Internet Gold Acquires 012- Golden Lines, Leading Israeli ISP and Telephony Operator

PETACH TIKVA, Israel, July 2 /PRNewswire-FirstCall/ -- Internet Gold, today announced that it reached an agreement to acquire 60% of the control and equity in 012 Golden Lines Ltd ("012") according to a company valuation of US$140 million. Detailed agreement shall be signed by the parties within the coming days and will be subject to the approval of the Boards of Directors and the relevant regulatory authorities. According to the agreement, following the acquisition, the companies will act to merge 012 with Smile.Communications Ltd ("Smile.Communications ") which is a wholly owned subsidiary of Internet Gold and specializes in providing internet and international communications services.

Internet Gold is one of the pioneering internet companies in Israel which acts in this market since 1996. The company is controlled by the Eurocom Communications Group which is owned by the Elovitch family. Internet Gold operates under the brand Smile and during the beginning of this year the company have reorganized its operation and separated its activities into two wholly owned specialized subsidiaries: Smile.Communications which provides internet and international communications and, along side with it, Smile.Media which specializes in internet media and advertising, e-Commerce and paid content services.

Following the completion of the transaction and the execution of the merger, the new merged company will be one of the significant communications companies in Israel with a combined estimated revenues of NIS 1 billion and an estimated of over a third market share of the internet and international communications markets in Israel, (these revenues are in addition to the group's media businesses which are managed in the sister company Smile.Media). The newly merged company will also strive to continue its penetration into the fixed line domestic VoB telephony market in which 012 has started to play a role during the recent year and it is currently the only Israeli operator which succeeded to penetrate the fixed telephony market which is currently dominated by Bezeq and HOT Telecom 077. 012 is active in the fixed VoB domestic market under the prefix of 072.

Following the completion of the merger, Eli Holtzman, CEO of Internet Gold, will continue to manage the mother company and also the subsidiary Smile.Media Ltd. The newly merged company of 012 and Smile.Communications will be managed by Stella Hendler, CEO of 012.

"I am excited about with this acquisition and merger and believe it is a wise and correct move," said Eli Holtzman CEO of Internet Gold. "Both companies are successful enjoying superb managements which, despite heavily competitive market conditions, have succeeded to position themselves with significant market shares and high brand awareness and consumers' satisfaction. I have no doubt that this merger between our companies will create a new market force which will assist us in further strengthening our position in the communications market. Both companies have many versatile development plans in Israel and abroad and the two respective management teams are exceptional human resources which will drive the merged company into a new business era. Since the year 2000, I have strived to expand our group's activity also towards the Internet media by starting and/or acquiring several portals and e-Commerce sites. During recent months, we have decided to focus further significant efforts by building a specialized dedicated management team for Smile.Media. I am a great believer in this market and intend to invest most of my time resources in it in order to create significant market value for IGLD's investors which 100% owns both Smile.Communications and Smile.Media."

About Internet Gold

Internet Gold is Israel's leading IP Group with a major presence across all Internet-related sectors. Its Smile.Communications Ltd. subsidiary offers a variety of Internet access and related value-added services, international telephony and enterprise/IT integration services. Its Smile.Media Ltd. subsidiary manages a growing portfolio of Internet portals and e-Commerce sites.

Internet Gold is part of the Eurocom Communications Group. Its shares trade under the symbol IGLD on the Nasdaq National Market and the Tel Aviv Stock Exchange.

For additional information about Internet Gold, please visit its investors' site at http://www.igld.com/.

For further information, please contact: Marybeth Csaby KCSA Worldwide [phone] In Israel: Mor Dagan Investor Relations [phone] Ms. Idit Azulay, Internet Gold [phone]