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Jackson, Mississippi – October 11, 2007 – XFONE, Inc. (AMEX and TASE: XFN) announced today that NTS Communications, Inc. (“NTS”) has recently been approved by the United States Department of Agriculture to receive $11.8 million in Rural Utilities Service (RUS) broadband loan funding for the purchase and installation of the network, central office and customer premise equipment that will make up NTS’ Fiber-to-the-Premise (FTTP) optical network to be constructed in the Levelland and Smyer, Texas markets. The term of the loan is 17 years, with interest only to be paid in the first year. The interest rate is based upon the prevailing average rate of marketable treasury obligations.

XFONE recently signed a definitive agreement to acquire NTS.

NTS will offer voice, video and data options via its FTTP Network to an estimated 6,000 customers. The RUS loan will fund an aggressive network build out which is planned to begin in the later part of 2007 with the first customers expected to be added in the second quarter of 2008. Based on a market survey conducted in accordance with RUS guidelines, NTS projects a market penetration of nearly 70%. Market analysis indicates that 69% of the target market customers now have Internet service and 82% of these potential customers have transmission speeds below 1 Mpbs. The NTS residential data package will include an 8 Mbps downstream/1Mbps upstream transmission rate which will be offered with both voice and video services.

NTS will leverage the technology, expertise and experience it has gained successfully offering FTTP services to customers in Lubbock, Texas.

Guy Nissenson, CEO of XFONE stated, “The RUS funds provide NTS with a very low cost of capital to finance the next phase of FTTP roll-out in Western Texas. The company’s successful introduction of this service in Lubbock, Texas has demonstrated a very high adoption rate by homes passed, high gross margins and high customer retention rates. FTTP is a state-of-the-art offering and we expect a rapid return on the investment in this project."

RUS broadband loans are granted as part of the USDA’s Rural Development Telecom-munications Program, which provides financing for the development of telecommunications infrastructure in rural America through partnerships with rural cooperatives, nonprofit associations, public bodies and for-profit utilities. Specifically, The Broadband Access Loan Program provides loans for funding the costs of construction, improvement and acquisition of facilities to provide broadband service to eligible rural communities.

On August 23, 2007 XFONE announced that it had signed a definitive agreement to acquire NTS, a premier provider of integrated voice, data and video solutions, headquartered in Lubbock, Texas. The acquisition is expected to significantly expand XFONE’s service area and creates a diversified communications services company with combined annualized revenues and EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) exceeding $114 million and $14 million, respectively based upon the first six months of 2007 unaudited results. The acquisition is expected to dramatically enhance XFONE’s revenues, cash flows, and profitability while concurrently positioning the company to take advantage of significant opportunities to drive future growth and profits through innovative service offerings and operating synergies. Completion of the acquisition is subject to certain conditions, including obtaining financing and the receipt of regulatory approvals where relevant.