August 15, 2007

JACKSON, MS –August 15, 2007 – XFONE, Inc. (AMEX and TASE: XFN) (“XFONE” or “the Company”), an international diversified communications services company announced financial results for the three and six month periods ended June 30, 2007.

Financial highlights for the three months ended June 30, 2007 compared to the three months ended June 30, 2006:

Total revenues increased 39% to $11,629,806 from $8,367,198 Gross profit margins rose to 55.9% of sales from 37.8%. XFONE’S operations in the UK increased 79.9% to $6,478,252. XFONE USA revenues decreased 8.8% to $3,191,865. Revenues from XFONE 018, the Company’s Israeli-based operations, increased 55% to $1,959,689. Operating profit grew to $781,293 from $250,796. EBITDA for the quarter increased 100% to $1,052,983 from $525,707. Net income increased to $411,439, or $0.036 earnings per basic share, compared to $229,209, or $0.023 per basic share.

Financial highlights for the six months ended June 30, 2007 compared to the six months ended June 30, 2006:

Total revenues increased 38.7% to $23,153,522 from $16,690,082 Gross profit margins also improved, rising to 55.4% from 37%. XFONE’S operations in the UK contributed $12,574,190 to total revenues, a 80.8% increase from revenues of $6,955,045. XFONE USA revenues decreased 9.1% to $6,610,958. Revenues from XFONE 018, the Company’s Israeli-based operations, increased 60.9% to total $3,968,374. Operating profit grew to $1,477,247 from $419,935. EBITDA for the period increased 127% to $2,003,935 from $884,130. Net income increased to $855,834 or $0.075 earnings per basic share, compared to $347,342, or $0.038 per basic share.

As of June 30, 2007, XFONE had $10,457,597 in cash and accounts receivable and total shareholders’ equity of $21,238,445.

Guy Nissenson, President and CEO of XFONE, stated, “During the quarter, we continued to see significant overall growth driven by strong performance from our UK and Israeli operations. The increased revenues coupled with lower fixed costs continue the enhanced margins and meaningful profitability that we saw in the first quarter of this year. We achieved this despite a higher than expected attrition of US dial-up customers for the quarter. We continued to make significant investments in sales and marketing to drive organic growth across our company, and remain very focused on organic growth and attracting small business customers. Furthermore, we continue to evaluate acquisition candidates to help add scale to our business as we look to build a multi-hundred million dollar international telecom company.”

Conference Call:

The Company will host a conference call this morning at 9:00 a.m. Eastern Time to discuss the Company’s second quarter results. The conference call may be accessed in the U.S. and Canada by dialing toll- free 1-877-407-8033. International callers may access the call by dialing 1-201-689-8033.

A replay of the teleconference will be available for 30 days after the call and may be accessed domestically by dialing 1-877-660-6853 and international callers may dial 1-201-612-7415. Callers must enter account number 286 and conference number 251541.
To access the live webcast, log onto the XFONE website at http://www.xfone.com. The webcast can also be accessed at http://www.InvestorCalendar.com. An online replay will be available shortly after the call.




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

XFONE, INC. AND SUBSIDIARIES Consolidated Statement of Operations (unaudited)   Six months ended June 30, Three months ended June 30,   2007 2006 2007 2006 Revenues $ 23,153,522 $ 16,690,082 $ 11,629,806 $ 8,367,198 Cost of revenues (10,323,243) (10,510,433) (5,130,021) (5,206,666) Gross profit 12,830,279 6,179,649 6,499,785 3,160,532 Operating expenses: Research and development (31,796) (20,801) (16,018) (10,401) Marketing and selling (5,474,506) (1,513,832) (2,742,530) (792,328) General and administrative (5,846,730) (4,225,081) (2,959,944) (2,107,007) Total operating expenses (11,353,032) (5,759,714) (5,718,492) (2,909,736) Operating profit (loss) 1,477,247 419,935 781,293 250,796 Financing expenses, net (306,695) (196,055) (166,826) (50,962) Equity in income of affiliated company 112,585 133,827 33,449 38,759 Profit (loss) from a change of holding of affiliated company (55,189) Income (loss) before minority interest and taxes 1,283,137 302,518 647,916 238,593 Minority interest (173,131) 12,346 (80,996) (9,299) Income before taxes 1,110,006 314,864 566,920 229,294 Taxes benefits (expenses) (254,172) 32,478 (155,481) (85) Net income $ 855,834 $ 347,342 $ 411,439 $ 229,209 Earnings per share: Basic $ 0.075 $ 0.03 $ 0.036 $ 0.023 Diluted $ 0.075 $ 0.036 $ 0.036 $ 0.022 Weighted average shares outstanding: Basic 11,481,080 9,033,069 11,521,916 9,800,069 Diluted 11,481,080 9,607,782 11,531,220 10,374,782 Reconciliation of Non-GAAP Financial Measures* Net income $ 855,834 $ 347,342 $ 411,439 $ 229,209 Depreciation and amortization 526,688 464,195 271,690 274,911 Financing expenses, net 306,695 196,055 166,826 50,962 Equity in income of affiliated company (112,585) (133,827) (33,449) (38,759) Loss from a change of holding of affiliated company 55,189 Minority interest 173,131 -12,346 80,996 9,299 Taxes on income 254,172 -32,478 155,481 85 EBITDA* $ 2,003,935 $ 884,130 $ 1,052,983 $ 525,707