August 15, 2007

XFONE Second Quarter Revenue Increases 39% to $11.6 Million and EBITDA Increases 100% To $1 Million

Financial highlights for the six months ended June 30, 2007 compared to the six months ended June 30, 2006:

As of June 30, 2007, XFONE had $10,457,597 in cash and accounts receivable and total shareholders’ equity of $21,238,445.

Guy Nissenson, President and CEO of XFONE, stated, “During the quarter, we continued to see significant overall growth driven by strong performance from our UK and Israeli operations. The increased revenues coupled with lower fixed costs continue the enhanced margins and meaningful profitability that we saw in the first quarter of this year. We achieved this despite a higher than expected attrition of US dial-up customers for the quarter. We continued to make significant investments in sales and marketing to drive organic growth across our company, and remain very focused on organic growth and attracting small business customers. Furthermore, we continue to evaluate acquisition candidates to help add scale to our business as we look to build a multi-hundred million dollar international telecom company.”

Conference Call:

The Company will host a conference call this morning at 9:00 a.m. Eastern Time to discuss the Company’s second 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 251541.
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 telephone services; prepaid and postpaid calling cards; cellular services; VoIP services; reselling opportunities; and email and fax broadcasting services. The Company serves customers across Europe, Australia, North America, South America, Asia 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./i>

For More Information, Please Contact:

For More Information, Please Contact:
	International IR Contact	Israel IR Contact
	John Nesbett 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

XFONE, INC. AND SUBSIDIARIES Consolidated Statement of Operations (unaudited)
	Six months ended June 30,		Three months ended June 30,
	2007	2006	2007	2006
Revenues	$ 23,153,522	$ 16,690,082	$ 11,629,806	$ 8,367,198
Cost of revenues	(10,323,243)	(10,510,433)	(5,130,021)	(5,206,666)
Gross profit	12,830,279	6,179,649	6,499,785	3,160,532
Operating expenses:
Research and development	(31,796)	(20,801)	(16,018)	(10,401)
Marketing and selling	(5,474,506)	(1,513,832)	(2,742,530)	(792,328)
General and administrative	(5,846,730)	(4,225,081)	(2,959,944)	(2,107,007)
Total operating expenses	(11,353,032)	(5,759,714)	(5,718,492)	(2,909,736)
Operating profit (loss)	1,477,247	419,935	781,293	250,796
Financing expenses, net	(306,695)	(196,055)	(166,826)	(50,962)
Equity in income of affiliated company	112,585	133,827	33,449	38,759
Profit (loss) from a change of holding of affiliated company		(55,189)
Income (loss) before minority interest and taxes	1,283,137	302,518	647,916	238,593
Minority interest	(173,131)	12,346	(80,996)	(9,299)
Income before taxes	1,110,006	314,864	566,920	229,294
Taxes benefits (expenses)	(254,172)	32,478	(155,481)	(85)
Net income	$ 855,834	$ 347,342	$ 411,439	$ 229,209
Earnings per share:
Basic	$ 0.075	$ 0.03	$ 0.036	$ 0.023
Diluted	$ 0.075	$ 0.036	$ 0.036	$ 0.022
Weighted average shares outstanding:
Basic	11,481,080	9,033,069	11,521,916	9,800,069
Diluted	11,481,080	9,607,782	11,531,220	10,374,782
Reconciliation of Non-GAAP Financial Measures*
Net income	$ 855,834	$ 347,342	$ 411,439	$ 229,209
Depreciation and amortization	526,688	464,195	271,690	274,911
Financing expenses, net	306,695	196,055	166,826	50,962
Equity in income of affiliated company	(112,585)	(133,827)	(33,449)	(38,759)
Loss from a change of holding of affiliated company		55,189
Minority interest	173,131	-12,346	80,996	9,299
Taxes on income	254,172	-32,478	155,481	85
EBITDA*	$ 2,003,935	$ 884,130	$ 1,052,983	$ 525,707