Press Release

Zhone Technologies Helps Leading Saudi Arabia Operator Mobily Deploy Nationwide Fiber Network

Zhone's industry-leading MXK OLT to provide Fiber-to-the-Home (FTTH), business services and mobile backhaul to the Kingdom's second largest mobile operator

Oakland, CA — January 5, 2012 — Zhone Technologies, Inc. (NASDAQ:ZHNE), ), a global pioneer in FTTx network access solutions, announced today that through a partnership with BTC Networks, Etihad Etisalat (Mobily), a leading mobile voice and data service provider in the Kingdom of Saudi Arabia, is utilizing Zhone's industry-leading MXK™ Optical Line Termination (OLT) for its Greenfield nationwide Fiber network. The network will deliver fixed broadband services to residential and business customers using Gigabit Passive Optical Network (GPON) technology. The MXK OLT will also be used to provision business services and transport mobile backhaul network traffic.

Saudi Arabia remains one of the biggest and fastest growing economies in the Middle East. Currently, fixed telephony lines stand at 4.5 million with over 3.4 million lines in residences and homes, representing roughly 69% of the households in the Kingdom. Fixed broadband subscriptions stood at over 2 million subscribers at the end of June 2011, representing over 33% of the household penetration. Currently, over 80% of the fixed broadband users are utilizing xDSL for their broadband services in the Kingdom.

Mobily will leverage the Zhone MXK OLT to deliver affordable and reliable high-speed Internet access and advanced video services in its new FTTx offerings utilizing GPON technology. Alongside, Mobily plans to leverage the same MXK OLT to backhaul part of the 2G and 3G traffic for its over 18 million mobile subscribers in the Kingdom. Mobily's network covers all cities and major towns in the Kingdom and more than 22,000 km of highways.

"The scalability and density of Zhone's MXK gives us the unprecedented flexibility, robust network control and the ability to offer more bandwidth to customers with greater efficiency," said Salah ALamoudi, VP Transmission Mobily. "Our established wireless presence and our expansive fixed broadband plans necessitated a multi-service platform choice with high scalability, density, reliability and interoperability. We tested many platforms before choosing the MXK as one of our FTTx vendor partner. Zhone's success in the region with the MXK platform was a big reason for our choice of going with Zhone."

The MXK's ability to support multi-play services for residential and business customers and mobile backhaul simultaneously has enabled Mobily to configure its networks with maximum flexibility and efficiency. With advanced bandwidth intensive applications growing rapidly and the need for fiber based backhaul to support the additional bandwidth demand being critical, Zhone provides network reliability in a high-performance solution designed specifically for operator's current fixed broadband, and mobile backhaul needs.

"As a leading operator in the Middle East, Mobily is paving the way for the availability of next generation services and applications," said Brian Caskey, chief marketing officer, Zhone. "Mobily's use of the MXK for broadband residential and business services along with mobile backhaul is a great example of the system's expanded capabilities and a key milestone for Zhone's ability to deliver scalable, manageable and service-rich network solutions. We are proud to support Mobily in its new fiber initiative and this deployment further validates Zhone as a leading provider for tier-one and tier-two operators, internationally."

To date, Zhone has deployed over 2,600 of its fully redundant, carrier-grade all-IP MXK platforms with more than 150 service providers in more than 40 countries globally. Zhone's MXK platform is a fully redundant, carrier-grade all-IP platform and the industry's first terabit access concentrator. Featuring industry-leading density, scalability and switching capacity, the MXK provides non-blocking capacity of up to 3,600 100 Mbps GPON subscribers or 360 1G Active Ethernet subscribers.

For more information about Zhone's MXK and FiberCell solutions, please visit http://www.zhone.com.

About Zhone Technologies

Zhone Technologies, Inc. (NASDAQ: ZHNE) is a global leader in all IP multi-service access solutions, serving more than 750 of the world's most innovative network operators.

The IP Zhone is the only solution that enables service providers to build the network of the future…today, supporting end-to-end Voice, Data, Entertainment Social Media, Business, Mobile Backhaul and Mobility service.

Zhone is committed to building the fastest and highest quality All IP Multi-Service solution for its customers.

Zhone is headquartered in California and its products are manufactured in the USA in a facility that is emission, waste-water and CFC free.

About About Mobily

Etihad Etisalat (Mobily) was established in 2004 by a consortium led by Etisalat, the UAE based telecom conglomerate. Mobily is the official brand name of Etihad Etisalat, renowned as the second largest mobile service provider in the Kingdom of Saudi Arabia. The awarded 25-Year telecommunication mobile license was complemented by a subsequent purchase of a 3G license. Mobily is the 1st Saudi communications company to get an operation license for 3rd generation services and beyond. In December 2004, Mobily was listed on Tadawul Stock Exchange. Today, Mobily equates to 40%+ market share of the mobile subscriptions in the Kingdom.

Mobily owns the vast majority of shares in the Saudi National Fiber Network (SNFN) composed with 12,800 KM of structured fiber cable, panned into 7 fully protected rings covering 35 Saudi cities plus access to 60 major hub sites for telecommunications prime points of presence, and complimented with 20 inter-metropolis fiber loops in major Saudi cities. Furthermore, Mobily is a lead investor in prime global submarine cable projects that are expected to be operational in the near future. For more information visit: http://www.mobily.com.sa

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