Spantel President Issues Open Letter to Shareholders FUENGIROLA, Spain, Oct. 20 /PRNewswire-FirstCall/ -- Spantel Communications, Inc. (OTC:SPAL) (BULLETIN BOARD: SPAL) today has provided the following open letter from its president, Jose Ramon Basterra, to shareholders and the investment community at large in order to update all parties on the Company's operational progress. To Our Shareholders I would like to take this opportunity to update you on the remarkable progress our company has achieved over the last six fiscal quarters. We have been able to realize revenue growth in every quarter since we began operations and this sustained growth has been instrumental in bringing us to profitability. This past year has been a good year for us as we have seen sales increase in the third fiscal quarter by 18.4%, from $4,063,108 in the third fiscal quarter of 2003 to $4,812,481 in the third fiscal quarter of 2004. Year to date revenues increased by 21.87%, from $12,210,638 in fiscal 2003, to $14,881,092 in fiscal 2004, staying within management objectives with a 43.21% gross operating margin. During the third fiscal quarter of 2004 we redeployed some assets and took some one-time extraordinary charges to position us in what management has identified as future growth markets that we have developed in the past year. This includes access into the mobile phone sector, in addition to a wholesale department. With the introduction of our own prepaid calling card platform in Madrid we have also seen margins increase in the calling card sector. Additionally we have added operator assistance service and premium numbers to better optimize our resources at our call centers. We believe that we are well positioned to continue to grow into 2005. Although last year we reported earnings of $0.05 per share, we expect that earnings for this fiscal year will be negatively impacted due to capital expenditures and extraordinary charges associated with the start-up of some of our newer services. We believe that these capital expenditures were essential to enable us to remain competitive as well as operate with a healthy operating margin. My staff and I are fully committed to giving our customers and shareholders the confidence to know that we are in a dynamic growth industry located in one of Europe's strongest economies, and we believe that we are poised for a fantastic future. By any measure, the story of this past year is one of a turnaround. We believe that the real success, however, lies not in this year's achievements, rather it is found in the resolve and focus we developed during the process that we hope will equip us for the future. My philosophy, and one that I try to instill in our management team, is that if we successfully manage our core business, such success will lead us to new opportunities. Deregulation and competition have pushed us to be lean and efficient, to measure the performance of every employee and every business practice, and to have a financial toughness in managing and leveraging our assets. This mindset has imposed a rigid discipline on our operating practices, which puts this year's results in the proper context. More importantly, it instills within us optimism for the future. This mindset has also enabled us to explore new opportunities in markets where our core business can be expanded or otherwise complemented. We at Spantel are proud of our accomplishments and look forward to continued growth in the future as we have seen in the past. Although we have grown steadily since inception and are now profitable from an operating standpoint, we believe that the share price of our common stock is not reflective of these accomplishments. As many of you are aware, in an industry such as telecommunications, many companies trade at price multiples significantly higher than ours. We are hopeful that as word of our accomplishments spread, our potential as a competitor in our market and our corresponding market value will follow. We look forward to an exciting future and invite you to visit our facilities in Spain anytime. Regards, Spantel Communications, Inc. Jose Ramon Basterra President Footnote: Third quarter 2004 financials are unaudited Spantel Communications, Inc. is a provider of telecommunications services throughout Spain. To learn more about Spantel, visit the Company's website at http://www.spantel.es/. SAFE HARBOR: Except for historical information contained herein, the statements in this release are forward-looking and made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties, which may cause the Company's actual results in future periods to differ materially from forecasted results. Those risks include, among other things, the competitive environment in the telecommunications industry in general and in the Company's specific market areas, inflation, changes in costs of goods and services and economic conditions in general. Those and other risks are more fully described in the Company's filings with the Securities and Exchange Commission. Contact: Spantel Communications, Inc. Mr. Robert Carlin +34.952.66.93.29 This release was issued through eReleases(TM). For more information, visit http://www.ereleases.com/. DATASOURCE: Spantel Communications, Inc. CONTACT: Mr. Robert Carlin, Spantel Communications, +34.952.66.93.29, Web site: http://www.spantel.es/

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