Xfone Acquires NTS

JACKSON, Miss. -- XFONE, Inc. (AMEX and TASE: XFN) announced that it has signed a definitive agreement to acquire NTS Communications, Inc., 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 $13 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.

The purchase price for the acquisition is $42 million (excluding acquisition related costs). Given the strong cash flow and balance sheet of the combined company, XFONE expects to finance the acquisition primarily with debt financing and is currently in discussions with potential lenders to close a financing in conjunction with the consummation of the acquisition.

Completion of the acquisition is subject to certain conditions, including receipt of regulatory approvals where relevant.

NTS operates the largest “non-ILEC” telecommunications network in West Texas, providing local, long distance, broadband data, video and private line services to approximately 47,500 residential and business customers. Based upon NTS’s unaudited six month results through June 30, 2007, NTS generated annualized revenues and EBITDA of approximately $68 million and $9.1 million, respectively.

Guy Nissenson, President and CEO of XFONE stated, “This acquisition makes enormous sense both economically and operationally. NTS contributes a high-quality facilities-based telecommunications network; a solid base of loyal customers; an effective sales and service operation and a 25 year history in Texas. The addition of NTS is expected to substantially increase our presence in the United States and provides multiple opportunities to leverage the operational strengths of both companies. We expect to drive EBITDA improvement as we integrate the operations.”

XFone Inc. (OTC: XFNE)