Jing Ou Yang - Director, IR Jack Lu - President and CEO Edmond Cheng - SVP and CFO

Mike Barone - Sidus Investment Jun Zhang - Wedge Partners Ke Chen - Shah Capital Management

Thanks for standing by for UTStarcom’s First Quarter 2011 Earnings Conference Call. At this time all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder this conference is being recorded. It is now my pleasure to introduce your host Ms. Jing Ou Yang, Investor Relations for UTStarcom. You may begin.

Hello everyone. Welcome to the UTStarcom’s first quarter 2011 earnings conference call. We distributed our earnings press release earlier today and you can find a copy on newswire services or on our website at www.UTStar.com. In addition we have posted a presentation on our website which you can download and use to follow along with today’s call. On today’s call we have Mr. Jack Lu, our President and CEO; and Mr. Edmond Cheng, our CFO. Before we get started I will read the company’s advisory and forward-looking statements. This call will include forward-looking statements on topics that include but may not be limited to the company’s restructuring initiatives, IPTV revenues, profit margins and projected business model. Forward-looking statements are generally indicated by such words as will, expect, estimate, goals, plans or similar words. These statements are forward-looking in nature and subject to risks and uncertainties that may cause actual results to differ materially. This including risks and uncertainties regarding the ability of the company into real life, anticipated results of operational improvements, the company’s ability to successfully launch internet TV platform, continued inter release and acquisitions, successfully operate new services business, execute our business plans and the managed regulator matters, as well as risk factors identified in latest annual report on Form 10-K, 10-Ka, quarterly reports on Form 10-Q and current reports on Form-8K as filed with the Securities and Exchange Commission. The company assures no obligation to update any forward-looking statements. I’d now turn the call over to our President and CEO, Mr. Jack Lu.

Thank you, Jing. And hello everyone on the call. As Jing mentioned we can follow along on today’s call by downloading the presentation from our website at www.UTStar.com. Let me start with Slide 4, which covers our operational achievements in the first quarter. This quarter we won new EPON/EOC from cable operators in Hunan, Zhejiang and Jiangsu province in China. This contracts are important to us actually (inaudible) technology that will have a traditionally sold to the telecom operators sales to the cable operators in China. We also received an award from the China’s Ministry of Science and Technology for our innovative Three Network Convergence solutions at a major China cable industry trade show. At this show we were able to benefit in the IPTV solutions to a number of Provincial cables operators and I’m happy that many of these lead are showing early progress now. Meanwhile, we continue to make progress to improve the company’s capital structure. As a result our operating expense decreased 34% compared to the same period last year. And we expect further improvements next quarter. In the first quarter we moved our Beijing headquarters into a [less expensive] more appropriately sized the facility. We also entered into a new lease agreements for our on view and operational facilities in Hangzhou. And we are in the process of moving into the new facility now. These moves give us a dramatic reduction in rental costs at both locations. Now please move to Slide 5, where I will discuss our business in Japan and India. In our last earnings call took place on a day off and that’s taking earthquake and tsunami at the stock in Japan. Our hearts and prayers have been with the people there and we are praying for that (inaudible) our team was last heard. At this point we do not anticipate any negative impact our business due to the earthquake there. On a happier note, we saw a significant increase in orders of our PTN product followed the successful completion of the previously disclosed field trial in 2010. In India, I’m pleased with better progress in establishing a JV integrate local partners. This was essentially (inaudible) with joint venture, it will help us to improve our position in this market. I will share more with you when we are able to secure a facility agreement. Turning to Slide 6. I wanted to discuss the market dynamics in China which are primarily growth drivers in our three prone strategy. As a reminder the new strategy are returned to China targeting telecom and the cable operators in parallel and providing both increment and services to our customers. According to (inaudible) the Chinese market for IPTV showed that 5 million more digital cable TV household including the two-way digital migration during the first quarter of 2011. This brings the total of two-way digital cable TV household in China to 50 million. In the Chinese IPTV market, during the first quarter of 2011, there were appraisal of 6.85 million IPTV subscribers. At the end of year 2011, total IPTV subscribers are expected to be 9 to 10 million with the growth rate of 1 to 2 million new subscribers this quarter. Finally, in the internet-enabled the TV market there were 7 million Internet TVs sold in China in the first quarter of 2011. And more than 15 million Internet TVs will be sold in the year 2011. As a leading provider of active IP based network solution, IPTV and Internet TV. We are well positioned to capture this growing market because there is opportunity. (inaudible) is further supported by China’s Three Network Convergence talent team. Next on Slide 7. I wanted to share more about the Internet TV platform, which we are targeting to launch this year through our majority owned subsidiary iTV Media Inc. whose name we are changing from (inaudible). This platform will be acceptable by potential customer through a new website called www.itv.cn. The focus of this business will be to provide a Chinese language content to overseas Chinese. We plan to launch high level trials in the second quarter and the two subscription based service in Q3 on Q4. iTV.cn will provide a high quality user experience with integrated multi-screen viewing from a single managed platform; time and local shifting; reliable HD streaming; multi-language programming and value-added interactive service, such as distance-learning, gaming and e-commerce. These revenue will be generated through advertising, subscription and stock or license fees. I’m encouraged by the progress of this business and look forward to seeing it generate income that will be captured in our new operational support service business segment. Now I’d like to hand the call over to our CFO, Edmond to share the financial revenue of our company in this quarter.

Thank you, Jack. Hello everyone. I will start by highlighting the company-wide financial results and then cover performance in our business segments which you may remember a new starting for this quarter. Now please turn to Slide 8. Our first quarter 2011 revenues were 61.3 million compared to 80.8 million in Q1 of 2010 and 76.1 million in the fourth quarter of 2010. The decrease was primarily due to the wind-down of our handset business which resulted in a decrease of 3.9 million in revenue as well as the decrease in the sales of MSAN product. At the same time I’d like to highlight that the sales of our PTN product in Japan increased significantly that is by 6.6 million in the first quarter of 2011 compared to the same period last year. To better understand the demand of our products in the future, let us look at the book-to-bill ratio in the first quarter o 2011 for the equipment sales business. Without the PAS deferred revenue our book-to-bill ratio was 1.03. With the PAS deferred revenue our book-to-bill ratio is 0.64. This shows that our existing business is in a stable and steady position. And near revenue growth will come from our new OSS assessment. On Slide number 9, you can see that gross profit in Q1 of 2011 was 19.1 million or 31% of revenue. This compared 27.2 million or 34% in Q1 of 2010 and 8.1 million or 11% of total revenue in Q4 of 2010. We expect to continue our focus on improving profitability by (inaudible) controls in our pricing processes and by generating higher margin revenue from the new operational support services business in 2011. In addition, the new and streamlined corporate structure improved our internal efficiency and provides added control over cost. (Inaudible) shows that our operating expenses continued to decrease both year-over-year and sequentially. Q1 OpEx was 30.2 million which compares to 46 million in Q1 of 2010 and 34.6 million in Q4 2010 is that our run rate operating expenses for quarter one re down to 24 million. As you can see we are well on our way to reach the annualized goal of lower than 100 million in OpEx for the full-year of 2011. On Slide 11. You can see that we have reduced our operating loss in Q1 of 2011 to 11.1 million and improvements on operating loss of 18.8 million Q1 of 2010. Our first quarter 2011 net loss was 10.3 million or a loss of $0.07 per share. This shows an improvement from quarter one of 2010 where the net loss was 16 million or a loss or $0.12 per share. The weighted average number of shares for this calculation was 155 million for quarter one of 2011. Next let’s look at our segmented financial results on Slide 12, and remember that we changed how we segment our revenue this quarter and also going forward in order to better reflect our operating structure and allow our investors to check our progress in our new OSS business. The new reporting segments are equipment sales and services sales. The equipment sales segment track our equipment sales including network infrastructure and application products. The second segment is service sales, service sales tracks the services and support we provide to customer related to the equipment they purchased and our new OSS services that we provide through long-term revenue sharing arrangement with the cable and telecom operators and our Internet TV platform established by our iTV Media subsidiary formally known as (inaudible). The revenue generated through long-term revenue sharing contacts of operational support services provided through cable and telecom operators improves. Advertising, subscription and software license fees. In the first quarter of 2011, the equipment sales segment generated 52.8 million in revenue and the gross margin of 32%. This compared to Q1 of 2010 revenue of 69.2 million at 33% gross margin. As a reminder, we are continuing to amortize the deferred revenue related to PAS through the end of 2011 at a rate of close to 23 million per quarter. Gross margin at services we have the PAS deferred revenue is approximately 35%. And PAS revenue is recorded under the equipment sales segment. Our services sales segment generated 8.5 million at 23% gross margin in the first quarter of 2011. This compared to 11.7 million at 37% gross margin in Q1 of 2010. As you can see on the slide, we have [both these] done further to provide additional detail. We expect to see the OSS segment begin to make significant contribution to the overall result starting in the third quarter of this year. The decrease in gross margin percentage of the service business was primarily due the decrease in this segments revenue was a costing providing this services cannot be reduced proportionately. Now let us turn to Slide 13 for the balance sheet and cash flow statement. We ended the quarter with a balance of 310 million in cash, cash equivalent and short-term investment at zero debt. In the first quarter of this year we have negative operational cash flow of 39.8 million. This is due to the following factors. At the end of last year, we disclosed our number of improvements in our management structure. During the early part of the first quarter, this management changes combined with seasonal delays related to the Chinese New Year to cost collections to fall below an acceptable level. The good news here is that the situation has been addressed. And the team is focused on stepping up collection efforts. As a result we are already seeing an improvement in the status of collections on delay accounts receivable. Also in quarter one, there were some restructuring related severance costs that impact our cash flow and we expect these to be lower in Q2. Cash flow is an important focus of our management team process. We continue to examine additional option to improve our cash flow. In addition to operational process improvements, we are considering safe financing and leasing arrangements. I’d now hand the call back to Jack.

Thank you, Edmond. While we have substantially measured through the most of the recorded period of our restructuring and we are also getting traction in IPTV’s including IPTV, iDTV and the Internet TV. We realized that we must make more serving of process to improve cash flow management and the (inaudible) of OSS services. We are focused this and making every effort to drive performance in this area. We anticipate that growth of the operational support service business will start to materially increase in the third quarter. This will come as a combination of organic growth through new agreements and also acquisitions. Some of which are already in the pipeline. I look forward to reporting on our progress in this area in the future. Finally I wanted to make it clear that we still believe that we are on track for the target we set on our last calls for 2011. As a reminder of the targets, I think we see on Slide 14, our total revenue for the year in the range of 300 to US$320 million, 10% of total sales in 2011 from our new OSS service business. Operating expenses of less than a US$100 million and breakeven in 2011 on a full-year basis. Thank you all for listening in. At this point I’d like to ask the operator to open us for the Q&A. Thank you.

Thank you. (Operator Instructions). Our first question comes from Mike Barone of Sidus Investment. Mike Barone - Sidus Investment: I was wondering if you could talk a little bit about your cash flow expectations for Q2. It seems like you had a couple of issues in Q1 that might not reoccur in Q2, and I just wondered if you would give us any guidance on cash flow for Q2 from an operating standpoint?Thank you.

We expect Q2’s operating cash flow to continue to improve, in fact we will be trying very fast to look at a situations where it will be close to (inaudible) situation there. Mike Barone - Sidus Investment: Okay. That’s a major improvement is there any specific reasons behind that?

One of the major reasons behind that is we have been stepping up the effort of collections because of situation happened in Q1. So that is something that we are catching up with the collection effort that will be the primary driver for that.

Also there are some physical reasons because of the Chinese New Year, that’s our traditional phenomena.

Our next question comes from Jun Zhang of Wedge Partners. Jun Zhang - Wedge Partners: My first question is what do you think the cable operator spending right now and any updates on the BT model. And what do you think [ran date] the corporation with 200 media group and also the international radio company revenue contribution starting Q1 or Q2 any insights of that. Thanks.

Okay. So, according to our observation and our (inaudible) customers from the cables sides, we can see the spending for their cable operators still increasing. So, we see lot of activities for [special] deals and corporation is in China. As for our operation with SMAC and CII, to actually that we disclosed before. What we called iTV.cn is actually based on operations with CII. Which still to be the major China’s for CII’s content deployment to our set of Chinese to us. So, we also mentioned we projected a significant revenue for this time in operation on the Q3 this year. Jun Zhang - Wedge Partners: And my second question is what do you think about the talk of IPTV spending, thinking of the government suspend the network convergence process. And what do you see the IPTV spending right now and how is UTSI positioned in that market right now. Thanks.

From (inaudible) that we comment on the PNC progress. So actually the most official message here from government is we are strived to working on [PUC] by Chinese government. And that was recent in total of 5 year plan. So, that is no doubt about that, although some of the operators from their own intra study (inaudible) but that is a government deal. So, no doubt as well going forward and according to all our competition with related government officials that is directly a message in recent week especially mentioned the MIIT, Ministry of Information Industry they are shipping in year's who called there is no support just (inaudible) possibility. Jun Zhang - Wedge Partners: And also what’s the revenue coming from Japan and India right now into 1 percentage revenue?

The percentage of revenue in quarter one coming from Japan is 44.4%. Coming from India is 10.8%. Jun Zhang - Wedge Partners: So, any idea revenue contributions from other Southeast Asian markets?

We expect other Southeast Asian market to be [flat] in the first half, but we are looking at increasing demand in second half at this point. Particularly we are working on the project in Thailand and Taiwan. Jun Zhang - Wedge Partners: My last question is, how do you see the process of cost reduction Q2 or is this possible in the Q2 to be profitable. And any ideas or insights?

We optimistically I’d say looking at Q2 to be very close to breakeven level.

(Operator Instructions) Our next question comes from Ke Chen of Shah Capital Management. Ke Chen - Shah Capital Management: There is a strong dose of smartphone on the streets in China. Could you talk about the potential opportunity to transfer PAS to Wifi station in China?

Yes, this is one of the strategic initiatives that we are working on. But you know because of the government policies and the frequency allocation for PHS this is viewed a kind of sensitive question into MIIT, but some of our customers from telecom operators in certain (inaudible) start to talk to us trying to convert the originally PHS base station into Wifi 3G offload (inaudible) stations. So, actually we have some trial orders already in Q4 and the Q1 this year. This is actually one of the key area that we are working with telecom operators that has continued to leverage our strength in other fields. Ke Chen - Shah Capital Management: So, this new business is not in your guidance in 2011 yet.

Yes, because we are seeing in the final stages we will only make it sure before we can put these guidance. Ke Chen - Shah Capital Management: And there is still (inaudible) of government policy as well.

Yes.

(Operator Instructions) Thank you. There are no further questions at this time. I will turn the conference back to management for closing comments.

Thank you for joining us on today’s earnings conference call. We look forward to updating you on our second quarter 2011 results in a few months time. Feel free to get in touch with us any time if you have any further questions, concerns or comments. Thank you everyone.

The conference is now concluded. Thank you for attending today’s presentation. You may now disconnect and have a great day.