diff --git a/lib/suse/connect/version.rb b/lib/suse/connect/version.rb
index 00f30e8d..47fce01a 100644
--- a/lib/suse/connect/version.rb
+++ b/lib/suse/connect/version.rb
@@ -1,5 +1,5 @@
 module SUSE
   module Connect
-    VERSION = '0.3.20'
+    VERSION = '0.3.21'
   end
 end
diff --git a/lib/suse/connect/zypper.rb b/lib/suse/connect/zypper.rb
index d6503e36..916fd47b 100644
--- a/lib/suse/connect/zypper.rb
+++ b/lib/suse/connect/zypper.rb
@@ -156,7 +156,13 @@ def services
         def install_release_package(identifier)
           return unless identifier
           _, _, status = execute_raw("rpm -q #{identifier}-release")
-          call("--no-refresh --non-interactive install --no-recommends --auto-agree-with-product-licenses -t product #{identifier}") unless (status == 0)
+          valid_error_codes = [Zypper::ExitCode::OK]
+          # in case of packagehub we accept some repos to fail the initial refresh, because the signing key is not yet imported.
+          # it is part of the -release package, so the repos will be trusted after the release package is installed
+          valid_error_codes << Zypper::ExitCode::Info::REPOS_SKIPPED if (identifier == 'PackageHub')
+          unless (status == 0)
+            call("--no-refresh --non-interactive install --no-recommends --auto-agree-with-product-licenses -t product #{identifier}", false, valid_error_codes)
+          end
         end
 
         def remove_release_package(identifier)
diff --git a/package/SUSEConnect.changes b/package/SUSEConnect.changes
index 372bafca..866ed79f 100644
--- a/package/SUSEConnect.changes
+++ b/package/SUSEConnect.changes
@@ -1,3 +1,9 @@
+-------------------------------------------------------------------
+Thu Sep 26 09:53:36 UTC 2019 - Thomas Schmidt <tschmidt@suse.com>
+
+- Update to 0.3.21
+  Fix error on first activation of packagehub extension (bsc#1124318)
+
 -------------------------------------------------------------------
 Wed Aug 8 16:02:30 UTC 2019 - Ivan Kapelyukhin <ikapelyukhin@suse.com>
 
diff --git a/package/SUSEConnect.spec b/package/SUSEConnect.spec
index 4ba3d613..76c96893 100644
--- a/package/SUSEConnect.spec
+++ b/package/SUSEConnect.spec
@@ -17,7 +17,7 @@
 
 
 Name:           SUSEConnect
-Version:        0.3.20
+Version:        0.3.21
 Release:        0
 %define mod_name suse-connect
 %define mod_full_name %{mod_name}-%{version}
diff --git a/spec/connect/zypper_spec.rb b/spec/connect/zypper_spec.rb
index 96ff594d..52d0c648 100644
--- a/spec/connect/zypper_spec.rb
+++ b/spec/connect/zypper_spec.rb
@@ -406,14 +406,22 @@
 
   describe '.install_release_package' do
     context 'when the release package is not yet installed' do
+      let(:status_106) { double('Process Status', exitstatus: Zypper::ExitCode::Info::REPOS_SKIPPED) }
       it 'calls zypper install' do
-        expect(Open3).to receive(:capture3).with(shared_env_hash, 'rpm -q opensuse-release')
-                           .and_return(['', '', 1])
+        expect(Open3).to receive(:capture3).with(shared_env_hash, 'rpm -q opensuse-release').and_return(['', '', 1])
 
         expect(Open3).to receive(:capture3).with(shared_env_hash, 'zypper --no-refresh --non-interactive install --no-recommends --auto-agree-with-product-licenses -t product opensuse') # rubocop:disable LineLength
                                            .and_return(['', '', status])
         subject.install_release_package('opensuse')
       end
+
+      it 'accepts initial repo refresh issue for PackageHub' do
+        expect(Open3).to receive(:capture3).with(shared_env_hash, 'rpm -q PackageHub-release').and_return(['', '', 1])
+
+        expect(Open3).to receive(:capture3).with(shared_env_hash, 'zypper --no-refresh --non-interactive install --no-recommends --auto-agree-with-product-licenses -t product PackageHub') # rubocop:disable LineLength
+                                           .and_return(['', 'Error building the cache', status_106])
+        subject.install_release_package('PackageHub')
+      end
     end
 
     context 'when the release package is already installed' do