ECI Telecom Lowers Guidance

PETAH TIKVA, Israel -- ECI Telecom Ltd. (Nasdaq: ECIL - News) announced today that, further to the press release issued earlier today by ECtel (NASDAQ: ECTX, of which ECI holds 59%) reporting preliminary second quarter results, ECI is updating its outlook for the second quarter ended June 30, 2003.

Based upon the revenue decline at ECtel, and a slightly larger than expected decline in the revenues of its core businesses, ECI now expects total consolidated revenues for its second quarter to be approximately $101 million - $103 million.

ECI also expects to take a number of special charges in the quarter. It will make certain additional provisions with respect to a specific long term receivable reflecting the expected outcome of advanced discussions with the customer. These discussions include revised and extended repayment terms. In addition, ECI plans to record charges associated with the recent restructuring of its Lightscape Optical Networks Division. These provisions and charges are expected to total approximately $15 million to $17 million.

As a result, ECI now estimates the total net loss for its second quarter of 2003 to be between $30 million and $32 million or ($0.28)/share to ($0.30)/share. This does not include any possible impact from an evaluation of goodwill to be undertaken by ECtel. As of March 31, 2003 the total goodwill on ECtel`s balance sheet was $16.3 million. Should this evaluation result in an impairment charge, it could further impact ECI's net loss by 59% of such a charge.

During the quarter, ECI continued to generate significant positive cash flow from operations and paid down $123 million of bank debt. At the end of the quarter, cash, cash equivalents, deposits and short-term investments exceeded bank debt by approximately $170 million, compared to an excess of $150 million at the end of the first quarter. ECI has also reached agreement with its banks and, as a result, is now in compliance with its debt covenants. Under the terms of the agreement ECI has $60 million in long term loans and a $30 million short term credit facility.

ECI will report its results for the quarter, and hold a conference call, on August 6, 2003.

ECI Telecom Ltd.

ECtel Ltd.