B Communications Reports Financial Results for the Second Quarter of 2017

RAMAT GAN, Israel, Aug. 31, 2017

"We are very pleased with the results of the second quarter of 2017 in which Bezeq achieved net profit of NIS 358 million ($102 million), which is on target with its annual net profit guidance of NIS 1.4 billion ($400 million) for 2017. With full confidence in Bezeq's long term cash generating power, we will continue our efforts to strengthen our financial stability and liquidity in order to improve our debt and equity positions" said Doron Turgeman, CEO of B Communications.

Agreement with the Israeli Tax Authority: On April 27, 2017, the Company entered into a tax assessment agreement with the Israeli Tax Authority with respect to final tax assessments for the tax years 2010-2014. The Agreement covers all pending tax assessments and other tax matters with respect to such years. Pursuant to the Agreement, the Company paid the Israeli Tax Authority NIS 25 million ($7 million), including interest and CPI linkage differences. In addition, according to the agreement the cost of Bezeq shares held by the Company for tax purposes will be approximately NIS 8.25 per share. 

Dividends from Bezeq: In accordance with Bezeq's dividend policy, Bezeq distributed during the second quarter of 2017 its profits for the second half of 2016 as a cash dividend of NIS 578 million ($165 million) to its shareholders. The dividend which was approved by Bezeq's general meeting of shareholders was paid on May 29, 2017. B Communications share of the dividend distribution was NIS 152 million ($44 million). 

On August 23, 2017, the Board of Directors of Bezeq resolved to recommend to the general meeting of its shareholders the distribution of a cash dividend of NIS 708 million ($203 million), representing Bezeq's net profit for the first half of 2017. The dividend, which is subject to shareholders' approval, will be paid on October 16, 2017 to shareholders of record as of October 1, 2017. B Communications' share of the dividend distribution, if approved, is anticipated to be NIS 186 million ($53 million).

ISA Investigation: The Company has been reporting the events concerning the investigation by the Israel Securities Authority ("ISA") relating to alleged improprieties surrounding the Yes-Bezeq deal. As reported, the investigation appears to focus on Bezeq's 2015 acquisition of the remaining ownership interest in its satellite TV unit, Yes, from its parent company Eurocom Communications. As previously reported the Company's Chairman and other senior officers at Yes were remanded to house arrest for a period of time and later barred from communicating on certain issues related to the investigation. In addition, following initial reports about the investigation, civil claims with motions to certify the claims as class action lawsuits were filed in Israel against the Company, Bezeq and others. The Company is currently evaluating the claims and its course of action.

Financial Liabilities and Liquidity