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Telefonica Selects ZyXEL to Provide ADSL Service in Brazil

ZyXEL's Prestige 642 Provides Telefonica Customers With An Easy-to-Use, Affordable Solution for ADSL Access

SAO PAULO, Brazil and HSINCHU, Taiwan, September 5 - ZyXEL Communications Co., (TAI: 2391.TW) an innovator and a leading supplier of DSL customer premises equipment (CPE), announced today that it has been chosen by Telefonica as the lead supplier of ADSL CPE for Telefonica's forthcoming ADSL service, Speedy and Speedy IP.

Telefonica's offer represents the first large-scale commercial rollouts for ADSL in South America. As Brazil's largest telecommunications company, Telefonica pioneered the ADSL service in the end of 1999 in Sao Paulo. Telefonica plans to mass deploy its Speedy service throughout the country, with 1 million lines in total by the year 2002 after the deregulation. As the preferred CPE of Telefonica's Speedy Service, ZyXEL's Prestige 642, a standalone external ADSL bridge/router, will be paired with Alcatel's DSLAMs (and other suppliers in the future) to provide high-speed ADSL services in the country.

"We are excited to partner with Telefonica enabling high-speed ADSL services in Brazil," said Shinjou Fang, President of ZyXEL. "This partnership reinforces ZyXEL's DSL access position in Brazil, as well as building another milestone closer to our goal of becoming one of the leading players in the broadband access market."

ZyXEL's Prestige 642 ADSL Bridge/Router ZyXEL's Prestige Series DSL Bridge is designed for small office, home office and residential users, enabling high-speed Internet connections at speeds of up to 8Mbps. Easy installation and factory-installed settings benefit both service providers and their customers by eliminating the time and technical expertise required to set up other vendors' DSL devices.

In addition to giving users the ability to perform popular tasks such as Web browsing and telecommuting, the Prestige Series DSL bridge/router also enables single IP accessing to a whole new range of networked services, including group videoconferencing, on-line streaming multimedia and multi-user interactive gaming, over existing single-pair copper wiring.

About Telefonica
Telefonica (1999 revenues: 22.9 billion euros) is the largest supplier of telecommunications services in the Spanish- and Portuguese-speaking world. Through affiliated companies in Latin America, Europe, Africa and the United States, the Group reaches a potential market of more than 550 million clients in 24 countries, with services ranging from fixed and mobile telephony to Internet, data transmission, call centers and broadcast media.

About ZyXEL Communications
ZyXEL Communications Co. (TAI:2391.TW), located in Hsinchu, Taiwan, is a leading supplier of complete networking access solutions for Internet/Intranet/VPN/Extranet applications. Products developed by ZyXEL over the years are not only industry leaders, but consistently win acclaim and are selected by worldwide telecommunications companies, ISPs, and other major businesses. ZyXEL now serves Telefonica, Cuba Telecom, Bell Atlantic (NYSE: BEL), Chunghwa Telecom, China Telecom, Czech Telecom, EarthLink (NASDAQ: ELNK), France Telecom (NYSE:FTE), Korea Telecom, Telecom Italia (NYSE:TI), Telia, Verio (Nasdaq: VRIO).

To speed widespread deployment of DSL, ZyXEL has engineered compatibility with central office equipment from Alcatel (NYSE:ALA), Ericsson (NASDAQ:ERICY), Fujitsu Network Communications, Lucent (NYSE: LU), NEC (NASDAQ: NIPNY), Newbridge, NLC, Nokia (NYSE: NOK), Nortel Networks (NYSE/TSE: NT), Orckit, PairGain (NASDAQ:. PAIR), Samsung, Siemens, and Copper Mountain Networks (Nasdaq: CMTN) into its DSL product lines. For more information on ZyXEL Communications, visit company's Website at http://www.zyxel.com.