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Pirelli Broadband Solutions and Arcor: Agreement for the Supply of GSM/Wi-Fi "Dual-Mode" Phones

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Pirelli Broadband Solutions
Viale Sarca 222, 20126
Milano, Italy



Press release date: October 11, 2006

Germany's second largest fixed-line operator has chosen a Pirelli solution for the upcoming commercial launch of its new Voice Over IP service

Milan, 11 October 2006 - Pirelli Broadband Solutions, the broadband access and second-generation photonics company of the Pirelli Group, and Arcor (Vodafone Group), Germany's second largest fixed-line operator, signed an agreement for the supply of Pirelli's new "dual-mode" phones. These handsets will be used by Arcor for the launch of a new commercial offer of Internet phone services (Voice Over IP).

The Pirelli "dual-mode" phone is an innovative handset which enables the convergence of fixed and mobile services, integrating cell phone technology with the advantages of phone calls over the Internet. The new Pirelli phone, based on SIP (Session Initiation Protocol), can alternatively function as a telephone handset in WiFi mode or as a mobile phone.

"In Pirelli, Arcor has found an experienced partner that has convinced the company with its innovative dual-mode telephone. With dual mode, we can realise a new generation of fixed network communication. Our voice and DSL connections will be easier to use, more individual and more mobile", emphasised Harald Stober, CEO of Arcor.

"The innovative dual-mode phone - said Mauro Sacchetto, CEO of Pirelli Broadband Solutions - is the result of our Company's intensive research activity and Pirelli know-how in the broadband technology sector and in Voice Over Ip services. The agreement with a leading operator like Arcor confirms the validity of our solution and will strengthen our presence in one of Europe's main telecommunication markets".

Using the "dual-mode" phone, users will be able to make regular mobile phone calls using a SIM card or call via the internet with a DSL subscription. This solution enables the use of mobile features such as SMS, MMS, e-mail and Internet also through a fixed-broadband connection, with the added benefits of greater bandwith and cost savings.

About Pirelli Broadband Solutions Pirelli Broadband Solutions specializes in broadband access technology and photonics. The Access division provides a range of broadband CPE, including access gateways, set-top boxes, multiple handsets, and a remote management system. The Photonics division leverages nanotechnology and its use of tunable and pluggable solutions to deliver multi-wavelength components, modules and subsystems, including tunable lasers, GPON triplexers, an integrable tunable laser assembly, radio over fiber and a CWDM metro access system. In full year 2005, Pirelli Broadband Solutions posted revenues of 112 million euros (+78% compared to a year earlier).

About Arcor Arcor AG & Co. KG is the second largest fixed-line telecommunications provider in Germany. With its Germany-wide voice and data network covering more than 32,000 km in length, Arcor offers its private and corporate customers a broad range of services for voice, Internet and data transfer. Revenues rose in the fiscal year 2005/2006 by more than 330 million euros to over 1.9 billion euros. Arcor employs 3,800 people all over Germany. The shareholders in Arcor are Vodafone Group Plc, Deutsche Bahn AG and Deutsche Bank AG.

Contact:

Pirelli Broadband Solutions Press Office: +39 02 8535 4270 pressoffice@pirelli.com www.pirelli.com

Arcor Press Office: +49 69 2169 3212 presse@arcor.net www.arcor.de
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