RAFI MAOR President and CEO of ECI Telecom

Mr. Rafi Maor

As you probably know, when the Israeli economy began, Israel was focused in establishing intensive labor industries such as textile, agriculture etc., all at the low end of the value chain. As the country's economy evolved and became more sophisticated, the nation realized that we do not have any natural resources aside from some exceptions such as minerals and magnesium from the Dead Sea. We also realized that based on our cost of labor and growing GDP, we would not be able to compete effectively with Low Cost Geography (LCG) countries such as India or China in terms of intensive labor low-end goods and the only advantage we have in our hands is our "local brain power". I personally believe that this "DNA" was formed as a result of our geopolitics situation - we are a nation living under high stress with complex homeland security challenges and no natural resources, which required us to develop a very creative and very assertive mode of operation.

The first step was Israel's enormous government investment in the high-tech defense sector and infrastructure, for instance IAI and Elbit. Not surprisingly, if you segment the top of the Israeli high- tech industry you will see that most of the core management people and engineers grew in those companies or in IDF-related units (Israel Defense Forces). Initially, those industries were not driven purely by economics, the only rationale for their existence was the fact that we did not have other sources for the required technologies that we needed. People like me spent their time designing, testing and producing these solutions for the IDF and the main focus was execution not profit. Later, this deep know-how pool was converted to export these technologies and spin them into civilian applications. People understood that we have an asset in hand and began to develop it. The launch of the Venture Capital world in Israel accelerated the process which actually created a "second Silicon Valley" in Israel. We internalized the fact that we have a unique set of competitive skills in this area and we suddenly had the required financial resources available: the "high-tech boom" had begun in Israel. The IDF "produced" many people with great technical background, innovation and creativity. Once combined with this financial backing, we turned into a "start-up & technology world leader", second only to California's Silicon Valley in terms of number of start-ups per capita.

We, Israelis, are very good at entrepreneurship, innovation and ideas, as well as initial execution (i.e low-scale operation) When it comes to scalability and real global operations, we are still developing our skills and required culture although we do have great success stories here, such as Teva generic pharmaceuticals business and others. ECI has certainly been successful as well, as we effectively compete and win business in the global multi-billion dollar Telecom sector. ECI differentiates itself in this highly competitive and rapidly commoditizing market based on the traditional characteristics we defined above for Israel as a nation - through innovation, technology efficiency & extreme customer focus and loyalty.

We are equipped and focused on being a global company, which is well demonstrated by our structure worldwide and distribution of revenues. Though ECI went private in 2007, at that time our revenues were on an approximate $700M run rate, most of which coming from outside of Israel. We successfully leverage the culture and "DNA" of Israel to compete and succeed in the global market. ECI operates today as a true global company. In my view, a good intuitive definition (rather than business school definition) for a global company would be a company which operates all over the globe in which color, religion and gender are transparent. The only thing that matters is talent. This outlook stands at the base of our future expansion plans.

UNITED WORLD
Founded in 1961, ECI has grown from a small technology company into an experienced global provider of networking infrastructure equipment to the world's largest carriers. Mr. Maor, could you please provide us with a global overview on how you established yourself as a market leader, through your series of aggressive acquisitions?

Mr. Rafi Maor

I believe that ECI established its leadership position in the growing telecommunication global market by leveraging innovation with a focused approach and excellence in execution. We understood very early that we need to complement our basic approach with selective mergers & acquisitions (M&A's) activities and direct international presence. In the modern world, one of the most efficient ways to grow is through M&A's, which always present a challenge and can be a big risk, especially for companies that are not capable to manage effectively the Post Merger Integration (PMI) phase. Most M&A's do not succeed because they fail in this phase. We will certainly continue to grow through Mergers and Acquisitions but we must be selective. Mergers and Acquisitions can bring additional products or technologies or markets, each has its own advantages and relates to specific company goals. Today, the company focuses on two areas, which belong to two sectors. We were betting on the cellular market and on broadband access, and both turned out excellent. We combined these two bets by focusing on emerging countries. We realized that emerging countries are below the big companies' radar screens and we have been very successful there. For instance, in India we own 37% of the transport market. We are the leaders over there. The reason for this is that we started in India many years ago, before anyone else had a serious presence. We did the same in the former Soviet Union and we are very dominant in that market as well. Today in India, cellular companies are adding an average of six to seven million new mobile subscribers per month. We are working with Bharti Airtel, a company that holds approximately 40% of the Indian cellular market. Our strategy was to grow with them - we partner with our customers and, in India, this was particularly successful as our customers experienced significant growth. Customer focus is key in emerging markets, and we have excelled here.

UNITED WORLD
What are your thoughts on future acquisitions for the company, and how are you working to look for new acquisition possibilities to make the company even more successful?

Mr. Rafi Maor

The company is certainly successful today; we have a good mix of business between mature markets and emerging territories where we are enjoying most of our growth. We have approximately 50% market share in the France Telecom broadband market and approximately 35-40% in Deutsche Telekom (T-Com) broadband market. We are active with British Telecom and Vodafone as well. In North America, we have a growing business with the independent operating companies (IOCs) and the MSO (cable) markets, with more than 35% quarter-over-quarter growth in the most recent quarters. ECI's success is driven by the fact that we are a recognized leader in the technology sector despite our smaller Research & Development resources, compared to that of our competitors. The main driver behind our success is a combination of our focus and our constant initiatives on what to do and not to do. We are extremely focused and are always striving to find new areas where we can add value and create innovation. If you review our history, you will find that we were first to market with many of our solutions.

Having said that, we refer to M&As as a very effective mean to extend our market reach and product offering and we will certainly continue to grow through organic and non-organic (M&A) business activities. This will include market share acquisitions as well as complementing technology acquisitions. As an example, the acquisition of Laurel Networks in June 2005 falls into the second category. It enabled us to accelerate our time to market with our next generation transport solutions, which are being launched across our markets as we talk.

UNITED WORLD
From tier-one national carriers to small enterprises, ECI's equipment serves as the platform for key applications including Business Services, Voice, Video and Wireless Backhaul. How are you marketing and communicating your solutions and your technology as the number one solution?

Mr. Rafi Maor

The answer is simple: innovation, efficiency and customer focus. We cannot compete against the giants in the telecom sector based on size, but we can - and have - done so through highly innovative products, platforms that are efficient and provide cost-effective solutions to our customers' problems, and finally the highest level of customer focus, bordering on reverence. Our customers are our partners, and their success is our success.

We recently announced a business framework that really demonstrates this strategic thinking. ECI 1Net defines ECI's total focus on optimal transition to Next-Generation Networks, through the unique combination of innovative and flexible network equipment, fully integrated solutions and all-around services.

We focus on the areas in which we excel and that make us unique. That is what gives us an advantage over our competitors combined with the fact that we provide something that our competitors cannot - that's the agility to address our customers' needs in a very hands-on, high touch manner.

This innovation, flexibility and our capability to listen, and quickly react, to our customers is something that our customers value. Networks are getting increasingly complex, "cookie cutter" solutions do not meet all needs any longer. I spend at least one day in each of my main territories every quarter - North/South America, Europe, India/APAC and the former Soviet Union. I do a quarterly review in every area and I get a direct sense of what are the main developments, requirements and threats directly from the people who sense and experience it in the field. A day or two later, I am able to address it with the company's top management and agree on the necessary actions. For a large company, it takes much longer to do something similar and therefore we can react much faster.

UNITED WORLD
On September 28, 2007, ECI was acquired by Swarth Group, and certain funds that have appointed Ashmore Investment Management Limited as their investment manager, in a transaction valued at approximately $1.24 billion. Following the acquisition, ECI's ordinary shares were de-listed from the NASDAQ Stock Exchange and it is now a privately held company. May you please comment on this new ownership, and how it will make you even more competitive for the future?

Mr. Rafi Maor

In September, we de-listed from NASDAQ, as we were acquired by two groups. The Ashmore Group is a 30 billion-dollar London-based hedge fund. The Swarth Group is a private investment company focused on the telecom and IT markets, with major global holdings. One of these holdings is GVT, an emerging carrier in Brazil, which has become the most successful emerging broadband carrier worldwide. The Swarth Group is controlled by CEO and Chairman Shaul Shani, who has been involved in telecom and technologies ventures for many years. Swarth's CFO is Ady Marom, who has a rich experience from a financing and investment background.

As a private company, we can make long-term strategic decisions with greater ease because we do not have pressure from shareholders. A fitting example is our recent manufacturing outsourcing agreement, when we were able to make such decision quickly and efficiently.

UNITED WORLD
May you please tell us about your ECI Channel Partner Program partners and distribution network in the international market?

Mr. Rafi Maor

When you look at a company like ours, one of the most important factors is the front end, i.e. sales, marketing and support - those functions that directly touch the customer. The most efficient, and rapidly scalable way to expand our front end organization would be through a combination of direct sales and channels, through which the company increases our "feet on the street," and market reach, especially in the key verticals we are expanding into, such as the utitlies market. ECI manages and works with a channel network that ranges from smaller, local agents all the way up to large, multi-national global companies. Our channel programs are designed to provide the tools, training and leads to best equip their own go-to-market strengths. Key to our channel development is finding the right channel partner for the specific regional or technical challenges we are addressing.

UNITED WORLD
Could you please share with us, ECI Telecom's activities and operations in the US, and how you position yourself in the US market?

Mr. Rafi Maor

The US market is important to ECI even though today most of our business is being conducted outside of the US. ECI has had cyclical success in the NA market. Some years ago, we were doing 3-4 times the revenue we are today due to a stronger product fit and strength of the sales force at that time; we actually acquired a US company with a product well suited for a strong market demand at the time. More recently, we focused on products and the requirements of the rapidly growing emerging markets and other technology segments and our presence in NA dropped somewhat. In 2006 we set forth to address this. In the past two years we have hired a new Head of North America, reorganized and balanced skill sets, updated our product portfolio to address the NA market and have refined and strengthened our focus, specifically on the IOC and the MSO markets and we are now seeing the results. Our sales in the US have grown by over 40% year-over-year.

UNITED WORLD
As a successful and experienced leader, what is your management style, and what do you see as the most important criteria's to become a successful manager and lead a company to growth and success?

Mr. Rafi Maor

First of all, you will never find me in a complacent state of mind. I am very hands-on in my business but I also empower my people and let them do their job successfully with my full support. We give our employees the tools to run forward and we are successful in this respect. I feel it is important to communicate regularly, provide focus and feedback but ultimately enable an environment of forward momentum. Speed, creativity, results. The ECI culture is built in a way that embraces success and learns from failure.

UNITED WORLD
Our readers are very interested in learning about the people who are responsible for the companies and institutions that we highlight in our report. You have a long experience in the management of global technology companies. Prior to joining ECI, you spent nine years at Indigo, as President and COO. Following the acquisition of Indigo by Hewlett Packard in 2002, you were the General Manager of HP/Indigo Division and Vice President at HP Corporate with worldwide responsibility for the product line. And before Indigo you spent 20 years at IAI. What are the accomplishments that have given you the most personal satisfaction?

Mr. Rafi Maor

I have done many things in my career, from flight testing to large project management. I managed the military aircraft and unmanned aircraft divisions at IAI. I moved into digital imaging and printing and spent ten years there until I moved into telecommunications. I think that I have been "very curious" in my career, I like to learn. My work and life balance may look insane but I know how to run away. I spend quality time with my family, I scuba dive and used to fly light aircrafts. At the end of the day I have a wonderful family, I work very hard but my family and especially my wife Dodie understands and supports me in a way which certainly enables me to do my job better. I come to work every day and love it.

UNITED WORLD
As you are well aware of, USA TODAY is the Number One newspaper in the United States, 70% of the readers are actually investors themselves. If you had the chance to send out a direct message to the readers of USA TODAY, what would you like to tell to them?

Mr. Rafi Maor

This may sound standard but I would say that the sky is the limit. Look at Israel, we are a tiny young country that started from nothing and today we are world leader in many areas. That is a direct result of strong belief, vision and execution - we believed that it is possible even when things don't look quite that way. .When I was young I heard of the American dream, the land of unlimited opportunities and I think that that is what Israel is today. My message is that everyone who believes in what they are doing and has the right vision and energy will get where they want to go and then…. The sky is the limit.

United World
Thank you for this interview.