Xfone Corporate Headquarters
5307 W Loop 289 Lubbock, TX 79414 		Phone: (806) 771-5212
Fax: (806) 788-3398

XFONE Nine Months Net income Increases 152% to $1.4M or $0.12 Per Share on
32% Increase In Revenues to $35.3M
NTS Acquisition Expected To Close January 2008; Combined Pro Forma
Nine Months EBITDA approximately $11M

November 15, 2007

JACKSON, MS –November 15, 2007 – XFONE, Inc. (AMEX and TASE: XFN) (“XFONE” or “the Company”), a multinational communications services company with operations in the US, the UK and Israel, announced financial results for the three and nine month periods ended September 30, 2007.

Guy Nissenson, President and CEO of XFONE, stated, “I am pleased to report record quarterly and nine months results. During the third quarter, we continued to drive strong overall growth, increased margins and profitability. Our UK and Israeli subsidiaries grew 62% and 52%, respectively, as a result of innovative niche marketing strategies and strong customer retention. This growth resulted in our gross profit margin for the first nine months of 2007 reaching 57 percent of sales compared to 39 percent in 2006 and a 152 percent increase in net income. Our definitive agreement to acquire Texas-based NTS, which we announced in August, is expected to provide tremendous additional scale to our business in the US, catapulting XFONE’s sales to over $110 million with annualized EBITDA exceeding $14 million.”

Financial highlights for the three months ended September 30, 2007 compared to the three months ended September 30, 2006:
  • Total revenues increased 25.8% to $12.1 million from $9.7 million
  • Gross profit margins rose to 59.6% of sales from 41.5%
  • Operating profit grew to $848,544 from $419,214
  • EBITDA for the quarter increased 137% to $1.1 million from $482,457.
  • Net income increased to $565,467, or $0.05 earnings per diluted share, compared to $210,917, or $0.02 per diluted share
  • Xfone USA has experienced continued attrition of residential dial-up customers. XFONE USA’s improved sales organization has strategically refocused on the business market and has seen significant growth in new customer wins through October.
Financial highlights for the nine months ended September 30, 2007 compared to the nine months ended September 30, 2006:
  • Total revenues increased 32.5% to $35.3 million from $26.6 million
  • Gross profit margins rose to 57% from 39%
  • Operating profit grew to $2.3 million from $803,361
  • EBITDA for the period increased to $3.1 million from $1.5 million
  • Net income increased to $1.4 million, or $0.12 earnings per diluted share, compared to $564,580, or $0.06 per diluted share
  • Net cash provided by operating activities of $3.2M provided for the repayment of short and long term financial debt by $2.5M
As of September 30, 2007, XFONE had $11,022,191 in cash and accounts receivable and total shareholders’ equity of $21,892,830.

NTS Acquisition
On August 23, 2007, XFONE announced the signing of a definitive agreement to acquire NTS Communications, Inc., a premier provider of integrated voice, data and video solutions, headquartered in Lubbock, Texas with approximately 47,500 residential and business customers. NTS serves a diverse and stable customer base that includes financial institutions, energy companies, medical enterprises, and governmental and educational entities. NTS has invested over $23 million in developing a Fiber-to-the-Premise platform, which enables unique economies and allows NTS to provide a voice, data and cable “triple play” offering to residential and business customers.

For the first nine months of 2007, on an unaudited pro forma combined basis, adjusted XFONE, NTS and Auracall revenues totaled $85.8 million with approximately $11million in EBITDA.

Mr. Nissenson commented, “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 financing and receipt of regulatory approvals where relevant.

Conference Call:
The Company will host a conference call this morning at 9:00 a.m. Eastern Time to discuss the Company’s third 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 262333. 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.


XFONE, INC. AND SUBSIDIARIES
Consolidated Statement of Operations
(unaudited)
 
  Nine months ended
September 30, 		Three months ended
September 30,
  2007 2006 2007 2006
 
Revenues $35,298,441 $26,648,167 $12,144,919 $9,654,252
Cost of revenues 15,232,960 16,348,972 4,909,717 5,647,202
         
Gross profit 20,065,481 10,299,195 7,235,202 4,007,050
         
Operating expenses:        
  Research and development 38,245 31,770 6,449 10,590
  Marketing and selling 8,598,893 2,661,663 3,124,387 1,120,273
  General and administrative 9,102,552 6,802,401 3,255,822 2,456,973
         
Total operating expenses 17,739,690 9,495,834 6,386,658 3,587,836
         
Operating profit (loss) 2,325,791 803,361 848,544 419,214
         
Financing expenses, net (380,347) (338,724) (73,652) (139,100)
Equity in income of affiliated company 132,868 (11,187) 20,283 (147,450)
Profit (loss) from a change of holding of affiliated company   (56,194)    
Other income   64,361   20,930
         
Income (loss) before minority interest and taxes 2,078,312 461,617 795,175 153,594
         
Minority interest (218,138) 79,727 (45,007) 67,156
         
Income before taxes 1,860,174 541,344 750,168 220,750
         
Taxes benefits (expenses) (438,873) 23,236 (184,701) (9,833)
         
Net income $1,421,301 $564,580 $565,467 $210,917
         
Earnings per share:        
Basic $ 0.124 $ 0.060 $ 0.049 $ 0.020
         
Diluted $ 0.124 $ 0.060 $ 0.049 $ 0.020
         
Weighted average shares outstanding:        
Basic 11,495,871 9,615,690 11,528,181 10,966,100
         
Diluted 11,495,871 10,075,460 11,528,181 11,425,870
         


  Nine Months Ended 9/30/07 Nine Months Ended 9/30/06 Three Months Ended 9/30/07 Three Months Ended 9/30/07
Net income $1,421,301 $ 564,580 $ 565,467 $ 210,917
Depreciation and amortization 823,384 690,865 296,696 226,670
Financing expenses, net 380,347 338,724 73,652 139,100
Equity in income of affiliated company (132,868) 11,187 (20,283) 147,450
Loss from a change of holding of affiliated company - 56,194 - -
Other income - (64,361) - (20,930)
Minority interest 218,138 (79,727) 45,007 (67,156)
Taxes on income 438,873 (23,236) 184,701 (153,594)
         
EBITDA* $ 3,149,175 $ 1,494,226 $ 1,145,240 $ 482,457
         


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 worldwide. 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