Trading Update

SEATTLE, WA - October 17, 2007 –Citel, which designs, develops and markets a range of Voice over Internet Protocol (VoIP) solutions for the business telephony market, today reports on trading for the six months ended 30 September 2007.

For the six months ended 30 September 2007, revenues are expected to be US $2.64 million, an increase of 23% from US $2.15 million for the six months to 30 September 2006. During the first six months of the fiscal year the Company has executed its revised strategy to focus on end users and Tier 2/3 carriers.  During the period Citel expanded its portfolio of Tier 2/3 carriers, signing deals with leading carriers in the Caribbean and Central America.  In addition, good progress was made on direct end user sales, including a major contract win with a large US university. Management believes that the education market represents significant potential for Citel’s VoIP migration solution and the Company is currently in discussions with a number of major colleges and universities in the US. Sales of the key TVA product have shown strong growth and now represent approximately a quarter of total turnover. 

However, while progress has been very encouraging and shipment levels of TVA continue to expand, it remains difficult to predict the timing of the benefits of the Company’s direct and leveraged selling efforts. Consequently, Citel now considers it unlikely that it will achieve market forecasts for the year ending 31 March, 2008. In light of the revised outlook, the Company is in the process of realigning its cost base. The Company has reduced staffing levels by 30% across all functional groups and is consolidating office numbers from three to two. As at 30 September, Citel had cash of US$2.3m which, together with credit facilities and reduced cost levels, should support the current business plan through to profitability.

Going forward the Company will continue its strategic focus on Tier 2/3 carriers and direct selling, where it believes more immediate revenues can be derived in a shorter time frame.  Management retains its belief in the potential of the Tier 1 carrier market and will continue to apply appropriate levels of resource to ensuring Citel is well placed to benefit from any pick up in demand from this channel. 

Citel looks forward to further updating the market at the time of publishing the results for the six months ended 30 September, 2007 in December 2007.

Commenting on the announcement, Jose David, Interim CEO, said, “Our strategy to focus on direct selling and Tier 2/3 carriers is driving more immediate revenues and progress has been encouraging.  The market for VoIP migration remains large and we continue to be the only provider of this migratory VoIP solution.  Our pipeline of opportunities continues to grow and we believe our aggressive sales strategy will drive the business forward.  We remain confident in the strength of Citel’s market position.”

About Citel plc

Citel enables SMBs and large enterprises to realize the cost and productivity benefits of IP telephony while at the same time leveraging their existing PBX infrastructure. Businesses with single or distributed locations, and PBX vendors, can now deploy next-generation IP applications and services at their own pace, with little business disruption by installing Citel’s TVA Portico products. Service providers can deploy hosted IP telephony services, without having the client rip-and-replace existing PBX handsets and LAN cabling. End-user training is also eliminated for the desktop client. Citel is a publicly traded company with corporate headquarters in Seattle, with R&D/ Product Development staff in Nottingham, England (UK). For more information, visit www.citel.com.

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This Press Release does not constitute or form any part of any offer or invitation to sell or issue or any solicitation of any offer to purchase or subscribe for any securities in any jurisdiction, nor shall it (or any part of it) or the fact of its distribution form the basis of, or be relied upon in connection with, or act as any inducement to enter into, any contract or commitment therefore.

Copyright 2007, Citel plc. All Rights Reserved.

Citel and The VoIP Migration Company are trademarks of Citel Technologies, Inc. All other product and company names mentioned herein may be trademarks of their respective owners.