Jing Ou Yang – Director, IR William Wong – CEO Robert Pu – CFO

Ladies and gentlemen, thank you for standing by for UTStarcom’s Fourth Quarter and Full Year 2012 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. If you have any objections, you may disconnect at this time. It is now my pleasure to introduce your host, Ms. Jing Ou Yang, Investor Relations Director for UTStarcom. You may begin.

Hello everyone and welcome to UTStarcom’s fourth quarter and full year 2012 earnings conference call. Earlier today, we distributed our earnings press release and you can find a copy on our website at www.utstar.com. In addition, we have posted a slide show presentation on our website, which you can download and use to follow along with today’s call. On today’s call, we have Mr. William Wong, our CEO; and Mr. Robert Pu, our CFO. Before we get started, I will read the Company’s advisory on forward-looking statements. This call will include forward-looking statements relating to the company’s media operational support service business, new strategy of the company’s business and the company’s performance in year 2013. These statements are forward-looking in nature and subject to risks and uncertainties that may cause actual results to differ materially. This includes risk and uncertainties related to operating figures in financial condition and cash consumption of the company, figures in the composition of the company’s management and their effect on the company. The Company’s ability to realize anticipated result of operational improvements, and the benefit of the divestiture transactions, successfully operate its new Service business, execute on its business plan and manage regulatory matters, as well as risk factors identified in the company’s latest Annual Report on Form 20-F, and current reports on Form 6-K as filed with the Securities and Exchange Commission. The company is inaccurate of the transitions and the conduct of its business which fall to additional risks as a result. All forward-looking statements included in the press release are based upon the information relevant to the company as of the date of this release which may change and UTStarcom assumes no obligation to update any such forward-looking statements. I will now turn the call over to our CEO, Mr. William Wong.

Thank you, Jing and hello to everyone. As Jing mentioned, you can follow along with today’s call by downloading the presentation from our website at www.utstar.com. Also, unless otherwise stated, all figures mentioned during the call are in US dollars. ] Let me begin from slide 5, by saying that 2012 was a momentous year for UTStarcom. We took forward a strategic action to transform the company by strengthening the management team, Board of Directors and business model and accelerating a transition to higher growth, more profitable business lines. In short, we took many steps to better position the company and carry forward for the benefit of employees and customers and allow us to deliver greater value to shareholders over the long term. To begin with, as you will remember, during the third quarter we kick started a new way forward by exiting the non-strategic and underperforming IPTV deployment business. In conjunction with this important milestone, we identified a set of priorities that will drive our way forward. The priorities on page 6 of the presentation includes advance our efforts to transition into higher growth, more profitable areas and enhance the value of the business. To redeploy working capital to support higher return opportunities, particularly in the value-added services area and generate a more predictable, subscriber-based recurring revenue stream. Having identified this as UTStarcom’s strategic growth priorities, we then developed a very specific new strategy designed to fully transform the company into a higher growth, more profitable business focused on providing next generation media operational support services and higher value-added broadband equipment offerings. Move to slide 7. First we are deploying a TV over IP Services Platform with the aim of turning UTStarcom into a leading provider of high-in-demand digital content, such as local content, premium licensed studio content, internet…

Thank you, William and hello everyone. Starting from slide number 15, I will discuss on full year 2012 financial results in more detail. Before I walk through the specifics, let me begin by saying that our overall performance and the underlying fundamentals largely mirror the third quarter. In particular, we were able to achieve our full year 2012 gross margin goals of approximately 35% and an increase in broadband equipment sales relative to the third quarter results. At the same time, we made some progress we have begun to see traction on this front in the fourth on a sequential basis and as planned we see that moving forward. Lastly, we ended the quarter in a strong financial position with no debt and approximately $180 million cash on balance sheet. We will use this liquidity to invest in our growth and as William has mentioned, execute on our strategic initiatives designed to increase shareholder value. Now I would turn to the specific results. In the third quarter of 2012, we have divested the IPTV business we will report the financial results of IPTV business separately as discontinued operations for all comparable periods but only in the requirements to do so. At this point for better comparison of the Q4 and full year performance, we have prepared non-GAAP financial results which focus on our broadband business and presents the IPTV business as discontinued operations. So for today’s purposes, I will focus on our broadband business and exclude largely the already divested businesses from our discussion. Please turn to slide 16 for a revenue discussion. For the fourth quarter, revenue was $41 million, compared to $47 million for the fourth quarter of 2011. For the full year, revenue was $157 million, compared to $179 million in 2011. For both the fourth quarter…

Thanks, Robert. We are very pleased with the prospects and initial progress that is underway, whether we are not claiming victory yet and there is a great deal more to do. Please turn to slide 24. With respect to the immediate term, this year we will require focus and hard work as we invest in and build a platform for the future and we currently view 2013 as a year of investment and continued transition, at the same time, the company personally expects to achieve a degree of incremental improvement and overall financial performance versus 2012. There will be a need to replace unprofitable revenue that was removed with the IPTV divestiture and revenue will be below last year while this process is ongoing and the top line is in transition. At the same time, the company will focus on holding margins relatively stable by maintaining a similar product mix to 2012, as well as making additional progress with lowering operating expenses. Looking to the future, we expect our new strategic plan will result in stronger and more predictable financial results as we expect to achieve accelerated successes and high rate of growth beginning in 2014. More specifically, as mentioned earlier in the call, we anticipate revenue for the new TV over IP services to become the majority revenue contributor for UTStarcom by 2013 with gross margins in that part of the business exceeding 50%. Before I end the call, I think it is worth taking a moment to summarize to you a short list of key takeaways from today in short. 2012 was a year of significant enhancement change for UTStarcom. We successfully divested the IPTV business along a new strategy that we firmly believe positions us better for success in the foreign markets. We made investments in this strategy and we began to see some good signs of initial traction in the marketplace via some of the new and excellent partnerships that will drive our business forward. We also strengthened our management team and board creating a team very well equipped to bring UTStarcom forward. While doing lot of this, we also focus diligently on finding the ways to reward our shareholders during this time of transition. We returned $45 million to shareholders which will include both share repurchases and our recently completed tender offer in January 2013. And we expect to effect a reverse share split that should improve the marketability and liquidity of our common stock. In conclusion, we are very excited about the long-term opportunities before us and we are confident that our clearly defined new strategy positions us very well in evolving media environment. We expect our actions to enable us to capture opportunities that will translate into significant overall improvement in the company’s business performance and enable us to deliver enhanced shareholder value over the long-term. This concludes our remarks and now we would like to take any questions that you might have. Operator, please open the line for Q&A.

Thank you. (Operator Instructions) The first question will come from Jim (inaudible) a private investor. Please go ahead.

Yes, our company has performed poorly for years. President (Shi Jin Ping) has outlined a new great renaissance plan for China. Will our company’s performance improve? Or will we be an embarrassment to President (Shi Jin Ping) and (Lee Kur Chung) an embarrassment to President (Shi Jin Ping’s) great renaissance plan?

As we have outlined our strategy moving forward, it is a strategy that we plan to implement over the course of next few years. So far, we are quite confident that we are actually heading along that line. We have demonstrated milestones along the way and we will continue to execute along that path. So, I believe we are trending in the right direction with what we have done so far.

Thank you.

(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 our fourth quarter and full year 2012 earnings conference call. We look forward to updating you on our first quarter 2013 in a few months time. Feel free to get in touch with us anytime if you have further questions, concerns or comments. Thank you everyone.

The conference has concluded. We thank you for attending today’s presentation. You may now disconnect your line.