CELJF Cellcom Israel Ltd (PK)

 

Further to the description in section f, regarding the Group’s headquarters in Netanya, in November 2021, the Company extended the lease agreement for a period of additional 8 years (from January 1, 2023 to December 31, 2030) in respect of an area of approximately 16,000 square meters, which is used for the Company's headquarters and also in respect of  underground parking areas. The Company has an option to extend the lease agreement for additional period of 5 years. The extension of the lease agreement together with the reduction of lease areas are expected to reduce the rental expenses and related expenses by approximately NIS 12 million per year as of the year 2021.

---

A - 2

---

A - 3

---

 

In November 2021, the Company entered into a framework agreement to expand the activity of sharing passive infrastructure on cell sites with Pelephone Communications Ltd. and PHI Networks (2015) Limited Partnership. The expansion of the cooperation may facilitate and streamline the activity of constructing cell sites. The entry into force of the agreement is conditional on receiving approval from the Israeli Competition Authority and the Israeli Ministry of Communications. There is no certainty that such approvals will be received.

A - 4

---

A - 5

---

The Company’s Board of Directors hereby respectfully submits the Board of Directors’ Report on the State of the

Company’s Affair and its subsidiaries (hereinafter together: "The Group") for the period of nine and three months

ended on September 30, 2021 (the "Report Period"). The review below is limited in its scope and refers to events and

changes to the Company's affairs which occurred during the Reporting Period and are material. This Report is prepared

according to the Israeli Securities Regulations (Periodic and Immediate Reports), 1970 (the “Report Regulations”) and

on the assumption it is being read together with the Company's Periodic Report for the year 2020 filed on Form 6-K on

March 17, 2021 ("The Periodic Report for the year 2020") as updated by the Company's periodic report for the first and second

quarters of 2021 filed on  Form 6-K on May 20, 2021 and August 2021 (the "First Quarter Report" and the

"Second Quarter Report", respectively)

 

The Board of Directors’ Explanations on the State of the Company’s Affairs and results of operation

 

 

 

The Company was incorporated in Israel in 1994 as a private company under the laws of the State of Israel, under the name Cellcom Israel Ltd. Until February 8, 2021, the Company’s shares were listed for dual trading on the New York Stock Exchange (NYSE) and on the Tel Aviv Stock Exchange. Since February 9, 2021, the Company’s shares are only traded on the Tel Aviv Stock Exchange.

 

As of the date of this Report and until the completion of the de-registration of the Company’s shares under US securities laws, if completed, the Company is reporting both under Israeli reporting obligations that apply to companies whose shares are not listed for dual trading, and under US reporting obligations. Similarly, US law with respect to liability towards the Company’s investors also applies in material aspects, alongside Israeli law.

 

The Group operates in the Israeli communications market in two areas of activity, which are reported as reportable segments in the Company’s consolidated financial statements (for details see Note 4 to the Company’s consolidated financial statements as of September 30, 2021 which are attached as chapter C to this report (the “Financial Statements”)):

 

 

 

1.2.     A review of the Company’s management regarding the results of the Group’s activity for the third quarter of 2021

 

The Company ended Q3 2021 with revenues of NIS 994 million compared to NIS 956 million in the corresponding quarter last year, reflecting an increase of approximately 4%. The Company has 3,246 thousands cellular subscribers (an increase of approximately 20,000 subscribers compared to the end of Q2 2021), 250,000 television subscribers, the number of fiber-optic subscribers increased to 123,000 (compared to 113,000 subscribers at the end of Q2 2021).

 

The revenues from services in the mobile segment in the current quarter increased by approximately 14.5% compared to the corresponding quarter in 2020 and amounted to NIS 474 million. The increase mainly derives from Golan’s consolidation starting from September 2020. Revenues from services in the fixed-line segment decreased by approximately 7% compared to the corresponding quarter last year and amounted to approximately NIS 304 million. The decrease mainly derives from a decrease in revenues from transmission services revenues received from Golan prior to its acquisition by the Company. Revenues from end-user equipment in Q3 2021 amounted to approximately NIS 255 million, with a gross profit of NIS 34 million, compared to revenues of NIS 261 million with a gross profit of NIS 22 million in the corresponding quarter last year.

 

The current quarter's data continue to reflect the Company’s return to operating profitability in 2021 following an improvement in ongoing revenues from the mobile segment while maintaining operational efficiency and cutting down on operating costs. As a result, the Company’s operating profit in the current quarter amounted to approximately NIS 58 million, compared to a loss of approximately NIS 6 million in the corresponding quarter last year. The increase in operating profit mainly derives from the consolidation of Golan’s results and operational streamlining that manifested itself in a significant decrease in costs.

 

The Company’s adjusted EBITDA (as defined in section 4.1 below) for the Report Period amounted to NIS 277 million, compared to NIS 231 million in the corresponding quarter last year, an increase of 19.9%, whereas the Company’s net profit amounted to NIS 13 million, compared to a loss of NIS 37 million in the corresponding quarter last year.

 

The Company ended the quarter with a free cash flow (FCF) (as defined in section 4.1 below) of approximately NIS 110 million, compared to NIS 44 million in the corresponding quarter last year, an increase of 150%, which mainly derives from an improvement of the Company’s results, an improvement of the working capital, and from implications of the Golan transaction and the consolidation of its results.

 

The current quarter's data continue to reflect the actions taken by the Company for improving experience and quality of service, inter alia, through a significant upgrade of the cellular and fixed-line infrastructure (which manifests itself in an increase in the scope of the Company’s investments in infrastructure), and an emphasis on a high level of service and fairness towards the customers.

 

The Company intends to continue investing in infrastructure and improving the quality and level of service to its customers also in the future, anticipating that this will lead to a continued improvement of customer satisfaction and to an increase in its revenues and results of operations.

 

1.3.          Material events during the Report Period and after the date of the report

 

 

 

1.4.          The Corona virus spread

 

Further to the Company's report in Note 1.b of the Annual Financial Statements, and section 1.4 in Chapter B, of the Second Quarter Report, during the third quarter of 2021, the Company continued to experience a significant decline in roaming revenues of outgoing and incoming tourism compared to the period before Coronavirus crisis, although as a result of a partial return of outgoing tourism the Company's revenues increased compared to the corresponding quarter of 2020. The Company estimates that the material adverse effect on its results of operations is expected to continue in the near future as long as the restrictions on the movement of outbound and inbound tourism continue.

 

Regarding the restrictions on trading and closing malls - in light of the opening of the Israeli economy, since the beginning of the year, the effect of such restrictions on the Company’s results of operations in the current quarter was not significant.

 

The Company examined its financing sources and liquidity, and estimates that it has the financial strength to deal with the implications of Covid-19, inter alia in light of the diversification of its areas of activity and its scope of surpluses and liquidity.

 

The Company examined the effect of the crisis on its current balance in its statement of Financial Position including current assets, inventory, fixed assets, and influence on changes in leasing agreements and did not make any adjustments in material amounts due to the crisis.

 

Nevertheless, since this is an event that is outside the control of the Company and due to the ongoing nature of the crisis that is characterized by uncertainty, inter alia, regarding the date on which the pandemic  shall be contained, as of the date of the Financial Statements, there is no certainty with respect to the scope and impact on the Company and on the market in general, inter alia, in light of market conditions, the phases of coping with the pandemic in Israel and the world, the scope of unemployment, the scope of private consumption, concern for development of a local or global recession, or another outbreak of the virus. Such sweeping effects, if realize, in whole or in part, could have an adverse effect on the business of the Group and its results of operations.

 

The Company’s estimations with respect to the trends, events, and developments in connection with the coronavirus spread, which are expected to have an effect on its business activity and results, and regarding the manner of their effect on the Company, its activity and its results, constitutes forward looking information as defined in the U.S Private Securities Litigation Reform Act of 1995 and  and in the Israeli Securities Law 1968, which is uncertain, since it is affected by an a variety  of factors that are beyond the Company’s control, and it is inter alia subject to the effect of the factors set forth above, and under the risk factors in the Company’s areas of activity (as set forth in Section 26 of Chapter A to the Periodic Report for the year 2020).

 

 

 

 

 

 

¹ See definition in Section 4 below.

 

 

 

B - 9

---

 

 

 

 (*)changes in the investment portfolio and deposits are  Neutralized from free cash flow.

 

For the nine month  period neutralization of changes in deposits of NIS 324 million and neutralized payment by Golan in the amount of  NIS 75 million to the MOC, which is part of the Purchasing of Golan by the Company.

 

Central operational indicators - cellular segment:

 

Central operational indicators – Fixed-line segment:

 

²  Cellular subscribers data refers to “active” subscribers. For purpose of the subscriber base, one “subscriber” means one cellular number. The Company adds a subscriber to the subscribers base upon its joining to the service. A prepaid subscriber is added to the subscribers base only upon charging a prepaid card. A subscriber that ceased being an “active” subscriber is a subscriber that does not generate revenue and activity on the Cellcom network for six consecutive months. Up to and including Q3 2020, the base also included data subscribers (data communications). A data subscriber ceased being an “active” subscriber if it used less than 0.5 Gigabytes or generated cumulative revenues of less than NIS 1, during a six month period. As of the fourth quarter of 2020 the Company ceased to include in its active subscribers base date subscribers (approximately 427,000 active subscribers). to the best of the Company’s knowledge, the six months’ policy is consistent with the policies adopted by other cellular providers in Israel, but the policy of counting the subscribers is not identical between the various cellular providers (the main difference refers to the manner of counting the data subscribers).

³  The churn rate is calculated according to the ratio of cellular subscribers who disconnected from the Company’s services (whether as a result of the subscriber initiating the disconnection or the Group doing so) and of subscribers who became inactive during the period, and the remaining active subscribers at the beginning of the period. The churn rate does not include the subscriber removal of 2020 as aforementioned.

⁴  ARPU is calculated by dividing the total average monthly revenues from cellular services for the period, by the number of average active subscribers for the period. Revenues from cellular services include, inter alia, include revenues from roaming services and from hosting and network sharing revenue, and monthly revenues from repair services, but they do not include revenues from occasional repair services and from the sale of equipment.

⁵ Subscribers data refers to “active” subscribers.

 

Operational Data (million NIS)	Q1'20	Q2'20	Q3'20	Q4'20	Q1'21	Q2'21	Q3'21
Number of cellular Subscribers	2,747	2,734	3,641	3,204	3,232	3,226	3,246
Churn rate for cellular Subscribers	8.80%	8.70%	8.70%	8.40%	7.80%	8.60%	7.20%
Monthly cellular ARPU (NIS)	48.1	46.9	45.7	48.6	47.4	47.7	48.6
TV field Subscribers (thousands)	246	245	251	252	254	250	250
Internet infrastructure field Subscribers (thousands)	279	283	289	293	297	296	300
			80	93	106	113	123

⁶ Opertional expenses including other expenses and excluding depreication expenses and equipment cost.

⁷ “Net debt” is defined as undertakings for debentures and credit and loans from banking corporations and others (with no undertaking for leases deriving from the implementation of the provisions in IFRS 16), and, less cash and cahs equivalents and current investments in marketable securities and deposits.

 

Below are the Board of Directors’ explanations on the Company’s liquidity position for the nine and six months periods ended at September 30, 2021 compared to the corresponding periods last year (in NIS millions):

 

 

 

 

 

 

 

November 15, 2021

Annex - Details Regarding debentures in Circulation as of the Report Date

 

 

(*)	On these dates the debenture series were expanded. The information appearing in the table refers to the full series.

(**)

As of September 30, 2021, the Company’s debentures (Series H, I, K, and L) are material and constitute more than 5% of the Company’s total liabilities as presented in the Financial Statements. Similarly, as of September 30, 2021, the Company’s net debt to adjusted EBITDA8 ratio was 2.03 including the total interest accrued in the books. There was no cause for early redemption in the Report Period.

 

 

 

 

 

 

(1)

In June 2014, August 2014, January 2015, September 2015, March 2016, August 2016, June 2017, January 2018, June 2018, August 2018 and December 2018, Maalot ratified the Company’s A+ rating with a stable outlook. In March 2019, Maalot updated the Company’s rating forecast from A+ with a stable outlook to a rating of A+ with a negative outlook. In August 2019, Maalot updated the Company’s rating forecast from A+ with a negative outlook to a rating of A with a negative outlook. In May 2020, August 2020, and November 2020, Maalot ratified the Company’s rating of A with a negative outlook. In August 2021 Maalot ratified the Company’s rating A and updated its outlook to a stable outlook.

 

 

Cellcom Israel Ltd. Condensed Consolidated Interim Financial Statements   As at September 30, 2021

The accompanying review report is a non-binding translation into English of the original review report published in Hebrew. The version in Hebrew is the approved text.

Tel-Aviv, Israel	Kesselman & Kesselman
November 15, 2021	Certified Public Accountants (lsr.)
	A member firm of PricewaterhouseCoopers International Limited

 Cellcom Israel Ltd. 

Condensed Consolidated Interim Statements of Financial Position

---

										Convenience
										translation
										into US dollar
										(Note 2F)
		September 30,				September 30,				September 30,				December 31,
		2020				2021				2021				2020
		NIS millions								US$ millions				NIS millions
		(Unaudited)								(Unaudited)				(Audited)
Current assets
Cash and cash equivalents			630				590				183				719
Current deposits			123				30				9				429
Trade receivables			967				881				273				985
Current tax assets			3				10				3				2
Other receivables			46				49				15				39
Deferred expenses - right of use			58				60				19				52
Inventory			80				87				27				73
			1,907				1,707				529				2,299
Non- current assets
Trade and other receivables			217				154				47				183
Deferred expenses - right of use			308				324				100				315
Property, plant and equipment, net			1,363				1,343				416				1,402
Intangible assets and others, net			2,161				2,138				662				2,188
Investments in equity accounted investees			138				135				42				131
Right-of-use assets, net			648				599				186				639
Deferred tax assets			-				3				1				-
			4,835				4,696				1,454				4,858
			6,742				6,403				1,983				7,157
Current liabilities
Current maturities of debentures and of loans from financial institutions			513				381				118				514
Current tax liabilities			-				3				1				-
Current maturities of lease liabilities			204				210				65				214
Trade payables and accrued expenses			653				632				196				768
Provisions			170				116				36				176
Other payables, including derivatives			214				282				87				257
			1,754				1,624				503				1,929
Non- current liabilities
Long-term loans from financial institutions			163				-				-				50
Debentures			2,336				2,366				733				2,723
Long-term lease liabilities			468				428				133				457
Provisions			30				28				9				30
Other long-term liabilities			3				1				0				41
Liability for employee rights upon retirement, net			18				11				3				11
Deferred taxes liabilities			52				42				13				36
			3,070				2,876				891				3,348
			4,824				4,500				1,394				5,277
Equity
Equity attributable to owners of the Company			1,918				1,903				589				1,880
			6,742				6,403				1,983				7,157

November 15, 2021		Doron Cohen		Avi Gabbay		Shai Amsalem
Date of approving the financial statements		Chairman of the board		CEO		CFO

Cellcom Israel Ltd.

Condensed Consolidated Interim Statements of Income

---

										Convenience translation into US dollar (Note 2F) For the nine month period ended September 30,												Convenience translation into US dollar (Note 2F) For the three month period ended September 30,
		For the nine month period ended September 30,												For the three month period ended September 30,												For the year ended December 31,
		2020				2021				2021				2020				2021				2021				2020
		NIS millions								US$ millions				NIS millions								US$ millions				NIS millions
		(Unaudited)																								(Audited)
Revenues			2,703				3,030				938				956				994				308				3,676
Cost of revenues			(2,052	)			(2,201	)			(682	)			(744	)			(705	)			(218	)			(2,800	)
Gross profit			651				829				256				212				289				90				876
Selling and marketing expenses			(411	)			(491	)			(152	)			(147	)			(164	)			(51	)			(580	)
General and administrative expenses			(245	)			(226	)			(70	)			(76	)			(78	)			(24	)			(330	)
Credit losses			(26	)			(6	)			(2	)			(4	)			(6	)			(2	)			(27	)
Other income, net			21				35				12				9				17				5				38
Operating profit (loss)			(10	)			141				44				(6	)			58				18				(23	)
Financing income			6				6				2				10				1				-				10
Financing expenses			(136	)			(132	)			(41	)			(42	)			(40	)			(12	)			(182	)
Financing expenses, net			(130	)			(126	)			(39	)			(32	)			(39	)			(12	)			(172	)
Share in losses of equity accounted investees			(9	)			(4	)			(1	)			(2	)			(2	)			(1	)			(14	)
Profit (Loss) before taxes on income			(149	)			11				4				(40	)			17				5				(209	)
Tax benefit (taxes on income)			23				(5	)			(2	)			3				(4	)			(1	)			39
Profit (loss) for the period			(126	)			6				2				(37	)			13				4				(170	)
Attributable to:
Owners of the Company			(126	)			6				2				(37	)			13				4				(170	)
Profit (loss) for the period			(126	)			6				2				(37	)			13				4				(170	)
Profit (loss) per share
Basic profit (loss) per share (NIS)			(0.83	)			0.04				0.01				(0.22	)			0.08				0.02				(1.11	)
Diluted profit (loss) per share (NIS)			(0.83	)			0.04				0.01				(0.22	)			0.08				0.02				(1.11	)

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

C - 4

---

Cellcom Israel Ltd.

Condensed Consolidated Interim Statements of Comprehensive Income

---

										Convenience												Convenience
										translation												translation
										into US dollar												into US dollar
										(Note 2F)												(Note 2F)
		For the nine month period ended September 30,								For the nine month period ended September 30,				For the three month period ended September 30,								For the three month period ended September 30,				For the year ended December 31
		2020				2021				2021				2020				2021				2021				2020
		NIS millions								US$ millions				NIS millions								US$ millions				NIS millions
		(Unaudited)																								(Audited)
Profit (loss) for the period			(126	)			6				2				(37	)			13				4				(170	)
Other comprehensive income items that after initial recognition in comprehensive income were or will be transferred to profit or loss
Changes in fair value of cash flow hedges,net			-				2				1				-				1				-				(2	)
Total other comprehensive income for the period that after initial recognition in comprehensive income was or will be transferred to profit or loss, net of tax			-				2				1				-				1				-				(2	)
Other comprehensive income items that will not be transferred to profit or loss
Re-measurement of defined benefit plan, net of tax			-				-				-				-				-				-				2
Total other comprehensive profit for the period that will not be transferred to profit or loss, net of tax			-				-				-				-				-				-				2
Total other comprehensive profit for the period, net of tax			-				2				1				-				1				-				-
Total comprehensive profit (loss) for the period			(126	)			8				3				(37	)			14				4				(170	)
Total comprehensive profit (loss) attributable to:
Owners of the Company			(126	)			8				3				(37	)			14				4				(170	)
Total comprehensive profit (loss) for the period			(126	)			8				3				(37	)			14				4				(170	)

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

C - 5

---

Cellcom Israel Ltd.

Condensed Consolidated Interim Statements of Changes in Equity

---

		Attributable to owners of the Company
		Share capital				Share premium				Capital reserves				Retained earnings				Total equity				Convenience translation into US dollar (Note 2F)
		NIS millions																US$ millions
For the nine months period ended September 30, 2021 (Unaudited)
Balance as of January 1, 2021 (Audited)			2				792				(2	)			1,088				1,880				582
Comprehensive profit for the period, net of tax
Profit for the period			-				-				-				6				6				2
Other comprehensive income for the period, net of tax			-				-				2				-				2				1
Transactions with owners, recognized directly in equity
Share based payments			-				-				-				15				15				5
Balance as of September 30, 2021 (Unaudited)			2				792				-				1,109				1,903				590

		Attributable to owners of the Company
		Share capital				Share premium				Receipts on account of share options				Retained earnings				Total				Non-controlling interests				Total equity
		NIS millions
For the nine months period ended September 30, 2020  (Unaudited)
Balance as of January 1, 2020 (Audited)			2				623				24				1,236				1,885				2				1,887
Comprehensive loss for the period, net of tax
Loss for the period			-				-				-				(126	)			(126	)			-				(126	)
Transactions with owners, recognized directly in equity
Share based payments			-				-				-				14				14				-				14
Equity offering			-				-				5				-				5				-				5
Derecognition of non-controlling interests due to loss of control in a consolidated company			-				-				-				-				-				(2	)			(2	)
Exercise of share options			-				169				(29	)			-				140				-				140
Balance as of September 30, 2020 (Unaudited)			2				792				-				1,124				1,918				-				1,918

Cellcom Israel Ltd.

Condensed Consolidated Interim Statements of Changes in Equity (cont'd)

---

		Attributable to owners of the Company
		Share capital				Share premium				Capital reserves				Retained earnings				Total				Convenience translation into US dollar (Note 2F)
		NIS millions																				US$ millions
For the three month period ended September 30, 2021  (Unaudited)
Balance as of July 1, 2021 (Unaudited)			2				792				(1	)			1,092				1,885				584
Comprehensive profit for the period, net of tax
Profit for the period			-				-				-				13				13				4
Other comprehensive income for the period, net of tax			-				-				1				-				1				-
Transactions with owners, recognized directly in equity
Share based payments			-				-				-				4				4				1
Balance as of September 30, 2021 (Unaudited)			2				792				-				1,109				1,903				589

		Attributable to owners of the Company
		Share capital				Share premium				Receipts on account of share options				Retained earnings				Total equity
		NIS millions
For the three month period ended September 30, 2020  (Unaudited)
Balance as of July 1, 2020 (Unaudited)			2				702				15				1,155				1,874
Comprehensive loss for the period, net of tax
Loss for the period			-				-				-				(37	)			(37	)
Transactions with owners, recognized directly in equity
Share based payments			-				-				-				6				6
Exercise of share options			-				90				(15	)			-				75
Balance as of September 30, 2020 (Unaudited)			2				792				-				1,124				1,918

C - 7

---

Cellcom Israel Ltd.

Condensed Consolidated Interim Statements of Changes in Equity (cont'd)

---

		Attributable to owners of the Company
		Share capital				Share premium				Receipts on account of share options				Capital reserve				Retained earnings				Total				Non-controlling interests				Total equity
		NIS millions
For the year ended December 31, 2020  (Audited)
Balance as of January 1, 2020			2				623				24				-				1,236				1,885				2				1,887
Comprehensive loss for the year
Loss for the year			-				-				-								(170	)			(170	)			-				(170	)
Other comprehensive income (loss) for the year, net of tax			-				-				-				(2	)			2				-				-				-
Transactions with owners, recognized  directly in equity
Share based payments			-				-				-				-				20				20				-				20
Equity offering			-				-				5				-				-				5				-				5
Deduction of non-controlling interest due to loss of control in subsidiaries			-				-				-				-								-				(2	)			(2	)
Exercise of share options			-				169				(29	)			-				-				140				-				140
Balance as of December 31, 2020			2				792				-				(2	)			1,088				1,880				-				1,880

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

C - 8

---

Cellcom Israel Ltd.

Condensed Consolidated Interim Statements of Cash Flows

---

										Convenience translation into US dollar (Note 2F)												Convenience translation into US dollar (Note 2F)
		For the nine months period ended September 30,								For the nine months period ended September 30,				For the three months period ended September 30,								For the three months period ended September 30,				For the year ended December 31
		2020				2021				2021				2020				2021				2021				2020
		NIS millions								US$ millions				NIS millions								US$ millions				NIS millions
		(Unaudited)																								(Audited)
Cash flows from operating activities
Profit (loss) for the period			(126	)			6				2				(37	)			13				4				(170	)
Adjustments for:
Depreciation and amortization			690				673				207				230				220				68				924
Share based payments			14				15				5				6				4				1				20
Net change in fair value of  investment property			5				5				2				2				2				1				7
Gain on sale of shares in a consolidated company			(1	)			-				-				-				-				-				-
Taxes on income (tax benefit)			(23	)			5				2				(3	)			4				1				(39	)
Financing expenses, net			130				126				39				32				39				12				172
Other expenses (income)			6				(8	)			(2	)			6				3				1				7
Share in losses of equity accounted investees			9				4				1				2				2				1				14
Changes in operating assets and liabilities:
Change in inventory			(14	)			(14	)			(4	)			14				20				6				(7	)
Change in trade receivables (including long-term amounts)			109				109				34				(4	)			75				23				125
Change in deferred expenses - right of use (including long-term amounts)			(37	)*			(54	)			(17	)			(12	)*			(21	)			(7	)			(50	)
Change in other receivables (including long-term amounts)			(19	)*			(2	)			(1	)			(18	)*			6				2				-
Change in trade payables, accrued expenses and provisions			(43	)			(142	)			(45	)			(15	)			(91	)			(28	)			53
Change in other liabilities (including long-term amounts)			(57	)			9				3				(19	)			2				1				(51	)
Payments for derivative hedging contracts, net			(1	)			(3	)			(1	)			16				-				-				(3	)
Income tax paid			(4	)			(8	)			(2	)			2				(2	)			(1	)			(9	)
Net cash from operating activities			638				721				223				202				276				85				993
Cash flows from investing activities
Acquisition of property, plant, and equipment			(195	)			(247	)			(76	)			(58	)			(116	)			(36	)			(296	)
Additions to intangible assets and others			(145	)			(150	)			(46	)			(50	)			(49	)			(15	)			(203	)
Acquisition of equity accounted investee			(3	)			-				-				-				-				-				(3	)
Change in current investments and deposits			401				399				124				446				72				22				89
Recepits from other derivative contracts, net			11				(1	)			-				-				-				0				1
Interest received			5				-				-				-				-				-				5
Acquisition of subsidiary, less cash purchased			(1	)			-				-				3				-				-				-
Cash disposed from sale of shares in a consolidated company			(608	)			-				-				(608	)			-				-				(608	)
Net cash used in investing activities			(535	)			1				2				(267	)			(93	)			(29	)			(1,015	)

Cellcom Israel Ltd.

Condensed Consolidated Interim Statements of Cash Flows (cont'd)

---

		For the nine months period ended September 30								Convenience translation into US dollar (Note 2F) For the nine months period ended September 30				For the three months period ended September 30								Convenience translation into US dollar (Note 2F) For the three months period ended September 30				For the year ended December 31
		2020				2021				2021				2020				2021				2021				2020
		NIS millions								US$ millions				NIS millions								US$ millions				NIS millions
		(Unaudited)																								(Audited)
Cash flows from financing activities
Receipts (payments) for derivative contracts, net			(4	)			2				1				(3	)			2				1				(6	)
Payments for long-term loans from financial institutions			(100	)			(187	)			(58	)			-				-				-				(212	)
Repayment of debentures			(417	)			(389	)			(122	)			(194	)			(389	)			(120	)			(417	)
Proceeds from issuance of debentures, net of issuance costs			194				-				-				-				-				-				583
Interest paid			(120	)			(117	)			(36	)			(43	)			(37	)			(11	)			(130	)
Equity offering			5				-				-				-				-				-				5
Proceeds from exercise of share options			140				-				-				75				-				-				140
Payment of principal of lease liabilities			(177	)			(160	)			(50	)			(59	)			(54	)			(17	)			(228	)
Net cash used in financing activities			(479	)			(851	)			(265	)			(224	)			(478	)			(147	)			(265	)
Changes in cash and cash equivalents			(376	)			(129	)			(40	)			(289	)			(295	)			(91	)			(287	)
Cash and cash equivalents as at the beginning of the period			1,006				719				223				919				885				274				1,006
Cash and cash equivalents as at the end of the period			630				590				183				630				590				183				719

A.	Statement of compliance

B.	Functional and presentation currency

C.	Basis of measurement

D.	Use of estimates and judgments

D.	Use of estimates and judgments (cont'd)

		For the three and nine month periods ended September 30,				For the three month period ended December 31,				For the year ended December 31,
		2021				2021				2022				2023				2024				2025					2026 - 2030
		NIS millions
		(Unaudited)
Decrease (increase) in depreciation expenses			6				6				12				3				(3	)			(10	)			(14	)

E.	Exchange rates and known Consumer Price Indexes are as follows:

		Exchange rates of US$				Consumer Price Index (points)*
As of September 30, 2021			3.229				228.26
As of September 30, 2020			3.441				223.34
As of December 31, 2020			3.215				223.34
Increase (decrease) during the period:
Nine months ended September 30, 2021			0.44	%			2.20	%
Nine months ended September 30, 2020			(0.43	)%			(0.59	)%
Three months ended September 30, 2021			(0.95	)%			0.79	%
Three months ended September 30, 2020			(0.72	)%			0.10	%
Year ended December 31, 2020			(6.97	)%			(0.60	)%

F.	Convenience translation into U.S. dollars (“dollars” or “$”)

●

Cellular segment - the segment includes the cellular communications services, cellular equipment and supplemental services.

●

Fixed-line segment - the segment includes landline telephony services, internet services, television services, transmission services, landline equipment and supplemental services.

		For the nine months period ended September 30, 2021
		NIS millions
		(Unaudited)
		Cellular				Fixed-line				Reconciliation for consolidation				Consolidated				Reconciliation of subtotal Adjusted segment EBITDA to profit for the period
External revenues			2,056				974				-				3,030
Inter-segment revenues			10				106				(116	)			-
Adjusted segment EBITDA *			504				341												845
Depreciation and amortization																			(673	)
Taxes on income																			(5	)
Financing income																			6
Financing expenses																			(132	)
Other expenses																			(16	)
Share based payments																			(15	)
Share in losses of equity accounted investees																			(4	)
Profit for the period																			6

Cellcom Israel Ltd.

Notes to the Condensed Consolidated Interim Financial Statements

---

Note 4 - Operating Segments (cont'd)

		For the nine months period ended September 30, 2020
		NIS millions
		(Unaudited)
		Cellular				Fixed-line				Reconciliation for consolidation				Consolidated				Reconciliation of subtotal Adjusted segment EBITDA to loss for the period
External revenues			1,709				994				-				2,703
Inter-segment revenues			12				116				(128	)			-
Adjusted segment EBITDA *			370				327												697
Depreciation and amortization																			(690	)
Tax benefit																			23
Financing income																			6
Financing expenses																			(136	)
Other expenses																			(3	)
Share based payments																			(14	)
Share in losses of equity accounted investees																			(9	)
Loss for the period																			(126	)

		For the three months period ended September 30, 2021
		NIS millions
		(Unaudited)
		Cellular				Fixed-line				Reconciliation for consolidation				Consolidated				Reconciliation of subtotal Adjusted segment EBITDA to profit for the period
External revenues			682				312				-				994
Inter-segment revenues			3				36				(39	)			-
Adjusted segment EBITDA *			168				109												277
Depreciation and amortization																			(220	)
Taxes on income																			(4	)
Financing income																			1
Financing expenses																			(40	)
Other income																			5
Share based payments																			(4	)
Share in losses of equity accounted investees																			(2	)
Profit for the period																			13

Cellcom Israel Ltd.

Notes to the Condensed Consolidated Interim Financial Statements

---

Note 4 - Operating Segments (cont'd)

		For the three months period ended September 30, 2020
		NIS millions
		(Unaudited)
		Cellular				Fixed-line				Reconciliation for consolidation				Consolidated				Reconciliation of subtotal Adjusted segment EBITDA to loss for the period
External revenues			633				323				-				956
Inter-segment revenues			4				42				(46	)			-
Adjusted segment EBITDA *			114				117												231
Depreciation and amortization																			(230	)
Tax benefit																			3
Financing income																			10
Financing expenses																			(42	)
Other expenses																			(1	)
Share based payments																			(6	)
Share in losses of equity accounted investees																			(2	)
Loss for the period																			(37	)

		Year ended December 31, 2020
		NIS millions
		(Audited)
		Cellular				Fixed-line				Reconciliation for consolidation				Consolidated				Reconciliation of subtotal Adjusted segment EBITDA to loss for the year
External revenues			2,349				1,327				-				3,676
Inter-segment revenues			15				153				(168	)			-
Adjusted segment EBITDA *			525				393												918
Depreciation and amortization																			(924	)
Tax benefit																			39
Financing income																			10
Financing expenses																			(182	)
Other income																			3
Share based payments																			(20	)
Share in losses of equity accounted investees																			(14	)
Loss for the year																			(170	)

(1)	Financial instruments measured at fair value for disclosure purposes only

		September 30,																December 31,
		2020								2021								2020
		Book value				Fair value*				Book value				Fair value*				Book value				Fair value*
		NIS millions
Debentures including current maturities and accrued interest			(2,741	)			(2,795	)			(2,782	)			(2,931	)			(3,160	)			(3,329	)
Long-term loans from financial institutions including current maturities and accrued interest			(302	)			(307	)			-				-				(188	)			(192	)

Note 6 - Revenues

Composition

		For the nine month period ended September 30,								For the three month period ended September 30,								For the year ended December 31
		2020				2021				2020				2021				2020
		(Unaudited)																(Audited)
		NIS millions
Revenues from equipment			643				842				261				255				878
Revenues from services
Cellular services			1,105				1,314				386				446				1,543
Land-line communications services			877				806				285				269				1,153
Other services			78				68				24				24				102
Total revenues from services			2,060				2,188				695				739				2,798
Total revenues			2,703				3,030				956				994				3,676

C - 16

---

Cellcom Israel Ltd.

Notes to the Condensed Consolidated Interim Financial Statements

---

Note 7 – Loans

 

In June 2021, further to the continued improvement in the Group's cash flow and in order to reduce financing expenses, the Group prepaid a payment in a total amount of NIS 50 million from the remaining loan balance (which was supposed to be repaid in June 2022), following which the total repayment of loans, which were repaid in full at that date (and up to September 30, 2021), totaled an amount of NIS 150 million.

Note 8 - Impairment testing for cash-generating unit containing goodwill

As of December 31, 2020, the Company performed a quantitative assessment for each of its cash generating units and assessment if a reduction for the goodwill impairment for its cellular and fixed-line segments are required.

The recoverable amount of each of the Company's cash-generating units was evaluated by the company with the assistance of an external appraiser using the Value In Use model which was calculated using discounted cash flows method based on a projected five-year cash flows. The five-year projected cash flows were estimated in light of the long-term growth rate. The Company used a relevant discount rate, which reflected the specific risks associated with the future cash flows of its cash-generating units.

At the end of the second quarter of 2021, the Company examined if there are internal and external indications that could lead to a change in the assessment of the work performed as of December 31, 2020. The Company concluded that the development which happened during the second quarter of 2021 relating to the legal proceedings in relation to Marathon (018) Xfone ltd ("Xfone") might harm future revenues from the network sharing agreement between Xfone and the Company (for additional details, see Note 11(c)), and accordingly constitutes an indicator of impairment in the cellular segment that required examination of the recoverable amount of cash-generating unit that is attributed to the cellular segment.

The actual results of the Company may differ from those assumed in the Company's valuation method. It is possible that the Company's assumptions described above could change in the future. If any of these assumptions change materially from the Company's plans, it may lead to record an impairment of goodwill in the future. The book value of the goodwill that is attributed to the cellular segment as of September 30, 2021 is NIS 831 million.

These assumptions are as follows:

	Cash generating unit Cellular segment
discount rate after tax	7.25%
Pre-tax discount rate	8.8%
Terminal value growth rate	1.5%
Market share in the long term	29.0%
ARPU in representative year	NIS 52.50

•

The terminal value growth rate is denominated in real terms.

•

The cash generating units have cash flows for 4.5 years, as included in their discounted cash flow model.

•

The long-term growth rate has been determined as 1.5% which represents, among others, the natural population growth rate.

•

The pre-tax discount rate is estimated and calculated using several assumptions, among others, cash generating units' Cost of Equity, risk premium for normative debt leveraging of the Group and estimates of the normative leverage ratio for the industry.

•

ARPU (Average revenue per user) in terminal year (except revenue from hosting services and national roaming services), in NIS.

C - 17

---

Cellcom Israel Ltd.

Notes to the Condensed Consolidated Interim Financial Statements

---

Note 8 - Impairment testing for cash-generating unit containing goodwill (cont'd)

Sensitivity to changes in assumptions

 

The book value of the cash generating unit in the cellular segment as of June 30, 2021 is NIS 3,015 million, which is lower than the estimated recoverable amount of NIS 4,027 million, therefore, no impairment was recognized. Management has identified key assumptions for which there reasonably could be a possible change that could cause the carrying amount to exceed the recoverable amount. The table below shows the amount that these assumptions are required to change individually in order for the estimated recoverable amount to be equal to the carrying amount:

 

	Cash generating unit Cellular segment
Pre-tax discount rate	11.2%
Terminal value growth rate	(0.3)%
Market share	23.8%
ARPU	NIS 50.3

At the end of the third quarter of 2021, the Company examined whether there were additional external and internal indications which may lead to a change in the assessment of the work performed as of June 30, 2021. In light of the developments in the legal procedure against Xfone (as stated in Note 11C below), no deterioration is expected in the projected cash flows from Xfone compared to the last forecast in the work mentioned above and therefore, the Company concluded that are no indications that require an assessment of a goodwill impairment.

 

Determination of the fair value of cash generating units requires significant discretion, including considerations regarding the appropriate capital rates, final growth rates, weighted costs of capital and, the amount and timing of the expected future cash flows. the Company will continue to monitor the recoverable amount of its cash generating units to determine whether events and changes in circumstances such as deterioration in the business climate or operating results, continuous decline in the share price, changes in management’s business strategy or downward adjustments to the Company’ cash flows projections, warrant further impairment testing in future periods.

C - 18

---

 

Cellcom Israel Ltd.

Notes to the Condensed Consolidated Interim Financial Statements

---

Note 9 - Contingent Liabilities

A.

The Group is involved in various lawsuits against it deriving from the ordinary course of business. The costs that may result from these lawsuits are only accrued when it is more likely in more than 50% that a monetary liability will be incurred and the amount of that liability can be quantified or estimated within a reasonable range. The amount of the provisions recorded in the financial statements is based on a case-by-case assessment of the risk level, while events that occur in the course of the litigation may require a reassessment of this risk. The Group’s assessment of risk is based both on the advice of its legal counsels and on the Group's estimate of the probable settlements amounts that are expected to be incurred, if such settlements will be agreed by both parties. The provision recorded in the financial statements as of September 30, 2021, in respect of all lawsuits against the Group amounted to NIS 85 million.

Most of the purported class actions that are filed against the Group are claims by end customers of the Group, primarily for allegations regarding unlawful charges, conduct in breach of law or license, or breach of agreements with the customers, while causing pecuniary and non-pecuniary damages to the customers (hereinafter: “Consumer Claims”). In addition, various legal proceedings have been brought against the Group by employees, subcontractors, suppliers, authorities and others, most for allegations of violation of law with respect to termination of employment and mandatory payments to employees, allegations for breach of contract, copyright infringement, patent infringement and mandatory payments to authorities (hereinafter: “Other Claims”).

After the end of the reporting period, a purported class action was filed against the Group in which no claim amount was noted. At this preliminary stage, it is not possible to assess its chances of success. And also, a purported class action against the Group in an amount estimated by the plaintiffs to be approximately NIS 150 million was terminated.

Described hereunder are the outstanding lawsuits against the Group, classified into groups with similar characteristics as of September 30, 2021. The amounts presented below are calculated based on the claims amounts as of the date of their submission to the Group:

Group of claims	Claim amount	Claim amount for claims without an estimate of chance of success	Total
	NIS million
Consumer Claims	1,939 (1) (2)	15	1,954
Other Claims	13	-	13
Total	1,952	15	1,967

(1)

Including claims against the Group and other defendants together in a total amount of approximately NIS 700 million, without the Group noting the separate claim amount from the Group, and two additional claims against the Group and other defendants together in a total amount estimated by the plaintiffs to be approximately NIS 6 million.

(2)

There are additional claims against the Group for which no claim amount was noted, for which the Group may have additional exposure.

C - 19

---

Cellcom Israel Ltd.

Notes to the Condensed Consolidated Interim Financial Statements

---

Note 9 - Contingent Liabilities (cont'd)

Described hereunder the number and amount of the claims as at September 30, 2021, divided down by amount of the claim:

Claim amount	Number of claims	Total claims amount (NIS millions)
Up to NIS 100 million *	42	556
NIS 100-500 million	3	705
Unquantified claims	13	-
Against the Group and other defendants together without specifying the amount claimed from the Group	2	700
Against the Group and other defendants together, in which the amount claimed from the Group has been quantified	2	6
Unquantified claims against the Group and other defendants	4	-
Total	66	1,967

* Including 26 claims filed against the Group by employees, subcontractors, suppliers, authorities and others as of September 30, 2021, in a total amount of approximately NIS 13 million.

B.

In June 2021, a judgment was given by the Israeli Central District Court in a class action lawsuit filed against the Group in December 2014, alleging that the Group charged the customers a full monthly billing cycle, even if they disconnected during the month and not at the cycle-end, which obliges the Group to pay an amount of NIS 32 million (including compensation to the plaintiff and attorneys' fees). The Group applied and received a stay order to pay the amount and on October 2021 the Company appealed the judgment to the Israeli Supreme Court. In light of the judgment, the Group recorded a provision of the full amount in other expenses section in its financial statements for the second quarter of 2021.

Note 10 - Collective employment agreement

In April 2021, the Company and its subsidiary Dynamica, have entered into a collective employment agreement with the Company's employees' representatives and the Histadrut, an Israeli labor union, for a term of three years (2021-2023). The agreement includes policy and employment terms similar to those practiced with certain modifications, including a 3% average salary increase in 2022 and 2023 to entitled employees and mechanisms to allow the Company to improve its service level and operational excellence, among others, by constant improvement to our employees' quality and quantity. Employees' participation in the Company's gains – 12.5% over an annual operational net profit of NIS 400 million, divided quarterly, remains unchanged.

C - 20

---

Cellcom Israel Ltd.

Notes to the Condensed Consolidated Interim Financial Statements

---

Note 11 - Material event in the reporting period

A.

Update on the Corona virus measures and possible implications

Further to Note 1B of the Annual Financial Statements for the year 2020, during the first nine months of 2021, the Company continued to experience a significant decline in roaming revenues from outgoing and incoming tourism compared to the period before the Corona crisis, although as a result of a partial return of outgoing tourism, the Company's revenues increased compared to the corresponded period of 2020. The Company estimates that the material adverse effect of roaming services on its results of operations is expected to continue in the near future insofar as the restrictions on the movement of outbound and inbound tourism shall continue.

Regarding the restrictions on trading and closure of malls - in light of the opening of the Israeli economy, since the beginning of the year, the effect on the Company's results of operation in the first nine months of 2021 were insignificant.

The Company examined its sources of funding and liquidity, and estimates that it has the financial strength to deal with the implications of the crisis, among other things, in light of the diversity of its activity and its liquidity levels. The Company examined the effect of the crisis on the balance financial position including current assets, inventory, fixed assets, and influence on changes in leasing agreements and did not make any adjustments in material amounts due to the crisis.

Nevertheless, since this is an event that is outside the control of the Company and due to the ongoing nature of the crisis that is characterized by uncertainty, inter alia, regarding the time on which the pandemic shall slow down, as of the date of the financial statements, there is no certainty with respect to the scope of the impact on the Company and on the market in general, inter alia, in light of market conditions, and the stages of dealing with the pandemic in Israel and worldwide, the scope of unemployment, the scope of private consumption, concern for development of a local or global recession, -or additional outbreak of the virus. Such extensive effects, if occur, in whole or in part, could have an adverse effect on the business of the Group and the results of its operations.

B.

Investment agreement in IBC

Further to Note 32 F in the Annual Financial Statements, in February 2021, after receiving the required regulatory approvals, the transactions with Hot telecommunication systems Ltd. (together with its affiliated entities) ("HOT") in I.B.C (Unlimited) Holdings L.P ("IBC Partnership") was completed. As a result, a decrease in Company's holding in IBC Partnership, the Company recorded a one-time profit in the amount of NIS 14 million in Other income in during the first quarter of 2021.

C - 21

---

Cellcom Israel Ltd.

Notes to the Condensed Consolidated Interim Financial Statements

---

Note 11 - Material event in the reporting period (cont'd)

C.

The Sharing Agreement with Xfone

Further to Note 32 D in the Annual Financial Statements of 2020, regarding the insolvency proceedings of Marathon (018) Xfone Ltd., or Xfone, and offers for Xfone's purchase under these proceedings, on September 24, 2021, the Company entered into an agreement for the modification of the Company and Xfone's sharing and usage agreement (the sharing and usage agreement as updated as aforesaid "the Updated Sharing Agreement") with a corporation controlled by Mr. Yariv Lerner and the Clearmark Fund ("the Corporation"). On October 12, 2021, the Corporation submitted a proposal to purchase 2/3 of Xfone's share capital (the balance will remain with Xfone's controlling shareholder) and jointly with Xfone and its controlling shareholder submitted a settlement arrangement with Xfone's creditors, under which Xfone shall be bound by the Updated Sharing Agreement. On October 17, 2021, the court approved the settlement arrangement proposed jointly by the Corporation, Xfone and its controlling shareholder (following the approval of the settlement arrangement by the creditors' meetings) and the purchase proposal by the Corporation.

The modifications to the Updated Sharing Agreement include, among others, Xfone's undertaking to obtain the amended license from the MOC and the allocation of frequencies by virtue of the last frequency tender and the payment of the license and frequency fees to the MOC; the extension of the sharing agreement validity for ten years from the date of receipt of the abovementioned approvals and the update of the consideration mechanism.

In addition, as part of the Updated Partnership Agreement, the Corporation was given the option to obligate the Company to purchase the full (100%) of Xfone's share capital during a period of between 3 and 5.5 years from the date of the closing of the transaction, in exchange for an amount of NIS 130 million (which may increase in certain circumstances) (the "Purchase Option"). To the extent that such Purchase Option, which is conditional on receiving regulatory approvals from the MOC and the Competition Commissioner, will not be exercisable, the Corporation was given the possibility to obligate the Company to provide Xfone with an interest-bearing loan in the same amount against collateral in an amount as was agreed between the parties, and subject to the provisions of any law. The Company cannot estimate whether the Purchase Option will be exercised, and to the extent that it is exercised, whether the approvals required for its exercise will be received and under what conditions.

There is no certainty that the required approvals for updating the sharing agreement and/or for the purchase of 2/3 of Xfone's share capital will be received by the corporation.

Until 17 June 2021 (the date the director of the arrangement was appointed), Xfone continued not making the monthly payments that it is required to pay under the Sharing Agreement, and only transferred a partial amount. Starting from such date (17 June 2021), and until 17 August 2021, pursuant to the instruction of the director of the arrangement, Xfone paid the Company a total of approximately NIS 8 million per month, including VAT, and starting from 18 August 2021, and until the date the arrangement is completed (which is subject, inter alia, to the approval of Xfone’s acquisition by the Corporation and regulatory approvals), Xfone shall pay to the Company an amount of approximately NIS 5 million per month, including VAT.

During the current quarter, the Company adjusted the debt balance with Xfone in order to reflect the arrangements set forth in the Updated Sharing Agreement, and credited an allocation of approximately NIS 14 million in the credit losses section of the statements of income. The total revenues from Xfone that are included in the financial statements for the 9 month period ending 30 September 2021, amount to NIS 45 million.

C - 22

---

Cellcom Israel Ltd.

Notes to the Condensed Consolidated Interim Financial Statements

---

Note 11 - Material event in the reporting period (cont'd)

D.

MOC demands return of financial benefit received by Golan

Further to Note 7 of the Annual Financial Statements for the year 2020, regarding a demand by the MOC from Golan Telecom ltd ("Golan"), a wholly owned subsidiary of the Group, to return financial benefits it received from the MOC in the past (some of which have already been returned as mentioned in the note), as a condition for the approval of the Golan purchase transaction by the Group, on July 28, 2021, the Group received the MOC's resolution by which Golan is required to return the balance of the monetary benefits, totaling approximately NIS 59 million as of the date of the demand.

On 31 October 2021, Golan filed an administrative petition to the District Court in Jerusalem to revoke the aforementioned Ministry’s decision and to return the payment it received from Golan. As mention in the Note, Golan recognized the full provision of the said demand (before its consolidation by the Company) in its financial statements.

E.

Share based payments

In August and November 2021, approximately 1.7 million options were granted to a certain non-director office holder and certain senior employees under the Company's 2015 Share Incentive Plan, to be vested in three equal installments on each of the first, second and third anniversary of the allocation date at an exercise price ranging between NIS 11.40 to NIS 17.33. The options of the first installment may be exercised within 18 months from their vesting, and the options of the second and third installment may be exercised within 12 months from their vesting.

C - 23

---

Cellcom Israel Ltd.

 

Separate Interim Financial Information

As at September 30, 2021

(Unaudited)

Contents

	Page
Auditors' special report on separate financial information	C - 2
Condensed Separate interim Financial Information	C - 3
Condensed Interim Information of Profit or Loss	C - 4
Condensed Interim Information of Comprehensive Income	C - 5
Condensed Interim Information of Cash Flows	C - 6
Additional Information to the Separate Financial Information	C - 8

---

The accompanying review report is a non-binding translation into English of the original review report published in Hebrew. The version in Hebrew is the approved text.

To

The Shareholders of

Cellcom Israel Ltd.

Netanya, Israel

Re: Auditors' special report on separate financial information in accordance with Regulation 38D to the Israeli Securities Regulations (Periodic and Immediate Reports) – 1970

Introduction

We have reviewed the separate financial information disclosed in accordance with Regulation 38D to the Israeli Securities Regulations (Periodic and Immediate Reports), 1970 of Cellcom Israel Ltd (hereafter - the Company) as of September 30, 2021 and for the nine and three months periods then ended. This separate financial information is the responsibility of the Company's Board of Directors and management. Our responsibility is to express an opinion on this separate financial information based on our review.

 

We did not review the financial information included in the financial statements of investees, the total net assets less total liabilities of which amounted to NIS 49 million as of September 30, 2021, and the Company's share in the loss of those investees amounted to NIS 21 million and NIS 4 million respectively, for the nine and three months periods then ended.

 

The financial statements of those investees were reviewed by other independent auditors, whose reports have been furnished to us, and our opinion, insofar as it relates to amounts included for those investees, is based on the reports of the other independent auditors.

 

Scope of review

We conducted our review in accordance with (Israel) Review Standard No. 2410, issued by the Israeli Institute of Certified Public Accountants regards "Review of Interim Financial Information Performed by the Independent Auditor of the Entity." A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with auditing principles generally accepted in Israel and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review and the review reports of the other auditors, nothing has come to our attention that causes us to believe that the accompanying condensed interim financial statements do not present fairly, in all material respects, in conformity with Regulation 38D to the Israel Securities Regulations (Periodic and Immediate Reports), 1970.

Tel Aviv, Israel	Kesselman & Kesselman
November 15, 2021	Certified Public Accountants (Isr.)
	A member firm of PricewaterhouseCoopers International Limited

---

Kesselman & Kesselman, Derech Menachem Begin 146, Tel-Aviv 6492103, Israel,

P.O Box 7187 Tel-Aviv 6107120, Telephone: +972 -3- 7954555, Fax:+972 -3- 7954556, www.pwc.com/il

C - 2

---

Cellcom Israel Ltd.

Condensed Interim Information of Financial Position

---

										Convenience
										translation
										into US dollar
										(Note 1C)
		September 30,								September 30,				December 31,
		2020				2021				2021				2020
		NIS millions								US$ millions				NIS millions
		(Unaudited)												(Audited)
Current assets
Cash and cash equivalents			530				319				99				578
Current investments and deposits			3				-				-				310
Trade receivables			967				794				246				927
Current tax assets			3				9				3				3
Other receivables			41				37				11				32
Inventory			52				50				15				41
			1,596				1,209				374				1,891
Non- current assets
Trade and other receivables			206				176				55				170
Property, plant and equipment, net			1,262				1,248				386				1,295
Intangible assets and others, net			397				404				125				431
Investments in equity accounted investees			1,994				2,239				693				2,063
Loans from investees and capital notes			387				381				118				373
Right-of-use assets, net			618				561				174				607
			4,864				5,009				1,551				4,939
			6,460				6,218				1,925				6,830
Current liabilities
Current maturities of debentures and loans from financial institutions			513				381				118				514
Current maturities of lease liabilities			187				194				60				198
Trade payables and accrued expenses			541				426				132				581
Provisions			81				106				33				89
Loans from investees companies			52				150				46				90
Other payables, including derivatives			136				230				71				169
			1,510				1,487				460				1,641
Non- current liabilities
Long-term loans from financial institutions			163				-				-				50
Debentures			2,336				2,366				733				2,723
Long-term lease liabilities			454				405				125				440
Provisions			30				28				9				30
Other long-term liabilities			2				1				-				41
Liability for employee rights upon retirement, net			16				10				3				9
Deferred taxes liabilities			31				18				6				16
			3,032				2,828				876				3,309
			4,542				4,315				1,336				4,950
Equity
Equity attributable to owners of the Company			1,918				1,903				589				1,880
			1,918				1,903				589				1,880
			6,460				6,218				1,925				6,830

The accompanying notes are an integral part of these Separate financial statements.

November 15, 2021		Doron Cohen		Avi Gabbay		Shai Amsalem
Date of approving the financial statements		Chairman of the board		CEO		CFO

C - 3

---

Cellcom Israel Ltd.

Condensed Interim Information of Profit or Loss

---

										Convenience												Convenience
										translation												translation
										into US dollar												into US dollar
										(Note 1C)												(Note 1C)
		Nine months period ended September 30,								Nine months period ended September 30,				Three months period ended September 30,								Three months period ended September 30,				Year ended December 31,
		2020				2021				2021				2020				2021				2021				2020
		NIS millions								US$ millions				NIS millions								US$ millions				NIS millions
		(Unaudited)																								(Audited)
Revenues			1,760				1,987				614				626				651				202				2,381
Cost of revenues			(1,504	)			(1,590	)			(492	)			(540	)			(507	)			(157	)			(2,020	)
Gross profit			256				397				122				86				144				45				361
Selling and marketing expenses			(269	)			(314	)			(97	)			(94	)			(104	)			(32	)			(390	)
General and administrative expenses			(199	)			(164	)			(51	)			(53	)			(57	)			(18	)			(237	)
Credit losses			-				(3	)			(1	)			(3	)			(3	)			(1	)			(25	)
Other income (expenses), net			21				41				13				8				19				6				45
Operating loss			(191	)			(43	)			(14	)			(56	)			(1	)			-				(246	)
Financing income			6				12				4				2				2				1				34
Financing expenses			(137	)			(130	)			(40	)			(31	)			(38	)			(12	)			(204	)
Financing expenses, net			(131	)			(118	)			(36	)			(29	)			(36	)			(11	)			(170	)
Share in profit of investees companies			167				167				52				43				52				16				204
Pofit (Loss) before taxes on income			(155	)			6				2				(42	)			15				5				(212	)
Tax benefit (taxes on income)			29				-				-				5				(2	)			(1	)			42
Profit (Loss) for the period			(126	)			6				2				(37	)			13				4				(170	)

               

The accompanying notes are an integral part of these Separate financial statements.

C - 4

---

Cellcom Israel Ltd.

Condensed Interim Information of Comprehensive Income

---

										Convenience												Convenience
										translation												translation
										into US dollar												into US dollar
										(Note 1C)												(Note 1C)
		Nine months period ended September 30,								Nine months period ended September 30,				Three months period ended September 30,								Three months period ended September 30,				Year ended December 31,
		2020				2021				2021				2020				2021				2021				2020
		NIS millions								US$ millions				NIS millions								US$ millions				NIS millions
		(Unaudited)																								(Audited)
Profit (Loss) for the period			(126	)			6				2				(37	)			13				4				(170	)
Other comprehensive income items that after initial recognition in comprehensive income were or will be transferred to profit or loss
Changes in fair value of cash flow hedges transferred to profit or loss, net of tax			-				2				1				-				1				-				(2	)
Total other comprehensive income for the period that after initial recognition in comprehensive income was or will be transferred to profit or loss, net of tax			-				2				1				-				1				-				(2	)
Other comprehensive income items that will not be transferred to profit or loss
Re-measurement of defined benefit plan, net of tax			-				-				-				-				-				-				2
Total other comprehensive loss for the period that will not be transferred to profit or loss, net of tax			-				-				-				-				-				-				2
Total other comprehensive profit for the period, net of tax			-				2				1				-				1				-				-
Total comprehensive profit (loss) for the period			(126	)			8				3				(37	)			14				4				(170	)

The accompanying notes are an integral part of these Separate financial statements.

C - 5

---

Cellcom Israel Ltd.

Separate Information on Cash Flows

---

										Convenience												Convenience
										translation												translation
										into US dollar												into US dollar
										(Note 1C)												(Note 1C)
		Nine months period ended September 30,								Nine months period ended September 30,				Three months period ended September 30,								Three months period ended September 30,				Year ended December 31,
		2020				2021				2021				2020				2021				2021				2020
		NIS millions								US$ millions				NIS millions								US$ millions				NIS millions
		(Unaudited)																								(Audited)
Cash flows from operating activities
Loss for the period			(126	)			6				2				(37	)			13				4				(170	)
Adjustments for:
Depreciation and amortization			587				549				170				193				178				55				780
Share-based payments			14				15				4				6				4				1				20
Net change in fair value of  investment property			5				5				2				2				2				1				7
Taxes on income (tax benefit)			(29	)			-				-				(5	)			2				1				(42	)
Financing expenses, net			131				118				37				29				36				11				170
Other income			-				(11	)			(3	)			-				-				-				-
Share in profit of equity accounted investees			(167	)			(167	)			(52	)			(43	)			(52	)			(16	)			(204	)
Changes in operating assets and liabilities:
Change in inventory			(12	)			(9	)			(3	)			5				8				2				(1	)
Change in trade receivables (including long-term amounts)			80				103				32				(41	)			127				39				154
Change in other receivables (including long-term amounts)			(17	)			(1	)			-				(24	)			(1	)			-				(3	)
Change in trade payables, accrued expenses and provisions			56				(91	)			(28	)			80				(85	)			(26	)			34
Change in other liabilities (including long-term liabilities)			(64	)			53				16				(13	)			(3	)			(1	)			(89	)
Payments for derivative hedging contracts, net			(1	)			(3	)			(1	)			16				-				-				(3	)
Income tax paid			(7	)			(6	)			(2	)			(3	)			(2	)			(1	)			(7	)
Net cash from operating activities			450				561				174				165				227				70				646
Cash flows from investing activities
Acquisition of property, plant and equipment			(217	)			(227	)			(70	)			(88	)			(115	)			(36	)			(262	)
Acquisition of intangible assets and others			(135	)			(129	)			(40	)			(48	)			(42	)			(13	)			(181	)
Investments in investee companies			(616	)			-				-				(611	)			1				-				(617	)
Change in current investments, net			420				310				96				464				-				-				110
Receipts for other derivative contracts, net			11				(1	)			-				-				-				-				1
Dividend received			195				-				-				195				-				-				195
Interest received			5				-				-				-				-				-				6
Net cash from (used in) investing activities			(337	)			(47	)			(14	)			(88	)			(156	)			(49	)			(748	)

The accompanying notes are an integral part of these Separate financial statements.

C - 6

---

Cellcom Israel Ltd.

Condensed Interim Information of Cash Flows (cont'd)

---

										Convenience												Convenience
										translation												translation
										into US dollar												into US dollar
										(Note 1C)												(Note 1C)
		Nine months period ended September 30,								Nine months period ended September 30,				Three months period ended September 30,								Three months period ended September 30,				Year ended December 31,
		2020				2021				2021				2020				2021				2021				2020
		NIS millions								US$ millions				NIS millions								US$ millions				NIS millions
		(Unaudited)																								(Audited)
Cash flows from financing activities
Payments for derivative contracts, net			(4	)			2				1				(3	)			2				1				(6	)
Repayment of long-term loans from financial institutions			(100	)			(187	)			(58	)			-				-				-				(212	)
Repayment of debentures			(417	)			(389	)			(121	)			(194	)			(389	)			(121	)			(417	)
Receipt from issuance of debentures, net of issuance costs			193				-				-				-				-				-				596
Interest paid			(120	)			(116	)			(36	)			(43	)			(36	)			(12	)			(130	)
Equity offering			5				-				-				-				-				-				5
Receipt of loan from investees			60				60				19				60				60				19				90
Proceeds from exercise of share options			140				-				-				74				-				-				140
Payment of principal of lease liabilities			(164	)			(143	)			(44	)			(55	)			(47	)			(15	)			(210	)
Net cash from (used in) financing activities			(407	)			(773	)			(239	)			(161	)			(410	)			(128	)			(144	)
Changes in cash and cash equivalents			(294	)			(259	)			(79	)			(84	)			(339	)			(107	)			(246	)
Cash and cash equivalents as at the beginning of the period			824				578				179				614				658				204				824
Cash and cash equivalents as at the end of the period			530				319				100				530				319				97				578

The accompanying notes are an integral part of these Separate financial statements.

C - 7

---

Cellcom Israel Ltd.

Additional Information to the Separate Financial Information

---

Note 1- Basis of Preparation of the Financial Information

A. Definitions

Presented hereunder is condensed financial information from the Group’s condensed consolidated financial statements as at September 30, 2021 (hereinafter – the consolidated financial statements), which are issued as part of the periodic reports, and which are attributed to the Company itself (hereinafter – separate financial information), and are presented in accordance with Regulation 38D (hereinafter – the Regulation) and the tenth addendum to the Securities Regulations (Periodic and Immediate Reports) – 1970 (hereinafter – the tenth addendum) regarding separate financial information of an entity.

Unless stated otherwise, all the terms presented in the separate financial information are as defined in the Company's consolidated financial statements as of December 31, 2020 (hereinafter: "the consolidated financial statements").

"The Company" – Cellcom Israel Ltd.

"Investee companies" – Subsidiaries and companies accounted on the equity basis.

"Inter-company transactions" – transactions between the company and her investees.

"Inter-company balance", "Inter-company revenues and expenses", "Inter-company cash flows" – balances, revenues or expenses, and cash flows, depending on the matter, arising from inter-company transactions, which eliminated in the consolidated financial statements.

B. Basis of preparation of the financial Information

Accounting Policy in the condensed separate interim financial information, is in accordance with the accounting policies, which detailed in the separate financial information as of December 31, 2020.

C. Convenience translation into U.S. dollars ("dollars" or "$")          

For the convenience of the reader, the reported NIS figures as of and for the six and three month period ended June 30, 2021, have been presented in dollars, translated at the representative rate of exchange as of September 30, 2021 (NIS 3.229 = US$ 1.00). The dollar amounts presented in these financial statements should not be construed as representing amounts that are receivable or payable in dollars or convertible into dollars, unless otherwise indicated.

Note 2 - Commitments, loans and significant transactions with Investees

A.

Investments and ownership interest in investee companies

		Company's ownership interest in the investee				September 30,								Convenience translation into US dollar (Note 1C) September 30,				December 31,
						2020				2021				2021				2020
						NIS millions								US$ millions				NIS millions
Cellcom Fixed Line Communication L.P.			100	%			1,363				1,574				487				1,412
Golan Telecom Ltd.			100	%			368				397				123				398
Dynamica Cellular Ltd.			100	%			123				133				41				121
I.B.C (Unlimited) Holdings L.P.			33%-50	%			138				134				42				130
Other Companies			-				2				1				-				2
							1,994				2,239				693				2,063

C - 8

---

Cellcom Israel Ltd.

Additional Information to the Separate Financial Information

---

Note 2 - Commitments, loans and significant transactions with Investees (cont'd)

B.

Loans to investee companies

		September 30,								Convenience translation into US dollar (Note 1C) September 30,				December 31
		2020				2021				2021				2020
		NIS millions								US$ millions				NIS millions
Loan to Golan Telecom Ltd. *			137				131				41				123
Capital Note - Golan Telecom Ltd.			250				250				77				250
			387				381				118				373

       

* The loan was granted as part of the sharing network agreement singing in 2017, half of which in includes an annual interest rate of 1.85% and is linked to the CPI, the other half includes an interest rate of 3.5% and is not linked.

C.

Loans from investee companies

		September 30,								Convenience translation into US dollar (Note 1C) September 30,				December 31
		2020				2021				2021				2020
		NIS millions								US$ millions				NIS millions
Short-term loan from Cellcom Fixed Line Communication L.P. *			52				150				46				90

* The loan includes an annual interest rate of 2.6% and is not linked.

D.

Dividend's and share of profits from limited partnerships

		Nine months period ended September 30,								Three months period ended September 30,								Year ended December 31,
		2020				2021				2020				2021				2020
		NIS millions
Cellcom Fixed Line Communication L.P.			510				-				510				-				510
Dynamica Cellular Ltd.			25				-				25				-				25
			535				-				535				-				535

C - 9

---

Cellcom Israel Ltd.

Additional Information to the Separate Financial Information

---

Note 3 - Events during and after the reporting period

A.

For additional information regarding an early repayment of a loan, see Note 7 to the consolidated interim financial statements.

B.

For additional information regarding the collective employment agreement signed between the employees and the company, see Note 10 to the consolidated interim financial statements.

C.

For additional information regarding the Covid-19 virus and his possible effects on the company, see Note 11 A to the consolidated interim financial statements.

D.

For additional information regarding the investment agreement under which HOT entered as partner at I.B.C (Unlimited) Holdings L.P., see Note 11 B to the consolidated interim financial statements.

E.

For additional information regarding company's network sharing agreement with Xfone, see Note 11 C to the consolidated interim financial statements.

F.

For additional information regarding share based payments, see Note 11 E to the consolidated interim financial statements.

C - 10

---

Quarterly Report regarding the Effectiveness of Internal Control over Financial Reporting and

Disclosure Pursuant to regulation 38C(a) of the Regulations:

 

The Management, under the supervisions of the Board of Directors of Cellcom Israel Ltd. (hereafter: the "Company") is responsible for determining and maintaining appropriate internal control over financial reporting and disclosure in the Company.

 

In this regard, the members of the Management are as follows:

 

1.	Avi Gabbay, CEO

 

2.	Shai Amsalem, CFO

 

The internal control over financial reporting and disclosure includes the existing controls and procedures in the Company, which were determined by the Chief Executive Officer and the senior corporate financial officer or under their supervision, or by someone who in practice carries out these functions, under the supervision of the Company‘s Board of Directors and which are intended to provide a reasonable degree of assurance regarding the reliability of financial reporting and the preparation of the reports according to the provisions of the law and to ensure that the information which the Company is required to disclose in the reports that it publishes according to the provisions of the law is gathered, processed, summarized and reported on the dates and in the format prescribed by law.

 

The internal control includes, among other things, controls and procedures that were determined to ensure that the information which the Company is required to disclose as aforesaid, was accumulated and submitted to the Company‘s Management, including the Chief Executive Officer and the senior corporate financial officer or someone who in practice fulfills these functions, in order to facilitate decision making at the appropriate time, with regard to the disclosure requirements.

 

Due to its structural constraints, internal control over financial reporting and disclosure is not intended to provide absolute assurance that misrepresentation or the omission of information in the reports will be prevented or revealed.

 

In the quarterly report on the effectiveness of the internal control over financial reporting and disclosure which was attached to the quarterly report for the quarter ended on June 30, 2021 (hereinafter: the "The Quarterly Report on Internal Control"), The internal control was found to be effective.

 

Until to the date of the report, the Board of Directors and Management were not made aware of any event or matter that would have changed their assessment of the effectiveness of internal control, as it was  found in the Last  Quarterly Report on Internal Control.

 

As of the date of the report and based on what is stated of the effectiveness of the internal control in the Last Quarterly Report and on the information brought to the attention of the Management and the Board of Directors as mentioned above, the internal control is effective.

 

---

Executive Statements

 

The Statement of the CEO according to Regulation 38C(d)(1)

 

The undersigned, Avi Gabbay, states as follows:

 

1.	I have reviewed the quarterly report of Cellcom Israel Ltd. (hereinafter – the "Company") for the third quarter of 2021 (hereinafter – the "Reports");

 

2.

Based on my knowledge, the Reports do not contain any misrepresentation of a material fact or omit any representation of material fact required so that the representations included therein, in light of the circumstances under which such representations were made, are not misleading with respect to the Reports period;

 

3.	Based on my knowledge, the financial statements and other financial information included in the Reports adequately reflect in all material aspects the financial position, the results of operations and cash flows of the Company for the dates and periods to which the Reports relate;

 

4.	I have disclosed to the Company's auditor, the Board of Directors and the Company's audit committee, based on my most recent assessment regarding the internal control over financial reporting and disclosure:

 

a.

All material deficiencies and weaknesses in determining or operating the internal control over financial reporting and disclosure, which could reasonably adversely affect the Company's ability to gather, process, summarize or report financial data so as to cast doubt on the reliability of financial reporting and the preparation of financial statements in accordance with law; and –

 

b.

Any fraud, whether or not material, that involves the CEO or anyone directly subordinated to the CEO or that involves other employees who have a significant role in internal control over financial reporting and disclosure.

 

5.	I, by myself or together with others in the Company:

 

a.

have determined such controls and procedures, or ascertained the determination and fulfillment of controls and procedures under my supervision, intended to ensure that material information relating to the Company, including its subsidiaries as defined in the Securities Law (Annual Financial Statements) – 2010, is made known to me by others in the Company and the subsidiaries, particularly during the period in which the Reports are being prepared; and –

 

b.

have determined such controls and procedures, or ascertained the determination and fulfillment of such controls and procedures under my supervision, intended to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with law, including in accordance with generally accepted accounting principles;

 

c.

No event or matter during the course of the period between the date of the last report (quarterly or annual) and the date of this report has been brought to my attention that would change the conclusion of the Board of Directors and Management with respect to the effectiveness of the internal control over the Company's financial reporting and disclosure.

 

The foregoing does not derogate from my responsibility or the responsibility of any other person under any law.

 

________________________

Avi Gabbay

CEO

 

November 15, 2021

 

D - 2

---

The Statement of the Highest Ranking Officer in Finance according to Regulation 38C(d)(2)

 

The undersigned, Shai Amsalem, states as follows:

 

1.	I have reviewed the interim financial statements and other financial information included in the interim period reports of Cellcom Israel Ltd. (hereinafter – the "Company") for the third quarter of 2021 (hereinafter – the "Reports" or "Reports for the Intermediate period");

 

2.

Based on my knowledge, the interim financial statements and other financial information included in the interim period reports do not contain any misrepresentation of a material fact or omit any representation of material fact required so that the representations included therein, in light of the circumstances under which such representations were made, are not misleading with respect to the Reports period;

 

3.

Based on my knowledge, the interim financial statements and other financial information included in the interim period reports, adequately reflect in all material aspects the financial position, the results of operations and cash flows of the Company for the dates and periods to which the Reports relate;

 

4.	I have disclosed to the Company's auditor, the Board of Directors and the Company's audit committee, based on my most updated assessment regarding the internal control over financial reporting and disclosure:

 

a.

All material deficiencies and weaknesses in determining or operating the internal control over financial reporting and disclosure to the extent it relates to the interim financial statements and other financial information included in the interim period reports, which could reasonably adversely affect the Company's ability to gather, process, summarize or report financial data so as to cast doubt on the reliability of financial reporting and the preparation of financial statements in accordance with law; and –

 

b.

Any fraud, whether or not material, that involves the CEO or anyone directly subordinated to the CEO or that involves other employees who have a significant role in internal control over financial reporting and disclosure.

 

5.	I, by myself or together with others in the Company:

 

a.

have determined such controls and procedures, or ascertained the determination and fulfillment of controls and procedures under my supervision, intended to ensure that material information relating to the Company, including its subsidiaries as defined in the Securities Law (Annual Financial Statements) – 2010, is made known to me by others in the Company and the subsidiaries, particularly during the period in which the Reports are being prepared; and –

 

b.

have determined such controls and procedures, or ascertained the determination and fulfillment of such controls and procedures under my supervision, intended to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with law, including in accordance with generally accepted accounting principles;

 

c.

No event or matter has been brought to my attention which occurred during the period between the date of the last report (quarterly or annual) and the date of this report that relates to the interim financial statements and any other financial information that is included in the interim period reports, that would change the conclusion of the Board of Directors and Management with respect to the effectiveness of the internal control over the Company's financial reporting and disclosure.

 

The foregoing does not derogate from my responsibility or the responsibility of any other person under any law.

 

______________________

Shai Amsalem

CFO

 

November 15, 2021

 

D - 3

---

Liabilities report of the Company by repayment date

Sections 9D and 38E to the Israeli Securities

Regulations (Periodic and immediate Reports) (1970)

 

Report as of September 30, 2021.

Following are the liabilities of the Company by repayment date:

 

A. Debentures issued to the public by the reporting Entity and held by the public, excluding debentures held by the Company's parent, controlling shareholder, companies controlled by one of the parties mentioned above or by companies controlled by the Company - based on separate financial data of the Entity ("Solo" reports) (NIS in thousands)

 

		Principle repayment																				Gross interest
																						payments
																						(excluding				Total
		NIS				NIS																deduction of				by
		(CPI linked)				(Not linked)				Euro				USD				Other				tax)				years
First year			171,299				219,065				0				0				0				81,816				472,180
Second year			171,299				400,953				0				0				0				69,909				642,161
Third year			171,299				400,953				0				0				0				53,454				625,706
Fourth Year			21,168				436,454				0				0				0				37,000				494,622
Fifth year and thereafter			21,168				808,926				0				0				0				40,422				870,516
Total			556,233				2,266,352				0				0				0				282,601				3,105,185

B. Private debentures and non-bank credit, excluding debentures or credit granted by the Company's parent, controlling shareholder, companies controlled by one of the parties mentioned above or by companies controlled by the Company - based on separate financial data of the Entity ("Solo" reports) (NIS in thousands)

 

																						Gross
		Principle repayment																				interest
																						payments
																						(excluding				Total
		NIS				NIS																deduction of				by
		(CPI linked)				(Not linked)				Euro				USD				Other				tax)				years
First year			0				0				0				0				0				0				0
Second year			0				0				0				0				0				0				0
Third year			0				0				0				0				0				0				0
Fourth Year			0				0				0				0				0				0				0
Fifth year and thereafter			0				0				0				0				0				0				0
Total			0				0				0				0				0				0				0

C. Bank credit from Israeli banks - based on separate financial data of the Entity ("Solo" reports) (NIS in thousands)

 

																						Gross
		Principle repayment																				interest
																						payments
																						(excluding				Total
		NIS				NIS																deduction of				by
		(CPI linked)				(Not linked)				Euro				USD				Other				tax)				years
First year			0				0				0				0				0				0				0
Second year			0				0				0				0				0				0				0
Third year			0				0				0				0				0				0				0
Fourth Year			0				0				0				0				0				0				0
Fifth year and thereafter			0				0				0				0				0				0				0
Total			0				0				0				0				0				0				0

---

 

D. Bank credit from non-Israeli banks - based on separate financial data of the Entity ("Solo" reports) (NIS in thousands)

 

																						Gross
		Principle repayment																				interest
																						payments
																						(excluding				Total
		NIS				NIS																deduction of				by
		(CPI linked)				(Not linked)				Euro				USD				Other				tax)				years
First year			0				0				0				0				0				0				0
Second year			0				0				0				0				0				0				0
Third year			0				0				0				0				0				0				0
Fourth Year			0				0				0				0				0				0				0
Fifth year and thereafter			0				0				0				0				0				0				0
Total			0				0				0				0				0				0				0

E. Summary of tables A-D, totals of: bank credit, non-bank credit and debentures - based on separate financial data of the Entity ("Solo" reports) (NIS in thousands)

		Principle repayment																				Gross interest
																						payments
																						(excluding				Total
		NIS				NIS																deduction of				by
		(CPI linked)				(Not linked)				Euro				USD				Other				tax)				years
First year			171,299				219,065				0				0				0				81,816				472,180
Second year			171,299				400,953				0				0				0				69,909				642,161
Third year			171,299				400,953				0				0				0				53,454				625,706
Fourth Year			21,168				436,454				0				0				0				37,000				494,622
Fifth year and thereafter			21,168				808,926				0				0				0				40,422				870,516
Total			556,233				2,266,352				0				0				0				282,601				3,105,185

 

F. Off-balance credit exposure (for financial guaranties and undertakings to provide credit) - based on separate financial data of the Entity ("Solo" reports) (NIS in thousands)

 

																						Gross
		Principle repayment																				interest
																						payments
																						(excluding				Total
		NIS				NIS																deduction of				by
		(CPI linked)				(Not linked)				Euro				USD				Other				tax)				years
First year			0				0				0				0				0				0				0
Second year			0				0				0				0				0				0				0
Third year			0				0				0				0				0				0				0
Fourth Year			0				0				0				0				0				0				0
Fifth year and thereafter			0				0				0				0				0				0				0
Total			0				0				0				0				0				0				0

G. Off-balance credit exposure (for financial guaranties and undertakings to provide credit) of all consolidated companies, excluding companies that are considered as reporting companies, and excluding the reporting Company's data described above in Table F (NIS in thousands)

 

																						Gross
		Principle repayment																				interest
																						payments
																						(excluding				Total
		NIS				NIS																deduction of				by
		(CPI linked)				(Not linked)				Euro				USD				Other				tax)				years
First year			0				0				0				0				0				0				0
Second year			0				0				0				0				0				0				0
Third year			0				0				0				0				0				0				0
Fourth Year			0				0				0				0				0				0				0
Fifth year and thereafter			0				0				0				0				0				0				0
Total			0				0				0				0				0				0				0

E - 2

---

H. Totals of: bank credit, non-bank credit, and debentures of all consolidated companies, excluding companies that are considered as reporting companies and excluding the data of the reporting Entity described above in Tables A-D (NIS in thousands)

 

																						Gross
		Principle repayment																				interest
																						payments
																						(excluding				Total
		NIS				NIS																deduction of				by
		(CPI linked)				(Not linked)				Euro				USD				Other				tax)				years
First year			0				0				0				0				0				0				0
Second year			0				0				0				0				0				0				0
Third year			0				0				0				0				0				0				0
Fourth Year			0				0				0				0				0				0				0
Fifth year and thereafter			0				0				0				0				0				0				0
Total			0				0				0				0				0				0				0

I. Total credit granted to the reporting Entity by the parent company or controlling shareholder, and total amounts of debentures issued by the reporting Entity that are held by the parent company or controlling shareholder (NIS in thousands)

 

																						Gross
		Principle repayment																				interest
																						payments
																						(excluding				Total
		NIS				NIS																deduction of				by
		(CPI linked)				(Not linked)				Euro				USD				Other				tax)				years
First year			0				0				0				0				0				0				0
Second year			0				0				0				0				0				0				0
Third year			0				0				0				0				0				0				0
Fourth Year			0				0				0				0				0				0				0
Fifth year and thereafter			0				0				0				0				0				0				0
Total			0				0				0				0				0				0				0

E - 3

---

J. Credit granted to the reporting Entity by companies controlled by the parent company or by the controlling shareholder, and are  not controlled by the reporting Entity, and debentures issued by the reporting Entity held by companies controlled by the parent company or by controlling shareholder and are not controlled by the reporting Entity (NIS in thousands)

		Principle repayment																				Gross interest
																						payments
																						(excluding				Total
		NIS				NIS																deduction of				by
		(CPI linked)				(Not linked)				Euro				USD				Other				tax)				years
First year			97				91				0				0				0				342				530
Second year			97				1,950				0				0				0				336				2,383
Third year			97				1,950				0				0				0				284				2,331
Fourth Year			129				1,981				0				0				0				232				2,342
Fifth year and thereafter			129				6,939				0				0				0				364				7,432
Total			548				12,911				0				0				0				1,558				15,018

K. Credit granted to the reporting Entity by consolidated companies and debentures issued by the reporting Entity held by consolidated companies (NIS in thousands)

 

		Principle repayment																				Gross interest
																						payments
																						(excluding				Total
		NIS				NIS																deduction of				by
		(CPI linked)				(Not linked)				Euro				USD				Other				tax)				years
First year			0				150,300				0				0				0				2,473				152,773
Second year			0				0				0				0				0				0				0
Third year			0				0				0				0				0				0				0
Fourth Year			0				0				0				0				0				0				0
Fifth year and thereafter			0				0				0				0				0				0				0
Total			0				150,300				0				0				0				2,473				152,773

L. (1) Cash and cash equivalents and short-term deposits based on the Company's separate financial data (NIS in thousands): 319,000.

(2) Cash and cash equivalents and short-term deposits based on the Company's consolidated Statements (NIS in thousands): 620,000

E - 4

---

CELLCOM

 Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

			CELLCOM ISRAEL LTD.
Date:	November 16, 2021		By:	/s/  Liat Menahemi Stadler
				Name:	Liat Menahemi Stadler
				Title:	VP Legal and Corporate Secretary

---