PRESS RELEASE

Telegroup Inc. Expands Services and Management in Europe

Increases Netherlands capacity four-fold

FAIRFIELD, Iowa--(BUSINESS WIRE)--Sept. 10, 1998-- Telegroup, Inc. (Nasdaq: TGRP - news) announced today that it is expanding its product and services offering, increasing network capacity, and adding to its management team in Europe.

Cliff Rees, Telegroup's Chief Executive Officer stated: ``Our European expansion is on-time and in line with our previously announced timetable. We are continuing to execute our core business strategy by increasing network capacity and expanding our product selection in key markets. We expect to see strong traffic growth in Europe as a result of these strategic moves.''

In the Netherlands, Telegroup has expanded its number of switches four-fold and is increasing network facilities capacity in response to a substantial increase in traffic since activating an interconnect agreement with the Dutch PTT last December. In the past four months, Telegroup has installed three new Excel LNX switches in Amsterdam, Zwolle, and Heerlen and expects to add points of presence in Rotterdam and The Hague by year-end. Telegroup also expects to nearly triple its incoming circuit capacity connecting its switches to the Dutch public service telephone network by November, 1998, and to activate an international private line connecting its Dutch network to its international gateway switch in London in October, 1998.

In Denmark, Telegroup activated an interconnect agreement in July with Tele Denmark, the Danish PTT, enabling Telegroup to offer national and international long distance services to its Danish customers. In the U.K., Telegroup activated an interconnect agreement in July with Energis, adding national long distance to its existing international offering.

Giles Redpath, Telegroup's Vice President for Europe, commented: ``These product and network capacity expansions are critical elements of our strategy to increase penetration of the European corporate marketplace. We are poised to take immediate advantage of these additions with our newly established Pan-European telemarketing office in the Amsterdam area and expanded direct sales forces in the U.K. and Germany.''

Mr. Redpath continued: ``These moves are consistent with our objective of providing integrated voice and data products at competitive prices to retail and wholesale customers. In the U.K., our new interconnect enables us to offer national long distance services to our existing U.K. customer base at savings of up to 20% relative to our primary competitors and 30% relative to the PTT. The Dutch network additions will allow us to rapidly expand our 1633 code access services to corporate customers at rates up to 15% below the PTT, enhancing our position as the leading Dutch alternative provider of long distance services.''

Telegroup also announced that it has appointed Mr. Giuseppe Funaro as its Managing Director for Italy. Mr. Funaro will be responsible for building Telegroup's customer base among small and medium sized enterprises, particularly those with high international usage. Telegroup maintains a switch in Milan and a point of presence in Rome. Mr. Funaro was previously Business Development Manager for AT&T in the U.K. Prior to that he was Product Manager for Messaging Services with Cable & Wireless. Mr. Funaro will be based at Telegroup's office in Milan.

Telegroup is a leading global provider of national and international long distance telecommunications services, serving residential and small and medium-sized business customers in more than 200 countries worldwide. The company also provides value-added wholesale services to over 40 domestic and international telecommunications carriers. Telegroup operates a global, digital, facilities-based network, the Telegroup Intelligent Global Network(R), which consists of 25 Nortel DMS 250/300 and Excel LNX voice switches in 12 countries, 23 Nortel Passport ATM switches, 6 enhanced services platforms, 26,000 miles of owned IRU and leased IPL capacity on digital fiber-optic cable links, and leased parallel data transmission capacity. Telegroup had revenues of $337 million in 1997.

Application of the Safe Harbor of the Private Securities Litigation Reform Act of 1995: This news release contains statements which are not historical facts and may be considered forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including expansion of Telegroup's network and product offerings, improvement of Telegroup's competitive position, increase in its corporate customer base, projected savings and benefits from new services, and achievement of Telegroup's business plan. Telegroup's actual results may differ materially due to numerous factors including, without limitation, the Company's success in developing its business plan, and acquiring additional financing needed to meet this plan, foreign currency fluctuations, termination of certain operating agreements, and changes in tax law. Those and other risks are described in the Company's filings with the Securities and Exchange Commission.

Contact:

     Telegroup Inc., Fairfield
     Steve Hutchins, 515/472-5000
     shutchins@telegroup.com
          or
     Analysts/Investors Contact:
     Telegroup Inc., Fairfield
     Douglas A. Neish, Chief Financial Officer, 515/472-5000
     dneish@telegroup.com