MTS Announces Third Quarter 2011 Financial Results

Ra’anana, Israel –November 10, 2011 – MTS – Mer Telemanagement Solutions Ltd. (Nasdaq Capital Market: MTSL), a global provider of business support systems (BSS) for comprehensive telecommunication management, telecommunications expense management (TEM) solutions and customer care & billing (CC&B) solutions, today announced its financial results for the third quarter of 2011 and the nine months ended September 30, 2011.

Revenues for the third quarter of 2011 were $3.0 million, compared with $2.7 million in revenues during the same quarter last year and revenues of $3.0 million in the second quarter of 2011. The Company’s operating profit was $244,000 in the third quarter of 2011 compared to an operating loss of $28,000 for the third quarter of 2010. Net income for the third quarter  of 2011 was $226,000 or $0.05 per basic and diluted share, compared with net income of $14,000 or $0.00 per basic and diluted share in the third quarter of 2010. Revenues for the nine month period ended September 30, 2011 were $8.8 million, compared with $8.6 million for the comparable period in 2010. Net income for the nine months ended September 30, 2010 was $588,000 or $0.13 per basic and diluted share, compared with net income of $59,000 or $0.01 per basic and diluted share in the comparable period in 2010.

Our cash and marketable securities rose to $3.0 million at September 30, 2011, which reflects our improved operating cash flow of $794,000 during the nine month period ended September 30, 2011.

“The Company’s CC&B solution for Mobile Virtual Network Operator (MVNO) activity has grown both as license and managed service. We have recently signed 2 new contracts with multinational MVNOs to provide customer care & billing (CC&B) solution” said Eytan Bar, CEO of MTS.

About MTS

Mer Telemanagement Solutions Ltd. (MTS) is a worldwide provider of innovative solutions for comprehensive telecommunications expense management (TEM) used by enterprises, and for business support systems (BSS) used by information and telecommunication service providers.

Since 1984, MTS Telecommunications’ expense management solutions have been used by thousands of enterprises and organizations to ensure that their telecommunication services are acquired, provisioned, and invoiced correctly. In addition, the MTS’s Application Suite has provided customers with a unified view of telecommunication usage, proactive budget control, personal call management, employee cost awareness and more.

AnchorPoint TEM solutions enable enterprises to gain visibility and control of strategic assets that drive key business processes and crucial competitive advantage. The AnchorPoint’s software, consulting and managed services solutions -- including integrated Invoice, Asset, and Usage Management and Business Analytics tools -- provide professionals at every level of the organization with rapid access to concise, actionable data.

MTS's solutions for Information and Telecommunication Service Providers are used worldwide by wireless and wireline service providers for interconnect billing, partner revenue management and for charging and invoicing their customers. MTS has pre-configured solutions to support emerging carriers of focused solutions (e.g. IPTV, VoIP, WiMAX, MVNO) to rapidly install a full-featured and scaleable solution.

Headquartered in Israel, MTS markets its solutions through wholly owned subsidiaries in the United States, Hong Kong and The Netherlands as well as through OEM partnerships with Siemens, Phillips, NEC and other vendors.  MTS shares are traded on the NASDAQ Capital Market (symbol MTSL).  For more information please visit the MTS web site: www.mtsint.com.

Certain matters discussed in this news release are forward-looking statements that involve a number of risks and uncertainties including, but not limited to, risks in product development plans and schedules, rapid technological change, changes and delays in product approval and introduction, customer acceptance of new products, the impact of competitive products and pricing, market acceptance, the lengthy sales cycle, proprietary rights of the Company and its competitors, risk of operations in Israel, government regulations, dependence on third parties to manufacture products, general economic conditions and other risk factors detailed in the Company’s filings with the United States Securities and Exchange Commission.

Contacts:

Company:

Alon Mualem

CFO

Tel: +972-9-7777-540

Email: Alon.Mualem@mtsint.com

CONSOLIDATED BALANCE SHEETS

U.S. dollars in thousands

	September 30,		December 31,
	2011		2010
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	2,917	$	2,124
Restricted marketable securities		130		147
Trade receivables, net		964		1,251
Other accounts receivable and prepaid expenses		131		174
Inventories		9		17
Total current assets		4,151		3,713
LONG-TERM ASSETS:
Severance pay fund		839		798
Other investments		6		4
Deferred income taxes		33		33
Total long-term assets		878		835
PROPERTY AND EQUIPMENT, NET		173		165
OTHER ASSETS:
Goodwill		3,479		3,479
Other intangible assets, net		1,142		1,415
Total other assets		4,621		4,894
Total assets	$	9,823	$	9,607

CONSOLIDATED BALANCE SHEETS

U.S. dollars in thousands (except share and per share data)

	September 30,			December 31,
	2011			2010
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade payables	$	337		$	305
Accrued expenses and other liabilities		2,048			2,085
Deferred revenues		2,016			2,452
Liabilities of discontinued operations		351			351
Total current liabilities		4,752			5,193
LONG-TERM LIABILITIES -
Accrued severance pay		1,075			1,051
COMMITMENTS AND CONTINGENT LIABILITIES
SHAREHOLDERS' EQUITY:
Share capital		13			13
Additional paid-in capital		19,746			19,676
Treasury shares		(29	)		(29	)
Accumulated other comprehensive income		(29	)		(4	)
Accumulated deficit		(15,705	)		(16,293	)
Total shareholders' equity		3,996			3,363
Total liabilities and shareholders' equity	$	9,823		$	9,607

CONSOLIDATED STATEMENTS OF OPERATIONS

U.S. dollars in thousands (except share and per share data)

	Nine months ended September 30,				Three months ended September 30,
	2011		2010		2011			2010
Revenues:
Product sales	$	2,933	$	3,283	$	926		$	897
Services		5,911		5,340		2,083			1,793
Total revenues		8,844		8,623		3,009			2,690
Cost of revenues:
Product sales		836		1,196		255			369
Services		1,982		2,134		662			752
Total cost of revenues		2,818		3,330		917			1,121
Gross profit		6,026		5,293		2,092			1,569
Operating expenses:
Research and development, net of grants from the OCS		1,445		1,100		500			429
Selling and marketing		1,465		1,877		439			596
General and administrative		2,677		2,269		909			572
Total operating expenses		5,587		5,246		1,848			1,597
Operating profit (loss)		439		47		244			(28	)
Financial income (expenses), net		79		25		(11	)		43
Capital gain on sale of  investment		78		-		-			-
Income before taxes on income		596		72		233			15
Tax on income (benefit), net		8		13		7			1
Net income	$	588	$	59	$	226		$	14
Net Income per share:
Basic and diluted net income per Ordinary share	$	0.13	$	0.01	$	0.05		$	0.00
Weighted average number of Ordinary shares used in computing basic and diluted net loss per share		4,459,057		4,458, 975		4,459,057			4,458,975