"We are pleased to report another quarter of double digit revenue growth," said Bryan Boyd, President and CEO, TeraGo Inc. "TeraGo has launched service in 11 new markets since our IPO in 2007, most recently in Abbotsford, BC and Ottawa, ON, and having completed that investment, our focus will continue to be on driving growth within our existing 42 markets. In line with our expectations, we realized a $650,000 improvement in EBITDA in the third quarter compared to the second quarter as a result of prudent cost management and revenue growth. Continued improvement in EBITDA and maintaining a fully funded business plan remain top priorities for us."

Third Quarter 2008 Highlights

• revenue for the quarter was $7.9 million, an increase of 22% over the third quarter of 2007
• EBITDA was $(0.1) million in the third quarter, compared to $0.2 million a year earlier, and $(0.7) million in the previous quarter
• Net customer locations added in the quarter were 169 compared to 163 in the third quarter of 2007
• Average monthly churn rate for the quarter was 1.17% compared to 0.86% in the third quarter of 2007
• ARPU for the quarter was $599 compared to $596 in the third quarter of 2007, an increase of 1%
• 4,382 customer locations in service as at September 30, 2008, an increase of 22% from a year earlier

TeraGo's total revenue for the three-month period ended September 30, 2008 was $7.9 million, an increase of 22% compared to $6.4 million of revenue generated in the third quarter of 2007. The increase in revenue is primarily the result of a greater number of customer locations in service, as well as existing customers upgrading their internet and data connections and adding additional service locations. Service revenue, which is recurring in nature, comprised 98% of total revenue in the quarter, while installation revenue represented 2%.

Total customer locations in service reached 4,382 at September 30, 2008, an increase of 800 net new locations or 22% compared to 3,582 customer locations in service one year earlier. Net customer locations added during the third quarter of 2008 totaled 169.

Average monthly revenue per customer location, or ARPU, was $599 in the third quarter of 2008, an increase of 1% from $596 in the third quarter of 2007. The increase in ARPU was driven primarily by existing customers upgrading the capacity of their services in addition to an increase in the number of new customers requiring higher capacity services.

The average monthly churn rate was 1.17% for the three months ended September 30, 2008, compared to 0.86% for the same period in 2007. The average monthly churn rate was 0.95% for the nine months ended September 30, 2008 compared to 0.93% for the same period in 2007. The Company will continue to monitor churn levels closely in light of the current economic environment.

Gross profit was $5.8 million in the quarter, representing 74% of revenue, compared to $4.9 million or 76% of revenue in the third quarter of 2007. Gross profit margins in the quarter were impacted primarily by network expansion and upgrade activities and by an increase in the Company's customer support team. The Company's costs of service are largely fixed and will be leveraged as the business scales.

Sales, general and administrative (SG&A) expenses were $5.9 million in the quarter, an increase of 24% compared to $4.8 million for the same quarter in the previous year. The increase was primarily driven by increases in salaries and compensation-related expenses, as the Company added personnel to accelerate its acquisition of new customers and to support its growing base of subscribers. Direct sales personnel stood at 40 as at September 30, 2008, six fewer than at the end of the prior quarter. Management does not expect to increase the number of direct sales personnel to 50 by the end of this year as previously communicated. The future growth of the sales team will be dependent on the economic environment.

EBITDA was $(0.1) million in the third quarter of 2008 compared to $0.2 million a year earlier. As anticipated, EBITDA showed significant sequential improvement compared to $(0.7) million in the second quarter of 2008. This improvement in EBITDA is in line with management's expectation as the Company focuses on prudent cost management while revenue continues to grow. Net loss was $(2.6) million or $(0.23) per share in the third quarter of 2008 compared to a net loss of $(1.5) million or $(0.13) per share in the same period in 2007.

As of September 30, 2008, TeraGo had cash and cash equivalents and short-term investments of $16.1 million compared to $20.9 million at June 30, 2008. The Company had no debt outstanding as of September 30, 2008. Management believes that the Company's current cash and short-term investments and its anticipated cash flow from operations will be sufficient to meet working capital and capital expenditure requirements for the foreseeable future. As of November 10, 2008, TeraGo had 7,487,460 Common Shares, 3,633,474 Class A Non-voting Shares and two Class B Shares outstanding.

TeraGo Networks Inc. has been providing businesses in Canada with carrier-grade wireless broadband and data communications services since 2001. The national broadband service provider owns and manages its wireless IP network in 42 major markets across Canada, serving more than 4,000 customer locations. TeraGo Networks is a wholly owned subsidiary of TeraGo Inc. (TSX: TGO).

Keywords: abbotsford bc, bryan boyd, third quarter ended september, period ended september, customer locations, top priorities, quarter ended september, data connections, customer location, arpu, ebitda, tgo, cost management, additional service, wireless broadband

By Robert Hoskins

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