UTStarcom t Buy Into Taiwanese Telecom provider

Taipei, March 20, 2008 (CENS)--Starcom Inc. will buy a stake of First International Telecom (FIT) Corp. in a direct private offering organized by FIT for an estimated NT$60 million (US$1.87 million at US$1:NT$32) as its first step into Taiwan's WiMAX-service market.

UTStarcom is a world leading supplier of Internet Protocol-based, end-to-end networking and telecommunications solutions and personal handyphone service (PHS) phones. Its Taiwanese partner in this case is a leading provider of PHS service, a low-tier mobile phone service.

First International Telecom is among the six Taiwanese telecom providers to win Taiwan's first batch of WiMAX-service licenses. The company is first Taiwanese licensed WiMAX provider to win investment promise from a foreign company.

UTStarcom is researching the feasibility of adding PHS antenna to WiMAX base stations so that a base station can provide two services at cost for one service. China Telecom Co., Ltd. and some Japanese PHS telecom providers are planning to diversify into WiMAX segment, inspiring UTStarcom to jostle for a spot in the market.

In the private offering, major subscribers include the Shin Kong Group, FIT Holdings, and Taiwan Secom Co., Ltd. FIT plans to offer 80-100 million shares at NT$10 a unit in this offering. The company plans to launch another private offering after this one to issue 150 million shares. FIT will open second offering to foreign investors including UTStarcom.

FIT has contracted LEO Systems Inc., one of its affiliates, to integrate backbone networks for its WiMAX system. The contract costs around NT$458 million (US$14 million). Motorola will be the most likely supplier of WiMAX base stations to FIT. FIT estimates it will need 1,200-1,500 base stations in northern Taiwan alone.