Lubbock, TX – August 14, 2009 – XFONE, Inc. (NYSE Amex and TASE: XFN) (“XFONE” or “the Company”) announced results for the three and six months ended June 30, 2009.

Guy Nissenson, President and CEO, commented, “Despite this difficult time for the worldwide economy and the telecommunications industry in particular, Xfone delivered solid second quarter results. Sequentially, revenues remained essentially flat for the second quarter of 2009 as compared to the first quarter of 2009. We also saw highlights during the quarter such as a further reduction in SG&A in the US. Unfortunately, the quarter also included a one-time non-recurring loss of $506,176 related to the unsuccessful promotion of pre-paid calling cards at Xfone 018. As a result of the loss, the Company discontinued the distribution of these calling cards. Without the one-time loss, adjusted EBITDA for the second quarter was $2.1 million compared to $3.1 million in the second quarter of 2008. Including the one-time loss we reported EBITDA of $1.5 million.”

Financial highlights for the three months ended June 30, 2009:

• Total revenues were $21.4 million, a decrease of 17.1% compared to $25.9 million for the three months ended June 30, 2008.
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was $2.1 million compared to $3.1 million for the three months ended June 30, 2008.
• Operating income excluding non-recurring loss was $1.1 million, compared to $1.9 million for the three months ended June 30, 2008.
• Net financing expense decreased to $2.7 million, compared to $3.1 million for the three months ended June 30, 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 Company reported a net loss of $1.9 million or a loss of $0.10 per share, assuming 18,376,075 fully diluted shares outstanding at June 30, 2009, compared to a net loss of $1 million or $0.05 per share, assuming 18,404,632 fully diluted shares outstanding at June 30, 2008.
• The Company reported positive cash flow from operating activities of $1.9 million for the three months ended June 30, 2009, compared to negative $0.8 million for the three months ended June 30, 2008.

Financial highlights for the six months ended June 30, 2009:

• Total revenues increased 3% to $42.9 million compared to $41.6 million for the six months ended June 30, 2008.
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was $4 million compared to $4.8 million for the six months ended June 30, 2008.
• Operating income excluding non-recurring loss was $2.1 million, compared to $3 million for the six months ended June 30, 2008
• Net financing expenses decreased to $1.2 million, compared to a net financing expense of $4 million for the six months ended June 30, 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 Company reported net income of $0.5 million or $0.025 per share, assuming 18,376,075 fully diluted shares outstanding at June 30, 2009, compared to a net loss of $0.9 million or $0.05 per share, assuming 16,864,161 fully diluted shares outstanding at June 30, 2008.
• The Company reported positive cash flow from operating activities of $3.1 million compared to $0.5 million for the six months ended June 30, 2008.

Mr. Nissenson continued, “Our U.S. division contributed approximately $15.5 million or 72% to total revenues with gross margins of 45%. U.S revenues were down slightly related to the continued attrition of residential customers, but nonetheless, on a sequential basis the division maintained its revenue and gross margin performance in a very difficult economic environment. During the quarter, our FTTP buildout continued in Levelland, Texas. Thus far, we are achieving a subscription rate of approximately 50% of the businesses we pass. In addition to our progress building out the Levelland network, we continue to pursue additional RUS broadband funding and believe our current projects and past experience position us well to access grants and loans currently being made available by the federal government's stimulus plan for the construction of advanced broadband networks in select rural areas of the United States.”

Mr. Nissenson concluded, “We remain focused on controlling expenses and identifying new opportunities to grow our business. Our industry experience and state-of-the art FTTP technology have allowed us to persevere in difficult market conditions and we believe that Xfone is well positioned for long term growth.”

Conference Call:
The Company will host a conference call on Monday, August 17, at 10:00 a.m. Eastern Time to discuss its 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 329560.

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.

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CONSOLIDATED STATEMENTS OF INCOME

About XFONE, Inc.
A U.S.-domiciled corporation, XFONE is a holding and managing company with operations in the United States, the United Kingdom and Israel, that offers a wide range of communications services which include: local, long distance and international telephony services; video; 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.

For More Information, Please Contact:
U.S. IR Contact
John Nesbett/Jennifer Beloeau Institutional Marketing Services (IMS) Phone: 1.203.972.9200. E-mail: jnesbett@institutionalms.com
Xfone Contact
Niv Krikov Chief Financial Officer Phone:  + 972.39254446 (Israel) E-mail: E-mail: niv@xfone.com