Lubbock, TX – January 29, 2010 – XFONE, Inc. (NYSE Amex and TASE: XFN) (“XFONE” or “the Company”) a provider of telecommunications services, announced today that it has entered into an agreement for the divestiture of its U.K. Division. Pursuant to the agreement, Abraham Keinan, a significant shareholder and chairman of Xfone, will acquire the business unit in a transaction valued by the Company at approximately $4.5 million. As part of the consideration, Xfone will be released from a financial obligation of approximately $1.6 million previously provided by Mr. Keinan's son, and will be entitled to receive earn-out remuneration in an aggregate amount of $1.9 million, paid as percentage of the EBITDA margin of the UK Division in the future. Upon the closing of the transaction, Mr. Keinan will terminate his consulting agreement with Xfone, waive any future monthly fees and the right to an appropriate severance package which he would have been entitled to under the consulting agreement. Keinan will also resign from the boards of Xfone's subsidiaries. The closing of the transaction is subject to the approval of the Company's Audit Committee, Board of Directors and shareholders.

Guy Nissenson, President and CEO stated, "The divestiture of the UK business will allow us to increase our focus and concentrate our resources on the continued development and rollout of our higher margin Fiber-To-The-Premise (FTTP) network in the U.S. Since our acquisition of NTS Communications, the Company has made great progress with the installation of our fiber network from Lubbock to Levelland and completed more than 1,700 passings within the Levelland market since October 2009. Our current subscription rate among business and residential customers passed as of January 15 is approximately 30% which is on track with our internal expectations."

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	Company Contact
John Nesbett/Jennifer Beloeau Institutional Marketing Services (IMS) Phone: 1.203.972.9200. E-mail: jnesbett@institutionalms.com	Niv Krikov Chief Financial Officer Phone:  + 972.39254446 (Israel) E-mail: E-mail: niv@xfone.com