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Zhone Technologies MALC Smoothes Telecom Egypt Transition to VoIP

Project delivers packet voice with extensive support for future access technologies

Oakland, CA — June 13, 2006 — Zhone Technologies, Inc. (NASDAQ: ZHNE), the first company dedicated to building total-delivery solutions for voice, data, video and entertainment services worldwide today announced a major project with Telecom Egypt, who will deploy Zhone’s MALC Broadband Loop Carrier Technology to provide VoIP and Data Services for various parts of their Network.

The project combines Zhone MALC with Nortel CS2K Softswitch and ATM network technology allowing circuit switched voice to move onto the pure packet network transparently to end users in terms of service availability, call quality and billing. Zhone’s MALC also provides a proven roadmap for the delivery of new voice, video and data services such as ADSL2+, VDSL2, PON, Ethernet and IP Video.

Eng. Dawlat El Badawy, Vice Chairman for Project Planning, Telecom Egypt said: "The Scope of this Project is to install a Nortel CS2K Softswitch along with the Zhone MALC as access concentrators in the TE network. This will allow TE to provide its customers with voice services including both POTS and VoIP Services."

"The Introduction of the MALCs in our network will allow TE to support its current voice services needs based on a next generation platform as well as investigating future access services, delivery options and network optimisations, which will result in more value added services to TE customers" Eng. Badawy added.

Telecom Egypt has a fixed line customer base in excess of 10.6 million subscribers, which makes it the largest fixed line provider in the Middle East and Africa. The migration will initially only apply to voice services with other services under future consideration.

The MALC BLC supports the full range of subscriber voice services including POTS, Specials, T1/E1 and VoIP. TDM traffic can be converted to packet at the MALC for transport across the IP network. Since the MALC supports both TDM and packet voice, service providers can deploy today to serve existing services and cut over to packet voice under software control, on a port-by-port basis. Dual TDM and packet uplinks are also supported, providing similar flexibility for the migration of trunking facilities.

At the central office a MALC configured with an integrated voice gateway may be used to provide a GR-303 / V5.2 interface to existing local exchange switches. Service providers can migrate traffic to IP transport networks while continuing to leverage legacy switch facilities.

Mike Scheck, EVP Worldwide Sales for Zhone Technologies commented, "This is a major win for us in the region and plays to the strengths of our MALC product, which allows carriers to transition the network at a pace to suit themselves."

"The ability to migrate without disruption while still leveraging existing switching and exchange infrastructure is a major benefit to our carrier customers and the modular nature of MALC allows the process to be scaled without compromise." Scheck concludes.

About Zhone Technologies

Zhone Technologies is a worldwide leading supplier of communications network equipment for telephone companies and cable operators. Zhone is enabling enhanced services by allowing network operators to offer broadband services over their existing networks today while simultaneously retooling for packet-based VoIP and IPTV over both copper and fiber access lines.

By utilizing Ethernet and IP technology, Zhone's products simplify network operations by consolidating multiple services onto a single access line. This convergence of services and networks simplifies provisioning and operations, delivers quality and reliability, and opens the door for delivering exciting new services.

Zhone pioneered this new category of products now commonly referred to as Broadband Loop Carriers (BLCs) which are regarded among the fastest growing segments of the multi-billion dollar DSL market. According to industry analysts, Zhone is first in broadband loop carrier market share. Zhone is also first in Ethernet over bonded copper market share and Zhone's products were awarded top ranking among BLCs.

With corporate headquarters in Oakland, California, Zhone operates development centers across North America and has sales and service facilities and customers spanning the globe. With deployments at over 600 carriers including some of the world's largest networks, Zhone has enabled carriers to reinvent their businesses.

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