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UTStarcom Announces Strategic Divestiture of Its Personal Communications Division

ALAMEDA, Calif., July 1 /PRNewswire-FirstCall/ -- UTStarcom, Inc.
(Nasdaq: UTSI), today announced that it has reached an agreement to sell its
Personal Communications Division ('PCD') to a newly formed entity controlled
by AIG Vantage Capital, a part of AIG Investments. The expected proceeds of
approximately US$240 million will be based primarily on the net working
capital levels, subject to certain adjustments. In addition to the cash
consideration, UTStarcom could also receive up to US$50 million based on a
three-year earn out provision. The transaction, which is expected to be
completed within two business days, has been unanimously approved by
UTStarcom's board of directors and is subject to customary closing conditions
including debt financing. Completion of the transaction is not subject to
UTStarcom shareholder approval and the waiting period under the
Hart-Scott-Rodino Antitrust Improvement Act has expired.

UTStarcom Announces Strategic Divestiture of Its Personal Communications Division
UTStarcom Announces Strategic Divestiture of Its Personal Communications Division

(Logo: http://www.newscom.com/cgi-bin/prnh/20051013/SFTH063LOGO)

The divestiture of PCD is consistent with UTStarcom's strategic focus
announced in late 2007, which is aimed at maximizing UTStarcom's opportunities
in its core IP-based product offerings in rapidly growing economies around the
world. The PCD business, which primarily distributes handsets and related
accessories in North America, was identified as a divestiture opportunity at
that time. This transaction, combined with the recently announced divestiture
of the Mobile Solutions Business Unit, will complete two milestones in
simplifying the operations of UTStarcom.

Subsequent to the transaction, the privately held company will be called
Personal Communications Devices, LLC and will be led by PCD's current
management team who will be part-owners of the company with AIG Vantage
Capital and other investors. The Handset business unit of UTStarcom will
continue to design and provide devices to be sold in the Americas through
Personal Communications Devices, LLC as part of a supply agreement. UTStarcom
will also sell devices directly to carriers in other areas of the world.

'With the divestiture of our PCD unit, our management team and employees
will focus on pursuing the growth opportunities related to our core product
suite of IPTV, NGN and Broadband offerings,' said
Peter Blackmore, UTStarcom's
chief executive officer and president. 'The streamlined business model will
provide better transparency into our operations and improved liquidity as we
execute our strategic plan.'

Philip Christopher, the president of UTStarcom's PCD, stated, 'Operating
as a standalone business will afford the new company greater distribution and
financial flexibility and better positions us to capitalize on emerging market
trends and strategic growth opportunities. We will continue distributing
handsets and accessories throughout North America, and we remain focused on
providing our current manufacturing partners and carrier customers outstanding
support and service.'

Merrill Lynch & Co. acted as financial advisor to UTStarcom.

Conference Call Information

The company will host a conference call to discuss this transaction. The
call will take place at 5:30 a.m. (PDT) / 8:30 a.m. (EDT) on Tuesday, July
1st
. The conference call dial-in numbers are as follows: United States -
888-398-3046; International - 706-902-1962. The conference ID number is
53564742.

A replay of the call will be available for 30 days. The conference call
replay numbers are as follows: United States - 800-642-1687; International -
706-645-9291. The Access Code is 53564742.

Investors will also have the opportunity to listen to the conference call
and the replay over the Internet through the investor relations section of
UTStarcom's Web site at: http://www.utstar.com.

To listen to the live call, please go to the Web site at least 15 minutes
early to register and to download and install any necessary audio software.
For those who cannot listen to the live broadcast, a replay will also be
available on the UTStarcom Web site.

About UTStarcom, Inc.

UTStarcom is a global leader in IP-based, end-to-end networking solutions
and international service and support. The company develops, manufactures and
markets its broadband, wireless and terminal solutions to network operators in
both emerging and established telecommunications markets worldwide. UTStarcom
enables its customers to rapidly deploy revenue-generating access services
using their existing infrastructure, while providing a migration path to
cost-efficient, end-to-end IP networks. UTStarcom was founded in 1991 and is
headquartered in Alameda, Calif. The company has research and development
centers in the USA, Canada, China, Korea and India.

For more information about UTStarcom, please visit the UTStarcom Web site
at http://www.utstar.com.

Forward-Looking Statements

This release includes forward-looking statements, including the foregoing
statements regarding the anticipated completion of the divestiture, the
anticipated proceeds of the transaction, our expectation regarding a supplier
agreement with Personal Communications Devices, LLC, our expectations with
respect to continuity of the PCD business as operated by Personal
Communications Devices, LLC, our expectations regarding product innovations
and improvements in our internal operations, liquidity and cost structure, our
expectations regarding use of cash, and our expectations regarding our
business model and execution of our strategic plan. These statements are
forward-looking in nature and subject to risks and uncertainties that may
cause actual results to differ materially. These risks include the ability of
the company to complete the transaction as anticipated, the ability of
Personal Communications Devices, LLC to generate cash in connection with the
earn out provision, and the ability of Personal Communications Devices, LLC to
complete its transition to a standalone company with minimal disruption, as
well as the risk factors identified in its latest Quarterly Report on
Form 10-Q, as filed with the Securities and Exchange Commission.

SOURCE UTStarcom, Inc.