Telefónica selects Alcatel for end-to-end network transformation in Latin America

Paris, October 10, 2006 - Alcatel (Paris: CGEP.PA and NYSE: ALA) today announced that it has been selected by Telefónica to provide solutions for its access, Metro Ethernet, IP edge and optical transport networks in Latin America, enabling Telefonica to offer new high-bandwidth interactive services to its residential and corporate customers.

The integrated and flexible solutions, reflecting different stages of deployment in each of these countries, will provide higher bandwidth capacity per end-user, with unique differentiated quality of services. This, in turn, will enable the simultaneous delivery of personalized multimedia services such as IPTV, video on demand and HDTV to residential customers and advanced virtual private network services to enterprise customers.

“Our selection of Alcatel as technological partner is based on their broadband, optical and IP service routing market leadership and experience as well as their long-term collaboration with our Group. They inspire us with the confidence we need to ensure that our clients can enjoy the new services demanded with the required quality and reliability”, stated Horacio Acerbi, Director Services Technology, Telefónica Internacional (Telefónica Latin America).

Michel Rahier, President of Alcatel’s fixed communications activities said, “Telefónica is leveraging Alcatel’s unparalleled experience in triple play deployments worldwide. Our network infrastructure, based on IP-based industry-leading solutions, is reinforcing Telefónica’s worldwide leadership in advanced communication and entertainment services. This success also strengthens our position as partner of choice in such strategic network transformations”.

This award follows the recently announced selection of Alcatel to support Telefónica’s broadband network transformation in Spain.

Alcatel is involved in more than 40 major triple play deployments and more than 40 network transformation projects worldwide and is the world leader in broadband access with more than 100 million DSL lines shipped worldwide. According to Synergy Research Group, Alcatel was #2 in the Services Edge Router category in Q2 2006, with a 19% market share and according to Ovum-RHK, Alcatel is the world leader in optical networking for the fifth year running with a 16% market share in 2005.

About Alcatel
Alcatel provides communications solutions to telecommunication carriers, Internet service providers and enterprises for delivery of voice, data and video applications to their customers or employees. Alcatel brings its leading position in fixed and mobile broadband networks, applications and services, to help its partners and customers build a user-centric broadband world. With sales of EURO 13.1 billion and 58,000 employees in 2005, Alcatel operates in more than 130 countries. For more information, visit Alcatel on the Internet: http://www.alcatel.com

Alcatel’s solution for Telefonica
For broadband access, Alcatel will provide its 7302 Intelligent Services Access Manager (ISAM), the first high bandwidth IP access platform with xDSL interfaces ranging from ADSL2plus to the latest VDSL2 standard, and specifically designed to deliver a range of bandwidth intensive interactive services to all users simultaneously. Telefónica will be able to offer any service from any equipment port, and will combine multiple real-time applications in the network with a guaranteed quality of service.In the Metro Ethernet and IP edge network, the Alcatel 7750 Service Router (SR) will enable Telefónica to offer corporate access services and virtual private networks based on MPLS, on a national level. The solution’s unique hierarchical quality of service (H-QoS) capabilities mean that Telefónica can differentiate the traffic it carries, guaranteeing varying classes of service levels, and optimizing bandwidth. As well, the Alcatel 7750 SR supports multiple service types with tremendous scale and quality of service, which guarantees that stringent Service Level Agreements (SLAs) on business-critical data applications can be met. For the transport network, Alcatel will provide its data-aware Optical Multi-Service Node (OMSN) systems, 1678 Metro Core Connect (MCC) and 1696 Metrospan systems to enhance network capacity and multi-service aggregation functionality for triple play service delivery. The solution offers the scalability and flexibility required to transport multiple data traffic streams over a single end-to-end managed platform with differentiated and guaranteed quality of service.

About Alcatel’s user-centric triple play
To meet today’s quest for increased personalized and interactive services, Alcatel helps worldwide operators transform their networks and deliver a new end-user experience. Alcatel’s user-centric triple play builds on its leadership in broadband technology, IP networking, optics, new multimedia and video applications, as well as end-to-end services integration. End-users will enjoy unique, exciting services including video on demand, personal TV, community channels, online gaming and sharing of music, photos and home videos, all delivered simply and seamlessly via a range of devices and networks. Alcatel is currently involved in more than 40 triple play network projects worldwide including AT&T/SBC, BellSouth, France Telecom, Swisscom, Fastweb or Chunghwa Telecom… For more information: http://www.alcatel.com/tripleplay

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Contact Information

Mark Burnworth

Corporate Media Relations

Alcatel

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