Gilat Reports Fourth Consecutive Quarter of Improved Financial Results in Q3 2006.

PETAH TIKVA, Israel -- Gilat Satellite Networks Ltd. (Nasdaq: GILT), a worldwide leader in satellite networking technology, solutions and services, today reported its results for the quarter ending September 30, 2006.

Highlights for the Quarter:

* Revenues increased to $63.8 million, representing a 30% year-over-year growth;

* Net income increased to $2.7 million, from a net loss of $1.7 million in 3Q2005;

* Positive cash flow of $15 million

* Shareholders' equity increased by $72.6 million, long term debt decreased by $71.7 million, mainly due to York's loan conversion

Revenues for the third quarter of 2006 were $63.8 million, up from $49 million in the same period of 2005. Net income for the third quarter of 2006 was $2.7 million or $0.11 per diluted share, compared to a net loss of $1.7 million or $0.08 per diluted share in the third quarter of 2005. Non-GAAP net income (1) for the third quarter of 2006 was $3.5 million, or $0.14 per diluted share, versus a net loss of $1.7 million or $0.08 per diluted share in the same quarter of 2005. EBITDA (2) for the third quarter of 2006 was $10.0 million, increased from $4.0 million in the comparable period of 2005.

Revenues for the nine month period ended September 30, 2006 were $183.4 million, up from $153.4 million in the comparable period of 2005. Net income for the nine month period ended September 30, 2006 was $6.0 million or $0.25 per diluted share, compared to a net loss of $4.7 million or $0.21 per diluted share in the same period of 2005. Non-GAAP net income for the nine month period ended September 30, 2006 was $9.2 million, or $0.39 per diluted share, versus a net loss of $4.7 million or $0.21 per diluted share in the comparable period of 2005. EBITDA for the nine month period ended September 30, 2006 was $28.2 million, increased from $13.9 million in the comparable period of 2005.

Non-GAAP net income, earnings per share and EBITDA for the three and nine month period of 2006 exclude non cash stock option expenses in an amount of $0.7 million and $3.2 million respectively, which are not included in the comparable periods of 2005.

On September 27th, York Capital Management exercised its option to convert all of its $70.4 million loan, plus accrued interest of approximately $1.0 million, into approximately 10.6 million ordinary shares of the Company. After the conversion, Gilat's outstanding shares increased from roughly 23.2 million shares to approximately 33.8 million shares.

Following the transaction, York owns approximately 33 percent of Gilat's outstanding and issued shares.

Gilat's Chief Executive Officer and Chairman of the Board Amiram Levinberg said, "We have succeeded in achieving improvement in all our main financial parameters this quarter. We further increased our revenues, improved our operating income and enhanced our net income. During the quarter, we saw more business in emerging markets, especially in Russia, Africa, and Latin America. We are also witnessing an increase in demand for business continuity projects in the U.S. With a comprehensive product offering, a broad global customer base, and a strong financial position, I believe we are well positioned for the year ahead."

Recent Announcements

--Gilat was selected by Empresa Nicarag1/4ense de Telecomunicaciones (Enitel) to provide a SkyEdge hub station and VSATs. Enitel will use the VSAT equipment to provide Nicaraguan and Latin American customers with Internet access, rural telephony, GSM trunking, fax and prepaid telephony.

--Gilat's Spacenet Inc. subsidiary signed a five-year enterprise networking services contract with H-E-B, a U.S. regional supermarket chain. In addition to providing satellite connectivity to all Texas-based H-E-B retail stores, Spacenet is also providing its SmartCare[TM] enterprise-grade network management services.

--Teleport-Services, a Russian satellite services operator, selected a Gilat SkyEdge broadband satellite hub station and VSATs to expand an interactive distance-learning network for the Modern University for the Humanities (MUH). In addition to serving 300 sites for MUH, Teleport-Services will use the VSAT network to serve businesses and government agencies in remote regions of eastern Russia, where terrestrial connectivity options are either unavailable or unreliable. Teleport-Services' clients will use the VSAT connectivity for Internet access, distance learning, video conferencing and other interactive data applications.

--Gilat was selected by Portugal Telecom Group (PT) to provide a SkyEdge hub and nearly 1,000 VSATs for rural connectivity and enterprise customers . PT is a global telecom operator serving Portugal, Brazil, Africa and many other important international markets. To meet Universal Service Obligation (USO) requirements, PT will deploy SkyEdge VSATs at remote community centers in southern Portugal's Algarve region to provide citizens with rural telephony, fax and Internet access.

About Gilat Satellite Networks Ltd.

Gilat Satellite Networks Ltd. (Nasdaq: GILT) is a leading provider of products and services for satellite-based communications networks. The Company operates under three business units: (i) Gilat Network Systems ("GNS"), which is a provider of network systems and associated professional services to service providers and operators worldwide; (ii) Spacenet Inc., which provides managed services in North America for businesses and governments through its Connexstar service brand and for consumers through its StarBand service brand; (iii) Spacenet Rural Communications, which offers rural telephony and Internet access solutions to remote areas primarily in Latin America.

Gilat was founded in 1987 and has shipped over 600,000 Very Small Aperture Terminals (VSATs) to more than 85 countries across six continents. Gilat's headquarters is located in Petah Tikva, Israel. The Company has 14 local offices and three service facilities worldwide. Gilat markets the SkyEdge [TM] Product Family which includes the SkyEdge[TM] Pro, SkyEdge[TM] IP, SkyEdge[TM] Call, SkyEdge[TM] DVB-RCS and SkyEdge[TM] Gateway. In addition, the Company markets numerous other legacy products. Visit Gilat at www.gilat.com.

Safe Harbor:

Certain statements made herein that are not historical are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. The words "estimate", "project", "intend", "expect", "believe" and similar expressions are intended to identify forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties. Many factors could cause the actual results, performance or achievements of Gilat to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements, including, among others, changes in general economic and business conditions, inability to maintain market acceptance to Gilat's products, inability to timely develop and introduce new technologies, products and applications, rapid changes in the market for Gilat's products, loss of market share and pressure on prices resulting from competition, introduction of competing products by other companies, inability to manage growth and expansion, loss of key OEM partners, inability to attract and retain qualified personnel, inability to protect the Company's proprietary technology and risks associated with Gilat's international operations and its location in Israel. For additional information regarding these and other risks and uncertainties associated with Gilat's business, reference is made to Gilat's reports filed from time to time with the Securities and Exchange Commission.

Notes:

(1) The attached summary financial statements were prepared in accordance with U.S. GAAP. The attached summary financial statements for Q3 2006 are unaudited. To supplement the consolidated financial statements presented in accordance with GAAP, the Company presents Gilat's net income, EBITDA and earnings per diluted share, before the share-based payment charge, which is the non-cash stock option expense as per SFAS 123 (R). This non-GAAP presentation of net income, EBITDA and earnings per share is provided to enhance the understanding of the Company's historical financial performance and comparability between periods.

(2) Operating income (loss) before depreciation, amortization, non cash stock option expenses as per SFAS 123(R) and exceptional items, ('EBITDA') is presented because it is a measure commonly used and is presented solely in order to improve the understanding of the Company's operating results and to provide further perspective on these results. EBITDA, however, should not be considered as an alternative to operating income (loss) or net income (loss) for the period as an indicator of the operating performance of the Company. Similarly, EBITDA should not be considered as an alternative to cash flows from operating activities as a measure of liquidity. EBITDA is not a measure of financial performance under generally accepted accounting principles and may not be comparable to other similarly titled measures for other companies. EBITDA may not be indicative of the historic operating results of the Company; nor is it meant to be predictive of potential future results. Reconciliation between the Company's Operating income (loss) and EBIDTA is presented in the attached summary financial statements.

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