TEL AVIV -- Bezeq The Israel Telecommunication Corp., Limited (TASE: BEZQ), Israel's largest telecommunications provider, announced today its financial results for the first half and second quarter 2007.

Key highlights:

Dov Weissglas, Chairman of the Board of Bezeq, said the financial results are certainly impressive, despite the difficult period the company has experienced. "The strength of the Bezeq Group is an unquestioned fact. This strength is due to its customers' faith in Bezeq, in all sectors, and its range of abilities. The Group's impressive range of communication products is reinforced, day by day, by the faith of the public that makes Bezeq, Pelephone, yes and Bezeq International their first choice. In the tumultuous Israeli market, Bezeq is an island of stability and consistency."

Weissglas went on to say, "I am pleased to discover constant and consistent improvement in results across the board, throughout my entire term at Bezeq. Bezeq Wireline, whose new growth engines - the internet, data services and value added services - have almost completely compensated for the erosion in revenues from landline telephony; Pelephone and yes, which are constantly improving their performance; and Bezeq International, which has posted record earnings every quarter."

"However, it is difficult to gloss over the regulatory restrictions imposed on Bezeq. Some of these regulations are outdated, and were it not for them, even better results could have been achieved," said Weissglas.

Acting CEO of Bezeq, Avi Gabbay, praised the financial results and thanked the employees for the immense effort they invested in the past few months, which was a difficult period for the company.

Avi Gabbay said, "Bezeq is steadily becoming a service company, and not a supplier of infrastructure only. The decline in landline telephony revenues is a global trend resulting from mobile substitution and competition. Our challenge is to prepare properly by reinforcing new growth engines and constantly improve all components of operations."

Gabby went on to say, "A significant part of Bezeq's future, and of the sector in general, lies in the hands of the Grunau Committee. We hope and believe that a coherent long-term policy will be defined, which will generate proper and healthy competition based on excellence and the consumer's choice and not on regulatory discrimination of some of the players. We hope that the committee's results will enable customers in Israel to benefit from broadband as in other parts of the world," says Gabbay.

Bezeq, The Israel Telecommunications Corp. Ltd. (OTC: BZQIF)