ECI Telecom and Momentum Management Announce Spin-Off of Celtro Inc.

PETACH TIKVA, Israel--()--Sept. 10, 2003--ECI Telecom (NASDAQ:ECIL) and Momentum Management jointly announced today the spin-off of ECI Telecom's business unit, ECI-celtro, a world leader in transmission solution for the backhaul mobile networks, to create an independent and privately-held company to be known as Celtro Inc. Momentum Management, a venture group specializing in the acceleration to profitability of technology companies, led the spin-off and successfully completed a round of investment from leading investors, including Genesis Partners, Cedar Fund and Discount Capital Markets. ECI Telecom will retain minority stake in the company.

Celtro Inc., with its innovative technology and highly skilled team develops and has commercially deployed backhaul network transmission optimization systems for GSM operators. The patented systems boost 2G and 2.5G technologies and ensure a smooth, efficient, low risk and low cost migration path to future cellular transmission technologies.

"Our decision to spin off ECI-celtro is another step in implementing our strategy of focusing on our core businesses," said Doron Inbar, President and CEO of ECI Telecom. "As an independent company, we believe that Celtro is well positioned to exploit growth opportunities and to become a leader in this vital emerging segment of the telecom market. ECI is pleased to maintain its presence in this important new market segment and will continue to assist in Celtro's development."

Dr. Eyal Kishon, Managing Partner at Genesis said, "As longstanding investors in the telecom market, Gal Israely of Cedar and myself are excited about this new company and its future potential. We envision Celtro becoming a world leader in optimization solutions for cellular operators based on the strength of its core technology and the skills of its R&D team."

Celtro's team and core technology are descended directly from ECI's former NGTS Division, world leader in digital circuit multiplication equipment, which recently merged with NexVerse(TM) Networks to form Veraz Networks. The Division developed and marketed the QuadCoder, an all-traffic compression system for the cellular network that is installed in live traffic systems worldwide. Celtro, with its patented technologies and extensive R&D, has succeeded in bringing this know-how to cellular operators, delivering new products that enhance and optimize their expanding cellular infrastructure.

Celtro's DynaMate (Dynamic Mobile Access Transmission Expander) product line is a unique, cost-efficient, feature scalable optimization solution for the backhaul of cellular networks. It achieves transmission optimization by means of an innovative, patented method of statistical multiplexing. It yields an increase of more than 220% in voice and data traffic over existing links, regardless of the transmission infrastructure. Finally, DynaMate delivers more than 50% savings in network costs and falls well within the industry's aggressive ROI requirements.

Ron Zor, Managing Partner, Momentum Management, will assume the role of Chairman and CEO of the new company. "We didn't need much inducement to invest in the new company," he said. "ECI Telecom is world renowned and a market leader in compression technologies. Continuing this tradition, Celtro has added on a layer of unique technology that represents a perfect fit between the product and the cellular market of today. The cellular market is still one of the fastest growing segments of the telecom industry, and Celtro's solution fulfills a vital industry need -- network optimization."

About Celtro Inc.

Celtro Inc. (www.celtro.com) develops, manufactures and markets innovative technologies designed to help cellular operators maximize utilization of their backhaul transmission infrastructure. Celtro has developed the DynaMate, a new product line of backhaul network optimization systems for GSM networks. It enables cellular operators to significantly increase the number of subscribers and to decrease backhaul transmission infrastructure resources.

About Momentum Management

Momentum Management is a venture management group, focused on financing technology companies positioned in high-growth market segments. Momentum's aim is to build a company's value by assisting it to reach profitability while enhancing its technology and product offering. With an average of over twenty years in the field, the Momentum Management team has extensive technological and business expertise, as well as a thorough understanding of market trends. The team consists of four partners and a marketing executive, with Discount Capital Markets, acting as financial sponsor.

About ECI Telecom

ECI Telecom provides advanced, telecommunications solutions to leading carriers and service providers, worldwide. By translating a deep understanding of its customers' needs into innovative, technologically excellent solutions, ECI enables its customers to increase the value of their networks and reduce operating expenses. ECI's platforms enable carriers and service providers to easily introduce new revenue-generating services. ECI has pioneered key technologies including voice compression, SDH, DSL, and has enabled the establishment of global networks. ECI specializes in metro optical networks, broadband access, bandwidth management and carrier-class VoIP solutions.

Certain statements contained in this release may contain forward-looking information with respect to plans, projections or future performance of the Company. By their nature, forward-looking statements involve certain risks and uncertainties including, but not limited to, product and market acceptance risks, the impact of competitive pricing, product development, commercialization and technological difficulties and other risks detailed in the Company's filings with the Securities and Exchange Commission.

Celtro and DynaMate are trademarks of Celtro Inc. NexVerse is a trademark of Veraz Networks, Inc.

Contacts

Celtro Inc.
Ron Zor, +972-3-926-3033
Fax +972-3-926-3022
Ron.Zor@celtro.com
or
Momentum Management
Debbie Lanyi, +972-3-710-0119
Cell +972-54-93 10 92
Fax +972-3-710-0100
debbie@momentumm.com

Contacts

Celtro Inc.
Ron Zor, +972-3-926-3033
Fax +972-3-926-3022
Ron.Zor@celtro.com
or
Momentum Management
Debbie Lanyi, +972-3-710-0119
Cell +972-54-93 10 92
Fax +972-3-710-0100
debbie@momentumm.com