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January 28, 2010

Xfone to sell UK business unit for $4.5m

To focus on core FTTP business in the US

By CBR Staff Writer

Xfone, a provider of telecommunications services, has entered into an agreement for the divestiture of its UK Division, to focus on core FTTP business in the US.

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 $4.5m.

As part of the consideration, Xfone will be released from a financial obligation of approximately $1.6m previously provided by Mr Keinan’s son, and will be entitled to receive earn-out remuneration in an aggregate amount of $1.9m, paid as percentage of the EBITDA margin of the UK Division in the future.

Up on completion 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.

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Mr 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 of Xfone, said: 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 US.

“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.

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