PETAH TIKVA, Israel--ECI Telecom Ltd. (NASDAQ/NM symbol: ECIL) announced today the signing of a Memorandum of Understanding (MOU) with ELCO Holdings Ltd. (Traded on the Tel-Aviv Stock Exchange) for the sale of its Business Systems Division for US $75 million. ECI Telecom's Business Systems division designs and develops advanced PBX systems for businesses and organizations.

Commenting on the new transaction, ECI Telecom's President and CEO, Doron Inbar, said: "We are pleased to continue implementing our focused approach to develop the areas of business that we have identified as major growth areas for ECI Telecom. The sale of the Business Systems Division reflects ECI Telecom's strategy to focus on these key growth engines, while detaching itself from other areas of business. The strong capabilities of the Business Systems Division will be further enhanced by the new move to ELCO Holdings.

As part of its streamlined approach, ECI Telecom is strategically focused on Broadband Access solutions, Transport and Core Network solutions (including optical networking solutions) and Gateway solutions that include Voice over IP and Voice over ATM.

The sale of the Business Systems Division follows ECI Telecom's continuous strategy of divesting its non-core businesses, a trend that began in 1999 and continues in 2000. In the new company, owned by ELCO Holdings, ECI Telecom will retain minority equity interest, the percentage of which is yet to be determined.

The transaction is subject to the completion of due diligence, final negotiations of the definitive agreement and various approvals of the authorities and respective Board of Directors.

ECI Telecom Ltd. is a provider of integrated network solutions for digital communications and data transmission systems. The Company designs, develops, manufactures, markets and supports end-to-end digital telecommunications solutions for today's new services and converging networks. The Company's products create bandwidth, maximize revenues for network operators, expand capacity, improve performance and enable new revenue-producing services. In doing so, they enhance the capabilities of existing networks to support voice, data, video and multimedia services. ECI Telecom's equipment supports traffic in more than 500 service networks in over 145 countries.

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