XFONE Reports 2007 Unaudited Pro Forma EPS of $0.30 (Excluding One-Time Non-Recurring...

XFONE Reports 2007 Unaudited Pro Forma EPS of $0.30 (Excluding One-Time Non-Recurring Charge) and $111 Million in Revenues

Pro Forma Results Combine Xfone and Recently Acquired NTS
Communications
JACKSON, Miss.--(Business Wire)--
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 audited consolidated financial
statements for the year ended December 31, 2007 and pro forma
unaudited combined results of Xfone and NTS Communications, Inc.
("NTS"), which Xfone acquired on February 26, 2008, as if the
acquisition had occurred on January 1, 2007.

Pro forma revenue for the year was $111.2 million. Pro forma
adjusted 2007 EBITDA (earnings before interest, taxes, depreciation
and amortization) which excludes a $2.9 million non-recurring loss
related to the MCI Worldcom legal case, was $12 million. Pro forma net
income, excluding the non-recurring charge of $2.9 million, was $5.6
million, or $0.30 per share assuming 18.4 million fully diluted shares
outstanding through 2007. Actual pro forma net earnings for the year
was $3.6 million, or $0.19 per share based on 18.4 million fully
diluted shares outstanding through 2007.

Guy Nissenson, President and CEO of XFONE, stated, "2007 was an
exciting and transformative year for our company. Concurrent with 18%
stand alone growth, we focused on closing the acquisition of NTS which
was consummated in February of 2008. The addition of NTS dramatically
increases XFONE's scale, reach and service offerings in the United
States. Notably, NTS has invested $23 million in developing a
Fiber-to-the-Premise (FTTP) platform which enables unique economies
and facilitates a voice, data and cable 'triple play' offering for
customers. The combined Company expects to drive future growth and
profits through innovative service offerings such as the 'triple play'
and by leveraging its existing operating synergies. The magnitude of
this acquisition is reflected in the strong pro forma earnings.
Furthermore, the integration process is underway and we look forward
to driving additional synergies in 2008."

Audited revenues for the year ended December 31, 2007, not
including NTS, increased 18% to $44,723,934 from $37,971,037. As the
result of the one-time non-recurring $2.9 million expense the company
reported a net loss of $1.3 million, or $0.11 per share based on
11,779,390 weighted average fully diluted shares outstanding. Net
income for 2006 was $660,696, or $0.06 per share based on 10,135,874
weighted average fully diluted shares outstanding.

Mr. Nissenson noted, "Our results in the UK decreased in the later
part of 2007 due to an increase in the cost which customers calling
our international services from a mobile phone have to pay, as levied
by the mobile operator. This made one of our products no longer cost
effective. As a result, our team in the UK mobilized quickly to offer
customers an alternative product which gives them the opportunity to
buy credit for international calls through premium rate text. This has
been successful in terms of migrating customers, and total monthly
minutes switched have since stabilized and are increasing as we head
into 2008."

Mr. Nissenson concluded, "In the first quarter of 2008 we
announced the signing of an Agreement of Principles for the
acquisition of majority interest of Tadiran Telecom Communications
Services in Israel. Tadiran, with annualized revenue of approximately
$24 million based on unaudited financial reports for the period ended
September 30, 2007, brings an installed customer base of medium to
large size businesses in Israel which we intend to use as a gateway to
the local telecom market in Israel. Additionally, we announced the
purchase of the remaining shares of Story Telecom, providing us with
100% ownership of that subsidiary. Moving forward, we expect these
developments, coupled with the successful integration of NTS, to
provide a positive impact on our earnings."

The audited financial information and unaudited pro forma
financial information above should be read in conjunction with the
historical financial statements of Xfone for the year ended December
31, 2007, which was filed with the Company's Annual Report on Form
10-KSB with the U.S. Securities and Exchange Commission today, and in
conjunction with the historical financial statements of NTS and pro
forma financial statements of Xfone, which will be included in a
Current Report on Form 8-K/A and filed with the SEC within 30 days.

The unaudited pro forma consolidated financial information
presented herein does not purport to represent what Xfone's actual
results of operations would have been had the acquisition of NTS
occurred on January 1, 2007, or to project Xfone's results of
operations for any future period.

Conference Call:

The Company will host a conference call on Wednesday, April 2 at
2:00 p.m. Eastern Time to discuss the financial 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 280251.

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 worldwide.

This press release contains forward-looking statements. The words
or phrases "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." XFONE's financial and operational
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 news 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, 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.

Xfone, Inc.

Pro Forma Combined Condensed Balance Sheet and Statements of
Operations (Unaudited)

The unaudited pro forma condensed combined financial information
reflecting the combination of Xfone, Inc, and NTS Communications Inc.
is provided for informational purposes only. The pro forma information
is not necessarily indicative of what the companies' results of
operations actually would have been had the merger been completed at
the dates indicated. In addition, the unaudited pro forma condensed
combined financial information does not purport to project the future
operating results of the combined company.

The amounts allocated to acquired assets and liabilities in the
unaudited pro forma financial statements are based on management's
preliminary valuation estimates. Definitive allocations will be
performed and finalized on a later stage. Accordingly, the purchase
price allocation pro forma adjustments included in the unaudited
financial statements are preliminary and have been made for the
purpose of providing unaudited pro forma condensed combined financial
information and are subject to revision based on a final determination
of fair value. In the opinion of management of the Company, all
adjustments have been made that are necessary to present fairly the
pro forma data.

The unaudited pro forma financial statements also include certain
purchase accounting adjustments, including items expected to have a
continuing impact on the consolidated results, such as decreased
depreciation expense on acquired tangible assets and interest payment
on debt. The unaudited pro forma statements do not include the impacts
of any revenue, cost or other operating synergies that may result from
the merger.

The pro forma condensed combined Balance Sheet reflects the result
of combining the consolidated balance sheet of Xfone, Inc and its
subsidiaries and the balance sheet of NTS Communications, Inc. as of
December 31, 2007.

The Xfone Statements of Income for the year ended December 31,
2007 have been combined with the NTS Statements of Income for the year
ended December 31, 2007.

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*T
Xfone, Inc. and Subsidiaries
----------------------------------------------------------------------
PRO FORMA BALANCE SHEETS
DECEMBER 31, 2007
(Unaudited)

NTS
Xfone, Inc. Communications
----------- ---------------

CURRENT ASSETS:
Cash $ 5,835,608 $ 7,976,454
Restricted cash 25,562,032 -
Account Receivables, net 5,886,499 3,836,531
Prepaid expenses and other receivables 3,985,307 1,536,433
Inventory - 562,995
=========== ---------------
Total current assets 41,269,446 13,912,413

INVESTMENTS - 5,791

MINORITY INTEREST 7,190 -

LONG TERM LIABILITIES 2,076,061 -

FIXED ASSETS, NET 5,747,758 29,265,524

OTHER ASSETS, NET 17,948,872 4,431,905
----------- ---------------

Total Assets $67,049,327 $47,615,633
=========== ===============

CURRENT LIABILITIES
Notes payables - current portion $ 1,094,339 $ 502,309
Trade Payables 8,287,420 2,670,852
Other liabilities and accrued expenses 5,322,045 3,530,193
Current maturities of obligations under
leases 89,654 -
Bonds - current portion 3,268,476 -
=========== ===============

Total current liabilities 18,061,934 6,703,354

DEFERRED TAXES 1,103 1,416,612

NOTES PAYABLE 1,013,808 2,745,867

OBLIGATIONS UNDER CAPITAL LEASES 31,893 -

BONDS 22,083,892 -

SEVERANCE PAY 148,600 -
----------- ---------------

Total liabilities 41,341,230 10,865,833

TOTAL SHAREHOLDERS' EQUITY 25,708,097 36,749,800
----------- ---------------

Total liabilities and shareholders' equity $67,049,327 $47,615,633
=========== ===============

Pro forma Pro form
adjustments Consolidated
---------------- ------------

CURRENT ASSETS:
Cash (3,249,373) (a) $ 10,562,689
Restricted cash (25,562,032) (b) -
Account Receivables, net 9,723,030
Prepaid expenses and other receivables (273,510) (c) 5,795,250
Inventory 562,995
-----------
Total current assets 26,643,964

INVESTMENTS - 5,791

MINORITY INTEREST - 7,190

LONG TERM LIABILITIES - 2,076,061

FIXED ASSETS, NET 3,020,281 (d) 38,033,563

OTHER ASSETS, NET 12,107,122 (e) 34,487,899
------------

Total Assets $101,254,468
============

CURRENT LIABILITIES
Notes payables - current portion $ 1,596,648
Trade Payables 10,958,272
Other liabilities and accrued expenses 1,200,000 (f) 10,052,238
Current maturities of obligations
under leases 89,654
Bonds - current portion 1,953,910 (g) 5,222,386
------------

Total current liabilities 27,919,198

DEFERRED TAXES (1,417,715) (c) -

NOTES PAYABLE 3,759,675

OBLIGATIONS UNDER CAPITAL LEASES 31,893

BONDS 22,083,892

SEVERANCE PAY 148,600
------------

Total liabilities 53,943,258

TOTAL SHAREHOLDERS' EQUITY (15,146,687) (h) 47,311,210
------------

Total liabilities and shareholders'
equity $101,254,468
============
*T

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(a). Net change in cash and cash equivalents includes:
1. Proceeds from issuance of bonds of $25.6m that as of December
31, 2007 was held as restricted cash in an escrow account.
2. Issuance of shares and warrants to XFN-RLSI Investments, LLC
and certain investors affiliated with or who are customers of
Gagnon Securities LLC. The issuance was consummated during
February 2008 for total proceeds of $8,060,000.
3. Amounts paid in cash to certain shareholders of NTS
Communications Inc. ("NTS") and acquisition costs paid in cash.
4. Adjustment of distribution of dividends to the former
shareholders of NTS during 2007 in the amount of approximately
$3m.
(b). Classification of proceeds from issuance of bonds to cash and
cash equivalents as part of closing the acquisition of NTS.
(c). Deferred tax liability in connection with interest and
depreciation expenses.
(d). Adjustment of depreciation expenses in NTS to the estimated
useful life of the assets.
(e). Record of intangible assets according to the Purchase Price
Allocation that was prepared by the Xfone. Third party valuation
will be completed within short time.
(f). Record of accrued expenses in relation to acquisition costs.
Record of interest payable to bonds holders in 2007 as if the
(g). bonds were issued on January 1, 2007.
(h). Adjustment of shareholders' equity includes:
1. Elimination of equity in NTS;
2. Issuance of common stock in connection with the acquisition
financing (as indicated in section (a)2 above);
3. Issuance of common stock and warrants to NTS senior
management; and
4. Adjustment due to distribution of dividends to the former
shareholders of NTS Communications Inc. during 2007.
*T

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Xfone, Inc. and Subsidiaries
PRO FORMA STATEMENTS OF OPERATIONS
(Unaudited)
YEAR ENDED DECEMBER 31, 2007

NTS
Xfone Inc. Communications
----------- ---------------

Revenues $44,723,934 $66,522,841
Cost of Revenues 19,626,322 40,860,503
----------- ---------------

Gross profit 25,097,612 25,662,338

Operating expenses:
Research and development 47,609 -
Marketing and selling 10,886,883 4,473,363
General and administrative 12,335,759 18,232,129
Non recurring loss 2,856,803 -
----------- ---------------

Total operating expenses 26,127,054 22,705,492
----------- ---------------

Operating profit (loss) (1,029,442) 2,956,846

Financing income (expenses), net (515,562) 134,449
Equity in income of affiliated
company 132,867 -
Other income - 480,869
----------- ---------------

Income (loss) before minority
interest and taxes (1,412,137) 3,572,164

Minority interest (297,860) -
----------- ---------------

Income before taxes (1,709,997) 3,572,164

Taxes on income 426,105 (1,486,897)
----------- ---------------

Net Income (loss) $(1,283,892) $ 2,085,267
=========== ===============

Adjustment of non recurring loss 1,999,762 (d)
-----------

Net income from recurring operations $ 715,870 (d)
===========

Earning per share:
Basic and Diluted $ (0.109)
===========

Adjustment of non recurring loss 0.170 (d)
-----------

Basic and Diluted $ 0.061
===========

Pro forma Pro forma
adjustments Consolidated
------------ ------------

Revenues $111,246,775
Cost of Revenues 60,486,825
------------

Gross profit 50,759,950

Operating expenses:
Research and development 47,609
Marketing and selling 15,360,246
General and administrative (3,020,081) (a) 27,547,607
Non recurring loss 2,856,803
------------

Total operating expenses 45,812,265
------------

Operating profit (loss) 4,947,685

Financing income (expenses), net (1,953,909) (b) (2,335,023)
Equity in income of affiliated
company 132,867
Other income 480,869
------------

Income (loss) before minority
interest and taxes 1,066,372 3,226,398

Minority interest - (297,860)
------------

Income before taxes 1,066,372 2,928,538

Taxes on income 1,691,225 (c) 630,433
------------

Net Income (loss) $ 3,558,971
============

Adjustment of non recurring loss 1,999,762 (d)
------------

Net income from recurring
operations $ 5,558,733
============

Earning per share:
Basic and Diluted $ 0.193
============

Adjustment of non recurring (d)
loss 0.109

Basic and Diluted $ 0.302
============
*T

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(a) Adjustment of depreciation expenses as result of Purchase Price
Allocation that was prepared by Xfone. Third party valuation will
be completed within short time.
(b) Interest expense on bonds in 2007 as if the bonds were issued on
January 1, 2007.
(c) Adjustment of income taxes in connection with depreciation and
interest expenses.
(d) Excluding the effect of non recurring loss, net of income tax.
*T

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Xfone, Inc. and Subsidiaries

STATEMENT OF OPERATIONS

Years Ended
December 31
------------------------
2007 2006
----------- -----------

Revenues $44,723,934 $37,914,037
Cost of revenues 19,626,322 21,968,998
------------ -----------

Gross profit 25,097,612 15,945,039
------------ -----------

Operating expenses:
Research and development 47609 45,709
Marketing and selling 10,886,883 4,937,007
General and administrative 12,335,759 9,927,301
Non- recurring loss 2,856,803
------------ -----------

Total operating expenses 26,127,054 14,910,017
------------ -----------

Operating profit (loss) (1,029,442) 1,035,022
Financing expenses, net (515,562) (540,688)
Equity in income of affiliated company 132,867 60,574
Loss from a change of holding of affiliated
company - (58,472)
Other income - 84,723
------------ -----------

Income (loss) before minority interest and
taxes (1,412,137) 581,159

Minority interest (297,860) 81,802
------------ -----------

Income (loss) before taxes (1,709,997) 662,961

Taxes on income 426,105 (2,265)

Net income (loss) $(1,283,892) $ 660,696
============ ===========

Basic net profit (loss) per share $ (0.109) $ 0.065
============ ===========

Diluted net profit (loss) per share $ (0.109) $ 0.065
============ ===========

Weighted average number of shares used for
computing:
Basic profit (loss) per share 11,777,645 10,135,874
============ ===========

Diluted profit (loss) per share 11,779,390 10,135,874
============ ===========

*T

US IR
Institutional Marketing Services (IMS)
John G. Nesbett/Jennifer Belodeau
203-972-9200
jnesbett@institutionalms.com
or
XFONE, Inc.
Niv Krikov, CFO, +972 39254446 (Israel)
niv@xfone.com
or
Israel IR
Kwan Communications
Zvi Rabin, +972 50 560 0140 (Israel)
zvi@kwan.co.il

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