Partner's best year ever Dear Shareholder, Partner has once again recorded an outstanding performance in 2008. We have made further progress during the year, while continuing the execution of our long-term strategy and exceeding our financial targets. Partner further strengthened its position as the leading provider of cellular services to the Israeli market, while posting double-digit increases in the key profitability metrics including net income, free cash flow, EBITDA and earnings per share (EPS). Our brand, orange™, has once again been selected as the strongest brand in the Israeli telecommunications market. In a saturated market, Partner succeeded in attracting 99,000 high quality new subscribers in 2008, to reach approximately 2.9 million subscribers at year-end 2008. We have managed to maintain a competitive cost structure despite the tough competition and the cost of implementing our new strategic activities, thereby achieving impressive profitability margins. Total revenues for the year reached NIS 6,330 million, an increase of 3.5% from 2007, while net income increased by 11.9% from NIS 940 million in 2007 to NIS 1,051 million in 2008. We succeeded in generating a strong free cash flow of NIS 1,308 million, an increase of 42.8% compared with 2007. EBITDA increased by 12.3% and reached NIS 2,257 million. Diluted EPS grew to NIS 6.73, an increase of approximately 12.9%. 2008 was the year in which Partner took the next important step in implementing its long term strategic direction of evolving from a pure cellular operator into a diversified multi-service communications and media service provider. At the end of the year we launched two major initiatives: the first is Internet Service Provider (ISP) and Voice over Broadband (VOB); by developing a pervasive presence in the customers' premises, Partner now offers its subscribers the benefits of service synergies with its core activity while strengthening its position as a leading telecommunications company in Israel; the second is the biggest entertainment portal in Israel called "orange time". orange time is aimed to set new standard of rich media portal in the areas of music, movies, TV series and on-line gaming. The vision of web portal unification demonstrates Partner's commitment to provide converged telecommunication services. At the same time, Partner continues to invest in its 3G and 3.5G network and services, reaching at year end, approximately 951,000 3G subscribers, representing 44% of Partner's post-paid customers' base. Partner's 3.5G network now covers more than 80% of Israel's most populated centers. The improved user experience provided by the 3.5G network has resulted in increased data and content usage and contributed to data and content revenues growth. In 2008 Partner distributed a total dividend of approximately NIS 841 million, representing a payout ratio of 80% of net income. Partner also conducted a buyback plan in the amount of NIS 351 million. The total cash amount distributed to the shareholders for 2008, either through dividend or share repurchases, was approximately NIS 1.2 billion. This demonstrates Partner's commitment to continue and deliver attractive dividend yield to its shareholders. Everything combines together – our vision Partner's success in 2008 was due to the Company’s ability to leverage its core strengths in network quality, brand value and customer service, combined with dedication to offering customers value-added services. Above all, Partner is committed to constantly deliver innovative products and services across different communications platforms. By offering cellular and transmission services, as well as VOB and ISP services, Partner is continually broadening its portfolio of products and services to generate additional future sources of revenues, enhancing customer satisfaction and loyalty and thereby continuing our solid history of creating and delivering value to our customers, shareholders and employees. Partner is indeed fulfilling its vision to lead the communication market in Israel with a different marketing approach, quality of service and technological innovation, for the benefit of the Company’s customers, its shareholders and employees. Leading the future 2009 is expected to be one of the most challenging years in recent global economic history and we believe that Partner’s operational and financial performance in 2008, our organizational culture and our fundamental business approach, coupled with the advantages of Partner's strong relationship with Hutchison Telecom, provide us with the ability to cope with future challenges and with a unique opportunity to continue to lead the communications market in Israel. We would like to thank Partner’s Board of Directors, management team and employees for their commitment to constantly achieving new levels of excellence. Their dedication to setting and meeting challenging performance targets is a highly valuable asset to the Company. Focused on the execution of its strategy, Partner is strongly positioned to meet and overcome tomorrow's challenges and to continue to deliver value to all its stakeholders. David Avner CEO Canning Fok Chairman of the Board