Phonetime Inc.

Phonetime Inc.

December 05, 2006 08:45 ET

Phonetime Completes US$4 Million Private Placement

Capital to Stimulate Growth of International Wholesale and Domestic 1+Services

MISSISSAUGA, ONTARIO--(CCNMatthews - Dec. 5, 2006) - Phonetime Inc. (TSX VENTURE:PHD), a leading Canadian supplier of Canadian and International long distance telecommunication services, today announced the completion of the private placement transaction previously disclosed on October 23, 2006. In accordance with the terms of the transaction, Phonetime issued to Creslin Limited ("Creslin") 40,000,000 Units, each Unit consisting of one Common Share and one Common Share Purchase Warrant, at a purchase price of CDN$0.11 per Unit. The Common Share Purchase Warrants are exercisable at any time within two years of the closing of the transaction at a price of CDN$0.15 per Common Share. The purchased securities are subject to a regulatory hold period which will expire on April 5, 2007.

The majority of this investment will be used to fund the expansion of the Company's international long distance wholesale division through sale of services to telecommunications companies in the United States, South America, Europe and Asia. To facilitate this growth, the Company is planning to build new telecommunications facilities in New York, Miami and London, England, as well as extending the reach of its well-established Canadian facilities.

The balance of the funds will be used for general corporate purposes as well as to support the continued growth of Phonetime's Call Select subsidiary, which provides 1+ Equal Access long distance services to various ethnic communities across Canada plus for acquisitions of existing subscriber bases, similar to Phonetime's recent acquisition of the assets of Thomas Hook Communications (see Press Release of September 7, 2006).

Wayne Silver, Phonetime's President and CEO, remarked that, "we are delighted that we have completed this investment. These funds will enable the Company to enhance its value by growing our wholesale business, expanding Call Select's telemarketing operations and pursuing new acquisitions."

Rodney Franklin, Chairman, stated "with this investment, we are now poised to build on our solid track record of revenue growth and profitability. To ensure that the financial markets are aware of our accomplishments and the potential this investment represents, we have now made it a priority to identify and retain an international Investor Relations group to draw Phonetime to the attention new public investors. We look forward to building on our achievements to date and to fulfilling our potential as a diversified and profitable telecommunications organization."

About Phonetime

Licensed as a Class A, International Carrier by the CRTC, Phonetime operates one of Canada's largest and most advanced private long-distance and VoIP telecommunications networks with points-of-presence in 40 major Canadian urban areas. Phonetime's wholesale network currently has the capacity to process over 8 billion minutes of traffic and has emerged as a cost effective wholesale backbone for VoIP service providers, including ILECs, CLECs, PTTs, and IPLECs world-wide. Phonetime offers wholesale origination and termination services to carriers worldwide.

Phonetime also markets its own competitively priced, branded calling cards (including Nuvo, Bravo, Lucky 888, Eureka, Hot and Call Value) across the country. These are distributed to consumer markets from more than 4,000 retail outlets, including Petro-Canada, Shell Canada, and Business Depot/Staples as well as through many Private Label distributors. With offices in Toronto, Montreal and Vancouver, Phonetime provides retail customers with multi-lingual customer service - an important competitive advantage.

Phonetime's Call Select subsidiary provides 1+ Equal Access and Dial Around long distance services to ethnic markets across Canada. Since its establishment, it has enabled Phonetime to deliver a range of new services in the higher margin and relatively stable post-paid market.

Note: This news release contains forward-looking information. Actual future results may differ materially. All figures are in Canadian dollars except as noted otherwise. The risks, uncertainties, and other factors that could influence actual results are described in the Company's annual report to shareholders.

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

Contact Information