Phonetime Inc.

Phonetime Inc.

December 19, 2006 11:36 ET

Phonetime to Acquire Balance of Call Select Shares

Company to Consolidate Revenues by Purchasing Management's 20% Position

MISSISSAUGA, ONTARIO--(CCNMatthews - Dec. 19, 2006) - Phonetime Inc. (TSX VENTURE:PHD), a leading Canadian supplier of long distance telecommunications services, today announced that it has entered into an agreement to acquire the outstanding shares of Call Select Inc. which it does not currently own. The agreement provides for Phonetime to issue 2 million of its common shares to the members of Call Select's management team in exchange for their 20% stake in Call Select. The transaction is scheduled to close on our about December 29th, subject to regulatory approval.

Call Select started business less than two years ago and its revenue now exceeds $900,000 per month from the sale of 1+ equal access long distance services, targeted primarily at ethnic communities across the country. For the past several quarters, Call Select has generated profits and positive cash flow and management expects this trend to continue in 2007. The Call Select management team has agreed to remain with Phonetime to focus on Call Select's rapid growth and acquisition programs.

Wayne Silver, Phonetime's President and CEO, stated, "We are very pleased with the opportunity to own Call Select outright as it allows us to consolidate 100% of its revenue with Phonetime. This will simplify our reporting requirements and may also provide long term enhancements to shareholder value. With the proceeds realized through our recently completed private placement financing (see Press Release dated December 4th), Call Select's management team has the mandate and resources to rapidly expand our base of 1+ customers through organic growth as well as through acquisitions."

Silver added, "We have seen very dramatic growth in our traffic volume and buying power from our increased wholesale activities. For the 1st 15 days of December we have already exceed 65 Million minutes of traffic and are projecting nearly 150 Million minutes for the month. This compares to only 60 Million for the entire December 2005, an increase of 150%."

Stan Cohen, President of Call Select added, "We have begun an ambitious expansion program at Call Select. In the last few months, we opened a new call centre in Montreal to focus on providing services to the French and Muslim markets and we have also been reviewing opportunities to out-source some of our telemarketing activities to foreign operations that specialize in selling 1+ service. To this end, we are considering call centres in Romania, the Philippines and India to market our services to various ethnic communities across North America." Speaking on behalf of Call Select's management team, Mr. Cohen also stated, "we are not only proud of Call Select's accomplishments over the past two years, we are also very impressed with Phonetime's overall performance during this time. Moreover, we believe this transaction is both timely and beneficial to all parties."


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 relatively higher margin residential subscription 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.

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