XFONE CEO Enters Agreement Providing Him The Option To Purchase A Minimum of 2.87 Million Shares From Chairman at $3.429 Per Share

Wednesday July 2, 11:06 am ET

LUBBOCK, Texas--(BUSINESS WIRE)--XFONE, Inc. (AMEX and TASE: XFN) ("XFONE" or "the Company") announced that on July 1, 2008, Abraham Keinan, Chairman of the Board of Directors of Xfone, Inc., and Guy Nissenson, President, CEO and Director, entered into an Irrevocable Option Agreement (the "Option Agreement") in which Mr. Keinan granted Mr. Nissenson (individually and/or together with the Nissenson Investors, as such term is defined in the Option Agreement) an irrevocable and exclusive option to purchase a minimum of 2,868,000 shares of Xfone common stock that he beneficially owns (the "Option Shares"), at any time through January 1, 2009, at a price per share of $3.429.

In the event that Mr. Nissenson decides to exercise the Option, Mr. Keinan has the right to sell to the purchaser(s) of the Option Shares up to an additional 340,000 shares of Xfone common stock that he owns, at the same price as the Option Shares (the "Additional Shares").

Upon the purchase of the Option Shares and any Additional Shares, (i) Mr. Keinan shall immediately resign from all of his positions with Xfone and/or its subsidiaries, (ii) shall relinquish any rights under his agreements with the Company and its subsidiaries, including fees, salary, bonuses, options (including but not limited to outstanding and fully vested options), severance pay, etc., and (iii) the Voting Agreement by and between Mr. Keinan, Mr. Nissenson and Campbeltown Business Ltd. dated September 28, 2004 shall terminate.

About XFONE, Inc.

A U.S.-domiciled corporation, XFONE 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 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.

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