Phonetime Releases Q3 Results.

MISSISSAUGA, Ontario -- Highlights Include Revenue Growth and Higher Profit Margins

Phonetime Inc. (TSX VENTURE:PHD), a leading Canadian supplier of long distance telecommunication services, today released its consolidated financial results for its 3rd fiscal quarter ending September 30, 2005.

In the 3rd Quarter 2005, Phonetime generated net earnings of $95,000, on revenue of $4.6 million with a gross profit of $1.75 million, and a gross profit margin of 37.8%. This compares favourably to the same period last year, in which Phonetime had net earnings of $67,000 on revenue of $4.3 million with a gross profit of $1.45 million and a gross profit margin of 33.8%. Revenue in the 3rd quarter 2005 also marked the fourth straight quarter in which Phonetime revenues increased.

Quarterly revenue growth and gross profit improvement over the past year is directly attributable to Phonetime's investment in Call Select and the success of wholesale VoIP long distance services for international carriers, which has now grown to over 20+ million minutes per month. As of the 3rd Quarter, Call Select is now contributing profits to Phonetime and is generating over $500,000 per month in revenue and growing.

For the nine month period ending September 31, 2005, the Company generated sales of $12.7 million with a net loss of $111,000, compared to revenue of $14.4 million and net earnings of $427,000 over the same period last year. The decline in revenue over the nine month period last year is the result of an industry wide drop in long distance rates charged for pre-paid calling card services, despite an increase in call volumes and the number of cards distributed by Phonetime.

On a segmented basis, the Company earned $272,000 on $11.2 million in revenue from telecommunications services, comprised of phone cards and wholesale long distance services, while Call Select, the Company's 1+ Equal Access business unit, lost $138,000 on revenue of $3.2 million but has now been profitable for the past 2 months and should contribute profits for the last quarter of the year. Inter-segment eliminations of $1.7 million over the nine months accounted for the difference between the revenues of the individual business units and the consolidated total revenue. During the nine month period, the Company eliminated its long term debt.

In commenting on the results, Wayne Silver, Phonetime's President and CEO, stated, "Although revenue from our long distance card business has remained flat due to rate pressures in the sector; our investment in starting Call Select to establish a re-occurring base of "1+" long distance revenue, is being rewarded. In the past quarter, we moved into expanded call centre facilities that will enable us to continue growing. Furthermore, our Wholesale business is growing significantly and we are now terminating 1 million minutes a day of wholesale business on our Network. Consequently, we expect that revenue will continue to trend higher over the coming months and that our gross profit margins will remain stable."

Phonetime encourages interested parties to review the Company's complete financial report along with management's discussion and analysis of its results for the nine month period, which may be found at www.sedar.com.

About Phonetime and Call Select

Phonetime operates one of Canada's largest private long-distance and VoIP networks for Retail and Wholesale Long Distance traffic, with points-of-presence in 27 major Canadian urban areas, with plans to expand to additional markets in the near future.

Phonetime's wholesale network currently processes over 1 Billion minutes of traffic and is rapidly emerging as the backbone for many of the new VoIP carriers, including ILEC's, CLEC's, PTT's and IPLEC's world-wide.

Phonetime also markets its own branded pre-paid calling cards (Nuvo, Bravo, Lucky 888, Eureka, Hot and Call Value) across the country, providing phone cards to over 4,000 retail outlets, including Petro-Canada, Shell Canada, and Business Depot/Staples as well as to many Private Label distributors.

With its billion minute global buying power, Phonetime delivers highly competitive prices, quality connections and multi-lingual customer service. Licensed as a Class A, International Carrier by the CRTC, Phonetime has offices in Toronto, Vancouver and Montreal.

Call Select was established by Phonetime to deliver 1+ Equal Access and Dial Around long distance services to ethnic markets in Canada. Call Select has successfully provided diversification for Phonetime, from primarily offering pre-paid telecommunications products to providing a wide range of new products and services, primarily in the higher margin, longer term, post-paid market.

Additional information about Phonetime and Call Select and the services are available on the websites: www.phonetime.com, www.dialnsave.ca, and www.callselect.ca.

Note: This news release may contain forward-looking information. Actual future results may differ materially. All figures are in Canadian dollars. 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 not approved nor disapproved the info rmation contained herein

Phonetime Inc. (TSX VENTURE:PHD)