Partner Communications Company Ltd., an Israeli mobile communications operator, announced that the company has entered into an agreement Ericsson, for the replacement of third party 3G equipment existing in Partner’s network and the expansion thereof, and for the support and maintenance of the Ericsson elements in Partner’s network. As a result, Ericsson shall become the sole vendor of Partner’s 3G network.

The Agreement is expected to lead to higher operational and technological efficiency and to result in cost reduction. The replacement process shall take place during a period ending on June 30, 2011 but may be completed earlier.

The transaction will result in depreciation acceleration of the replaced equipment, throughout the replacement period. The fixed assets value, net of depreciation of the replaced equipment as of September 30, 2007, is approximately USD 36 million. The main part of the depreciation is planned to take place during 2008.

In the event that the replacement and purchase of the new equipment is made in accordance with the provisions of the agreement, the total net cash flow, after all discounts and price arrangements, some of which are contingent, payable by Partner throughout the replacement period, for the new equipment and for the support and maintenance services, is an amount of approximately USD 64 million.

---

---