XFONE Letter to Shareholders

LUBBOCK, Texas--(Business Wire)--
XFONE, Inc. (NYSE Amex and TASE: XFN) ("XFONE" or "the Company") today released
the following letter to shareholders:

Dear Xfone Shareholders, Customers and Friends,

I am pleased to report our 2009 first quarter results. In spite of the
challenging economic landscape, we reported a solid first quarter performance
with revenues increasing 36% to $21.5 million and EBITDA (earnings before
interest, taxes, depreciation and amortization) of $2 million. Since last year
we have dramatically enhanced the size and scope of our Company with the
acquisition of NTS Communications in Texas and positioned Xfone to realize a
growing revenue percentage from the higher margin Fiber-To-The-Premise (FTTP)
offering. We have an exceptional customer base, industry leading technology and
a diverse revenue stream. Furthermore, a new growth engine has emerged with the
rural broadband build-out initiative from Washington. While still early in the
process, we believe this presents an opportunity for Xfone to accelerate its
penetration of new markets with an extremely low cost of capital for current
shareholders.

Earnings for the quarter benefited from a favorable exchange rate. Net financing
income increased to $1.5 million in the quarter ended March 31, 2009 compared to
a net financing expense of $903,169 in the quarter ended March 31, 2008,
primarily attributed to the effect of fluctuation in the exchange rate of the
New Israeli Shekel (NIS) on the Company`s bonds which are stated in NIS and
linked to the Israeli Consumer Price Index (CPI). The Bonds, which are traded in
Israel on the Tel Aviv Stock Exchange, were issued to facilitate the acquisition
of NTS.

Net income was $2.3 million, or $0.13 per share assuming 18.4 million diluted
shares through March 31, 2009, compared to net income of $81,130 or $0.005 per
share, assuming 15.4 million diluted shares outstanding through March 31, 2008.

Our non-U.S. subsidiaries continued to contribute cash flow to the business even
in this global economic slowdown. Nonetheless, currency fluctuation
significantly impacted their reported revenues. For example, our UK revenues
showed a decline of 24% to $3.7 million compared to the same quarter last year.
Notwithstanding the currency valuation, nominal revenues in the UK were flat
compared to the same quarter last year. Likewise, revenues at Xfone 018, our
Israeli division, decreased 4.6% to $2.2 million for the first quarter of 2009
compared to the first quarter of 2008 due to the revaluation of the U.S. Dollar
to the New Israeli Shekel in the quarter ended March 31, 2009. Notwithstanding
this currency valuation, the nominal revenues in Israel demonstrated an increase
of 11% as a result of Xfone 018`s new marketing initiatives.

Looking forward, we believe that there are two strategic initiatives that will
be important for building shareholder value over the next few years:

Growing Our FTTP Business

FTTP is a key profitability driver for our Company and we believe there are
significant opportunities for our services in select communities. Our ability to
provide a voice, video and data "triple play" offering attracts customers who,
because they are subscribing to three services rather than one, generate higher
monthly revenue per customer. For example, Average Revenue Per User (ARPU), at
March 31, 2009 for our non-FTTP U.S. customers approximated $75 per month, while
ARPU for residential FTTP customers exceeded $175 per month with business FTTP
customers exceeding $300 per month. Furthermore, these customers tend to stay;
monthly business and residential FTTP had an attrition rate of approximately
just 1% and 1.7%, respectively during the quarter.

In addition to building out the Levelland network and beginning the initial
sales process in this market, we have applied for additional RUS broadband
grants/loans. If approved, these new projects will extend our FTTP footprint to
include six communities in southern Louisiana and will add approximately 20,000
additional passings to our "triple play" network.

Stimulus Plan Offers a New Opportunity for Grants and Low Cost Capital

We remain highly focused on obtaining both grants and loans currently being made
available under the federal government's stimulus plan for the construction of
advanced broadband networks in select secondary markets in the United States. We
believe that our previous experience working with the government on the buildout
of our Levelland network positions us very competitively as a potential
recipient of federal funding.

A major challenge with FTTP is the capital expense associated with building out
the network. One of the few advantages that have come out of the recession is
the $790 billion Economic Stimulus Package. In part, it addresses the need for
investment in broadband Internet access so that business and residential
customers in rural and other underserved areas can link to the global economy.
At Xfone, we are well aware of the need for improved communications
infrastructure for rural and underserved markets. A cornerstone of our long term
growth plan is to provide improved voice, video and data services to these
markets across the U.S.

On a separate note, we recently announced the appointment of Virchow, Krause &
Company, LLP and Baker Tilly (Horowitz Idan Goldstein Sabo Tevet), independent
members of Baker Tilly International, as our new auditors. Baker Tilly
International is the eighth largest accounting network in the world with 145
members in 110 countries. With a presence in the United States, United Kingdom
and Israel, our new auditors have the scale and expertise to handle Xfone`s
audit requirements as we continue to grow our business.

Thank you for your continued support of Xfone.

Sincerely,

Guy Nissenson

President and Chief Executive Officer

Xfone, Inc.

This letter 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 letter, 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.

US IR:
Institutional Marketing Services (IMS)
John G. Nesbett/Jennifer Belodeau, 1-203-972-9200
jnesbett@institutionalms.com
or
XFONE, Inc.:
Niv Krikov, CFO, +972 39254446 (Israel)
niv@xfone.com

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