AvTel Communications Completes Acquisition of Digital Media International, Expanding Its Interactive WEB Development Unit.

SANTA BARBARA, Calif.--(BUSINESS WIRE)--Oct. 29, 1998--AvTel Communications (NASDAQ: AVCO), a single-source provider of integrated data, Internet-intranet, voice and video services, today announced that it has completed the acquisition of Digital Media International, an award-winning interactive multimedia developer. Terms were not disclosed.

"The acquisition of Digital Media gives us enormous latitude in the service portfolio we offer our clients," said Anthony E. Papa, Chairman and CEO of AvTel. "In addition to creating cutting-edge multimedia for a host of platforms as a separate operating division, we will be able to roll out a number of new products and service enhancements to our core business customers."

Over the past eight years, DMI has created and produced innovative interactive CD-ROM software, including products based on popular licenses such as Universal's "The Land Before Time," as well as Location-Based Entertainment (LBE) applications, including two attractions recently installed in a new LBE facility in Orlando, Florida. DMI's customers include Panasonic, Sound Source Interactive and Palladium Interactive, as well as one of the largest toy companies in the world and the world's largest theme park and animated motion picture producer.

DMI creates compelling 2D and 3D art and animation, engaging interactive design, special effects and sound effects. The company's significant base of proprietary technology, which includes cross-platform multimedia authoring tools and high-speed graphics rendering engines, facilitates the creation of successful multimedia titles for a wide variety of content publishers.

AvTel will leverage DMI's assets to explore new developments for consumer and corporate applications that continue to marry content innovation with high-speed connectivity.

"This acquisition follows a logical growth path as we expand our number of Internet and intranet customers," added Mr. Papa. "We believe that telecommunication-related services will have a dramatic effect on how businesses work and consumers entertain themselves. It's only natural that we begin to develop content to feed new, high-speed pipelines and develop forward-thinking technology for our business applications clients. With an intimate knowledge of the complexities of the bandwidth, we can offer strategic solutions that blend aesthetics with technological advancements."

AvTel Communications, Inc. is a provider of broadband network services integrating voice, data and video networking solutions for individuals and business customers. The Company markets and sells a broad range of telecommunications and advanced network services through independent value-added resellers and internal direct sales professionals. The Company targets mid-size corporations, small- office/home-office professionals and select residential market segments. The Company is fully certified by the FCC and registered in all 48 contiguous states and Hawaii. In addition, the Company holds billing agreements with all the Regional Bell Operating Companies, GTE and other independent telephone companies.

All statements in this press release other than statements of historical fact are forward-looking statements that involve substantial risks and uncertainties. Reference is made to the Company's Annual Report on Form 10-K for the year ended December 31, 1997 and to the Company's other reports filed with the Securities and Exchange Commission for a discussion of such risks and uncertainties and other factors that may have material effect on the Company's business.