MicroTel's CXR Telcom Subsidiary Completes Restructuring and has Implemented a Major Change to Its Business Model.

Business Editors & High-Tech Editors

RANCHO CUCAMONGA, Calif.--(BUSINESS WIRE)--Feb. 20, 2003

MicroTel International Inc (OTCBB:MCTL) ("MicroTel") today announced its CXR Telcom Corp. subsidiary located in Fremont, Calif. which manufactures field and central office test equipment and which operated at a loss in 2002 has implemented a new business model.

The new business model should allow the subsidiary to operate profitably by the third quarter of 2003. The new business model calls for all products to be completely assembled in Asia and received fully tested. All engineering for a new E1 version and other planned product line extensions will also be performed in Asia under the direction of the company's current vice president of engineering.

The change in business model also includes phasing-out the sale of central office equipment with the exception of the company's new Asynchronous Transmission Mode ("ATM") central office tester. These actions will allow greater concentration of effort upon field test equipment. The new business model also includes the sale of a new E1 version of the current T1 range of field instruments in Europe by the company's CXR (France) subsidiary. The new E1 model will replace the resale product sold under a competitor's brand name that was previously discontinued by CXR (France) in 2002.

This new business model began with the successful transition of the manufacturing of the company's highest volume printed circuit cards for its field test instruments to an Asian source in the third quarter of 2002 followed by the relocation of the CXR facility previously announced in November 2002 which represented an annualized cost savings of $325,000. The final restructure of the manufacturing work force was completed earlier this month and contributes an additional annualized saving of approximately $360,000.

Kevin Haug, president of CXR Telcom Corp. said: "The transition to this new business model began with the receipt of our first off shore assembled printed circuit cards in mid 2002 and should be completed with the receipt of fully assembled product in the third quarter of 2003. Our domestic test equipment revenue declined from $5.6 million in 2001 to $2.8 million in 2002.

"A substantial portion of this decline was due to a decrease in sales of central office test equipment thus prompting us to phase-out participation in this market, except for our ATM product, and to concentrate our efforts on field test equipment. CXR will continue to support its large installed base of central office equipment with repair service and optional upgrades."

Graham Jefferies, executive vice president MicroTel and COO Telcom Group stated: "MicroTel's two business segments Electronic Components and Communications Products is comprised of six profit and loss centers. CXR Telcom is the only operation that we expect to be unprofitable for the first and second quarters of 2003.

"However, we believe under our new business model the subsidiary should break-even in the second quarter and contribute profitability in the third and fourth quarters. While MicroTel does not expect any general overall improvement in the domestic telecommunications carrier markets other non-carrier customers are being pursued and we are achieving some success in the non-telecommunications market..

"While CXR Telcom Corporation will contribute losses in the first and possibly the second quarters these losses should be off-set by profitability in our other operations especially in the Electronic Components segment."

About MicroTel International

MicroTel International Inc. is an international manufacturer of defense and aerospace electronic components and communications equipment. MicroTel International's electronic components group, which includes XET Corp. and its international subsidiaries, provides custom power conversion products and digital and rotary switches to the electronic components global market primarily used for defense and aerospace applications.

MicroTel's communications group, consisting of CXR Telcom Corp. and CXR (France), provides testing, transmission, and network access equipment to the North American and European communications industries. Founded in 1983, the company operates out of facilities in the United States, France, England, Wales and Japan. As of Jan. 31, 2003, MicroTel International employed a total of 210 persons in its various subsidiaries and divisions.

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995

With the exception of historical information, the matters discussed in this news release are forward-looking statements that involve a number of risks and uncertainties. The actual future results of MicroTel could differ from those statements. Factors that could cause or contribute to such differences include, but are not limited to, the ability of CXR Telcom to return to profitability, the sufficiency of the cost reductions at CXR Telcom to reduce its break-even sales level, the possibility that MicroTel's other operations will not be sufficiently profitable in the next few months to offset the expected losses generated by CXR Telcom, the projected growth in the telecommunications and electronic components markets, the ability of MicroTel to expand its presence in its markets, trends in MicroTel's financial condition and results of operations, MicroTel's ability to distinguish itself from its current and future competitors, the continued demand for MicroTel's products, worldwide economic conditions, changes in governmental regulations and policies, the emergence of competitive products and services and unforeseen technical issues and those factors contained in the "Risk Factors" Section of the company's Form 10-K for the year ended Dec. 31, 2001.