First Quarter 2008 Financial Results Highlights

*** Revenues up 83% YoY to $6.5 million; slightly less than same quarter of 2007 given industry-wide seasonality.

*** Gross margin of 44%; down sequentially from previous quarter following weaker US dollar and two strategic, yet lower margin, projects.

*** Continued strong order generation with book-to-bill over one.

*** Substantially acquired all Compwise assets, a business analytic solutions provider, to expand IRMâ„¢ offerings.

First quarter 2008 revenues totaled $6.5 million compared to $3.6 million in the first quarter of 2007. Revenues slightly slid from fourth quarter 2007 that were $6.6 million, due to a seasonally weak first quarter.

Non-GAAP Gross margin for the first quarter of 2008 was 44.2%, compared to the 42.3% margin in the first quarter 2007. The lower gross margin in the first quarter follows the impact of the ongoing weakening of the US dollar, as well as the contribution of two lower-margin, yet strategic projects with major telecom groups. Non-GAAP gross margin in the fourth quarter of 2007 was 55.6%.

Non-GAAP operating loss for the first quarter of 2008 reached $1.8 million, a 47% decrease compared to a non-GAAP operating loss of $3.4 million in the first quarter of 2007. Non-GAAP operating loss for the fourth quarter of 2007 totaled $0.8 million. Operating loss for the first quarter 2008 includes a $282 thousand provision recorded for the contemplated settlement of a class action complaint filed in 2004, and was also adversely impacted by the factors described in the preceding paragraph.

Non-GAAP net loss for the first quarter of 2008 totaled $1.1 million, or $0.07 loss per share, a 64% improvement compared with a net loss of $3.1 million, or $0.19 loss per share, in the first quarter of 2007. Non-GAAP net loss for the fourth quarter 2007 totaled $0.5 million, or $0.03 per share. The net loss for the first quarter 2008 was negatively impacted by the ongoing weakening of the US dollar against the Israeli shekel. During the first quarter of 2008 the US dollar devaluated by 8% against the Israeli Shekel contributing to an approximate $400 thousand decline in the net income for the period.

On a GAAP basis, gross margin for the first quarter 2008 totaled 43.8%, compared to the 41.6% margin in the first quarter 2007, and 55.3% margin in the fourth quarter 2007. Operating loss for the first quarter of 2008 reached $2.0 million, compared to an operating loss of $4.3 million in the first quarter of 2007. Operating loss for the fourth quarter of 2007 totaled $1 million. On a GAAP basis, net loss for the first quarter of 2008 totaled $1.3 million, or $0.08 loss per share, compared to $4.0 million, or $0.24 per share, in the first quarter 2007. Net loss for the fourth quarter 2007 totaled $2.2 million, or $0.13 per share.

ECtel’s non-GAAP net income differs from results reported under U.S. GAAP. This is due to adjustments made for amortization of acquisition related intangible assets, share-based compensation expenses and the impact of the permanent impairment charge related to certain securities in December 2007. The accompanying tables provide a full reconciliation from GAAP to Non-GAAP results.

Cash, cash equivalents, and marketable bonds and securities as of March 31, 2008 were $28.5 million or $1.71 per share, compared to $29.1 million or $1.74 per share as of December 31, 2007.

“The first quarter of 2008 was another quarter of strong revenue and order generation for the company, despite this being our sector’s seasonally weakest quarter, with book-to-bill once again surpassing one,” commented Itzik Weinstein, President and CEO of ECtel. “During recent weeks and months we continued to identify new opportunities to enhance our product offering. Last week we announced the release of our next generation Fraudview version 8.2, as well as the acquisition of substantially all of Compwise’s assets, a provider of business analytic solutions for telecommunication operators. This acquisition is expected to further expand and strengthen our market leading Integrated Revenue Management product suite, while further expanding our customer base. We believe that these two developments, together with our strong customer base and technological leadership, will serve as additional foundations for future growth and execution, enhancing our position as a major player in the integrated revenue management and assurance space.”

Decline in value of certain securities. As of March 31, 2008 , the Company had $2.4 million of principal invested in Auction Rate Securities (ARS). Since certain of these ARS have experienced multiple failed auctions due to a lack of liquidity in the market for these securities, based on initial third party indications the Company recorded in the first quarter of 2008, an unrealized loss of $0.3 million in other comprehensive income as a reduction of shareholders’ equity, which is considered as a “temporary” impairment. All of these ARS are classified long-term investments.

A Webcast replay of the earnings call will be available after the call on the Company’s web site: http://www.ectel.com

About ECtel Ltd.

ECtel (NASDAQ : ECTX) is a leading global provider of Integrated Revenue Managementâ„¢ (IRMâ„¢) solutions for communications service providers. A pioneering market leader for nearly 20 years, ECtel offers carrier-grade solutions that enable wireline, wireless, converged and next generation operators to fully manage their revenue and cost processes. ECtel serves prominent Tier One operators, and has more than 100 implementations in over 50 countries worldwide. Established in 1990, ECtel maintains offices in the Americas and Europe.

For more information, please visit their website: http://www.ectel.com

Visit with them at Billingworld & OSS World Conference & Expo, April 30, May 1, Chicago 8th Annual Asia Pacific Billing, OSS and Revenue Assurance, May 12-15, Singapore Telecoms Fraud Africa, May 26-29, Capetown, South Africa