Press Release

Zhone's MXK Serves as the Cornerstone Platform for Bosnia Herzegovina Telecom's All-Zhone Network Delivering 3G Backhaul, FTTH, and Enterprise Ethernet throughout Sarajevo

With MXK, BH Telecom is First to Provide 1Gbps GPON to Businesses and 100Mps FTTH Services to Bosnia Herzegovina

Oakland, CA — May 26, 2010 — Zhone Technologies, Inc. (NASDAQ: ZHNE), a global leader in network access solutions for fiber, copper and wireless broadband infrastructures, today announced that BH Telecom (SASE:BHTSR) has selected Zhone's flagship MXK multi-service access platform (MSAP) to deliver GPON and mobile backhaul services to its customers in Sarajevo.

BH Telecom is the largest telecom operator in Bosnia Herzegovina, and will be the first in the region to deliver high performance GPON providing 1Gbps service to enterprise customers and 100Mbps service for residential triple play. For residential customers, this amounts to more than a 25x increase in broadband speeds and sets the stage for sophisticated IPTV services and smart home networking using Zhone's zNID optical network terminals (ONTs).

In addition to Fiber to the Home (FTTH), BH Telecom will serve Fiber to the Basement (FTTB) and extend ADSL and POTS services to Multi-Tenant Unit (MTU) subscribers using Zhone's EXpress Packet (XP) 1RU platforms.

In addition to being first to market with GPON, BH Telecom was the first provider to introduce wireless services to the region and will bolster its Global System for Mobile Communications (GSM) network using Zhone's MALC for Pseudowire (PWE) E1 termination and as a full service voice gateway in the Central Office. The company's network is integrated via Zhone's exclusive Access Operating System software. In addition to greater network control, Zhone's Access Operating System gives BH Telecom an industry leading feature suite, integrated security and lower operational costs for training, sparing, and back office management.

"Zhone's MXK serves as the bedrock platform for a new class of elite broadband services that further strengthens our position as an innovator and market leader," said Mr. Nasuf Hadziahmetovic, Manager of BH Telecom's BH Line Department. "We see improved broadband connectivity as foundational to economic growth and enriched opportunities from entertainment to education."

"In addition to performance, service intelligence and sizeable operational savings with the MXK, BH Telecom has an unsurpassed level of flexibility and readiness in this rapidly changing market," said Brian Caskey, CMO for Zhone. "With industry-leading subscriber density and twice the capacity of any other MSAP on the market, BH Telecom is well positioned to drive growth and service innovation well into the future."

About BH Telecom

BH Telecom is the largest telecommunications company in Bosnia and Herzegovina providing business and residential customers a full range of high-speed data and video services. BH Telecom was the first company in Bosnia and Herzegovina to provide wireless telephony and Fiber to the Home.

About Zhone Technologies

Zhone Technologies, Inc. (NASDAQ: ZHNE) is a global leader in multi-service access solutions, serving more than 750 of the world's most innovative network operators. The company offers the industry's only fully-integrated portfolio of MSAP, FTTx, EFM and Wi-Fi access technologies resulting in improved network agility and reduced costs in delivering the full spectrum of access services, including residential and business broadband, VoIP, and High-Definition IPTV — over copper, fiber, and wireless. Zhone is headquartered in California and its MSAP products are manufactured in the USA in a facility that is emission, waste-water and CFC free.

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