Internet Gold
Leading Israeli communications
and Interactive media Group
NASDAQ GM / TASE – 100 INDEX symbol: IGLD
Eli Holtzman, CEO
Doron Turgeman, CFO
Q1 2007
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.
History
 April 1992 - Euronet Golden Lines emerges as Eurocom Communications
services subsidiary (Information/Satellite/Int’l comm. Services)
 January 1996 – commence ISP service
 August 1999 – leading Israeli ISP. Public on NASDAQ
 2000 – subsidiaries - GoldMind / GoldTrade / IGI / MSN Israel
 Q1 2000 – signed partnership with MS / April 2000 – msn Israel is up
 Mid 2001 – turn & remain profitable / growth throughout almost all Q’s
 August 2004 – ILD service is launched with 015
 April 2005 – Dual listed on TASE (Dec. 06 – enters TA100 index)
 January 2006 – re-org & re-brand to Smile -
GT => SCL / GM => SML
 August 2006 – acquisition of 012 Golden Lines from the Fishman Group
 December 31st 2006 – 012 deal closing. Actual merger starts
Corporate Structure
Committed to growth…
2007 - crossing the 250 M$ revenue line
Primary drivers:
2006
200
– 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 - Q4/06
150
2007
in us $ millions
350Organic
CAGR = +26%
300
M&A CAGR = +63%
250
301
100
50
0
43
52
70
2003
2004
2005
98
2006
2007
Goal *
* post-merger
– 1st full year of the merged operation
– Continued growth expected in all lines
of business (under both ‘smile’ and
‘012’ brands)
Israel’s telecommunications market
2005 total – US$ 5.3 B
In US$ Billion
Internet, $0.3
ILD, $0.4
Multi-Channel
TV, $0.7
Cellular, $2.7
Fixed line & data,
$1.2
Source: Israeli MoC
Competition
Relative strength
Internet Access
(k subs)
Internet VAS Residential
Internet Business
Smile
Group
e-Advertising
e-Commerce
(US$ M’)
(US$ M’)
DATA
ILD
(m’ $) incl. hubbing
Fix telephony (VOB)
Cellular
Related
companies
*
Multi Channel TV
Radio stations
Residential Comm. Equip.
Satellite services

Market is rough on new entrants & small players
 ILD – x-fone 018 / Netvision’s 017 and also 015
 ISP – many micro ISP’s who never expanded
* Partner is the only independent cellular player / Eurocom was a co-founder / excellent working relations
Leveraging Strong Positioning
Access
Services
Major market share in a stable market
VoIP/VOB/TDM
Telephony
Two strong brands to drive growth in market share
Online
Advertising
We expect our advertising revenues will grow as
media budgets continue to shift to the Internet
Efficient merger
1 + 1 = 3…
Stronger emphasis on biz sector
Commercial penetration of domestic VoB
Significant savings on opex / capex
Efficient management of the two brands
Conservative estimation of 11-14M $/yr savings
1+1=3
Multiple Synergies between the two companies






Global data networks
Roaming services
Call centers
Fixed domestic telephony
Pre/post paid cards
TDM platform
 Value Added Services
 Biz services
 Hi level integration
 Hi level data security
 Dealer network
 e-Media & e-Commerce
The Merged Company: A Communications Powerhouse
communications activities only
+
In us$ millions
Q1 2007
Revenues
Q1 2006 ***
%YoY
F/Y - 2007*
67.5
57.4
17.6%
277
8.9
5.5
63%
42-45
EBITDA **
14.3
10.5
37%
61-64
Employees
1,659
2,039
EBIT **
(March 31)
Synergy
* company’s goals for the 1st full year of merged communications operations
** Non-GAAP EBIT & EBITDA - excluding non-cash amortization with respect to the 012 acquisition.
*** 2006 figures are on a pro-forma basis
012 - cash generator
ILD – growing in volume and revenue terms
International voice traffic from Israel - up 9.1% in 2006 vs. 2005
(Source: Israeli MOC)
International voice revenues for H1 2006 up 3% vs. H1 2005
(Source: IDC)
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, $0.4
072 - additional growth driver
Fixed telephony
 Total fixed telephony market in Israel - US$ 1.2B in 2005
 012 currently have only ~ 17k subscribers’ lines
 Our goal ~ 5% market share of this significant segment within 2-3 years
 Future marketing to rely on existing customer base of ~ 800 k subscribers
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
line &
data, $1.2
2006/2007: Growth of Online Advertising continues
Israel Internet Advertising
CAGR = +48%
90
80
70
60
50
40
30
20
10
0
85
in US$ millions
*
65
50
36
12
2002
22
2003
2004
2005
2006
2007
* Q3/06 - Media market affected by war conditions
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!
Source: Market surveys & IGLD estimates
US Internet Advertising
20
18
16
14
12
10
8
6
4
2
0
CAGR = +26%
19
in US$ billions
17
Internet Advertising in Israel is currently
> 6-7% of overall media spending
(~ $900M in 05’) - growing fast
12
10
6
2002
7
2003
2004
2005
2006
Israel’s online ad budgets are
low compared to exposure –
ad budgets always follows rating
2007*
estimated
Source: PWC IAB Internet Advertising Report, Sept. ‘05
& company's estimates
SEARCH - additional growth potential: US
search revenues - 40% of total e-Adv.
much higher than in Israeli market
Smile.Media – Content & Portal Brands
Property
msn-Israel
IGLD’s
ownership
50.1% SML
(49.9% MS Corp.)
Description
Hebrew language portal
Messenger, Hotmail Israel & MSN
Search Israel
start
100%
General portal & Search engine
nirshamim
100%
Academic portal
zahav.ru
100%
Russian language portal
V-games
100%
Games content portal
TheMoney
100%
Lead-generation financial portal
tipo
52%
Children’s portal
seret
51%
Cinema portal
yahala
51%
Arab-language portal
Radius100FM
50%
Leading Israeli radio station portal
SML Network
netex
goop
E-advertising network in 4 portals
Exclusive
marketing rights Search engine & directory
Youth portal
Leading e-Commerce Brands
Property
IGLD’s %
Description


P1000
100%


One of Israel’s top 4 e-Commerce sites
Outlet for >100 of Israel’s largest
consumer product suppliers
Growing revenues, positive EBIT
Low-risk commission model with
fulfillment directly from suppliers
LMT
50%

Leading Israeli on-line travel site
getprice
51%

Leading Israeli price comparison site
dbook
50%

Leading Bookstore
Paid
content
marketing
rights

Online magazines, newsletters,
recruitment & jobs search and other
content services
Two pure-play subsidiaries
Quarterly Growth
EBIT
Revenues
72.3
9.4
23.1
22.4
27.8
25.1
67.5
2.8
2.9
3.2
1.4
2
2.2
2.4
2.4
23.3
8.6
18.9
19.2
21.2
3.5
3.9
3.9
4.5
4.8
1
0.8
0.7
0.8
0.8
Q1 06
Q2 06
Q3 06
Q4 06
Q1 07
Q1 06
Q2 06
Q3 06
Q4 06
Q1 07 *
Media **
Communication
Media **
us$ in millions
Communication
us$ in millions
* Non-GAAP EBIT - excluding non-cash amortization with respect to the 012 acquisition.
** Presented on carve-out basis with respect to group’s reorganization
Two pure-play subsidiaries
Annual Growth
us$ in millions
Revenues
EBIT
301
45**
98
277
39
70
7
52
43
44
37
59
82
6
6
11
5
4
5
8
8
11
16
24
1
2
2
3
6
6
2003
2004
2005
2006
2007*
2003
2004
2005
2006
2007*
Media ***
Communications
Media ***
Communications
* Ebitda goal for 2007 ~ 72 / estimate for finance exp. ~ 9.6
**Non-GAAP EBIT - excluding non-cash amortization with respect to the 012 acquisition.
*** Presented on carve-out basis with respect to group’s reorganization
Balance sheet overview
As of March 31,2007
in us$ millions
Total assets
350
Total liabilities
284
Total shareholders’ equity
66
Total Debt Short-term
88
Total Debt Long-term
105
Total finance Debt
(including us$ 40M convertible bonds)
193
Comparables
Interesting market opportunity…
As of May. 18 2007
Q1 07/Q4 06
IGLD
Sify
PCNTF
SINA
SOHU
IIJI
$14.36
$8.36
$9.91
$37.00
$25.00
$7.67
Communications
Revenues (M$)
67.4
30.1
49.2
114.2
EBITDA
Market cap (M$)
price to revenues multiple
price to EBITDA multiple
14.1
N/A
N/A
N/A
2.1
N/A
N/A
N/A
3.4
134.0
0.7
9.7
17.2
626.8
5.5
36.5
4.9
1.1
N/A
N/A
N/A
2.9
0.2
N/A
N/A
N/A
72.3
15.3
298.7
1.0
4.9
33.0
2.3
354.4
2.7
38.5
Ticker
Share price
KCSA to send new slide
Media
Revenues (M$)
EBITDA
Market cap (M$)
price to revenues multiple
price to EBITDA multiple
Total
Revenues (M$)
EBITDA
Market cap (M$)
price to revenues multiple
price to EBITDA multiple
49.2
3.4
134.0
0.7
9.7
56.4
13.3
2,017.9
8.9
37.9
33.1
6.2
917.1
6.9
147.2
56.4
13.3
2,017.9
8.9
37.9
33.1
6.2
917.1
6.9
36.8
114.2
17.2
626.8
1.4
9.1
Goal: to become Israel’s Leading Full Suite
IPTV
Alternative Service Provider
IP seamless mobility
VoWi-Fi / Wi-MAX
VoB & business integration
Technology Value added services
e-Commerce & paid content
Portals & e-Advertising
International Long Distance (ILD) & Internet Access
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Strong Shareholders / Dedicated Management
 Public ~ 42%
(updated May 20, 2007)
 Eurocom Communications ~ 58%
 Focused, communications-oriented controlling parent group
 Leading Israeli private communications group representing exclusively
Nokia, Panasonic, GE and more
 Also holds equity in radio stations, DBS TV service provider, satellite
communications, cellular and more
 Closely-knit, results-oriented management team
 Most all level of management grows from within
 Experienced upper level management
Investment highlights
Leading Communications
Group
Positioned to lead rapidly
growing media markets
Working from strong cash
generating platform
Today: controls 1/3 of its markets with a
continuously growing market share
Tomorrow: entering new markets
over 30 portals & e-Commerce sites
High rate of market growth
All activities in both companies are major cash
generators
Merger anticipated to save ~ US$ 11-14M in exp/inv
No difficulty in servicing loan
Proven management
& ownership
(fin. exp. ~15% of Ebitda)
Both company's management teams, working
together with Eurocom (as controlling shareholder),
have proven capable of carrying out aggressive
growth / leadership strategies
Thank you!