Zhone Technologies Selects CTDI for Contract Manufacturing; Zhone Expands Capacity and International Distribution Capabilities Through Expanded Relationship With World-Class Manufacturing Firm.

OAKLAND, Calif. -- Zhone Technologies, Inc. (Nasdaq:ZHNE), the first company dedicated to building total-delivery solutions for voice, data and content services worldwide, announced today that Communications Test Design, Inc. (CTDI) has been selected to perform manufacturing and assembly for some of Zhone's Single Line Multi-Service (SLMS(TM)) products.

The CTDI Hungary plant, located in Budapest, is a 50,000 square-foot manufacturing facility with capabilities that include surface mount technology parts placement, electronic assembly and testing. CTDI is ISO 9001 certified and its award-winning world-class technical staff and diverse suite of telecommunication services are able to support all aspects of manufacturing functions for some of Zhone's high run-rate products.

The Budapest facility enables Zhone to offshore its manufacturing of high volume products with an award-winning world class manufacturer. As a result, Zhone achieves immediate cost benefits and Zhone's growing international customer base enjoys accelerated delivery intervals. Under terms of the agreement, CTDI's Hungary facility will be providing both manufacturing and warranty repair services for some of Zhone's market-leading SLMS products.

"CTDI is a proven leader in contract manufacturing, logistics and repair," said Ed Thompson, vice president of operations for Zhone. "Our selection of CTDI as a supply chain partner allows Zhone to maintain its quality commitment while improving our operations overhead."

"CTDI is pleased with the opportunity to expand its relationship with Zhone, a leading supplier in the telecommunications industry," said Jerry Parsons, Chairman and CEO of CTDI. "We look forward to providing Zhone with the quality manufacturing services that are essential to its success."

About CTDI

A premier Telecommunications service company headquartered in West Chester, Pennsylvania. CTDI has provided groundbreaking maintenance and product service solutions to the global telecommunications industry since 1975. Today, CTDI offers the most comprehensive Service Portfolio in the industry that includes: Wireline Repair & Logistics, Wireless Repair & Logistics, Engineering and Installation services, Global Supply Chain solutions and Product Engineering & Manufacturing. Today, CTDI services Original Equipment Manufacturers (OEM) and Carriers from 37 international strategic repair and logistics locations supported by an experienced team of over 3,500 telecommunications professionals. CTDI feels we are the best in the industry at what we do and has a company-wide commitment to achieving service excellence.

About Zhone Technologies, Inc. (Zhone)

Zhone designs and manufactures network equipment for network operators worldwide. Zhone's products allow network operators to deliver a rich array of voice, data, video, and entertainment services over their existing networks while simultaneously retooling for converged packet based voice (VoIP) and video (IPTV) over copper or fiber access lines.

Zhone's advanced networking solutions include the Single Line Multi-Service architecture (SLMS(TM)), Multi-Access Line Concentrator (MALC(TM)), Raptor(TM) ATM/IP DSLAMs, Zhone Residential Gateways (ZRG(TM)), GigaMux(TM) Optical Transport Systems and Zhone Management System (ZMS(TM)). With deployments at over 600 carriers including among some of the world's largest networks, Zhone has enabled network operators to reinvent their businesses. For more information, please visit http://www.zhone.com.

Zhone, the Zhone logo, and all Zhone product names are trademarks of Zhone Technologies, Inc. Other brand and product names are trademarks of their respective holders. Specifications, products, and/or product names are all subject to change without notice. Copyright (C) 2006 Zhone Technologies, Inc. All rights reserved.