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Telsur Expands Multi-Service Platform Strategy with Zhone Technologies

Telsur Selects Zhone's Malc Msap To Grow IP Video Initiative

Oakland, CA — January 15, 2008 — Zhone Technologies, Inc. (NASDAQ: ZHNE), a global provider of advanced communications equipment and a leading supplier for VoIP, IPTV, and Ethernet over copper and fiber access lines, today announced that, Telefónica del Sur S.A. (Telsur), has selected Zhone's multi-service access platform (MSAP) to expand the company's IPTV footprint. Telsur is a leader in the telecommunications market in Chile and recognized for advanced IP convergence throughout Latin America.

With Zhone's MALC, Telsur can immediately provision high-speed data and IPTV services over traditional ADSL and provision GPON fiber to the home (FTTH) services using the same platform and standard TR-069 Automatic Configuration Server.

"The flexibility to deliver a diverse range of services from a single platform is a logical evolution in triple play network strategy and Zhone is undoubtedly at the forefront of MSAP provisioning," said Robert Masse, CTO for Telsur. "The option to deliver quality sensitive IPTV services over fiber or copper is also an important factor in ensuring service parity to our customers."

"Chile is widely recognized for its sophisticated communications infrastructure, due in large part to the forward thinking of Telsur," said Mike Scheck, vice president of international sales for Zhone. "We're seeing MSAP adoption rates steadily climb for both new and existing customers as providers recognize improved performance across-the-board in service agility, power and ease of management."

About Telsur

Telefonica del Sur is the leading telecommunications company in the south of Chile, and is a 73,56%-owned subsidiary of Quiñenco Holdings (NYSE:LQ), one of Chile's largest business conglomerates with consolidated assets of over US$2.6 billion. With approximately 300,000 RGU (Revenue Generating Unit), it covers both residential and business clients in the 8th, 9th, 10th,11th and 14th regions of the country, including the cities of Concepción, Temuco, Valdivia, Osorno, Puerto Montt and Coyhaique. In addition to its solid position in the fixed telephony market, it also offers broadband and switched Internet business services, tele-surveillance services, alarms and access control, and national and international long distance services. Telefónica del Sur, has implemented the regions first public broadband wireless Internet network using Bluetooth and WiFi technologies, portable telephony service under PHS technology and recently launched a TVoIP service over DSL, called "WiTV". For more information please access www.telefonicadelsur.cl.

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 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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