MATAV-CABLE SYSTEMS MEDIA LTD. ANNOUNCES RECORD SECOND QUARTER 1996 RESULTS; EBITDA Grows 25%; Net Income Increases 55%

Business Wire, August 15, 1996

NETANYA, Israel--(BUSINESS WIRE)--August 15, 1996--Matav-Cable Systems Media Ltd. (NASDAQ: MATVY) today announced unaudited results for the second quarter and six months ended June 30, 1996.

Revenues for the second quarter were adjusted New Israeli Shekels (NIS) 70.9 million (U.S. $22.1 million) (a), an increase of 12.4% from the same period a year ago. Operating income was NIS 20.7 million (U.S. $6.5 million), up 40.9% from the second quarter of last year. Net income reached NIS 8.6 million (U.S. $2.7 million), an increase of 55.4% over last year. Net income per ADS for the second quarter were NIS 0.76 (U.S. $0.24) versus NIS 0.50, last year. Earnings before interest, taxes, depreciation and amortization (EBITDA) was NIS 36.6 million (U.S. $11.43 million), an increase of 25.3% from the same period a year ago.

Revenues for the six months ended June 30, 1996 reached NIS 139.8 million (U.S. $43.7 million), an increase of 10.3% over the same period a year ago. Operating income was NIS 40.1 million (U.S. $12.5 million), up 32.5% from last year. Net income was NIS 16.9 million (U.S. $5.3 million), up 147% from the same period last year. Net income per ADS were NIS 1.54 (U.S. $0.48) versus NIS 0.64, last year. EBITDA for the six months was NIS 71.6 million ( U.S. $22.35 million), up 21.6% from last year.

Since the end of March 1996, the Company has increased the number of homes passed to 339 thousand (from 335 thousand) and subscribers to 234 thousand (from 229 thousand). This represents a penetration rate of 69% versus 68.5% at the end of the first quarter.

During the second quarter, the Company completed a public offering of 2,700,000 American Depository Shares, each representing two ordinary shares. Net proceeds to the company were approximately U.S. $46 million. The ADSs are traded on the U.S. NASDAQ market.

On the last day of the quarter, the Restrictive Trade Practices Court approved the temporary settlement of the complaint filed by certain Israeli distributors of movies and other potential providers of CATV programs against Israel Cable Programming Company Ltd. (ICP), a company formed and owned by four of Israel's CATV operators (including Matav) and against the four cable operators. The agreement, valid for three years, enables the cable companies to maintain a nationwide screen and to cooperate in the production and editing of broadcast channels. The cable companies will operate 2 channels through ICP, while the remaining joint channels will be produced by independent producers.

After the close of the quarter, Matav announced that it has begun negotiations with Trefoil Capital Investors, L.P. to purchase some or all of the shares of RPT Telekom S.A. owned by Trefoil. RTP holds licenses to build and operate telecommunications systems including telephony systems in areas of Poland covering 6 million residents. It also holds a license to operate wireless communications systems throughout Poland. The transaction would be worth approximately $25-40 million (including the payment in consideration of the shares purchased and additional investments in the future). Trefoil, a fund partly owned by Shamrock Holdings of California, Inc., shareholders of Matav, holds approximately 20% of the outstanding shares of RPT. Dankner Investments, Ltd., which is also related to Matav, holds approximately 23% of RPT.

Commenting on the results, Robert Avi-Tal, President and Chief Executive Officer, said "We are very pleased to report our first results as a company publicly traded in the United States. We achieved record sales, earnings and EBITDA and continued to penetrate our markets. We also made significant progress in implementing our corporate strategy. We are exploring international opportunities in Poland and Spain and continue to invest our free cash flow. We are also pleased by the resolution of the ICP matter which allows us to cooperate with other cable operators".

Separately, the company today announced that it will hold an extraordinary meeting of shareholders to address various issues including the election of Moshe Arens as a director of the company. Mr. Arens has served in many different capacities in the government of Israel including Ambassador to the United States, Minister of Defense and Minister of Foreign Affairs. Recently, he has served as deputy chairman of The Israel Corporation, Ltd.

Matav is a leading operator and provider of broadband Cable TV services in Israel As one of five CATV operators in Israel, the Company operates in exclusive franchise areas which cover approximately 25% of Israel's households. The Company provides CATV services to about 25% of all CATV subscribers in Israel.

Note (a): Convenience translation into US dollars. The convenience translation of the Adjusted New Israeli Shekel (NIS) figures into US dollars was made at the rate of exchange prevailing at June 30, 1996: U.S. $1.00 equals 3.203 NIS. The translations were made purely for the convenience of the reader.