PalTel Announces Financial Results for H1-2010 and Appointment of new General Managers for Fixed and Data Operations

RAMALLAH, Palestine, August 18, 2010 -

    - 8.54% Growth in Net Revenues to reach US$ 231.48m
    - 8.03% Growth in EBITDA to reach US$ 99.27m
    - 11.71% Growth in Operating Income (EBIT) to reach US$ 78.21m
    - Net Income reached US$ 57.60m due to exceptional items
    - Total Assets reached US$ 739.65m
    - Shareholders Equity reached US$ 488.27m

H1-2010 Results

The Palestine Telecommunications Company, PalTel announced its
financial results for the second quarter for 2010. Consolidated net operating
revenues grew 8.54% to reach US$ 231.48m at the end of H1-2010 compared with
US$ 213.27m at the end of H1-2009. In regards to the operating revenues of
each segment, the company achieved a growth in its mobile, fixed Line and IT
revenues by 12.01%, 8.07%, and 12.50% respectively, while the data and media
revenues declined by 0.07% and 4.85% respectively.

The consolidated operating income for the company reached US$
78.21m by the end of H1-2010 compared with US$ 70.01m by the end of H1-2010,
a growth of 11.71%. This growth was achieved by an increase in consolidated
revenues and in light of the positive effect of the new operating policy.
The net income was affected by other expenses that rose to US$ 12.6m compared
with US$ 1.21m at the end of H1-2010, relating to a non-recurring provision
for contingent liabilities that may arise from the Palestine National
Authority claims. The consolidated net income decreased by 13.38% to stand at
US$ 57.60m at the end of H1-2010 compared with US$ 66.50m at the end of
H1-2009. This decline is attributable to losses in investments in VTel
Holdings. These losses increased to reach US$ 5.16m at the end of H1-2010
compared with US$ 0.52m at the end of H1-2009.

Current Operating Performance

Fixed Line

The number of fixed line subscribers witnessed a 12.11% growth
rate to stand at 404,187 subscribers compared with 360,534 as of the end of
H1-2009. This growth resulted from new acquisition campaigns. The average
monthly revenue per fixed line subscriber reached US$15.85 at the end of
H1-2010 compared with US$15.61 at the end of H1-2009.

Paltel Group's restructuring drive is continuing to focus on optimizing
operations by strengthening the company's core business while relying on
outsourcing for other services. As part of this restructuring, Mr. Abdul
Majeed Melhem was appointed on August 1, 2010 as the new General Manager of
PalTel, the fixed line operator.

Mr. Melhem has worked at Jawwal (mobile operator) since 1999
and was director of Sales during the period when the Mobile operator
witnessed its marked increase in its subscriber base to reach the 2 million
threshold. Additionally, Mr. Melhem was the Director of Wholesale at Paltel
Group and was responsible for wholesale operations for the fixed line
operator.

Mobile

The mobile segment witnessed a strong growth where the
subscribers' base grew by 30.34% to stand at 2.072m at the end of H1-2010
compared with 1.589m at the end of H1-2009, and grew by 15.09% compared with
the end of 2009 where as the total number of subscribers was 1.800m.

This growth in the number of mobile subscribers was affected
by several acquisition campaigns and new products and services that targeted
existing and prospective customers.

The blended ARPU declined by 13.8% to reach
US$14.95/subscriber/month during the first half of 2010 compared with
US$17.35/subscriber/month in H1-2009. This decrease in the ARPU is
attributable to the low ARPU of the new customers, in addition to offering
larger discounts to the customers.

Data

The data segment achieved a 21.40% growth rate in the number
of ADSL lines to stand at 102,389 lines by the end of H1-2010 compared with
84,338 lines as of the end of H1-2009 and 92,482 lines by the end of 2009.
The increase in the penetration rate of the ADSL lines (per landline) from
23.39% at the end of H1-2009 to 25.33% at the end of H1-2010 was accompanied
by an increase in the ARPU from US$ 22.64 (end of H1-2009) to US$ 24.78 (end
of H1-2010). This increase is due to increase the number of subscribers of
the high speed lines encouraged by the decrease of the ADSL prices.

Mr. Rami Shamshoum was appointed on August 8, 2010 as the
General Manager of Hadara, a Technology and Internet company belonging to the
Group as part and in parallel of the new restructuring strategy for Paltel
GroupPrior to his appointment, Mr. Shamshoum served as the Chief Commercial
Officer for PalTelMr. Mahmoud Yassin, the former General Manager of Hadara
has been appointed as the Chief Strategy Officer of the Paltel Group.

    Contact Person

    Ms. Neda Morrar
    Director of International Corporate Communications
    Paltel Group
    Tel: +970-2-294-4006
    Mob: +970-599-579-355
    neda.morrar@paltelgroup.ps

Contact Person: Ms. Neda Morrar, Director of International Corporate Communications, Paltel Group, Tel: +970-2-294-4006, Mob: +970-599-579-355, neda.morrar at paltelgroup.ps