XFN Xfone Common Stock

CEO Comments on Company's Positive Performance and Corporate Developments JACKSON, Miss., June 1 /PRNewswire-FirstCall/ -- In a letter to Company stockholders, Guy Nissenson, President and Chief Executive Officer of XFONE, Inc. (AMEX:XFN) ("XFONE" or "the Company"), an international diversified communications services company, stated the following: "I'm pleased to confirm that 2006 is indeed off to a great start as evidenced by our strong and profitable first quarter results. Through the implementation of our carefully crafted global growth strategy, XFONE, Inc. has improved its top and bottom line results and expanded its business. Total revenues increased to $7.8 million for the three months ended March 31, 2006 - up 26% over $6.2 million in revenues reported for the first quarter of 2005. Net income also improved, rising 35% to $111,000 from $82,000. "Driven largely by operational improvements and investments, we believe that we have only begun to realize the value inherent in our worldwide business operations and are actively engaged in fostering an environment for those businesses to grow rapidly and profitably. "We are particularly enthused by the progress we made on the U.S. operations acquisition front in the first quarter. XFONE USA not only completed the acquisitions of I-55 Internet Services and I-55 Telecommunications (both acquisitions began in late 2005), but it also closed on the asset purchases of EBI Comm, Inc. and Canufly.net, Inc., both internet service providers operating in Mississippi. "Collectively, these four acquisitions are serving to greatly strengthen XFONE USA's growth platform in the U.S. Gulf Coast region, providing for a much broader customer service footprint that now spans Mississippi, Alabama and Louisiana. Moreover, through cross-marketing of bundled communications products and services to our expanded customer base, XFONE USA is focused on materially increasing recurring revenue in the quarters ahead, while actively promoting enhanced customer loyalty to the XFONE brand. "During the three months ended March 31, 2006, XFONE USA increased its revenues 125% to $3.6 million - rising from $1.6 million posted in the same quarter of the prior year. Through continued organic growth of our expanded US operations, coupled with ongoing execution of our growth through acquisition strategy within the Gulf Coast region, we remain highly confident that XFONE USA will be a very strong performer for our Company in the year ahead. Moreover, we have reason to believe that the U.S. market will represent the greatest long term growth potential for XFONE, Inc. "XFONE 018, our Israel-based business, also enjoyed a strong first quarter. Having now served over 230,000 registered and non-registered users of our international telecommunications services since it launched operations in December 2004, XFONE 018 booked revenues of $1.1 million in the first quarter of 2006; more than tripling revenues when compared to the $373,000 reported in the first quarter of 2005. XFONE 018 was also able to breakeven on an EBITDA basis during the first quarter, compared to a loss of $160,000 in the prior year period helping to support our belief that this business will prove to be a material contributor to XFONE, Inc.'s overall growth and profitability in 2006. "Although revenues from Swiftnet, our United Kingdom operations, fell 24% to $3.2 million in the first quarter, down from $4.2 million in the 2005 first quarter period, our management team has been engaged in a series of strategic activities in order to strengthen our long term growth prospects in that region of the world. Of particular note is our recent purchase of a majority stake in Story Telecom and our recent acquisition of Equitalk.co.uk Limited, a privately held telephone company that holds the distinction of being the U.K.'s first fully automated e-telco. "Swiftnet and Equitalk will be re-branded and combined under "XFONE U.K." Through the appointment of Equitalk's founder John Burton as the new Managing Director of XFONE U.K., we are confident that we have the right leadership, the right mix of products and services, and the right execution strategy to position XFONE U.K. as a noted leader in the U.K. telecom industry, as well as a customer-preferred supplier of a comprehensive range of low cost, high quality voice, video and data products. "Clearly the stage for growth in 2006 has been set. Early indications are very encouraging across each of our businesses, supporting our position that we are poised to achieve a record year of revenue growth. In fact, I'm pleased to reiterate revenue guidance for the year of $36 million to $38 million, and note that we remain very optimistic that 2006 will mark our seventh-consecutive year of profitability. "With strong cash and accounts receivable positions, approximately $8.7 million as of March 31, 2006, as well as a defined road map to reach our ambitious growth objectives in each of our businesses, XFONE is off to a very exciting year. I would like to reiterate that, the ongoing support and dedication of our employees, partners, customers and shareholders has been our most valuable asset and will continue to play a leading role in driving our long term success. "I look forward to keeping you updated on all of our accomplishments in future quarterly letters," concluded Nissenson. 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 telephone services; prepaid and postpaid calling cards; cellular services reselling opportunities; and email and fax broadcasting services. The Company serves customers across Europe, Asia, North America, South America, Australia and Africa. 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 Securities and Exchange Commission. For More Information, Please Contact: At XFONE, Inc. Alon Mualem, Chief Financial Officer, 011-972-39254446 or via email at Or Elite Financial Communications Group Dodi Handy, 407-585-1080 or via email at DATASOURCE: XFONE, Inc. CONTACT: Alon Mualem, Chief Financial Officer of XFONE, Inc., +011-972-39254446, or ; or Dodi Handy of Elite Financial Communications Group, +1-407-585-1080, or Web site: http://www.xfone.com/

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