News Release

Italtel and Cisco Extend Strategic Relationship to Develop New Converged Solutions in EMEA and Latin America

The two companies further develop relationship to address business opportunities in the Next Generation Network and Business Voice Services markets
Sep 14, 2006

MILAN, September 13, 2006 - Italtel, one of the leading companies providing solutions, products and services for Next Generation Networks (NGN) and Next Generation Services (NGS), and Cisco Systems announced today the signing of a new agreement to extend their strategic technology and commercial alliance to 2008, with an expanded market coverage beyond Europe, Middle East and Africa to include the Latin America region.

Since signing the original strategic alliance agreement in early 2005, Italtel and Cisco have worked together on joint technology solutions for service providers focused on optimization of network infrastructures, multimedia communication services for the consumer segment, and hosted and managed Unified Communication services for the business segment.

Recent successful deployments include BT-Albacom, Belgacom, EITC (du) in the United Arab Emirates, Telecom Italia and Telekomunikacja Polska, among others.

As part of the extended agreement, Italtel has identified a set of solutions to help service providers deliver fixed-mobile converged services and embed intelligence in the network to accelerate service creation and reduce operational costs.

The extension of the agreement to support the Latin American market resulted from successful joint activities including implementation of VoIP infrastructure in Brazil and Argentina for fixed and wireless service providers with the goal of optimizing and expanding existing networks.

The Yankee Group expects the aggregate market for next generation network infrastructure and services to grow worldwide from € 3.5 billion to € 6.7 billion, resulting in a 24% compound annual growth rate (CAGR) between 2005 and 2008. More specifically, the prospects for growth within EMEA for NGN and NGS are very strong: capital expenditures will show a 22% CAGR, growing from €833 million to € 1.5 billion, according to the Yankee Group. Yankee Group research also shows that incumbent operators in Argentina, Brazil, Mexico and Chile all indicate progress towards Next Generation IP/MPLS Network deployment, helping fuel demand of new systems. (Source: Yankee Group February 2006).

"We're extremely pleased to announce that Italtel and Cisco Systems have further reinforced our strategic alliance," comments Mauro Righetti, chief executive officer of Italtel. "We're fully satisfied with the results we have reached so far. The alliance has allowed for the development of an offer that fully matches the requirements and demands of the market, covering all aspects of the network," continues Righetti. "Our leadership in Softswitch technology and Cisco's leadership in IP Next Generation Networks (IP NGN) and IP communications are the best complementary conditions for playing a crucial role in the new market, arising from the migration of existing voice infrastructure to IP-based networks."

"Through our work with major carriers across Europe, Cisco and Italtel have the combined experience and expertise to help service providers to select the right technology strategies to succeed in a dynamic and disruptive market," said Geraint Anderson, vice president of Service Providers in European markets at Cisco Systems. "The extended relationship between our two companies will help operators gain a competitive edge by accelerating next-generation network transformation and speeding the delivery of innovative services."

Massimo Migliuolo, vice president of Service Providers in Emerging Markets at Cisco Systems added: "The Middle East and Latin America are regions where there is strong growth and countless opportunities for operators who are moving into next-generation, triple and quadruple-play services. Our joint, recent project for du in the United Arab Emirates demonstrates our ability to bring proven solutions to new markets. Speed to market is vital for our customers and the close cooperation between Cisco and Italtel means we can deploy these solutions rapidly and effectively."

The two companies will continue to cooperate on the development and marketing of joint solutions based on the Italtel Softswitch and Cisco IP technologies. Italtel and Cisco joint solutions include Multimedia carrier-class IP communications, Hosted and Managed Unified Communication Services, Service and Network Control solution, IMS (IP Multimedia Subsystem) solution, and Next Generation Operational Support System (NG-OSS).

Telecom Italia successfully implemented the Cisco and Italtel solution to deploy hosted and managed Unified Communications services. Several large enterprises, particularly in the finance sector, have decided to deploy these services.

Strong demand is expected for hosted and managed Unified Communication Services in the enterprise market as well as in the public sector over the next three years. Telecom Italia is also considering the Cisco and Italtel joint solutions for the delivery and management of innovative services and fixed and mobile convergence.

The Italtel and Cisco business voice solution will be available for a live demonstration at the Broadband World Forum Europe held in Paris October 9 to 12, 2006.

About the Italtel Group

The Italtel Group designs, develops and installs solutions for new-generation integrated multi-service networks (voice/data/video), with cutting-edge products and a systems integration capacity that offers fixed and mobile telecommunications operators and Internet Service Providers, Large Companies and the Public Sector reliable infrastructures that are open to networking and flexible in their technological evolution. Italtel's revenues for 2005, as reported in the consolidated financial statements approved by the General Shareholders' meeting of February 27, 2006, totalled 545.8 million euros; the company today has around 2,300 employees.

The shareholders of Italtel Group S.p.A., are: CDRD Investment (Luxembourg) III S.a r.l., (48.77%), Telecom Italia Finance S.A. (19.37%), Cisco Systems International B.V. (18.40%), Advent Investment (Luxembourg) (8.65%), Brera Italtel LLC (2.16%), Cordusio Società Fiduciaria per Azioni - which holds in trust the shares of Group employees and Company directors in addition to its own shares in the Company (2.65%). The Chief Executive Officer of Italtel is Mauro Righetti.