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July 16, 2007

JACKSON, Mississippi – July 16, 2007 XFONE, Inc. (AMEX: XFN)(TASE: XFN), an international diversified communications services company, announced that its majority-owned UK subsidiary, Story Telecom, Ltd. has launched “TalkPal”, a service enabling customers to pay for international cell phone calls directly from their PayPal accounts.

Mr. John Burton, Chairman of Story Telecom, commented, ”As mobile telephones become the primary communications tool for many visitors and residents of the UK, we have seen increasing demand from the marketplace to provide an easy and effective payment method for international telephone calls. Our new TalkPal service allows customers to access their PayPal accounts directly from their mobile phones in order to pay for international calls. This innovative service allows our customers the flexibility to dial outside the country at their convenience, while realizing substantial savings compared to their mobile network provider's rate.”

About XFONE, Inc.

A U.S.-domiciled corporation, XFONE, Inc. is an international voice, video and data communications services provider with operations in the United Kingdom, the United States and Israel that offers a wide range of services, which include: local, long distance and international telephony services; prepaid and postpaid calling cards; cellular services; Internet services; messaging services (Email/Fax Broadcast, Email2Fax and Cyber-Number); and reselling opportunities. The Company serves customers across Europe, Asia, North America, South America, Australia and Africa. For the company’s website, please visit: www.xfone.com

This press release contains forward-looking statements. The words or phrases "should," "would be," "will allow," "intends to," "will likely result," "are expected to," "will continue," "is anticipated," "estimate," "project," or similar expressions are intended to identify "forward-looking statements." The Company's financial results reflected above should not be construed by any means as representative of the current or future value of its common stock. All information set forth in this press release, except historical and factual information, represents forward-looking statements. This includes all statements about the company's plans, beliefs, estimates and expectations. These statements are based on current estimates and projections, which involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. These risks and uncertainties include issues related to rapidly changing technology and evolving standards in the industries in which the Company and its subsidiaries operate; the ability to obtain sufficient funding to continue operations, maintain adequate cash flow, profitably exploit new business, and license and sign new agreements; the unpredictable nature of consumer preferences; and other factors set forth in the Company's most recently filed annual report and registration statement. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's analysis only as of the date hereof. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof. Readers should carefully review the risks and uncertainties described in other documents that the Company files from time to time with the U.S. Securities and Exchange Commission.

For More Information, Please Contact:
U.S. IR Contact	Israel IR Contact	Xfone Contact
John Nesbett/Jennifer Belodeau Institutional Marketing Services (IMS) Phone:  1-203-972-9200 E-mail: jnesbett@institutionalms.com	Zvi Rabin Kwan Communications Tel: (Israel) +972 50 560 0140 E-mail: zvi@kwan.co.il	Niv Krikov Chief Financial Officer Phone: + 972.39254446 (Israel) E-mail: niv@xfone.com