In A Strategic Move, Bezeq Aims To Lead The Laptop Revolution In Israel

• Bezeq is becoming the customer's communications service provider along the entire value chain, from high-speed internet infrastructure through the wireless network and added value services to the laptop

• Avi Gabbay, Bezeq CEO: "Within 3 years, more than 25% of Bezeq internet customers will have a laptop they purchased through us"

• Bezeq is offering all its customers a range of laptops and netbooks at attractive prices, in 36 payments and with no commitment

• Customers who upgrade their surfing speed and switch to NGN files will be offered laptops at an additional discount of NIS 720

Bezeq announced today a strategic move by the company for 2010 and it intends to change the rules of the game in the laptop computer world. Bezeq is becoming the main sales channel for laptops and netbooks, the concept being that the laptop should be truly personal, with everyone having his own. Bezeq believes that the laptop market is about to increase its already high growth rate, with hundreds of thousands of new owners and PC upgraders every year. Avi Gabbay, CEO of Bezeq: "Just as Bezeq created a revolution in the use of wireless networks in Israel, it intends to create a revolution in laptops. Bezeq's goal is to supply about 300,000 laptops within three years. What this means is that by 2012, more than 25% of Bezeq's internet customers will own a laptop."

This is a long-term move by Bezeq, which will enable existing and new customers of the company to upgrade to a laptop based on their personal needs. In this way, Bezeq becomes the customer's communications service provider along the entire value chain, from high-speed internet infrastructure through the wireless network and value added services to the personal laptop.

Starting today, Bezeq is offering its customers a number of laptop models, all NGN Ready for surfing, viewing and downloading media content on the NGN. Initially, Bezeq is offering Lenovo and Acer laptops of 5 types: Netbook (10" and 12"), Basic, Classic, and Advanced Premium. The laptops are offered in 36 equal interest-free payments at attractive prices, with no commitment to upgrade surfing speed. Those who upgrade and switch to NGN files will also be offered an additional discount of NIS 20 per month on the price of the laptop. The total discount on the laptop will be NIS 720.

This is not Bezeq's first step in the laptop field. The company has already launched advanced laptops in an exclusive offer to its customers, including the first mini-laptop of Asus and of Lenovo. But this latest step is far deeper, and aims to change the usage habits of laptop users by making it truly personal. In so doing, Bezeq is following in the footsteps of the world's leading communications companies, such as KPN Telefonica, Q2, Vodafone, AT&T and others.

In the past two years, the laptop market has undergone a true revolution as consumers switch from PCs to laptops. According to IDC research data, in the third quarter of 2009 no less than 155,000 laptops were sold in Israel. This represents an increase of 75% in laptop sales and of 500% of netbook sales compared with the third quarter of the prior year.

A survey commissioned by Bezeq from Teleseker found that about 50% of the public owns at least one laptop, and that in about 65% of households the laptop is not personal but is used by several persons. The findings also indicate that about two-thirds of those who do not have a laptop would like to buy one, and one third of those who do have one are keen to buy another one.

Another interesting fact, one that is pushing the use of personal laptops, is the increasing use of various company networks, which are becoming a virtual arm of personal life in the network. The personal laptop becomes part of the need to create a personal and private environment, as opposed to a situation where the user is unable to connect to the networks whenever he wants to because of "exposure" to other users in the home.

Ran Guron, VP Marketing at Bezeq: "The reasons for purchasing a laptop are not merely the desire to be mobile, but also the option of taking advantage of the entire computer world personally. Our assessments indicate that within five years, laptop penetration in Israel will be greater than the size of the population, similar to that of cell phones."

In the second stage of its strategy, Bezeq intends to assimilate new developments on the laptops, to complete the customer's experience. The laptops that Bezeq will supply will have built-in applications such as content-based telephone (Bphone), the Bgames portal, antivirus, network storage, a widget developed by Bezeq enabling surfing to applications and information from b144. All these will come together with graphic elements such as Wallpaper, screensavers, and so on. In addition, Bezeq is considering the launch of wireless USB, enabling the screening of computer content on HD television screens.

As part of its strategic move, Bezeq will also create an official page on Facebook, under the heading "A laptop for everyone". Bezeq will offer friends in the group professional surveys of laptops, auxiliary products and accessories. In addition, in the first month Bezeq will raffle off 15 laptops among friends in the group.

To set the ball rolling, Bezeq will have a campaign under the banner "Each to his own", accompanied by the song "Here I come" performed by Dag Nachash. The campaign will be run by the Adler Chomsky ad agency, and will appear on the internet and on television for about two weeks.

Investor Relations Contact:
Mr. Naftali Sternlicht
Bezeq
Phone: +972 2 539 5441
E-Mail: ir@bezeq.co.il

Media Relations Contact:
Mr. Guy Hadass
Bezeq
Phone: +972 3 626 2600
E-Mail: dover@bezeq.co.il