Press Release

MADRID, Spain--(BUSINESS WIRE)--Jan. 4, 2006--Teleconnect, Inc (OTCBB:TLCO - News) 10K filing for the fiscal year ending September 30, 2005, reflects continued financial improvements as a result of a continued focus on streamlining operations and investing in new products and services.

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Teleconnect, Inc´s, recent 10K filing for the fiscal year ending September 30, 2005 reporting an increase in Gross Profit during fiscal 2005 to $1,524,000, or 20%, from $1,223,000 in fiscal 2004. Gross profit margins increased 56% from 19.8% in 2004 to 30.9% in 2005. The principal reasons for the increase were management´s successful efforts to renegotiate its carrier pricing.

Cost of goods sold for the year ended September 30, 2005 were $3,406,000, a decrease of $1,538,000 or 31.1% from the prior year cost of sales of $4,944,000. Cost of Goods sold as a percentage of sales was 69,1% in this 2005 fiscal year end compared to 80.2% for the same period in 2004.

Selling, general and administrative expenses (SG&A) for the year ended September 30, 2005 were $3,574,000, a decrease of $553,000 or 19.5% from the prior year ´s operating expenses of $4,127,000. The principal reasons for the decrease were management´s effort to reduce its fixed costs such as the move of the corporate offices to a much more economical and newer industrial park.

Teleconnect Inc. President, Gustavo Gomez explains, "These reported results indicate that the strategy adopted by management for the year 2005 continues to have a positive impact on the bottom line of the Company. This past year has been the time to finish the restructuring and position strongly the Company in the market with new products and services for 2006. Within the coming months, we will be announcing a number of new distribution agreements, in addition to the launch of new services which will bring additional revenues to the Company and eventual net profitability. Our final objective is to create and build shareholder value."

About Teleconnect Inc:

Teleconnect Inc., Inc. through its wholly owned subsidiary Teleconnect Comunicaciones S.A., a Spanish telecommunications company, is a major player in the prepaid telecoms industry in Spain. Teleconnect, Inc. is traded on a U.S. stock exchange, the Over The Counter Bulletin Board (OTCBB:TLCO - News). Teleconnect provides commercial and residential users in Spain with a very competitive array of prepaid services. www.teleconnect.es

Forward Looking Statements:

Except for the historical information contained herein, the statements in this press release are forward-looking statements that involve risks and uncertainties. Potential risks and uncertainties include, without limitation, continued competitive pressures in the marketplace; the effect competitive and economic factors and the Company´s reaction to them may have on consumer and business buying decisions with respect to the Company´s products; the ability of the Company to make timely delivery of new products and successful technological innovations to the marketplace; the continued availability of certain components and services essential to the Company´s business currently obtained by the Company from sole or limited sources. More information on potential factors that could affect the Company´s financial results is included from time to time in the Company´s public reports filed with the SEC

Contact:
LC Group
Rick Lutz, 404-261-1196
lcgroup@mindspring.com