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Partner Communications Announces A Network Sharing Arrangement With Hot Mobile

Partner Communications Company Ltd. ("Partner" or the "Company") (NASDAQ and TASE: PTNR), a leading Israeli communications operator, announces the entering into a network sharing arrangement today with HOT Mobile Ltd. (“ Hot Mobile”), a wholly owned subsidiary of Hot Telecommunication Systems Ltd., an Israeli cellular telecommunication operator.

Partner and Hot Mobile have entered into a 15-year network sharing agreement (“ NSA”), the scope and terms of which are subject to approvals by the Israeli authorities, including the Antitrust Authority. Pursuant to the NSA, the parties would create a 50%-50% joint venture (“ JV”), which would operate and develop a cellular network to be shared by both companies (inter alia, as a result of pooling both companies' radio access network infrastructures to create a single radio access network) (the " Shared Network"). The JV will operate to optimize the Shared Network by reducing the number of network sites, while improving network coverage and capacity and introducing new technology, in order to improve network efficiency, optimize operating costs and reduce environmental impact.

Both companies will continue to compete and differentiate their services and each company will continue to retain and to operate its own core network, and will be responsible for providing cellular telecommunication services to its own customers, including the provision of customer service, value-added services, marketing and sales.

According to the provisions of the NSA , Hot Mobile will pay Partner a onetime amount, which will be paid by the beginning of year 2017, and afterwards each party will bear half of the capital expenditure (CAPEX) required for the erection of new network sites and the upgrade of the Shared Network. The bearing of the operating costs of the Shared Network will be according to a mechanism that was set and which is based, inter-alia, on the scope of the traffic in the Shared Network that each party will use.

As an intermediate phase, Partner and Hot Mobile have entered into a rights of use agreement, which will be valid until no later than December 31, 2016 (" ROU"), under which Partner will grant Hot Mobile, when possible, rights of use of its cellular network in order to supplement Hot Mobile’s network coverage. According to the ROU, Hot Mobile will pay Partner fixed base payments with additional variable payments, mainly determined by the volume of traffic.
  • The network sharing arrangement is expected to increase the capacity, to improve the coverage and quality and to accelerate the development of Partner’s cellular network infrastructure, while reducing operating costs.
  • The Shared Network will offer significant environmental benefits for the citizens of the State of Israel by reducing the number of network sites, gaining not only visual improvement but also a reduction in power consumption and required maintenance.
  • The network sharing arrangement marks an additional step in the adjustment of Partner's operational structure to the changing market conditions, while continuing to allocate resources to improve the advanced services that the Company provides its customers on the most advanced cellular network in Israel.

Mr. Haim Romano, Partner’s Chief Executive Officer, noted: "We are heeding the call of the Minister of Communications, Mr. Gilad Erdan, for cooperation between the operators in order to reduce the number of network sites and to combine, as much as possible, the cellular operators' infrastructures, taking into account environmental protection considerations and public opinion regarding network sites. This cooperation, the first of its kind in Israel, will increase competition in a manner that will benefit the consumer, will develop advanced cellular infrastructures and enable maximal utilization of the existing spectrum for the benefit of launching the fourth generation services. In addition, the cooperation will address the surging demand for mobile data services, will significantly improve the customer's experience and will enable him to enjoy the most advanced services in Israel."

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