Arelnet to Supply Sweden's Skanova With VoIP Network.

Business Editors/High-Tech Writers

TEL AVIV--(BUSINESS WIRE)--April 18, 2001

Arelnet Ltd (NASDAQ:ARLC)(TASE:ARNT.)

Arelnet To Supply First Phase of Multi-Million Dollar Network That

Will Be Europe's Largest VoIP Network

Arelnet Ltd. (TASE:ARNT.), a leading provider of VoIP telephony systems, today announced that Skanova, the Swedish independent wholesale network provider within the Telia group of companies, has selected Arelnet as its supplier of VoIP (Voice over Internet Protocol) infrastructure platforms for the first phase of the Swedish national VoIP network.

Arelnet was chosen in an international competition following extensive testing and interoperability operations with other vendors. Under the multi-phase contract, Arelnet will supply the national Skanova network with VoIP backbone core infrastructure equipment including Trunking Gateways, SS7 Signaling Interface Units, Gatekeepers, Network Management Servers, and Terminal Adaptors for voice and data at customer premises. The intended network will be a Class 5 replacement solution, intended to provide VoIP over broadband to the home.

Arelnet's partner in Sweden is UpGrade Communication AB. Arelnet and UpGrade will be working together to assist Skanova in the installation of Arelnet equipment.

Mr. Tomas Holmstrom, Skanova Director, commented, "We were highly impressed by Arelnet's professional performance and technical capabilities during the exhaustive testing we undertook. The first phase of our nationwide project will set the standards for the remainder of the project and our selection of Arelnet to play such a key role in our network development and deployment simply represents how highly we regard them. IP telephony is sure to become an alternative to traditional circuit-switched telephony and we are proud to be at the forefront of implementing this technology."

"Arelnet's lead role in improving and expanding Sweden's IP-based packet voice network, demonstrates the quality and cost performance of Arelnet technology and integrated platforms," stated Daniel Dreymann, Arelnet VP Sales.

"We believe that our strategy of providing all-encompassing IP backbone solutions bringing VoIP from carriers, through enterprises and all the way to the home, gives us an edge in understanding and implementing solutions that exceed client requirements. Being the lead supplier in this Skanova project is an exciting opportunity and we look forward to further contracts with new and established carriers throughout Europe," said Danny Shachoach, Arelnet Sales Director for EMEA (Europe, Middle East and Africa region).

About Skanova

Skanova is an independent wholesale network provider within the Telia group of companies. Skanova operates Sweden's largest telecom and data network, and offers its customers full network access, services and support. The Company's goal is to meet the growing need for top quality services. The challenge lies in enhancing the competitiveness of its customers with ground-breaking, and sometimes unexpected, solutions. Skanova has 2,700 employees, and an estimated turnover in its first year of operations of SEK 22 billion. For further information please visit www.skanova.com.

About Arelnet Limited

Arelnet is a leading provider of Voice over IP (VoIP) systems, specializing in end-to-end carrier grade solutions. Arelnet's i-Tone Prime suite of products is designed to deliver Real Time voice and fax as well as value added services, all over IP networks. Arelnet is publicly traded on the Tel Aviv Stock Exchange (TASE:ARNT). Arelnet's major shareholders are Keppel Telecommunications & Transportation (SING:KEPPEL T&T), Arel Communications and Software Ltd. (NASDAQ:ARLC), Nortel Networks (NYSE:NT), ELRON (NASDAQ:ELRNF), and Poalim Communications (TASE:POCO). For further information please visit our website at www.arelnet.com.