Elephant Talk To Acquire The Assets Of U.S. Based Telnicity, LLC

       Elephant Talk To Acquire The Assets Of U.S. Based Telnicity, LLC

International provider of software and services for the telecommunication
industry gets foothold in the U.S. mobile telecommunication market

All equity transaction provides access to the U.S. mobile telecommunications
market through Telnicity's direct and indirect relationships with several
major U.S. based mobile telecommunication companies.

Acquisition supports Elephant Talk's strategic focus of expanding its mobile
network operator business outside of Europe to drive long-term shareholder
value while preserving cash.

PR Newswire

SCHIPHOL, The Netherlands and OKLAHOMA CITY, Jan. 9, 2013

SCHIPHOL, The Netherlands and OKLAHOMA CITY, Jan. 9, 2013 /PRNewswire/ --
Executing on its strategy to enter the United States telecommunications
market, Elephant Talk Communications, Corp. (NYSE MKT: ETAK)
(www.elephanttalk.com), an international provider of software and services
developed to manage network, billing and systems infrastructure for the
telecommunication industry and a market leader in providing solutions to
counter electronic fraud for the financial services industry, today announced
plans to acquire 100% of the assets of Telnicity, LLC, a U.S. MVNE/MVNO
enabler company headquartered in Oklahoma City, Oklahoma in an all-equity
transaction.

(Logo: http://photos.prnewswire.com/prnh/20120917/MM75872LOGO)

(Logo: http://photos.prnewswire.com/prnh/20120917/MM75492LOGO)

According to the acquisition agreement between Elephant Talk and Telnicity,
which is subject to certain closing conditions and based on the closing price
of Elephant Talk stock on January 8, 2013, the transaction value is
approximately $1 million, with Elephant Talk issuing 1 million shares of
common stock at closing. The shares will be subject to a lock-up agreement
restricting sale or disposition of the shares for 18 months. The terms of the
acquisition agreement also provides for a bonus arrangement applicable when
revenue minus cost of sales is in excess of $1.00 per customer per month and
payable once the cash flow from the Telnicity business is sufficient to cover
the payments. The transaction is expected to close on or before March 8,
2013.

"We will work on a seamless and efficient global platform for MNO's, MVNE's,
and MVNO's to operate by taking advantage of the technologies of both
companies," said Steven van der Velden, Chairman and Chief Executive Officer
of Elephant Talk Communications. "Telnicity's relationships with several North
American based telecommunications companies provide a head start for the
launch of Elephant Talk's services into the U.S. mobile telecommunication
market. In addition, Telnicity's existing customer base will be able to
leverage Elephant Talk's technology and telecommunications relationships to
offer more complete international calling and roaming packages."

According to the terms of the acquisition agreement, Elephant Talk will
acquire all of the assets of Telnicity, LLC, a U.S. MVNE/MVNO enabler company
including the company's existing customer contracts, carrier agreements, and
access to telSPACE and mCASH, Telnicity's propriety turnkey back office
infrastructure and billing systems. Telnicity's 6 full-time equivalent
employees will remain in their current positions.

"The all-equity transaction will result in less than 1% dilution to existing
Elephant Talk stockholders while providing Elephant Talk a United States
market presence. We believe an all stock transaction is an efficient and lower
risk approach to entering this important market," stated Mr. Van der Velden.
"As we work to bring the Elephant Talk operations to the U.S., we expect the
financial impact to be limited for at least the first several quarters.
Elephant Talk remains on track to achieve its first month of positive
operational cash flow in early 2013."

"Telnicity is a one-stop shop for outsourced solutions for any company in any
industry to become a reseller of mobile communication services," said Dane
Gasio, Founder and Chief Executive Officer of Telnicity. "Joining forces with
Elephant Talk will allow the combined company to bring an expanded product
offering to the U.S. market to be driven by a strong U.S. based management
team with substantial in-market sales, marketing, and technology development
experience. Elephant Talk will give Telnicity the depth and breadth of product
offerings that allow it to be more competitive and attractive to larger U.S.
companies."

Upon the close of this transaction, Dane Gasio will become President of
Elephant Talk North America and will report directly to Elephant Talk Chief
Executive Officer Steven van der Velden. In this capacity, Mr. Gasio will work
closely with Elephant Talk's global mobile telecommunications operations to
build, further integrate, and maximize the value of this global
telecommunications company.

Elephant Talk recognizes that companies that can differentiate their service
on something other than price will have higher retention rates, higher
margins, and higher penetrations. The future of wireless requires a successful
data strategy where Telnicity's MVNO clients can provide customized content to
their end users. Telnicity has created functionality allowing its clients to
create dramatic product differentiation from its competitors.

Telnicity is positioned at the center of a true telecommunication convergence,
with a system that can support cross carrier/cross technology billing. With
the move towards convergent billing of multiple service offerings, and the
unknowns of where technology will head with the latest spectrum auction to
support LTE, WIMAX, and other 4G technology deployments, Telnicity is
positioned to succeed with a system designed to support any carrier
technology. If cellular carrier(s) change their wholesale strategy, Telnicity
is well-positioned with multiple carrier and multiple technology
relationships.

Telnicity's telSPACE allows its clients to sell, fulfill, and care for
multiple telecommunication services, including Pre and Post-Paid Cellular,
VOIP, Internet, and Long Distance. The system is completely rules based,
allowing for greater speed of integration and customization than any
competitor. Telnicity can enable any MVNO in only 3-4 weeks to sell privately
branded telecommunications services for many U.S. Carriers.

The Boards of Directors of Elephant Talk Communications, Corp. and controlling
shareholders of Telnicity, LLC have approved this transaction, which is
subject to customary closing conditions.

Elephant Talk Communications, Corp. (NYSE MKT: ETAK) is a leading
international provider of mobile networking software and services. The
Company's mission is to provide a single service, fully enabling and securing
the mobile cloud.

Elephant Talk empowers Mobile Network Operators (MNOs) and Mobile Virtual
Network Operators (MVNOs) by providing acloud based mobile communications
infrastructure, operating software and managed services, based mostly on
company developed and owned software. We enable these Mobile Operators and
Virtual Network Operators by offering a full suite of products, delivery
platforms, support services, superior industry expertise and high quality
customer service without substantial upfront investment.

As a specialized outsourcing partner, we provide operating software, managed
services, cloud and SaaS solutions, an integrated transaction and delivery
platform to the mobile telecommunications industry globally. Our products
include remote health care, credit card fraud prevention, mobile internet ID
security, secure remote file access management, loyalty and transaction
management services and a whole range of other emerging mobile services.

Elephant Talk can count several of the world's leading Mobile Operators
amongst their customers including Vodafone, T-Mobile and Zain, and virtually
all business is focused on tier 1 operators worldwide. Visit
www.elephanttalk.com.

ValidSoft Limited has been a wholly owned subsidiary of Elephant Talk since
early 2010 and underpins our mobile/cloud security offering. The company is a
market leader in providing solutions to counter electronic fraud relating to a
variety of bank, card, internet and telephone channels. ValidSoft's solutions
are used to verify the authenticity of both parties to a transaction (Mutual
Authentication), the security of the relevant telecommunication channel used
(Secure Communications), and the integrity of transactions itself (Transaction
Verification) for the mass market, in a highly cost effective and secure
manner while being very easy to use.

The company's clients include leading worldwide service providers and
institutions who benefit from a very substantial reduction in false positives,
thereby freeing up resources to combat actual fraud, as well as a substantial
elimination of the fraud itself, all in real time. ValidSoft is the only
security software company in the world that has been granted three European
Privacy Seals. Visit www.validsoft.com.

Telnicity, LLC, a U.S. company based in Oklahoma City is an MVNE/MNVO enabler
where mobility and simplicity meet, has developed a full turnkey MVNO, vMVNO,
VNO, and VNE billing system that enables any company in any industry to become
a sophisticated reseller of communication services as well as mobile commerce.
Telnicity offers MVNO client access to multiple services and technologies all
connected to one central back office where customers are acquired, activated,
billed and managed. Telnicity's turnkey MVNO solution allows its clients to
care for multiple telecom services including Pre and Post-Paid cellular VOIP,
Internet, mobile commerce, and International long distance. The Telnicity back
office integration strategy is based on automation and creating efficiencies
in areas where technology has not yet caught up to its fullest potential.

Forward-Looking Statements
Certain statements contained herein constitute "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995.
Such statements may include, without limitation, statements with respect to
the Company's plans and objectives, projections, expectations and intentions.
These forward-looking statements are based on current expectations, estimates
and projections about the Company's industry, management's beliefs and certain
assumptions made by management. Readers are cautioned that any such
forward-looking statements are not guarantees of future performance and are
subject to certain risks, uncertainties and assumptions that are difficult to
predict. Because such statements involve risks and uncertainties, the actual
results and performance of the Company may differ materially from the results
expressed or implied by such forward-looking statements. Given these
uncertainties, readers are cautioned not to place undue reliance on such
forward-looking statements. Unless otherwise required by law, the Company also
disclaims any obligation to update its view of any such risks or uncertainties
or to announce publicly the result of any revisions to the forward-looking
statements made here. Additional information concerning certain risks and
uncertainties that could cause actual results to differ materially from that
projected or suggested is contained in the Company's filings with the
Securities and Exchange Commission (SEC), copies of which are available from
the SEC or may be obtained upon request from the Company.

Contacts

Investor relations:
Steve Gersten
Elephant Talk Communications Corp.
813-926-8920
Steve.Gersten@elephanttalk.com

Peter Salkowski
The Blueshirt Group
415-489-2184
peter@blueshirtgroup.com

Public Relations:
UK: Fishburn Hedges
+44 (0)20 7839 4321
validsoft@fishburn-hedges.co.uk

SOURCE Elephant Talk Communications, Corp.

Website: http://www.elephanttalk.com
 
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