ECI Telecom And NKO Sign MOU Agreement to Purchase IP Telephony Manufacturing and Development Division of NKO

Business Wire, July 21, 1998

PETAH TIKVA, Israel--(BUSINESS WIRE)--July 21, 1998--ECI Telecom Ltd. (NASDAQ/NM symbol: ECILF) and NKO announced today the signing of an MOU agreement to purchase the IP Telephony systems division of NKO, a privately held USA-based developer and marketer of IP Telephony solutions and services.

Purchase is subject to completion of due diligence and board approval of both companies, execution of definitive agreements and compliance with other statutory and legal issues a closing is expected to occur in the third quarter.

Together with NKO's expertise, ECI Telecom will offer service providers universally deployable, toll-quality carrier grade systems that meet the highest available level of service quality. The purchase of NKO's IP Telephony Division will enhance ECI Telecom's Hi-PNet(tm) carrier class IP Telephony gateway and Hi-Gate(tm) solutions.

Mr. David Rubner, President and CEO, ECI Telecom said: "The planned acquisition of NKO and its technology is an additional step towards realizing ECI Telecom's IP Telephony strategy. NKO's world class team of experts will further enhance ECI Telecom's offerings in the area of managed IP networks, customer support, customer provisioning , billing and quality of service. This agreement emphasizes ECI Telecom's commitment to excellence in this field".

Ran Wellingstein Vice President Engineering and Operations IP Telephony Systems Division, NKO Inc. said "NKO Systems Division is extremely pleased to associate itself with ECI Telecom, a world class telecommunications equipment vendor. Together we can make a significant contribution to the Voice over IP (VoIP) marketplace, offering carrier class, high quality IP telephony."

NKO's patented technology supports the integration of voice, fax, data and video over a single IP network. Its convergent support system (CSERV) provides customer registration, customer support and billing support, call record processing as well as network directory and provisioning management. These capabilities enable service providers to offer voice and fax over IP services immediately. This complete offering of Voice over IP (VoIP) solutions leverages ECI Telecom's applications and gateway solutions to provide end to end Voice over IP service and support.

Currently providing VoIP services to over a 1,000 international customers over its managed bandwidth Global backbone, NKO's systems integrate regional networks into managed IP networks providing customers with global connectivity.

This new acquisition enhances the existing strategic joint development and marketing alliance agreements that ECI Telecom has in this field. With the addition of NKO technology to these strategic alliances, ECI Telecom now offers its customers a comprehensive end to end solution package for Multimedia and Telephony over IP.

About ECI Telecom's IP Telephony capabilities:

The ECI Telecom Hi-PNet(tm) architecture is ECI Telecom's vision of the future of IP Telephony. It is a fully standards compliant (H.323, SIP) approach to the implementation of IP Telephony in the rapidly changing telecommunications industry. This implementation consists of a range of carrier-class IP Telephony gateways; Hi-Gate(TM), as well as a family of servers to provide value added IP Telephony services such as: EGK (ECI Telecom Gate Keeper), ECS (ECI Telecom Conference Server), EFS (ECI Telecom Forum Server) and ECCS (ECI Telecom Call Center Server).

ECI Telecom's new Gateway (Hi-Gate 1000) will provide high density carrier class solutions to the incumbent , Next Generation Telcos and ISPs enabling high grade Voice, Fax and Multimedia services over the Internet/Intranet infrastructure.

A provider of integrated network solutions, ECI Telecom designs, develops, manufactures and markets digital telecommunications and data transmission systems, enabling network operators to deliver cost-effective services. ECI Telecom's systems provide capacity expansion, flexibility and management functions to more effectively utilize existing networks for voice, data, wide area and integrated networks.

About NKO:

Located in Florida, USA, NKO is an innovator in the converging telecommunications and interworking industry. Founded in 1995, NKO is composed of highly trained engineers end experts in telecommunication systems, distributed database management, international network operations and advanced software design.

NKO Service Division is operating a global IP Telephony network (NKONet) spanning four continents presently supporting both carriers and end-user customers.

This press release and additional information about the ECI Telecom is now available on ECI TELECOM's site on the World Wide Web: http://www.ecitele.com.

Certain statements contained in this release may contain forward-looking information with respect to plans, projections or future performance of ECI Telecom, the occurrence of which involves certain risks and uncertainties including, but not limited to, product and market acceptance risks, the impact of competitive pricing, product development, commercialization and technological difficulties and other risks detailed in ECI Telecom's filings with the Securities and Exchange Commission.