American TeleSource Reports Third Quarter Results.

SAN ANTONIO, Texas--(BUSINESS WIRE)--June 4, 1998--

     --   110% Increase in Revenues
     --   23% Increase in International Call Volumes
     --   ATSI to Hold Earnings Conference Call Friday, June 5, 1998
          at 10 a.m. Central Standard Time (see details below)

American TeleSource International Inc., "ATSI", (OTCBB:AMTI) today announced results for the third quarter of its current fiscal year. ATSI reported revenues for the third quarter ended April 30, 1998 of $8.8 million, representing a 110% increase over revenues of $4.2 million for the third quarter of 1997.

For the nine-month period ended April 30, 1998, ATSI's revenues increased 127% to $23.6 million compared with $10.4 million for the same period a year ago.

EBITDA for the third quarter of fiscal 1998 was ($853,046) compared to ($737,129) for the third quarter of fiscal 1997. For the current year's nine-month period ended April 30, 1998, EBITDA was ($1.1) million, an improvement over the ($2.4) million figure for the nine-month period of fiscal 1997.

The company experienced record revenues, surpassing those of any previous fiscal quarter, even though the company ceased providing network services for several weeks during February 1998. The company halted this service while it took steps to ensure regulatory compliance and has since resumed the service, reaching pre-February volume levels. The loss of volumes during the quarter was the primary factor in the decline in the EBITDA figure over the same period last year. Although services ceased during the period, the company still incurred costs related to this service.

During the third quarter, the company completed approximately 100,000 international calls (calls originating in Mexico), representing an increase of 23% over the company's previous high of approximately 81,000 calls during the quarter ended Jan. 31, 1998. The overall gross profit margin for the company was 37% for the quarter ended April 30, 1998, more than double the margin of 17% produced in the same quarter of fiscal 1997.

The net loss for the third quarter ended April 30, 1998 was $1.9 million, or $0.04 per share, compared to a net loss of $1.0 million or $0.04 per share during the same period a year ago. The net loss for the nine months ending April 30, 1998 was $3.7 million, or $0.09 per share, compared to a loss of $3.0 million, or $0.12 per share, during the same period of fiscal 1997.

The company also incurred significant costs during the three-month period ended April 30, 1998, which it considers to be non-recurring in nature. Approximately $225,000 in fees were incurred during the period related to the company's reincorporation from Canada to Delaware, which was approved by the company's shareholders on April 30, 1998 and declared effective by regulators on May 11, 1998. The company also incurred fees in connection with its planned acquisition of additional concessions from the Mexican regulatory authorities.

H. Douglas Saathoff, chief financial officer, commented: "The loss of wholesale traffic volumes, combined with non-recurring expenses, cost the company approximately $800,000 in earnings during the quarter. We made some necessary changes during the quarter, and now have greater network capacity and potential for growth than ever before."

Arthur L. Smith, chairman and chief executive officer, stated that: "Although we are disappointed with the EBITDA results, we believe that the decisions made associated with licensing and reincorporation ultimately translate into increased shareholder value. Additional concessions from the Mexican government should allow for new products and services to be offered within that market, as well as further reductions in costs. As we move forward, additional cost-cutting measures will be implemented to reduce selling, general and administrative expenses as a percentage of revenue."

American TeleSource International Inc. is a four-year-old telecommunications entity that is rapidly becoming a competitive force in niche services within the demonopolizing, underserved markets throughout Latin America, primarily Mexico. ATSI owns the San Antonio International Teleport, located at its corporate headquarters in San Antonio, providing networks for voice, data, fax and Internet, as well as call services for domestic and international long distance. ATSI has overcome high barriers to entry, giving it an advantage over certain competition. ATSI's bilingual, bicultural team has diligently focused on the acquisition of unique licensing, execution of interconnection agreements, deployment of network facilities and investment in distribution channels.

Certain statements contained herein (For example, the ability to offer new products and services and to reduce costs.) are "forward-looking statements" (as such term is defined in the Private Securities Litigation Reform Act of 1995). These statements are based upon the belief of the company's management, as well as assumptions made beyond information currently available to the company's management. Because such "forward-looking statements" are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements.

Factors that could cause results to differ materially from those expressed or implied by such forward-looking statements include, but are not limited to, the inability to obtain additional capital, loss of key personnel, unavailability of leased transmission facilities, damage, loss or malfunction of satellites, technological changes, service interruptions, equipment failures, customer attrition, competitive factors, general economic conditions, relationships with vendors, government supervision and regulation, changes in industry practices, and other factors discussed in filings made by the company with the Securities and Exchange Commission.

Table to follow

                    ATSI EARNINGS CONFERENCE CALL

       The conference call will be held on Friday, June 5, 1998
                  at 10:00 a.m. Central Standard Time

      To participate in the conference call, dial: 800/553-2165

For your convenience, this call is also being recorded and you may
listen to the discussion by dialing 800/696-1563 and entering the
following password: "ATSI" or 2874.  The hours this service will be
available are from 10:30 a.m. Central Standard Time Friday, June 5,
through 5:00 p.m. Central Standard Time Monday, June 8.
-0-
                American TeleSource International, Inc.
               Condensed Consolidated Statements of Loss
                              (unaudited)

                        Three Months Ended      Nine Months Ended
                            April 30,               April 30,
                     ----------------------  -----------------------
                         1997       1998        1997         1998
                     ----------  ----------  ----------  -----------
Operating revenues

Call services        $3,568,369  $3,875,293  $8,958,525  $10,381,643
Direct dial services       $ --  $1,515,679    $     --   $4,656,507
Network management
 services              $673,019  $3,441,832  $1,459,647   $8,530,342
                     ----------  ----------  ----------  -----------
Total operating
 revenues            $4,241,388  $8,832,804 $10,418,172  $23,568,492

Cost of services     $3,532,584  $5,531,683  $8,772,851  $14,434,843
                     ----------  ----------  ----------  -----------
Gross Profit           $708,804  $3,301,121  $1,645,321   $9,133,649

Selling, general
 and administrative  $1,445,933  $4,154,167  $4,003,968  $10,240,102
                     ----------  ----------  ----------  -----------
EBITDA                $(737,129)  $(853,046)$(2,358,647) $(1,106,453)

Depreciation and
 amortization          $187,116    $628,324    $433,562   $1,508,063
                     ----------  ----------  ----------  -----------

Loss from operations  $(924,245)$(1,481,370)$(2,792,209) $(2,614,516)

Other income
(expense), net        $(109,844)  $(288,985)  $(210,112)   $(968,628)
Provision for income
 taxes                     $ --   $(152,293)  $     --     $(152,293)
                     ----------  ----------  ----------  -----------

Net loss            $(1,034,089)$(1,922,648)$(3,002,321) $(3,735,437)
                    =========== ===========  ==========  ===========

CONTACT: American TeleSource International, San Antonio

Karen R. Mella, 210/375-1203

(Director, Investor Relations)

[e-mail]

http://www.atsi.net