Strengthens EXFO's position in high-growth Protocol test business

March 26, 2008

2 Min Read

QUEBEC CITY -- EXFO Electro-Optical Engineering Inc. (NASDAQ: EXFO; TSX: EXF) announced today that it has acquired all the shares of Navtel Communications Inc., a leading provider of Internet Protocol Multimedia Subsystem (IMS) and Voice-over-Internet Protocol (VoIP) test solutions for Network Equipment Manufacturers (NEMs) and Network Service Provider (NSP) labs.

Consideration paid consists of C$11.0 million in cash, subject to adjustments on working capital. The deal is expected to be neutral to EXFO’s earnings for the remainder of fiscal 2008 and accretive in fiscal 2009, excluding amortization of intangible assets to be accounted for in the acquisition.

Navtel Communications, a privately held company in the Toronto area, specializes in testing next-generation IP networks that are increasingly combining wireline and wireless technologies. Its InterWatch platforms, offering the highest performance in the industry, are fully scalable simulation and analysis test stations available in rack-mountable and portable formats. These solutions can perform several critical tests ― capacity, performance, stress and load testing ― on various network devices to assure their ability to perform under real-life, IP-based, multi-media traffic conditions. Test modules can be hosted inside Navtel’s platforms for characterizing next-generation switches, routers, session border controllers and media gateways.

IMS, which is being touted as the new technology that will merge the Internet with the telecom world, allows wireline and wireless carriers to use a common IP application system to deliver new multi-media services that can be combined with legacy services across a number of different access technologies. IMS has been developed to become the overlaying architecture that will enable the efficient management and deployment of quadruple (voice, video, data and mobile) IP services.

Navtel has positioned itself as a leading-edge supplier of IMS test solutions. It also offers a comprehensive suite of VoIP and Generalized Multi-Protocol Label Switching (GMPLS) test solutions, as well as a wide range of legacy test protocols that have been developed over its 30 years of existence.

Frost & Sullivan, a global growth consulting company, estimates that the IMS test and monitoring market will grow from an estimated $274.1 million in 2007 to $1.2 billion in 2013 for a compound annual growth rate of 27.9%. Navtel currently addresses approximately $130 million of this market.

“This acquisition fits strategically with our long-term plan to deliver strong growth in our Protocol test business, which posted a compound annual growth rate of 64% in the last two years and continues to deliver solid growth at the mid-point of fiscal 2008,” said Germain Lamonde, EXFO’s Chairman, President and CEO. “Navtel’s cutting-edge technology strengthens our offering for NEMs and NSP labs which, in turn, have a significant influence on product selections made by NSPs.”

EXFO (Nasdaq: EXFO; Toronto: EXF)

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