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EBITDA shows significant sequential improvementToronto – November 12, 2008 – TeraGo Inc. (TSX: TGO) today announced financial and operating results for the third quarter ended September 30, 2008.

Third Quarter 2008 Highlights

Total 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
“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.”

Key Financial & Operational Highlights
(All financial results are in thousands, except ARPU and loss per share)

Results of Operations

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 Nonvoting Shares and two Class B Shares outstanding.

Conference Call and Webcast

Management will host a conference call on Wednesday, November 12, 2008, at 9:00 a.m. EST to discuss these results. To access the conference call, please dial 416-644-3431 or 1-800-796-7558. A replay of the conference call will be available until Wednesday, November 19, 2008 at midnight EDT. To access the replay, call 416-640-1917 or 1-877-289-8525, followed by passcode 21286914#. The call will also be accessible via webcast at www.terago.ca or at www.newswire.ca. An archived replay of the webcast will be available for one year.

TeraGo’s unaudited interim financial statements for the three months ended September 30, 2008, and the notes thereto, and its Management Discussion and Analysis for the same period, have been filed on SEDAR at www.sedar.com.

Non-GAAP Measures

The term “EBITDA” refers to income before deducting interest, taxes, and amortization. EBITDA is a term commonly used to evaluate operating results. We believe that EBITDA is useful supplemental information as it provides an indication of the operational results generated by our business activities prior to taking into consideration how those activities are financed and taxed and also prior to taking into consideration asset amortization. We also exclude foreign exchange gain or loss, gain or loss in network asset disposals and stock option expense from our calculation of EBITDA. EBITDA is not a recognized measure under GAAP and, accordingly, investors are cautioned that EBITDA should not be construed as an alternative to operating income or net income determined in accordance with GAAP as an indicator of our financial performance or as a measure of our liquidity and cash flows. EBITDA does not take into account the impact of working capital changes, capital
expenditures, debt principal reductions and other sources and uses of cash, which are disclosed in the consolidated statements of cash flows. Our method of calculating EBITDA may differ from other issuers and, accordingly, EBITDA may not be comparable to similar measures presented by other issuers.

The term “ARPU” refers to our average revenue per customer location. We believe that ARPU is useful supplemental information as it provides an indication of our revenue from an individual customer location on a per month basis. ARPU is not a recognized measure under GAAP and, accordingly, investors are cautioned that ARPU should not be construed as an alternative to revenue determined in accordance with GAAP as an indicator of our financial performance. We calculate ARPU by dividing our service revenue by the average number of customer locations in service during the period and we express ARPU as a rate per month. Our method of calculating ARPU may differ from other issuers and, accordingly, ARPU may not be comparable to similar measures presented by other issuers.

The term “churn” or “churn rate” is a measure, expressed as a percentage, of customer locations terminated in a particular month. Churn represents the number of customer locations disconnected per month as a percentage of total number of customer locations in service at the end of the month. We calculate it by dividing the number of customer locations disconnected during a period by the total number of customer locations in service during the period. Churn is not a recognized measure under GAAP and, accordingly, investors are cautioned in using it. Our method of calculating churn may differ from other issuers and, accordingly, churn may not be comparable to similar measures presented by other issuers.

Forward-Looking Statements

This news release includes certain forward-looking statements that are made as of the date hereof and that are based upon current expectations, which involve risks and uncertainties associated with our business and the economic environment in which the business operates. All such statements are made pursuant to the ’safe harbour’ provisions of, and are intended to be forward-looking statements under, applicable Canadian securities legislation. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements. For example, the words anticipate, believe, plan, estimate, expect, intend, should, may, could, objective and similar expressions are intended to identify forward-looking statements. By their nature, forward-looking statements require us to make assumptions and are subject to inherent risks and uncertainties. We caution readers of this news release not to place undue reliance on our forward-looking statements as a number of factors could cause actual results, conditions, actions or events to differ materially from the targets, expectations, estimates or intentions expressed with the forward-looking statements.
When relying on forward-looking statements to make decisions with respect to the Company, investors and others should carefully consider the risks set forth in the Third Quarter 2008 MD&A, 2007 Annual MD&A and 2007 Annual Information Form that can be found on SEDAR www.sedar.com and other uncertainties and potential events. Except as may be required by Canadian securities laws, we do not intend, and disclaim any obligation to update or revise any forward-looking statements whether words or written as a result of new information, future events or otherwise.

About TeraGo NetworksTeraGo 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). More information about TeraGo is available at www.terago.ca.

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