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Vodafone Iceland Selects Zhone Technologies Multi-Service Access Platform for Voice and Multi-Megabit Data Delivery

Zhone Technologies MSAP Chosen to Expand Vodafone’s Tiered Service Portfolio

Oakland, CA — September 18, 2007 — Zhone Technologies, Inc. (NASDAQ: ZHNE), a global provider of advanced communications equipment and a leader in VoIP, IPTV, and Ethernet over copper and fiber access lines, today announced that Vodafone Iceland has selected Zhone's MALC(TM) multi-service access platform (MSAP) to deliver voice and premium-tiered data services throughout the region. Vodafone Iceland currently serves more than 150,000 business and residential customers, offering mobile, fixed internet, and multi-megabit data services.

"The unmatched versatility of Zhone's MALC will allow us to provide the full range of triple play services on a single platform, all under a single management system," said Hrannar Petursson Vodafone Iceland's spokesperson. "The MALC's operating efficiencies will allow us to offer our customers premium service level agreements while controlling our costs of delivery."

By selecting Zhone's MALC MSAP, Vodafone Iceland can deliver voice, data and symmetric EFM services over copper or fiber access lines and introduce new services such as IPTV via the simple addition of new line cards into the system chassis. In addition, the high port density of the MALC reduces significantly the impact of service expansion on CO space and power consumption.

"Vodafone Iceland is a valued customer with a highly sophisticated portfolio of services and a reputation for service excellence," said Mike Scheck, vice president of sales for Zhone. "The multi-service platform approach enables Vodafone to generate revenue more efficiently on existing services and grow revenues on new services while ensuring rapid deployment on customer demand."

The MSAP is acknowledged as the platform of choice for triple play service delivery. Recent analyst research shows that last quarter service providers in the US selected Zhone's MSAP for MSAP-based DSL service by more than 2 to 1 over all other major suppliers. Zhone realized a similar lead in both voice and DSL in the MSAP category for the CALA region and continues to make strong gains in Europe.

About Vodafone Iceland

Vodafone Iceland is a multi-play service provider offering mobile phone, fixed, internet and data services. Vodafone Iceland focuses on the needs of its customers and offers a wide portfolio of products to both individuals and companies. Vodafone Iceland is a key player on the Icelandic telecom market and the Vodafone mobile network covers 98% of populated areas in Iceland as well as most of the main tourist areas. Vodafone Iceland has a unique relationship with Vodafone Group, being the only single brand Vodafone company not owned by the Vodafone Group. Vodafone Group Plc is the world's leading mobile telecommunications company, with a significant presence in Europe, the Middle East, Africa, Asia Pacific and the United States through the Company's subsidiary undertakings, joint ventures, associated undertakings and investments. For more information please visit www.vodafone.is and www.vodafone.com.

About Zhone Technologies -- Access for a Converging World

Zhone Technologies, Inc. (NASDAQ: ZHNE) is a provider of advanced communications equipment to more than 600 operators worldwide. The company's broad line of access and transport networking solutions enables the full range of multi-play services, including residential and business broadband, VoIP, IPTV, and Ethernet. Zhone's converged access platform improves network agility and reduces costs, allowing operators to rapidly deploy premium services on their existing copper and fiber infrastructure while providing a seamless migration path to an efficient, all-IP network. www.zhone.com

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