NASDAQ NM / TASE - symbol: IGLD Eli Holtzman, CEO Doron Turgeman, CFO Q Internet Gold Leading Israeli communications and Interactive media Group

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

3 History  Founded in 1996 by Eurocom Communications Ltd. and Eli Holtzman  Within about three years became leading ISP in the Israeli market  Went public on NASDAQ in August 1999 and TASE on May 2005 Current business  100% owns two subs: Smile.Communications Ltd. and Smile.Media Ltd.  Smile.Communications – specializes in Internet services & Int’l telephony  Smile.Media – specializes in e-Advertising, e-Commerce and paid content  ~ 720 Full-Time Employees Internet Gold – Golden Lines - About Us…

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6 Committed to growth… crossing the 250 M$ revenue line 2006 – –Build-out of International VoIP Telephony services – –Expansion of Internet Advertising – –Expansion of Business Services – –012 acquisition to be completed and operations to be consolidated - Q4/ – –1st full year of the merged operation – –Continued growth expected in all lines of business (under both ‘smile’ and ‘012’ brands) Primary drivers: in us $ millions Organic CAGR = +20% M&A CAGR = +47% * post-merger

7 Israel’s telecommunications market Source: Israeli MoC 2005 total – US$ 5.3 B In US$ Billion

8 2006/07: Leveraging Strong Positioning Access Services Major market share in a stable market Stronger emphasis on biz sector VoIP/VOB/TDM Telephony Two strong brands to drive growth in market share Start commercial penetration of domestic VoB Online Advertising We expect our advertising revenues will grow as media budgets continue to shift to the Internet Efficient merger = 3… Significant savings on opex / capex Efficient management of the two brands Conservative estimation of 11-14M $/yr savings

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= 3 Multiple Synergies between the two companies  Global data networks  Roaming services  Call centers  Fixed domestic telephony  Pre/post paid cards  TDM platform  Value Added Services  Biz services  Hi level integration  Hi level data security  Dealer network  e-Media & e-Commerce

11 Rationale for the 012 acquisition Revenues EBIT *** EBITDA *** Employees 7491,2902,039Synergy Total * Q4/ Q1-3/2006 * Based on IGLD estimate *** Communications’ EBIT / EBITDA goals for 2007 exclude one time expenses relating to the merger. These goals assumes full synergy of merger to be achieved Q2/07 F/Y ** ** company’s goals for the 1st full year of merged communications operations SCL communications activities only In US$ millions

12 Leveraging state of the art telephony infrastructure To drive further growth  Most sophisticated VoIP platform  World class TDM platform  Auxiliary platforms (anti-fraud / billing / CRM etc.) ILD – growth driver for the communications industry International voice traffic from Israel - up 10.3% in 2005 vs up 12% in H1/06 vs. H1/05 International voice revenues for H up 3% vs. H (Source: Israeli MoC) + = cash generators

13 State-of-the-art telephony infrastructure  Solid investment in class 5 fixed telephony  No further significant investments required  Auxiliary platforms (anti-fraud / billing / CRM etc.) Fixed telephony  Total fixed telephony market in Israel - US$ 1.2B in 2005  012 currently have only ~ 13k subscribers’ lines  Our goal ~ 5% market share of this significant segment within 3-4 years  Future marketing to rely on existing customer base of ~ 800 k subscribers 072 / additional growth driver

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/2007: Growth of Online Advertising continues Source: PWC IAB Internet Advertising Report, Sept. ‘05 US Internet Advertising CAGR = +21% Source: Market surveys & IGLD estimates Israel Internet Advertising CAGR = +38% & company's estimates * * Q3/06 - Media market affected by war conditions in US$ billions in US$ millions estimated Israel’s broadband penetration is among the highest in the world ~70% of Israeli households have Internet access ~ 95% are connected via broadband! >40% of users are online >10 hours per week. 2.7M users per day! Israel’s online ad budgets are low compared to exposure – ad budgets always follows rating Internet Advertising in Israel is currently > 6-7% of overall media spending (~ $900M in 05’) - growing fast SEARCH - additional growth potential: US search revenues - 40% of total e-Adv. much higher than in Israeli market

16 Smile.Media – Content & Portal Brands PropertyIGLD’s ownership Description msn-Israel 50.1% SML (49.9% MS Corp.) Hebrew language portal Messenger, Hotmail Israel & MSN Search Israel start100% General portal & Search engine nirshamim100%Academic portal zahav.ru100%Russian language portal V-games100% Games content portal seret51% Cinema portal yahala51%Arab-language portal TheMoney75% Lead-generation financial portal tipo52%Children’s portal netex Search engine & directory goop Exclusive marketing rights Youth portal GPGe-Advertising network

17 Leading e-Commerce Brands PropertyIGLD’s % Description P %  One of Israel’s top 4 e-Commerce sites  Outlet for >100 of Israel’s largest consumer product suppliers  Growing revenues, positive EBIT  Low-risk commission model with fulfillment directly from suppliers msn shops 50.1%  e-Commerce ventures between MSN- Israel and retailers dbook 50%  Leading Bookstore getprice 51%  Israel’s #2 price comparison site Paid content marketing rights  Online magazines, newsletters, recruitment & jobs search and other content services

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19 Revenues US$ in millions EBIT Quarterly Growth US& in millions Two pure-play subsidiaries

20 Revenues US in millions EBIT Two pure-play subsidiaries Annual Growth * company’s goals ** Ebitda goal for 2007 ~ US$ M68 / estimate for finance exp. ~ US$ M10 ** Post merger IGLD’s estimate for 2006/07, excludes one time expenses relating to the merger

21 Balance sheet overview Total Cash 60.7 Current assets 84 Total assets Current liabilities 22.9 Total liabilities 78 Working capital 61.1 Total shareholders’ equity 41.3 in US$ millions

22 Comparables Interesting market opportunity… KCSA to send new slide

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24 Goal: to become Israel’s Leading Full Suite Alternative Service Provider Technology Value added services VoB & business integration VoWi-Fi / Wi-MAX IP seamless mobility IPTV e-Commerce & paid content International Long Distance (ILD) & Internet Access Portals & e-Advertising

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

26 Investment highlights Leading Communications Group Today: controls 1/3 of its markets with a continuously growing market share Tomorrow: entering new markets Positioned to lead rapidly growing media markets Owns over 18 portals & e-Commerce sites High rate of market growth Working from strong cash generating platform All activities in both companies are major cash generators Merger anticipated to save ~ US$ 11-14M in exp/inv No difficulty in servicing loan (fin. exp. ~15% of Ebitda) Proven management & ownership Both company's management teams, working together with Eurocom (as controlling shareholder), have proven capable of carrying out aggressive growth / leadership strategies Thank you!