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Internet Gold Leading Israeli communications and Interactive media Group. NASDAQ NM / TASE - symbol: IGLD. Eli Holtzman, CEO Doron Turgeman, CFO Q3 2006. Forward-Looking Statement.

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slide1
Internet Gold

Leading Israeli communications

and Interactive media Group

NASDAQ NM / TASE - symbol: IGLD

Eli Holtzman, CEO

Doron Turgeman, CFO

Q3 2006

forward looking statement
Forward-Looking Statement

The statements contained herein that are not purely historical are forward-looking statements. These forward-looking statements, and especially those regarding the 012 merger, involve risks and uncertainties and actual results could differ materially from the results discussed in these statements.

slide3
Internet Gold – Golden Lines - About Us…

History

  • Founded in 1996 by Eurocom Communications Ltd. and Eli Holtzman
  • Within about three years became leading ISP in the Israeli market
  • Went public on NASDAQ in August 1999 and TASE on May 2005

Current business

  • 100% owns two subs: Smile.Communications Ltd. and Smile.Media Ltd.
  • Smile.Communications – specializes in Internet services & Int’l telephony
  • Smile.Media – specializes in e-Advertising, e-Commerce and paid content
  • ~ 720 Full-Time Employees
committed to growth 2007 crossing the 250 m revenue line
Committed to growth…2007 - crossing the 250 M$ revenue line

Primary drivers:

2006

  • Build-out of InternationalVoIP Telephony services
  • Expansion of InternetAdvertising
  • Expansion of BusinessServices
  • 012 acquisition to be completed and operations to be consolidated - Q4/06

2007

  • 1st full year of the merged operation
  • Continued growth expected in all lines of business (under both ‘smile’ and ‘012’ brands)

in us $ millions

Organic CAGR = +20%

M&A CAGR = +47%

* post-merger

israel s telecommunications market
Israel’s telecommunications market

In US$ Billion

2005 total – US$ 5.3 B

Source: Israeli MoC

1 1 3 multiple synergies between the two companies
Value Added Services
  • Biz services
    • Hi level integration
    • Hi level data security
  • Dealernetwork
  • e-Media & e-Commerce
  • Global data networks
  • Roaming services
  • Call centers
  • Fixed domestic telephony
  • Pre/post paid cards
  • TDM platform
1 + 1 = 3 Multiple Synergies between the two companies
rationale for the 012 acquisition
Rationale for the 012 acquisition

communications activities only

In US$ millions

Q4/2005 + Q1-3/2006

*

F/Y - 2007**

Total

SCL

* Based on IGLD estimate

** company’s goals for the 1st full year of merged communications operations

*** Communications’ EBIT / EBITDA goals for 2007 exclude one time expenses relatingto the

merger. These goals assumes full synergy of merger to be achieved Q2/07

slide12
+ = cash generators

ILD – growth driver for the communications industry

International voice traffic from Israel - up 10.3% in 2005 vs. 2004

- up 12% in H1/06 vs. H1/05

International voice revenues for H1 2006 up 3% vs. H1 2005

(Source: Israeli MoC)

Leveraging state of the art telephony infrastructure

To drive further growth

  • Most sophisticated VoIP platform
  • World class TDM platform
  • Auxiliary platforms (anti-fraud / billing / CRM etc.)
slide13
072 / 075 - additional growth driver

Fixed telephony

  • Total fixed telephony market in Israel - US$ 1.2B in 2005
  • 012 currentlyhave only ~ 13k subscribers’ lines
  • Our goal ~ 5% market share of this significant segment within 3-4 years
  • Future marketing to rely on existing customer base of ~ 800 k subscribers

State-of-the-art telephony infrastructure

  • Solid investment in class 5 fixed telephony
  • No further significant investments required
  • Auxiliary platforms (anti-fraud / billing / CRM etc.)
2006 2007 growth of online advertising continues
*2006/2007: Growth of Online Advertising continues

Israel Internet Advertising CAGR = +38%

Israel’s broadband penetration is among the highest in the world

~70% of Israeli households have Internet access ~ 95% are connected via broadband!

>40% of users are online >10 hours per week. 2.7M users per day!

Israel’s online ad budgets are low compared to exposure –ad budgets always follows rating

Internet Advertising in Israel is currently > 6-7% of overall media spending (~ $900M in 05’) - growing fast

SEARCH - additional growth potential: US search revenues - 40% of total e-Adv. much higher than in Israeli market

in US$ millions

* Q3/06 - Media market affected by war conditions

Source: Market surveys & IGLD estimates

US Internet Advertising CAGR = +21%

in US$ billions

estimated

Source: PWC IAB Internet Advertising Report, Sept. ‘05

& company's estimates

slide19
Two pure-play subsidiaries

Quarterly Growth

Revenues

EBIT

US$ in millions

US& in millions

slide20
Two pure-play subsidiaries

Annual Growth

* company’s goals

US in millions

Revenues

EBIT

** Post merger

IGLD’s estimate for 2006/07, excludes one time expenses relating to the merger

** Ebitda goal for 2007 ~ US$ M68 / estimate for finance exp. ~ US$ M10

slide21
Balance sheet overview

in US$ millions

slide22
Comparables

Interesting market opportunity…

KCSA to send new slide

goal to become israel s leading full suite alternative service provider
1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

1996

Goal: to become Israel’s Leading Full Suite Alternative Service Provider

IPTV

IP seamless mobility

VoWi-Fi / Wi-MAX

VoB & business integration

Technology Value added services

e-Commerce & paid content

Portals & e-Advertising

International Long Distance (ILD) & Internet Access

slide25
Strong Shareholders / Dedicated Management
  • Public ~ 31%
  • Eurocom Communications ~ 69%
    • Focused, communications-oriented controlling parent group
    • Leading Israeli private communications group representing exclusively Nokia, Panasonic, GE and more
    • Also holds equity in radio stations, DBS TV service provider, satellite communications, cellular and more
  • Closely-knit, results-oriented management team
    • Most all level of management grows from within
    • Experienced upper level management
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