Coherent Puts Chinese Plans in Place with Eastcom.

LEESBURG, Va.--(BUSINESS WIRE)--Jan. 7, 1997--Coherent Communications Systems Corp of Leesburg, VA, has entered into a joint venture technology transfer with Chinese manufacturer Eastern Communications Company Limited (Eastcom), a subsidiary of the Hangzhou Communications Company Limited (HCCL), based in Zhejiang province and currently China's largest manufacturer and supplier of cellular mobile telephones and cellular mobile systems equipment authorized by the China Ministry of Posts and Telecommunications. Under the agreement, Eastcom will be licensed to manufacture Coherent's EC-6000 Series 2 digital echo cancellers in China, with the first products scheduled to roll off the production line in early 1997.

The agreement represents an important step for both companies, complementing Coherent's own regional representation with the ability to deliver locally-manufactured product, in line with MPT guidelines for the future. In addition, Coherent will benefit from strong additional sales support via Eastcom's team of 20 regional staff, coordinated from the company's headquarters in Hangzhou. For Eastcom, the agreement with Coherent strengthens its existing position as a leading communication equipment manufacturer - adding leading-edge echo cancellation technology to its existing portfolio of handsets, cellular infrastructure equipment, automatic teller machine, laser typesetting equipment, plus PDH and SDH equipment. Mr Bi, Director of Transmission Equipment at Eastcom elaborated: "Coherent's products are clearly the most advanced available, as well as conforming fully to the latest ITU-T standards. We are particularly excited by Coherent's approach to application-specific software, which operates on the hardware platform of the EC-6000. We believe that this provides an important competitive advantage which will be of great value to the fast-growing Chinese market. By linking our local manufacturing expertise to Coherent's technology, which already has an impressive global track record, we are confident of gaining significant market share for echo cancellers sold in China."

Responding for Coherent, the President and COO, David Powell, commented: "China is one of the most rapidly developing telecommunication markets in the world and Coherent is committed to being a major player in this market. Eastcom is an ideal partner to enable Coherent to fulfill this plan, providing an ISO 9002 certified manufacturing facility, superb technical support facilities throughout China and an excellent sales and marketing team. Eastcom will be assisted by Coherent's local office in China."

The EC-6000 Series 2 Digital Echo Cancellers provide advanced echo control for both wireline telephony and wireless digital cellular systems. Designed to exceed the ITU-T standards, the units feature Coherent's state of the art RISC processors, providing a flexible and fully expandable platform for consistent, reliable performance. The echo cancellers have the capability to support #5, #6 and #7 signalling, without the need for hardware or software changes. The echo canceller's design also includes voice optimization features to ensure superior "subjective" voice quality and fail-safe facsimile transmission.

The Coherent echo cancellers use patented Non-Linear Processor (NLP) techniques, as well as fast and stable convergence (50ms for combined ERL and ERLE of 35dB) - both [GA1]prerequisites for modern network applications. In addition, the units feature local loopback facilities, extensive alarm reporting and self-test diagnostics, as well as significantly reduced power consumption for improved performance and reduced heat generation. The EC-6000 Series 2 supports Coherent's range of application-specific software, enhancing the unit's adaptability for a wide range of problem-solving in different network situations. Software can be remotely downloaded and upgraded, providing a versatile and cost-effective means of maintaining maximum operational flexibility as the network changes. The echo cancellers support configuration and control locally, via a hand-held terminal, and also remote configuration via a PC or other terminal.

Coherent Communications Systems Corporation is a worldwide leader in state of the art voice enhancement technology, spanning echo cancellation platforms and associated network software. The Company's products are used globally by major commercial telecommunications companies and network operators, including AT&T Wireless, Cellular One, British Telecom, Nokia, NORTEL, Telia, Mercury, Cable & Wireless, Telmex, Cisco Systems, KDD, Deutsche Telekom and France Telecom among the extensive list. Coherent is a fully accredited ISO 9001 company, dedicated to maintaining the highest quality standards at every level. The Company's headquarters are based in Leesburg, Virginia, USA.

Also available via Coherent's Web Page: http://www.coherent.com Photo available upon request.

This news release contains forward looking statements, including statements of the Company's sales and marketing expectations, that involve risks and uncertainties associated with intense competition, variations in market growth, lack of customer acceptance, timely availability of raw and produced materials, and competitive pricing of products as well as other risks detailed in the Company's SEC reports.

CONTACT: Coherent Communications, Leesburg

Diane McClelland, 703/724-7311

Garrett Axford

Georgina Garrett, [phone]

E-mail: [e-mail]