Bezeq Group Reports Fourth Quarter and Full Year 2007 Financial Results

Yes: Multi-channel pay-TV subscribers reached 549,000, and average revenue per user (ARPU) increased 2.4% year-over-year, driving a 4.6% improvement in full year revenues and a 63.8% reduction in full year net loss

TEL AVIV, Israel — Bezeq The Israel Telecommunication Corp., Limited (TASE: BEZQ), Israel’s leading telecommunications provider, announced today its financial results for the fourth quarter and full year 2007, the period ended December 31, 2007.

‘yes’ Results

Revenue from the yes multi-channel pay-TV segment increased 1.2% to NIS 349 million in the fourth quarter of 2007. yes’ segment revenue for the full year 2007 increased 4.6% to a record NIS 1.42 billion. The full year rise in revenue was primarily related to a 1.7% net increase in subscribers as well as a 2.4% increase in the average revenue per user partially offset by a one-off customer discount in the second half of 2007.

Net loss for the yes segment in the fourth quarter of 2007 totaled NIS 73 million compared to a net loss of 42 million in the fourth quarter of 2006. For the full year 2007 yes’ net loss declined to NIS 116 million, a 63.8% improvement as compared to the full year 2006. During the second half of 2007, yes experienced a temporary reduction in revenues and increase in expenses related to a disruption of broadcasting services. However, yes has emerged from this event with minimal damage to its brand and with no change incremental customer churn.

Yes posted positive EBITDA of NIS 75 million (21.5% EBITDA margin) in the fourth quarter of 2007, compared to NIS 82 million (23.8% EBITDA margin) in the fourth quarter of 2006. yes posted positive EBITDA of NIS 329 million (23.2% EBITDA margin) for the full year 2007, up 11.9% year-over-year from NIS 294 million (21.7% EBITDA margin) in the full year 2006 period.

(end of period, in thousands)      2007    2006   Change
                                   ----    ----   ------
Number of subscribers               549     540     1.7%

The number of yes’ subscribers at the end of December 2007 was 549,000, up from 545,000 in the prior quarter and up from 540,000 at the end of 2006.