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Internet Gold-Golden Lines Ltd.

Investor Presentation • May 29, 2016

6859_rns_2016-05-29_b8b13110-308a-494c-8c9e-5f4d73100c43.pdf

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The Bezeq Era

Investors Presentation

May 2016

Forward-Looking Statement

This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are statements that are not historical facts and may include financial projections and estimates and their underlying assumptions, statements regarding plans, objectives and expectations with respect to future operations, products and services, and statements regarding future performance. These statements are only predictions based on our current expectations and projections about future events. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements. Those factors include the factors indicated in our filings with the Securities and Exchange Commission (SEC). For more details, refer to our SEC filings and the amendments thereto, including our Annual Report on Form 20-F and Current Reports on Form 6-K. We undertake no obligation to update forward-looking statements to reflect subsequent occurring events or circumstances, or to changes in our expectations, except as may be required by law.

IGLD's Profile

  • Internet Gold (TASE and Nasdaq: IGLD) is a telecommunications-oriented holding company. Internet Gold's holds 64.8% interest in B Communications Ltd. ("BCOM") (TASE and Nasdaq: BCOM), which in turn holds the controlling interest (approximately 26.3%) in Bezeq − The Israel Telecommunication Corp., Israel's largest telecommunications provider (TASE: BEZQ).
  • Internet Gold is a subsidiary of Eurocom Communications Ltd.
  • IGLD's debt includes 2 series of debentures that are traded on TASE. During Q1/2016 the rating of the both series was notched-up to A3 local rating.
  • Trades at a discount to Net Asset Value.
  • On May 26, 2016, B Communications' board of directors declared a cash dividend in the amount of NIS 355 million, Internet Gold expect to receive NIS 230 million from this dividend on June 29, 2016.) per share

Bezeq, B-Com and IGLD are ultimately controlled by the Eurocom Group, the most experienced operator in the Israeli telecommunications field

  • Eurocom was founded in 1979
  • One of Israel's largest holding companies with a strong presence in Israel and a growing international presence
  • Owned by Shaul Elovitch, Chairman of the Board of Directors (80% ownership) and Yossef Elovitch, Director (20% ownership)
  • Solid financial base and strategic partnerships support growth
  • Investments in telecommunications, satellite services, media, consumer electronics, real estate and additional fields

Traded on TASE Traded on NASDAQ

Eurocom: Israel's Largest Communications Footprint

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Experienced, Disciplined Leadership

Shaul Elovitch Founder & Chairman Over 40 years experience building leading communications businesses and other major investments businesses

Proven capabilities in:

  • • Strategy creation & strategic planning
  • • Marketing & brand development
  • • Operational & financial management
  • • Management of mergers & acquisitions
  • • Creation of partnerships
  • • Capital raising: 13 major transactions
    • • 2 IPOs – IGLD and BCOM
    • • 10 bond issues
    • • \$800 million Rule 144A offering

Doron Turgeman CEO since 2011 & CFO from 2001 till 2011 20 years experience in management 18 years in communications

Chairman of the board of directors of Bezeq and it's subsidiaries

Key Milestones for IGLD

From small entrepreneurial business to large holding company

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Group Structure

Source: Company's information, Bezeq's investors' presentation.

  • (1) Net debt figures are as of March 31, 2016. Holding percentage figures are as of May 25, 2016.
  • (2) IGLD's NAV is defined as value of IGLD's shares according to BCOM's NAV, based on Bezeq stock price as of May 25, 2016, less IGLD's net debt as of March 31, 2016.
  • (3) BCOM's NAV is defined as value of BCOM's shares according to Bezeq market cap, based on Bezeq stock price as of May 25, 2016, less BCOM's net debt as of March 31, 2016.
  • (4) Bezeq's EV/EBITDA and Net Debt/EBITDA ratios are effected by the full consolidation of Yes financials as of March 26,2015.

Reduction in LTV According to BCOM's NAV (NIS Millions)

8

Reduction in LTV According to Market Value (NIS Millions)

9

Bezeq, Our Base Asset

including the

Bezeq: Israel's Most Comprehensive Communications Infrastructure and Service Provider

On June 23, 2015, and Further to Bezeq's shareholders approval, approval was granted by the Ministry of Communications for the transfer of the means of control in Yes such that Bezeq would control Yes and hold all of Yes's issued and paid-up capital, unconditionally. This concludes the satisfaction of all the preconditions that were determined in the purchase transaction between Bezeq Eurocom D.B.S. Ltd., which was approved by the General Meeting on March 23, 2015. The closing took place on June 24, 2015. At the closing: (a) a total cash amount of NIS 680 million (six hundred and eighty million), was paid to Eurocom DBS; (b) Bezeq acquired the entire holdings of Eurocom DBS in Yes (including a right to exercise 43 Yes shares that it holds) and acquired all the shareholder loans provided by Eurocom DBS to Yes (c) Eurocom DBS director in YES, resigned. As a result of the closing Bezeq holds 100% of "YES"

Bezeq Financials (NIS Millions)

Net income attributable to shareholders

Free cash flow *

Source : Bezeq's press release

* Free cash flow is defined as free cash flows from operating activities less net payments for investments

distribution of 100% of its net income on a semi-annual basis

Dividend Yield from 2006 to 201 6

BezeqGroupDividendsbyYear(NISMM)

Source: Bezeq

* Dividend Yield is based on average market cap during the period

  • • Based on its ownership interest, BCOM will receive ~ 26.3% of Bezeq's annual dividends
  • • Since 2006, Bezeq has paid over NIS 25.2 billion (US\$ 6.7 billion) in dividends
  • • Bezeq's Board of Directors recommended the distribution of 100% of net profits for the second half of 2015 as a cash dividend to shareholders of NIS 776 million (approximately NIS 0.28 per share). The semi-annual dividend, which is subject to Bezeq's shareholder approval, would be payable on May 30, 2016. The ex-dividend date is May 17, 2016.

IGLD's Cash Position

IGLD's Unconsolidated Balance Sheet Data* As of Mrach 31, 2016

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* Does not include the balance sheet of BCOM ** On June 29, 2016 ,IGLD expects to receive NIS 230 million dividend from BCOM

IGLD's Solo Balance Sheet

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IGLD During The Last 15 Months

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I
S
B
i
l
l
i
t
t
e
n
a
n
c
a
e
o
n
s		 0.
8
2		 0.
7
6
(
2)
(
)
N
A
V
N
I
S
B
i
l
l
i
o
n
s		 1.
3
9		 1.
6
9
(
)
D
b
W
i
h
d
D
i
I
t
t
t
e
e
g
e
u
r
a
o
n
n
y
e
a
r
s		 3.
0
5		 3.
1
7
(
)
3
L
T
V
B
d
B
C
O
M
's
N
A
V
a
s
e
o
n		 3
7.
1
%		 3
1.
1
%
(
)
4
L
T
V
B
d
B
C
O
M
's
M
k
C
t
a
s
e
o
n
a
r
e
a
p		 5
8.
6
%		 3
8.
7
%
l
i
f
S
i
/
C
b
L
t
B
D
t
o
c
a
r
a
n
g
o
e
r
e
s
e
e
n
u
r
e
s		 B
B
B
+		 A
(
)
5
C
S
i
D
b
Y
T
M
t
e
r
e
s
e
e
n
u
r
e
s		 %
4.
4
8		 %
1.
4
0
(
)
5
S
i
b
D
D
t
Y
T
M
e
r
e
s
e
e
n
u
r
e
s		 8
%
6.
5		 2.
9
%
7
(
)
T
l
L
i
i
d
i
N
I
S
B
i
l
l
i
t
t
o
a
q
o
n
s
u
y		 0.
3
2		 0.
1
7

(1) Net financial debt reported at December 31, 2014 and March 31 2016.

(2) NAV is calculated as IGLD's share in Bcom's NAV minus its Net Financial debt.

(3) LTV is calculated as IGLD's Net Financial debt divided by its share in Bcom's NAV.

(4) LTV is calculated as IGLD's Net Financial debt divided by its share in Bcom's Market cap.

(5) YTM as of December 31,2014 and May 25, 2016.

Midroog Raised the Rating of the

Company's Debentures from Baa1.il to A3.il

On February 9 , 2016, Midroog Ltd., an Israeli rating company affiliated with Moody's ("Midroog") has raised the local rating of the Company's Series C and D Debentures from Baa1.il to A3.il, with a stable outlook.

The main considerations for the rating, as indicated by Midroog were:

  • The rating reflects the anticipated improvement to the Company's liquidity profile in light of projected dividends from B Communications, as reflected in the debt servicing ratios, which are expected to range between 0.8 to 2.4 in the short and medium term.
  • The significant improvement in the Company's financial leverage in light of the significant increase in the value of B Communications shares, which support the Company's financial flexibility. Midroog also noted the anticipated improvement in the coverage ratios as a result of the sale by B Communications Ltd. of 4.2% of the shares of Bezeq and the significant decrease in the net financial debt of B Communications. Midroog estimates that the expanded net debt to EBITDA coverage ratios are expected to range between 3.8 to 4.0.

Projection of Future Debt Repayment

(NIS millions)

  • • All amounts include future estimated interest payments
  • • As of May 26, 2016

The Bezeq Era

Thank you

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