ECI Buys Laurel Networks

PETACH-TIKVA, Israel -- ECI Telecom (NASDAQ: ECIL - News), a global provider of advanced telecommunication solutions to leading carriers and service providers today announced that it has signed a definitive agreement to acquire Laurel Networks, an innovative provider of Next-Generation IP/MPLS Multi-Service Edge Routers. Laurel`s products and technology will add edge routing and IP service capabilities to ECI's broadband, optical, and core routing portfolio, enabling ECI to enhance its systems functionally and to create complete multi-service IP solutions for service providers.

Under the terms of the agreement, ECI will pay $88 million in cash for Laurel. The transaction is subject to several standard closing conditions and is expected to close within a few weeks. Founded in 1999 and based in Pittsburgh, Pennsylvania, Laurel has received a total of $118 million in funding from leading U.S. venture capital funds including NEA & Trinity Ventures, as well as from Ciena Corporation. Most of the funding was used for the research and development of its industry leading line of IP Multi-Service Edge Routers. At this time Laurel has approximately 150 employees and $9 million in cash. It started selling its edge routers in 2002 and has almost doubled its sales every year since. Sales for the 12 months ended April 30, 2005, totaled $18 million. Among its key customers Laurel lists Level(3) as well as Korea Telecom and Dacom.

As service providers worldwide expand revenues through IP-based services such as IP Television, Video-on-Demand, and next-generation Voice over IP, they require highly available multi-service IP network infrastructures. Laurel's IP-based multi-service networking solutions combine full-featured multi-service support and complete Internet routing in a carrier-class IP-based platform. This unmatched service agility enables carriers to offer any type of service, including triple play and IP Virtual Private Networks, over a range of interface speeds and access networks with high flexibility and scalability to meet the evolving service delivery needs of carriers.

"Carriers' infrastructure and services are rapidly evolving to IP," said Doron Inbar, President and CEO of ECI Telecom. "By acquiring Laurel we add best-of-breed IP edge routing products, technology and expertise to our overall portfolio of IP solutions and strengthen ECI's position as a supplier of next-generation IP solutions. This acquisition is aligned with our strategic direction to enhance our ability to meet our customers' most demanding needs with innovative solutions as their next-generation multi-service networks evolve toward a single converged IP network."

"We are very excited to become part of the ECI family," said Don Pyle, CEO of Laurel Networks. "The Laurel team has originated the multi-service routing concept and demonstrated its advantages in flawless deployments at top tier carriers' networks. By coupling our IP edge routers with ECI's core routers, optical products, and broadband access, we can now create unmatched comprehensive solutions."

"ECI Telecom's acquisition of Laurel Networks brings together two highly complementary solution sets, with Laurel's well-regarded IP/MPLS edge routing technology effectively filling one of the few gaps in ECI's already robust portfolio of market-proven broadband access and optical technologies," said Erik M. Keith, Senior Analyst for Broadband Infrastructure at Current Analysis, Inc. "With the Laurel acquisition, ECI not only establishes a beach head in North America, but also enters the increasingly critical service provider edge market with a battle-tested platform that has garnered multiple high-profile customer wins including global carrier Level(3). Finally, Laurel's recently-introduced IP Video Router(TM) is a congruent fit with ECI's existing Hi-FOCuS(TM) solution set, which has already been deployed in multiple large-scale triple play service deployments in Europe and Asia."

ECI Telecom Ltd.