Matav Reports Settlement With Israeli Tax Authorities With Respect to the Capital Gains From the Sales of Partner Communications' Shares

Matav Reports Settlement With Israeli Tax Authorities With Respect to the Capital Gains From the Sales of Partner Communications' Shares

NETANYA, Israel, August 1/PRNewswire-FirstCall/ -- Matav Cable Systems Media Ltd. (Nasdaq: MATV) (hereinafter:
"Matav"), a leading Israeli provider of digital cable television services,
today announced that, further to the sale of shares of Partner Communications
Company Ltd. ("Partner") by its subsidiary Matav Investments Ltd. (the
"Subsidiary"), as previously announced on April 20, 2005, and further to
discussions with the Israeli Tax Authorities ("ITA") regarding the sales of
Partner shares by Matav and the Subsidiary in 2002 and 2003, following which
no agreement was reached pertaining to the tax aspects related to these
capital gains, and an order was issued against the Subsidiary with respect to
2002, today Matav and the Subsidiary reached a settlement with the ITA.

Pursuant to the settlement, a portion of the gain that was
recognized by the Subsidiary from the sale of Partner shares, in the amount
of approximately NIS 208 million, will be considered Matav's gain and offset
against Matav's carry-forward tax losses. The remaining total tax liability
from the sales of Partner shares, net of an advanced payment previously paid
to ITA, in the amount of approximately NIS 106 million (including accrued
interest and CPI linkage), is required to be fully paid by the Subsidiary, by
the end of August 2005.

In light of this settlement, Matav expects that the capital gain,
after taxes and related expenses, from the sale of Partner shares on April
20, 2005, which will be included in the Matav's financial statements for the
period ended June 30, 2005, will be approximately NIS 170 million, instead of
a capital gain of approximately NIS 115 million, which was reported in
Matav's press release from April 20, 2005.

About Matav:

Matav is one of Israel's three cable television providers,
serving roughly 25 percent of the population. Matav's current investments
include 1.2 percent of Partner Communications Ltd., a GSM mobile phone
company and 10 percent of Barak I.T.C. (1995) Ltd., one of the three
international telephony providers in Israel.

This press release contains forward-looking statements within
the meaning of the "safe harbor" provisions of the U.S. Private Securities
Litigation Reform Act of 1995. Forward-looking statements that are based on
various assumptions (some of which are beyond Matav's control) may be
identified by the use of forward-looking terminology, such as "may", "can
be", "will", "expects", "anticipates", "intends", "believes", "projects",
"potential", "are optimistic", "view" and similar words and phrases. Actual
results could differ materially from those set forth in forward-looking
statements due to a variety of factors, including but not limited to (1)
changes in technology and market requirements, (2) decline in demand for the
company's products, (3) inability to timely develop and introduce new
technologies, products and applications, (4) loss of market share and
pressure on pricing resulting from competition, (5) uncertainty as to the
completion of acquisition of new businesses or operations and integration
thereof with Matav's business, and (6) the other risk factors detailed in
Matav's most recent annual report and other filings with the US Securities
and Exchange Commission. Matav undertakes no obligation to publicly release
any revisions to these forward-looking statements to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events.

Source: Matav - Cable Systems Media Ltd.

Ori Gur Arieh, Counsel, Matav-Cable Systems Media Ltd., Tel.: +972-9-860-2261; Ayelet Shiloni, Integrated Investor Relations, Tel.:+1-866-447-8633, Tel:+972-6883-336, ayelet@integratedir.com.

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