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Tellza Announces 2014 Q2 Financial Results

Revenue for the six months ended June 30th climbs to $124M USD

TORONTO, ONTARIO -- (Marketwired) -- 07/25/14 -- Tellza Communications Inc. (TSX:TEL) announced its unaudited financial results for the six months ended June 30, 2014.

Revenue was $124 Million USD compared to $74.0 Million USD in Q2 of 2013, representing growth of 68%. Net Income was $0.5 million USD, compared to net income of $1.2 million USD in Q2 of 2013. Year to date EBITDA(i) in 2014 was $1.5 million USD compared to $2.1 million USD in Q2 of 2013, a decrease of 29%. The reduction in EBITDA is related to tighter margins in our core business, start-up costs related to routedynamix and acquisition costs related to the MatchcoM acquisition which was completed in February 2014.


                    CONSOLIDATED STATEMENTS OF OPERATIONS                   
    (amounts in thousands of U.S. dollars, except per share information)    
                                                                            
For the three and six months                                                
 end June 30th,                     2014        2013        2014        2013
                                       $           $           $           $
                            ------------------------------------------------
                             (Unaudited) (Unaudited) (Unaudited) (Unaudited)
                                                                            
Revenue                           72,766      39,792     124,132      73,842
Cost of revenue                   70,730      37,403     120,006      69,833
                            ------------------------------------------------
Gross margin                       2,036       2,389       4,126       4,009
                            ------------------------------------------------
                                                                            
Operating expenses                 1,363       1,037       2,653       1,913
Depreciation of property and                                                
 equipment                            73          32         147          62
Amortization of intangible                                                  
 assets                              280         103         575         209
Stock-based compensation               3          13           6          26
Minority Interest                     16           -          16           -
Interest and debt costs              -18           4           0          16
                            ------------------------------------------------
                                   1,717       1,189       3,397       2,226
                            ------------------------------------------------
Income before income taxes           319       1,200         729       1,783
                            ------------------------------------------------
Provision for (recovery of)                                                 
 income taxes                                                               
  Current                              -           -           -           -
  Deferred                           115         396         235         575
                            ------------------------------------------------
                                     115         396         235         575
                            ------------------------------------------------
Net and comprehensive income                                                
 for the period                      204         804         494       1,208
                            ------------------------------------------------
Earnings per share                                                          
  - basic and diluted               0.00        0.01        0.00        0.01
                            ------------------------------------------------
                                                                            
Weighted-average number of                                                  
 common shares                                                              
  - basic and diluted        187,713,991 151,231,492 186,300,822 151,231,492
                            ------------------------------------------------

Tellza completed Q2 - 2014 with $2 Million USD in cash and available borrowings of $3.6 Million. Since 2011, Tellza has generated $11.2 Million USD in Cash Profits(i) that have been utilized as set out in the following table: http://media3.marketwire.com/docs/TEL%20Tables.pdf

"We are excited with our progress in 2014, despite narrowing margins," said Gary Clifford, Executive Chairman. "We expect profits to grow in the second half of the year, as routedynamix (SMS platform) commercializes and we complete the migration of our networks across all of our portfolio businesses."

The Company's financial statements and other disclosures are available on SEDAR.

The Company's corporate profile is located at www.tellza/investors.

About Tellza

Tellza is a global communications company operating under several brands including Route Dynamix, Phonetime, Tel3, MatchCom and Tellza Technologies. Tellza is a public company listed on the Toronto Stock Exchange (TEL).

Caution Regarding Forward Looking Information:

This press release contains forward-looking statements, which may be identified by words like "expects", "anticipates", "plans", "intends", "indicates" or similar expressions. These statements are not a guarantee of future performance and are inherently subject to risks and uncertainties. Tellza's actual results could differ materially from those currently anticipated due to a number of factors set forth in reports and other documents filed by the Company with Canadian securities regulatory authorities from time to time. See www.sedar.com which contains all securities files.

(i)We define EBITDA and Cash Profits as earnings before taxes, depreciation and amortization, stock based compensation, and interest. EBITDA, which is a non-GAAP financial measure, it is a standard measure used in the telecommunications industry to assist in understanding and comparing operating results. EBITDA is reviewed regularly by management and our Board of Directors in assessing performance and in making decisions regarding the ongoing operations of the business and the ability to generate cash flows. Generally, a non-GAAP financial measure is a numerical measure of a company's performance, financial position or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with IFRS. EBITDA is not a measure of financial performance nor does it have a standardized meaning under IFRS. In evaluating these measures, investors should consider that the methodology applied in calculating as such measures may differ among companies and analysts. Below is a reconciliation of "EBITDA" to net income for the periods presented:


                                                           YTD   Cumulative 
                                                                2011 - 2014 
EBITDA Reconciliation        2011    2012     2013   2014 - Q2           Q2 
                           ------- ------- ------- ----------- -------------
                                $       $        $           $            $ 
Net Income before tax       2,802   2,321    3,236         729        9,088 
Interest and debt costs       338     160       33           0          531 
Stock-based compensation      113      53       12           6          184 
Amortization of intangible                                                  
 assets                     1,056     850      556         575        3,037 
Depreciation of property                                                    
 and equipment                517     120      127         147          911 
Gain on retirement of debt      -    (260)       -           0         (260)
Mark to fair value of                                                       
 common share warrants     (2,290)     (1)       -           0       (2,291)
                           -------------------------------------------------
EBITDA (Cash Profits)       2,536   3,243    3,964       1,457       11,200 
                           -------------------------------------------------

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