sale of associate accounted for using the equity method | - | - | 386 |
| Share in profits of entities held | - | - | 1 |
| Profit before taxes on income | 97 | 84 | 714 |
| Taxes on income | (25) | (24) | (150) |
| Net Profit for the period | 72 | 60 | 564 |
| Earnings per share | |||
| Basic earnings per share (in NIS) | 0.43 | 0.35 | 3.35 |
| Diluted earnings per share (in NIS) | 0.42 | 0.35 | 3.31 |
The accompanying notes to the condensed consolidated interim financial statements are an integral part thereof.
Cellcom Israel Ltd. Condensed Consolidated Interim Statements of Comprehensive Income
The accompanying notes to the condensed consolidated interim financial statements are an integral part thereof.
Condensed Consolidated Interim Statements of Changes in Equity
| Equity attributable to the shareholders of the Company | ||||
|---|---|---|---|---|
| Share capital | Share premium | Retained earnings | Total | |
| NIS millions | ||||
| For the three-month period ended March 31, 2026 | ||||
| Balance at January 1, 2026 (Audited) | 2 | 792 | 2,041 | 2,835 |
| Comprehensive income | - | - | 72 | 72 |
| Share-based payment | - | - | 6 | 6 |
| Dividend to shareholders of the Company | - | - | (200) | (200) |
| Balance at March 31, 2026 (Unaudited) | 2 | 792 | 1,919 | 2,713 |
| Equity attributable to the shareholders of the Company | ||||
| --- | --- | --- | --- | --- |
| Share capital | Share premium | Retained earnings | Total | |
| NIS millions | ||||
| For the three-month period ended March 31, 2025 | ||||
| Balance at January 1, 2025 (Audited) | 2 | 792 | 1,658 | 2,452 |
| Comprehensive income | - | - | 60 | 60 |
| Share-based payment | - | - | 5 | 5 |
| Balance at March 31, 2025 (Unaudited) | 2 | 792 | 1,723 | 2,517 |
| Equity attributable to the shareholders of the Company | ||||
| --- | --- | --- | --- | --- |
| Share capital | Share premium | Retained earnings | Total | |
| NIS millions | ||||
| For the year ended December 31, 2025 (Audited) |
| Equity attributable to the shareholders of the Company | ||||
|---|---|---|---|---|
| Share capital | Share premium | Retained earnings | Total | |
| NIS millions | ||||
| Balance at January 1, 2025 | 2 | 792 | 1,658 | 2,452 |
| Comprehensive income | - | - | 564 | 564 |
| Share-based payment | - | - | 19 | 19 |
| Dividend to shareholders of the Company | - | - | (200) | (200) |
| Balance at December 31, 2025 | 2 | 792 | 2,041 | 2,835 |
5/20/2026 | 4:01:20 PM | v1.2.5
Condensed Consolidated Interim Statements of Cash Flows
Condensed Consolidated Interim Statements of Cash Flows
Cellcom Israel Ltd.
Notes to the Condensed Consolidated Interim Financial Statements
Note 1 - The Reporting Entity
A. Cellcom Israel Ltd. ("the Company") is a company resident in Israel, incorporated in Israel and its official address is 10 Hagavish Street Netanya, 4250708, Israel. The Company's shares and BONDS are listed for trading on the Tel Aviv Stock Exchange Ltd. ("the TASE"). The Group's consolidated financial statements as of March 31, 2026, include those of the Company and its subsidiaries, as well as the Group's holdings in entities accounted for using the equity method ("the Group"). The Group operates and maintains a cellular and fixed-line communication system in Israel and provides cellular communication services, fixed-line telephony services, internet services, international call services, internet television services and transmission services (including through third-party infrastructure), as well as providing electricity to private and business customers in Israel within another field of activity. The Company is controlled by DIC, a limited partnership ("the Partnership"). The Partnership is controlled by Mr. Yuval Cohen through Fortissimo Capital 6 Management (GP) Ltd., which is the general partner in the Partnership, as well as the general partner in the general partner of Fortissimo Capital Fund 6, L.P. ("Fortissimo 6 Fund"). Fortissimo 6 Fund is a limited partner in the Partnership and holds more than 50% of the equity rights therein.
B. The Security Situation in Israel
In June 2025, Operation "Am Kalavi" against Iran began, which led to a partial shutdown of the economy as well as the closure of the skies for about two weeks, which adversely affected revenues from roaming services from incoming and outgoing tourism and also adversely affected sales of terminal equipment in the Group.
On February 28, 2026, a combined attack by the State of Israel and the United States began, named "Sha'agat Ha'ari", against government targets in Iran. According to the Company's estimate, in the first quarter of 2026, the total impact on the Company's profit (before tax) is approximately NIS 10 million, due to roaming services and sales of terminal equipment, where the main impact is attributed to roaming services.
The Company examined its sources of financing and liquidity and its access to future credit sources, and estimates that it has financial robustness to cope with the consequences of the war, among other things, in view of the diversification of its areas of activity and the scope of its liquid balances.
It should be noted that this may be an ongoing crisis event which is not under the Company's control, characterized by uncertainty; as of the date of approval of the financial statements, there is no certainty regarding the future extent of the impact on the Company and on the Israeli economy as a whole. Such broad impacts may adversely affect the Company's business and its operating results.
Note 2 - Basis of Preparation of the Financial Statements
A. Statement of Compliance with International Financial Reporting Standards
The condensed consolidated interim financial statements were prepared in accordance with IAS 34, Interim Financial Reporting, and do not include all the information required in full annual financial statements. They should be read together with the annual financial statements as of and for the year ended December 31, 2025 (hereinafter - "the Annual Financial Statements"). The condensed consolidated interim financial statements were approved for publication by the Company's Board of Directors on May 20, 2026.
B. Functional Currency and Presentation Currency
The condensed consolidated financial statements are presented in NIS, which is the Group's functional currency, and rounded to the nearest million. The Shekel is the currency that represents the main economic environment in which the Group operates.
C. Use of Estimates and Judgments
The estimates and assumptions applied in the preparation of these interim financial statements are applied consistently with those applied in the preparation of the annual financial statements.
Notes to the Condensed Consolidated Interim Financial Statements
Note 2 - Basis of Preparation of the Financial Statements (Cont.)
D. The following are details of the Consumer Price Indices (known index) and the US Dollar exchange rate:
| US Dollar Exchange Rate | Consumer Price Index (in points)* | |
|---|---|---|
| As of March 31, 2026 | 3.165 | 263.17 |
| US Dollar Exchange Rate | Consumer Price Index (in points)* | |
|---|---|---|
| As of March 31, 2025 | 3.718 | 258.08 |
| As of December 31, 2025 | 3.190 | 263.42 |
| Rates of Change: | ||
| For the three-month period ended March 31, 2026 | (0.78%) | (0.09%) |
| For the three-month period ended March 31, 2025 | 1.95% | 0.28% |
| For the year ended December 31, 2025 | (12.53%) | 2.36% |
*Based on 1993 index.
Note 3 - Accounting Policy
A. Format of Preparation of the Condensed Consolidated Interim Financial Statements
The Group's accounting policy in these condensed consolidated interim financial statements is consistent with the policy applied in the annual financial statements.
B. Disclosure of New IFRS Standards in the Period Prior to Their Application
Amendments to IFRS 9 Financial Instruments and IFRS 7 Financial Instruments: Disclosures
Further to what is stated in Note 3 K1 in the annual financial statements, as of January 1, 2026, the Company first applied the amendments to International Financial Reporting Standard 9 Financial Instruments (hereinafter: "IFRS 9") and International Financial Reporting Standard 7 Financial Instruments: Disclosures (hereinafter: "IFRS 7"), which were published by the International Accounting Standards Board (IASB) in May 2024, and which amend certain aspects of classification and measurement of financial instruments as well as disclosure requirements for them.
The application of the amendments as stated did not have a material effect on the Company's financial statements, in accordance with the Company's assessments as disclosed in the annual financial statements for 2025.
5/25/2026 (4:01:21 PM) v1.2.5
Notes to the Condensed Consolidated Interim Financial Statements
Note 4 - Operating Segments
The Group operates in three reportable operating segments as detailed below, which constitute strategic business units of the Group. These strategic business units are managed separately for the purpose of resource allocation and performance evaluation. The operating segments were determined based on internal management reports reviewed by the Group's Chief Operating Decision Maker. The Chief Operating Decision Maker does not examine the balance of assets or liabilities for these segments, and therefore they are not presented.
- Mobile Segment (Cellular Communication) - The segment includes cellular communication services, cellular terminal equipment, and related services.
- Fixed-line Segment (Wireline Communication) - The segment includes internet services, television services, transmission services, fixed terminal equipment, fixed-line telephony services, and related services.
- Electricity Segment (Electricity Services) - The segment includes electricity supply services by the Cellcom Energy (2023) Limited Partnership ("Cellcom Energy"). The revenues and expenses of the electricity segment are presented according to the Group's relative share (50%).
The accounting policy of the reportable segments is applied following the accounting policy appearing in Note 3, regarding the main accounting policies in the annual financial statements.
| For the three-month period ended March 31, 2026 | ||||||
|---|---|---|---|---|---|---|
| NIS millions | ||||||
| (Unaudited) | ||||||
| Mobile | Fixed-line | Electricity | Adjustments to Consolidated | Consolidated | Reconciliation of total Segmental Adjusted EBITDA to profit for the period | |
| Segment revenues - services | 410 | 298 | 49 | (49) | 708 | |
| Inter-segment revenues - services | 1 | 34 | - | (35) | - | |
| Segment revenues - equipment and other | 254 | 51 | - | - | 305 | |
| Total revenues | 665 | 383 | 49 | (84) | 1,013 | |
| Gross profit | 281 | 92 | 2 | (2) | 373 | |
| Operating profit | 99 | 19 | - | - | 118 | |
| Segmental Adjusted EBITDA * | 228 | 117 | - | - | 345 | |
| Depreciation and amortization | (222) | |||||
| Share-based payment | (6) | |||||
| Other income | 1 | |||||
| Finance income | 2 | |||||
| Finance expenses | (23) | |||||
| Income taxes | (25) | |||||
| Net profit for the period | 72 |
- Segmental Adjusted EBITDA is defined as operating profit before depreciation and amortization (including other expenses, other income (expenses), net of the Company, for legal claims included in the other expenses item), depreciation and amortization, gains (losses) from associates and share-based payments. In addition, it includes other income (expenses) that are part of the Company's ongoing operations, such as interest income regarding installment sale transactions and income for the Company's activities. Segmental Adjusted EBITDA is not a financial measure in accordance with IFRS and should not be compared to similar measures in other companies.
Note 4 - Operating Segments (Continued)
| For the three-month period ended March 31, 2025 | ||||||
|---|---|---|---|---|---|---|
| NIS millions | ||||||
| (Unaudited) | ||||||
| Mobile | Fixed-line | Electricity | Adjustments to Consolidated | Consolidated | Reconciliation of total Segmental Adjusted EBITDA to profit for the period | |
| Segment revenues - services* | 454 | 304 | 39 | (39) | 758 | |
| Inter-segment revenues - services | 1 | 34 | - | (35) | - | |
| Segment revenues - equipment and other | 307 | 47 | - | - | 354 | |
| Total revenues | 762 | 385 | 39 | (74) | 1,112 | |
| Gross profit | 257 | 92 | 1 | (1) | 349 | |
| Operating profit (loss) | 82 | 28 | (1) | 1 | 110 | |
| Segmental Adjusted EBITDA ** | 224 | 125 | (1) | 1 | 349 | |
| Depreciation and amortization | (235) | |||||
| Share-based payment | (5) | |||||
| Other income | 1 | |||||
| Finance income | 4 | |||||
| Finance expenses | (30) | |||||
| Income taxes | (24) | |||||
| Net profit for the period | 60 |
- Includes interconnect revenues
** Segmental Adjusted EBITDA reviewed by the Group's Chief Operating Decision Maker, represents the net profit before net finance expenses, taxes, other income (expenses) that are not part of the Company's ongoing operations (including provisions regarding legal claims included in the other expenses item), depreciation and amortization, gains (losses) from associates and share-based payments. In addition, it includes other income (expenses) that were part of the Company's ongoing operations, such as interest income regarding installment sale transactions and additional income in the Company's areas of operation. Segmental Adjusted EBITDA is not a financial measure in accordance with IFRS and should not be compared to similar measures in other companies.
Note 4 - Operating Segments (Continued)
| For the year ended December 31, 2025 | ||||||
|---|---|---|---|---|---|---|
| NIS millions | ||||||
| (Audited) | ||||||
| Mobile | Fixed-line | Electricity | Adjustments to Consolidated | Consolidated | Reconciliation of total Segmental Adjusted EBITDA to profit for the year | |
| Segment revenues - services * | 1,769 | 1,218 | 195 | (195) | 2,987 | |
| Inter-segment revenues - services | 4 | 141 | - | (145) | - | |
| Segment revenues - equipment and other | 1,095 | 162 | - | - | 1,257 | |
| Total revenues | 2,868 | 1,521 | 195 | (340) | 4,244 | |
| Gross profit | 1,073 | 378 | 6 | (6) | 1,451 | |
| Operating profit | 340 | 89 | - | - | 429 | |
| ** Segmental Adjusted EBITDA | 911 | 494 | 1 | (1) | 1,405 | |
| Depreciation and amortization | (961) | |||||
| Share-based payments | (19) | |||||
| Other income | 4 | |||||
| Finance income | 24 | |||||
| Finance expenses | (126) | |||||
| Profit from sale of a company accounted for under the equity method | 386 | |||||
| Share in profits of held entities | 1 | |||||
| Income taxes | (150) | |||||
| Net profit for the period | 564 |
- Includes interconnect revenues until June 15, 2025.
** Segmental Adjusted EBITDA reviewed by the Group's Chief Operating Decision Maker, represents the net profit before net finance expenses, taxes, other income (expenses) that are not part of the Company's ongoing operations (including provisions regarding legal claims included in the other expenses item), depreciation and amortization, gains (losses) from associates and share-based payments. In addition, it includes other income (expenses) that are part of the Company's ongoing operations, such as additional interest income regarding installment sale transactions and additional income in the Company's areas of operation. Segmental Adjusted EBITDA is not a financial measure in accordance with IFRS and should not be compared to similar measures in other companies.
Note 5 - Financial Instruments
Fair Value
Financial instruments measured at fair value for disclosure purposes only
The carrying amount of certain assets and liabilities, including cash and cash equivalents, customers, debtors and debit balances, current investments, including derivatives, suppliers and creditors and credit balances, including derivatives and long-term liabilities, is equal to or close to their fair value.
The fair value of the remaining financial liabilities and their carrying amount as presented in the consolidated statements of financial position are as follows:
| As of March 31 | As of December 31 | |||||
|---|---|---|---|---|---|---|
| 2026 | 2025 | 2025 | ||||
| Carrying amount | Fair value | Carrying amount | Fair value | Carrying amount | Fair value* | |
| NIS millions | ||||||
| BONDS, including current maturities and interest payable | (1,116) | (1,118) | (1,637) | (1,620) | (1,386) | (1,389) |
- The fair value of traded BONDS was determined based on the market price at the reporting date plus principal and interest amounts paid in the month following the end of the reporting period.
In January 2026, the Company repaid a total of NIS 281 million from the BONDS balance regarding principal and interest (in January 2025, a total of NIS 267 million regarding principal and interest).
Note 6 - Revenues
Composition:
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Note 7 - Contingent Liabilities
A. The provision included in the financial statements as of March 31, 2026, for all claims against the Group, amounts to a total of approximately 63 million NIS.
The main claims and motions to approve them as class actions filed against the Group are claims by the Group's customers, primarily concerning allegations of unlawful collection of funds, conduct not in accordance with law or license, or breach of agreements with customers, causing monetary and non-monetary damages to customers (hereinafter: "consumer claims"). In addition, various legal claims are filed against the Group by employees, subcontractors, suppliers, authorities, and others, primarily concerning allegations of violation of legal provisions and breach of agreements (hereinafter: "other claims").
After the reporting period, a claim and a motion to approve it as a class action were filed against the Group for which no claim amount was specified. At this preliminary stage, the chances of its success cannot be assessed. Furthermore, 5 class actions against the Group ended in a total amount estimated by the plaintiffs at approximately 5 million NIS.
Following is a detail of the outstanding claims against the Group as of March 31, 2026, classified into groups with similar characteristics. The amounts presented below are calculated based on the claim amounts as of the dates they were filed against the Group.
| Claim group | Amount of claims for which chances can be assessed* million NIS |
|---|---|
| Consumer claims | 98 |
| Other claims | 58 |
| Total | 156 |
- There are additional claims against the Group for which no claim amount was specified, for which due to the cause of action the Group may have additional exposure.
Following is a detail of the number and amount of the claims, as of March 31, 2026, divided by claim amount:
| Claim amount | Number of claims | Total claim amount (in million NIS) |
|---|---|---|
| Up to 100 million NIS * | 22 | 156 |
| Claims for which no claim amount was specified | 24 | |
| Claims for which no claim amount was specified against the Group and additional defendants | 6 | |
| Total | 52 | 156 |
- Including 19 claims filed against the Group by employees, subcontractors, suppliers, authorities, and others as of March 31, 2026, in the scope of approximately 58 million NIS.
B. Legal proceedings against IBC
- Further to Note 30G in the annual financial statements regarding a claim filed by the Company in the Tel Aviv-Yafo District Court against IBC Israel Broadband Company (2013) Ltd. ("IBC") on March 23, 2026, the court gave the status of a decision to a procedural arrangement submitted by the parties ("the procedural arrangement"), which settles the disputes regulated therein for the duration of the legal proceedings (until a final judgment).
Following are the main points of the procedural arrangement:
The Company will complete the amount of bank guarantees it provided to IBC under the mechanism set in the IRU agreement and in a scope not exceeding 50 million NIS, on condition that IBC will not forfeit from the bank guarantees any amounts in interpretative dispute between the parties.
IBC undertakes to avoid sending tax invoices that include, directly and/or indirectly, payments in dispute between the parties.
15
Note 7 - Contingent Liabilities (Continued)
B. Legal proceedings against IBC (Continued)
The Company committed to pay IBC in a timely manner the current payments (including for the 4th quarter of 2025) for the infrastructure services for the bundle of lines derived from the updated commitment rate (15%) out of a total of up to approximately 2 million customer households.
For each additional line the Company purchases beyond the above, the Company will pay IBC according to the line price in accordance with the IRU agreement, without this constituting a commitment to any scope or rate (15% or other) out of IBC's total deployment as it actually exists at the time of purchase.
For the lines purchased and/or to be purchased as stated above, IBC undertakes to provide the Company with all services for the lines to be purchased as stated, without additional and/or other conditions.
The procedural arrangement settles the disputes regulated therein for the duration of the legal proceedings (until a final judgment), and nothing stated therein, or not stated therein, shall prejudice any of the parties' claims or rights or constitute an admission of any claim.
- During April 2026, IBC filed an amended statement of counterclaim against the Company ("the amended statement of counterclaim"), in which, among other things, monetary relief in the amount of approximately 16.5 million NIS and declaratory reliefs were claimed. Among the declaratory reliefs, the court was requested to declare that the Company's conduct constitutes a breach of the IRU agreement between the parties, as well as an anticipated breach thereof. As stated in the amended statement of counterclaim, based on information held by IBC (including information regarding its planned deployment scope), it estimates by way of rough and non-binding estimate that as of the date of filing the original statement of counterclaim (filed during November 2025), it is an anticipated breach of non-payment of amounts totaling approximately 895 million NIS until the end of the IRU agreement period (beyond the amount claimed in the original statement of claim).
It is clarified that the procedural arrangement continues to remain in effect for the duration of the legal proceedings (until a final judgment). At this stage, the Company is unable to assess the results of the said legal proceeding.
Note 8 - Material Events During and After the Reporting Period
A. Share-based payment
On April 23, 2026, the General Meeting approved, after receiving the approval of the Compensation Committee and the Board of Directors of the Company, the allocation of 777 thousand warrants to the CEO of the Company according to a net exercise mechanism in accordance with the Company's equity compensation plan, with a value of approximately 7.8 million NIS. The warrants will vest in three equal tranches after one, two, and three years from the grant date. The warrants are exercisable within 24 months from their vesting date for the first tranche and within 12 months from their vesting date for the remaining tranches.
Assumptions in calculation of fair value:
Share price at grant date in 37.95 NIS
Expected volatility (weighted average) 34.1%-37.4%
Expected life of the warrant 2.66 (expected weighted average)
Risk-free interest rate 3.7%
In March 2026 and May 2026, after the reporting period, the Company's Board of Directors approved the allocation of approximately 0.3 million warrants to officers according to a net exercise mechanism in accordance with the Company's equity compensation plan, with a value of approximately 3.6 million NIS. The warrants will vest in four equal tranches after one, two, three, and four years from the grant date.
Assumptions in calculation of fair value:
Share price at grant dates in NIS 33.7-35.6
Expected volatility (weighted average) 35.2%-38.4%
Expected life of the warrant 3.75 (expected weighted average)
Risk-free interest rate 3.7%
Cellcom Israel Ltd.
Notes to the Condensed Consolidated Interim Financial Statements
Note 8 - Material Events During and After the Reporting Period (Continued)
B. Dividend Distribution
In March 2026, the Company's Board of Directors declared a cash dividend distribution in the amount of approximately 1.19 NIS per share and in a total amount of 200 million NIS, which was paid in April 2026, after the reporting period, to the holders of the Company's shares who were registered in the Company's shareholders' register at the end of the trading day on April 1, 2026.
17
Condensed Separate Interim Financial Information
As of March 31, 2026
(Unaudited)
Table of Contents
| Page | |
|---|---|
| Special report of the accountant on separate interim financial information | 2 |
| Condensed interim statements of financial position attributed to the Company | 3 |
| Condensed interim statements of profit and loss attributed to the Company | 4 |
| Condensed interim statements of comprehensive income attributed to the Company | 5 |
| Condensed interim statements of cash flows attributed to the Company | 6 |
| Notes to the separate financial information | 8 |
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Kost Forer Gabbay & Kasierer Tel. +972-3-6232525
144A Menachem Begin Road, ey.com
Tel-Aviv 6492102
To
The Shareholders of Cellcom Israel Ltd.
Dear Sirs/Madams,
Re: Special report of the auditing accountants on separate interim financial information according to Regulation 38D of the Securities Regulations (Periodic and Immediate Reports), 1970
Introduction
We have reviewed the separate interim financial information presented according to Regulation 38D of the Securities Regulations (Periodic and Immediate Reports), 1970 of Cellcom Israel Ltd. (hereinafter - the Company), as of March 31, 2026 and for the three-month period then ended. The separate interim financial information is the responsibility of the Company's Board of Directors and Management. Our responsibility is to express a conclusion on the separate interim financial information for these interim periods based on our review.
Scope of Review
We conducted our review in accordance with Review Standard (Israel) 2410 of the Institute of Certified Public Accountants in Israel - "Review of Interim Financial Information Performed by the Independent Auditor of the Entity". A review of separate interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards in Israel and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the aforementioned separate interim financial information is not prepared, in all material respects, in accordance with the provisions of Regulation 38D of the Securities Regulations (Periodic and Immediate Reports), 1970.
Kost Forer Gabbay & Kasierer
Tel-Aviv
Accountants
May 20, 2026
Condensed Interim Statements of Financial Position
| As of March 31 | As of December 31 | ||
|---|---|---|---|
| 2026 | 2025 | 2025 | |
| NIS millions | |||
| (Unaudited) | (Audited) | ||
| Current Assets | |||
| Cash and cash equivalents | 127 | 23 | 293 |
| Trade receivables | 633 | 677 | 639 |
| Current tax assets | - | 3 | - |
| Other receivables and debit balances, including derivatives | 55 | 51 | 71 |
| Current maturities of loans to subsidiaries | 27 | 22 | 56 |
| Inventory | 62 | 84 | 61 |
| 904 | 860 | 1,120 | |
| Non-Current Assets | |||
| Trade and other receivables | 202 | 210 | 204 |
| Property, plant and equipment, net | 1,433 | 1,471 | 1,451 |
| Intangible and other assets, net | 413 | 427 | 422 |
| Investments in subsidiaries accounted for using the equity method | 2,196 | 2,421 | 2,145 |
| Loans to subsidiaries and capital notes | 250 | 332 | 274 |
| Right-of-use assets, net | 532 | 550 | 555 |
| 5,026 | 5,411 | 5,051 | |
| 5,930 | 6,271 | 6,171 | |
| Current Liabilities | |||
| Current maturities of BONDS | 502 | 522 | 412 |
| Short-term credit | 200 | 208 | 200 |
| Current maturities of lease liabilities | 155 | 162 | 165 |
| Trade payables and accrued expenses | 555 | 718 | 588 |
| Provisions | 86 | 82 | 84 |
| Current tax liabilities | 62 | - | 50 |
| Loans from subsidiaries | - | 120 | - |
| Other payables and credit balances, including derivatives | 422 | 256 | 246 |
| 1,982 | 2,068 | 1,745 | |
| Non-Current Liabilities | |||
| BONDS | 605 | 1,102 | 942 |
| Long-term lease liabilities | 400 | 418 | 423 |
| Provisions | 29 | 25 | 28 |
| Other long-term liabilities | 9 | 2 | 9 |
| Excess of losses over investment in a subsidiary accounted for using the equity method | 9 | - | 9 |
| Post-employment benefit obligations, net | 14 | 12 | 13 |
| As of March 31 | As of December 31 | ||
|---|---|---|---|
| 2026 | 2025 | 2025 | |
| NIS millions | |||
| (Unaudited) | (Audited) | ||
| Deferred tax liabilities | 169 | 127 | 167 |
| 1,235 | 1,686 | 1,591 | |
| 3,217 | 3,754 | 3,336 | |
| Total Equity | |||
| Equity attributed to the shareholders of the Company | 2,713 | 2,517 | 2,835 |
| 5,930 | 6,271 | 6,171 |
Date of approval of the financial statements
Yuval Cohen
Chairman of the Board
Eli Adadi
CEO
Gadi Atias
CFO
Condensed Interim Statements of Profit and Loss
The attached notes constitute an integral part of the separate financial information.
Condensed Interim Statements of Comprehensive Income
Cellcom Israel Ltd.
The attached notes constitute an integral part of the separate financial information.
5
5/20/2020 | 4:01:25 PM | v1.2.5
Condensed Interim Statements of Cash Flows
The accompanying notes are an integral part of the separate financial information.
Condensed Interim Statements of Cash Flows
The accompanying notes are an integral part of the separate financial information.
Notes to Condensed Interim Separate Financial Information
Note 1 - Basis of Preparation of the Separate Financial Information
a. Definitions
Below is a summary of financial data from the summary of the consolidated financial statements of the Group as of March 31, 2026 (hereinafter - "consolidated financial statements"), published as part of the Periodic reports, attributed to the Company itself (hereinafter - "condensed interim separate financial information"), which are presented in accordance with Regulation 38D (hereinafter - "the Regulation") and the Tenth Schedule to the Securities Regulations (Periodic and Immediate Reports), 1970 - (hereinafter - "the Tenth Schedule") regarding the condensed interim separate financial information of the corporation.
This condensed interim separate financial information should be read in conjunction with the separate financial information as of December 31, 2025 and with the consolidated reports.
Unless stated otherwise, all terms used within the separate financial information are as defined in the Company's consolidated financial statements as of December 31, 2025 (hereinafter: "the Annual Consolidated Reports").
"The Company" - Cellcom Israel Ltd.
"Held entity" - subsidiary or associate.
"Intercompany transactions" - transactions of the Company with subsidiaries.
"Intercompany balances", "Intercompany income and expenses", "Intercompany cash flows" - balances, income or expenses, and cash flows, as the case may be, arising from intercompany transactions, which were eliminated in the consolidated reports.
b. Working Capital
As of March 31, 2026, the Company has a deficit in working capital totaling approximately NIS 1,078 million. The working capital deficit in the Company's solo report stems, among other things, from the fact that all of the Company's debt is managed within the Company while part of the positive working capital is in subsidiaries that are fully owned (100%) by the Company, as well as from a change in the Company's credit management which transferred part of its financial liabilities from long-term to short-term due to interest savings considerations. It should be noted that as of March 31, 2026, the Group has unutilized credit facilities totaling approximately NIS 600 million which were not taken into account within the working capital.
c. Significant Accounting Policies Applied in the Condensed Interim Separate Financial Information
The accounting policies in this condensed interim separate financial information are in accordance with the accounting policy rules detailed in the separate financial information as of December 31, 2025.
Notes to Condensed Interim Separate Financial Information
Note 2 - Material Engagements and Loans with Held Entities
a. Investments and Holding Rates in Held Entities
| Investments in held entities as of | ||||
|---|---|---|---|---|
| Company rights in capital | March 31 | December 31 | ||
| 2026 | 2025 | 2025 | ||
| NIS millions | ||||
| (Unaudited) | (Audited) | |||
| Cellcom Fixed-Line Communication L.P. | 100% | 1,497 | 1,693 | 1,437 |
| Golan Telecom Ltd. | 100% | 513 | 462 | 502 |
| Dynamica Communication Stores Chain Ltd. | 100% | 186 | 152 | 206 |
| IBC (Unlimited) Holdings Limited Partnership* | 0% | - | 122 | - |
| Cellcom Energy (2023) Limited Partnership | 50% | (9) | (8) | (9) |
| 2,187 | 2,421 | 2,136 |
- In October 2025, a transaction was completed for the sale of the Company's holdings in IBC, which was accounted for using the equity method. For information regarding the transaction, see Note 30F to the annual consolidated reports.
b. Loans to Held Entities and Capital Notes
| Loans to held entities as of | |||
|---|---|---|---|
| March 31 | December 31 | ||
| 2026 | 2025 | 2025 | |
| NIS millions | |||
| (Unaudited) | (Audited) | ||
| Loan to Golan Telecom Ltd. * | 27 | 104 | 80 |
| Capital notes - Golan Telecom Ltd. | 250 | 250 | 250 |
| 277 | 354 | 330 |
- The loan to Golan Telecom was granted in 2017 and as part of the signing of a cooperation agreement (which came to an end with its acquisition), half of it bears an annual interest rate of $1.85\%$ and is linked to the Consumer Price Index, and half of it bears an annual interest rate of $3.5\%$ and is not linked.
c. Loans from Held Entities
| Loans from held entities as of | |||
|---|---|---|---|
| March 31 | December 31 | ||
| 2026 | 2025 | 2025 | |
| NIS millions | |||
| (Unaudited) | (Audited) | ||
| Current maturities of loan from Cellcom Fixed-Line Communication L.P. * | - | 120 | - |
| - | 120 | - |
- The loan from Cellcom Fixed-Line Communication bears an annual interest rate at the Prime rate.
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Notes to Separate Interim Financial Information
Note 3 - Events During and After the Reporting Period
- On March 2, 2026, Dynamica announced a dividend distribution in the amount of NIS 40 million to its shareholders, which was paid on March 30, 2026;
- For information regarding legal proceedings against IBC, see Note 7B to the Consolidated Interim Financial Statements;
- For information regarding share-based payment, see Note 8A to the Consolidated Interim Financial Statements;
- For information regarding dividend distribution to the holders of the company's shares, see Note 8B to the Consolidated Interim Financial Statements.
Quarterly Report on the Effectiveness of Internal Control over Financial Reporting and Disclosure according to Regulation 38C(a)
Management, under the supervision of the Board of Directors of ("the Company"), is responsible for the determination and existence of adequate internal control over financial reporting and disclosure in the Company.
In this regard, the members of management are:
- Eli Adadi, CEO.
- Gadi Atias, CFO.
- Larissa Cohen, VP Legal Counsel and Regulation.
- Timurz Romashvili, VP Sales and International Operations.
- Yaniv Guetta, VP Information Systems.
- Efrat Madmoni, VP Human Resources.
- Yaakov Truzman, VP Business Customers Division.
- Avi Greenman, VP Engineering.
- Hanania Gilad, VP Residential Service.
- Galit Shakalo Offenberg, VP Retail.
- Michal Batzer, VP Marketing.
- Omer Harel, Head of Innovation and Digital.
Internal control over financial reporting and disclosure includes controls and procedures existing in the company, which were designed by the General Manager and the most senior officer in the finance field or under their supervision, or by whoever actually performs the said roles, under the supervision of the company's board of directors, which are designed to provide a reasonable degree of assurance regarding the reliability of financial reporting and the preparation of the reports in accordance with the provisions of the law, and to ensure that information that the company is required to disclose in the reports it publishes according to the provisions of the law is collected, processed, summarized and reported on the date and in the format prescribed by law.
Internal control includes, among other things, controls and procedures designed to ensure that information that the company is required to disclose as stated, is accumulated and transferred to the company's management, including the General Manager and the most senior officer in the finance field or to whoever actually performs the said roles, in order to allow decision-making at the appropriate time, with reference to the disclosure requirement.
Due to its structural limitations, internal control over financial reporting and disclosure is not intended to provide absolute assurance that a misleading presentation or omission of information in the reports will be prevented or discovered.
In the report regarding the effectiveness of internal control over financial reporting and disclosure which was attached to the Periodic report for the period ended December 31, 2025 (hereinafter - "the last internal control report"), the Board of Directors and Management evaluated the internal control in the Company; based on this evaluation, the Board of Directors and the Company's management reached the conclusion that the control as stated for December 31, 2025 is effective, and that no significant deficiencies or material weaknesses were found.
Until the date of the report, no event or matter has been brought to the attention of the Board of Directors and Management that would change the evaluation of the effectiveness of internal control, as presented in the framework of the last quarterly report regarding internal control.
As of the date of the report, based on the evaluation of the effectiveness of internal control in the last quarterly report regarding internal control, and based on information brought to the attention of Management and the Board of Directors as stated above, the internal control is effective, and no significant deficiencies or material weaknesses were found.
Executives' Declarations
General Manager's Declaration according to Regulation 38C(d)(1)
I, Eli Adadi, declare that:
(1) I have examined the quarterly report of Cellcom Israel Ltd. ("the Company") for the first quarter of the year 2026 ("the Reports");
(2) To my knowledge, the reports do not include any misrepresentation of a material fact and do not lack a representation of a material fact necessary so that the representations included in them, in light of the circumstances in which those representations were included, will not be misleading with reference to the period of the reports;
(3) To my knowledge, the financial statements and other financial information included in the reports fairly reflect, in all material respects, the financial position, results of operations and cash flows of the Company for the dates and periods to which the reports refer;
(4) I have disclosed to the Company's auditor, the Board of Directors, and the Audit Committee of the Company's Board of Directors, based on my most recent evaluation regarding internal control over financial reporting and disclosure:
a. All significant deficiencies and material weaknesses in the determination or operation of internal control over financial reporting and disclosure that are reasonably likely to adversely affect the Company's ability to collect, process, summarize or report financial information in a manner that casts doubt on the reliability of the financial reporting and the preparation of the financial statements in accordance with the provisions of the law; and also-
b. Any fraud, whether material or immaterial, in which the General Manager or those directly subordinate to him are involved, or other employees who have a significant role in internal control over financial reporting and disclosure are involved;
(5) I, alone or together with others in the Company:
a. Have determined controls and procedures, or ensured the determination and existence under my supervision of controls and procedures, designed to ensure that material information relating to the Company, including its consolidated companies as defined in the Securities Regulations (Annual Financial Statements), 2010, is brought to my attention by others in the Company and in the consolidated companies, particularly during the period of preparation of the reports; and also-
b. Have determined controls and procedures, or ensured the determination and existence under my supervision of controls and procedures, designed to reasonably ensure the reliability of financial reporting and the preparation of the financial statements in accordance with the provisions of the law, including in accordance with accepted accounting principles;
c. No event or matter that occurred during the period between the date of the last report (quarterly or periodic, as the case may be) and the date of this report has been brought to my attention, which would change the conclusion of the Board of Directors and Management regarding the effectiveness of the internal control over financial reporting and disclosure of the Company.
Nothing in the above shall detract from my responsibility or the responsibility of any other person, under any law.
Date: May 20, 2026
Eli Adadi,
CEO
Declaration of the Most Senior Officer in the Finance Field according to Regulation 38C(d)(2)
I, Gadi Atias, declare that:
(1) I have examined the interim financial statements and other financial information included in the reports for the interim period of Cellcom Israel Ltd. ("the Company") for the first quarter of the year 2026 ("the Reports" or "the Interim Period Reports");
(2) To my knowledge, the interim financial statements and other financial information included in the interim period reports do not include any misrepresentation of a material fact, and do not lack a representation of a material fact necessary so that the representations included in them, in light of the circumstances in which those representations were included, will not be misleading with reference to the period of the reports;
(3) To my knowledge, the interim financial statements and other financial information included in the interim period reports fairly reflect, in all material respects, the financial position, results of operations and cash flows of the Company for the dates and periods to which the reports refer;
(4) I have disclosed to the Company's auditor, the Board of Directors and the Audit Committee of the Company's Board of Directors, based on my most recent evaluation regarding internal control over financial reporting and disclosure:
a. All significant deficiencies and material weaknesses in the determination or operation of internal control over financial reporting and disclosure, as it relates to the interim financial statements and other financial information included in the interim period reports, which are reasonably likely to adversely affect the Company's ability to collect, process, summarize or report financial information in a manner that casts doubt on the reliability of the financial reporting and the preparation of the financial statements in accordance with the provisions of the law; and also-
b. Any fraud, whether material or immaterial, in which the General Manager or those directly subordinate to him are involved, or other employees who have a significant role in internal control over financial reporting and disclosure are involved.
(5) I, alone or together with others in the Company:
a. Have determined controls and procedures, or ensured the determination and existence under my supervision of controls and procedures, designed to ensure that material information relating to the Company, including its consolidated companies as defined in the Securities Regulations (Annual Financial Statements), 2010 is brought to my attention by others in the Company and in the consolidated companies, particularly during the period of preparation of the reports; and also
b. Have determined controls and procedures, or ensured the determination and existence under my supervision of controls and procedures, designed to reasonably ensure the reliability of financial reporting and the preparation of the financial statements in accordance with the provisions of the law, including in accordance with accepted accounting principles;
c. No event or matter that occurred during the period between the date of the last report (quarterly or periodic, as the case may be) and the date of this report has been brought to my attention, relating to the interim financial statements and any other financial information included in the interim period reports, which would change, in my evaluation, the conclusion of the Board of Directors and Management regarding the effectiveness of the internal control over financial reporting and disclosure of the Company.
Nothing in the above shall detract from my responsibility or the responsibility of any other person, under any law.
Date: May 20, 2026
Gadi Atias,
CFO
5/20/2026 (4:01:27 PM) v1.2.5
Kost Forer Gabbay & Kasierer
Tel. +972-3-6232525
144A Menachem Begin Road,
ey.com
Tel-Aviv 6492102
To
The Board of Directors of
Cellcom Israel Ltd.
10 HaGvish
Netanya
Dear Sir/Madam,
Subject: Consent letter regarding the shelf prospectus of Cellcom Israel Ltd. ("the Company") from April 2024
We hereby inform you that we consent to the inclusion (including by way of reference) in the subject shelf prospectus of our reports as detailed below:
- Review report of the auditing accountant dated May 20, 2026, on the consolidated interim financial statements of the Company as of March 31, 2026, for the three-month period ended on that date.
- Special report of the auditing accountant dated May 20, 2026, on separate interim financial information according to Regulation 38D of the Securities Regulations (Periodic and Immediate Reports), 1970 of the Company as of March 31, 2026, for the three-month period ended on that date.
Sincerely,
Kost Forer Gabbay & Kasierer
Accountants
Tel-Aviv,
May 20, 2026
5/25/2026 | 4:01:28 PM | v1.2.5