Phonetime Inc.
TSX VENTURE : PHD
PINK SHEETS : PHOEF

Phonetime Inc.

February 26, 2007 08:00 ET

Phonetime Announces Major Network Expansion

Network to accommodate 50,000 simultaneous calls

MISSISSAUGA, ONTARIO--(CCNMatthews - Feb. 26, 2007) - Phonetime (TSX VENTURE:PHD)(PINK SHEETS:PHOEF), announced today that it has begun a major network expansion. The new network will handle up to 50,000 simultaneous calls allowing the company to process more than 800 million minutes of call traffic per month.

The Company's proprietary software that effectively handles all call control and routing functions have been modified significantly to handle this new level of call capacity. Along with the software upgrades additional TDM and IP gateway expansions have been implemented into the company network.

Wayne Silver, President & CEO of Phonetime Inc. stated, "This is a major expansion that will allow us to increase our revenues and profits quickly while serving our customers better with the added network capacity and call processing power. We believe this expansion makes us one of the largest network infrastructures in Canada, rivalled only by the incumbent telephone companies."

Rodney Franklin, Phonetime's Chairman added, "Our constant strive to improve our proprietary systems allow us to seamlessly integrate with our customers and providers. We are a Global voice provider! This requires handling all types of call signalling worldwide and having a scalable platform which is only possible through proprietary IP systems such as ours."

ABOUT PHONETIME

Established in 1994, Phonetime is a leading Canadian supplier of International Long Distance telecommunication services. Phonetime Inc is publicly traded, listed on the Toronto Venture Exchange (TSX VENTURE:PHD). Licensed in Canada as a Class A International Carrier by the CRTC, Phonetime operates one of Canada's largest and most advanced private telecommunications networks in Canada. Phonetime has facilities in North America and Europe and Canada where it has 40 points-of-presence covering most major metropolitan areas, effectively offering on-net service to approximately 85% of Canada's population.

Phonetime's balanced portfolio of services includes retail products for individual consumers and businesses as well as wholesale long distance call delivery to large and small domestic and international carriers, offering both pre-paid and post-paid services. This balance enables Phonetime to maximize revenue from the utilization of available capacity and to minimize costs through volume.

In October 2006 Phonetime completed a US$4 million dollar private placement in order to stimulate growth of international wholesale and domestic 1+ services.

Caution Regarding Forward Looking Information:

This press release contains forward-looking statements within the meaning of securities laws, including the "safe harbour" provisions of the Ontario Securities Act and the United States Private Securities Litigation Reform Act of 1995. Forward-looking information is often, but not always, identified by the use of words such as "anticipate", "believe", "expect", "plan", "intend", "forecast", "target", "project", "may", "will", "should", "could", "estimate", "predict" or similar words suggesting future outcomes or language suggesting an outlook. Forward-looking statements in this press release include, but are not limited to, statements with respect to the anticipated revenue for the fourth quarter of fiscal year ended December 31, 2006 and for the fiscal year ended December 31, 2007.

Forward-looking statements and information are based on current beliefs as well as assumptions made by and information currently available to Phonetime concerning anticipated financial performance, business prospects, strategies and regulatory developments. Although management considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect.

By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and risks that predictions, forecasts, projections and other forward-looking statements will not be achieved. We caution readers not to place undue reliance on these statements as a number of important factors could cause the actual results to differ materially from the beliefs, plans, objectives, expectations and anticipations, estimates and intentions expressed in such forward-looking statements. These factors include, but are not limited to: incorrect assessments of value when making acquisitions; increases in debt service charges; fluctuations in foreign currency and exchange rates; inadequate insurance coverage; changes in tax laws; and Phonetime's ability to access external sources of debt and equity capital. Further information regarding these factors may be found under the heading "Risk Factors" in our management's discussion and analysis for the year ended December 31, 2005.

The foregoing list of factors that may affect future results is not exhaustive. When relying on our forward-looking statements to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Furthermore, the forward-looking statements contained in this press release are made as of the date of this press release, and Phonetime does not undertake any obligation to up-date publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements contained in this press release are expressly qualified by this cautionary statement.

The TSX Venture Exchange has neither approved nor disapproved the contents of the press release.

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