Bezeq Group (yes) Reports Second Quarter 2008 Financial Results

‘yes’: Multi-channel pay-TV revenue increased 7.3% year-over-year to NIS 380 million driven by a 5.5% improvement in ARPU to NIS 230 and a 1.5% increase in subscribers to 551,000

TEL AVIV, Israel — Bezeq The Israel Telecommunication Corp., Limited (TASE: BEZQ), Israel’s leading telecommunications provider, announced today its financial results for the second quarter 2008, the period ended June 30, 2008.

yes Results

Revenue from the yes multi-channel pay-TV segment increased 7.3% to NIS 380 million in the second quarter of 2008 from NIS 354 million in the year ago period. The rise in revenue was primarily related to a 5.5% year-over-year increase in ARPU to NIS 230 as well as a 1.5% net increase in subscribers.

Net loss for the yes segment in the second quarter of 2008 totaled NIS 99 million compared to a net loss of NIS 65 million in the second quarter of 2007, an increase of 52.3% year-over-year. This increase stemmed mainly from higher finance expenses related to debt linked to the Israeli consumer price index (CPI), an increase in content costs due to broadcasts of original productions and an increase in maintenance services by subcontractors.

yes posted positive EBITDA of NIS 103 million (27.1% EBITDA margin) in the second quarter of 2008 as compared to EBITDA of NIS 100 million (28.2% EBITDA margin) in the second quarter of 2007.

The number of yes subscribers as of June, 2008 was 551,000, up 8,000 subscribers from the year ago period and up from 549,000 as compared to March 31, 2008.

yes number of subscribers (end of period, in thousands):

Q2 2008  Q2 2007  Change   H1 2008  H1 2007  Change
-------  -------  ------   -------  -------  ------  
    551      543    1.5%       551      543    1.5%

More: Earnings Release