Jane Zuo – Senior Manager, IR William Wong – CEO Robert Pu – CFO

Ladies and gentlemen, thank you for standing by for UTStarcom’s Third Quarter 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. Jane Zuo, Investor Relations Senior Manager of UTStarcom. You may begin.

Hello everyone and welcome to UTStarcom’s third quarter 2013 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 our 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 business, strategic initiatives and the performance in the third quarter of 2013. These statements are forward-looking in nature and subject to risks and uncertainties that may cause actual results to differ materially and adversely from the company’s current expectations. This include risks and uncertainties related to among other things, changes in the financial conditions and cash position of the company, changes in the composition of the company’s management and their effect on the company; the company’s ability to realize anticipated results of operational improvements and benefit of the divestiture transactions, the ability to successfully identify and acquire appropriate technologies and businesses for inorganic growth and to integrate such acquisitions, the ability to internally innovate and develop new products, assumptions the company makes regarding the growth of the markets and the success of the company’s offerings in the market and the company’s ability to execute its business plans and manage regulatory matters. The risks and uncertainties also includes the 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 in a period of strategic transition and the conduct of its business is exposed to additional risks as a result. All forward-looking statements included in this conference call are based upon information available to the company as of the date of this conference call which may change and the company 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, Jane and hello to everyone. As Jane 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 U.S. dollars. I know that many of you have questions about the withdrawal of the proposal that UTStarcom received in March to acquire outstanding shares and take the company private. As it’s customary we have dedicated a portion of our quarterly review comments to address this proposal. We have more than usual to state about it but first let’s proceed with the recap of the quarter as there are lot to discuss. Let me begin by saying that the third quarter was another period in which we make significant progress. We continued to turn the business around both financially and operationally by building on our core strengths, maintaining our focus in controlling cost and pursuing a strategy that will give us new and more profitable sources of revenue in the future. The results of our efforts are increasingly evident in our quarterly financial results. Robert will delve into the details in a few moments. But let me touch on some highlights. Revenue growth was healthy again. We saw a another significant drop in operating expenditures [coming] in large parts from savings we achieved by rationalizing our business in recent quarters and divesting non-core product lines. We generated positive operating cash flow for the quarter and we are operating cash flow positive year-to-date. In addition, we generated positive operating income for the quarter, a sharp reversal from a loss in the previous quarter and slowed us in the same quarter last year. And finally our gross margin came back a bit on a sequential basis as we have fully [recognized] from one-time cost.…

Thank you, William, and hello everyone. Starting from Slide 11, I will discuss our third quarter and the first nine months 2013 financial results in more detail. Before I begin let me remind everyone that in the third quarter of 2012 we divested the IPTV business for better comparison of financial performance on a year-over-year basis. We have prepared non-GAAP financial results which focus on our remaining broadband business. For today’s purposes I will focus on our broadband business and exclude the already divested businesses from our discussion. Please turn to Slide 12, before I walk through the specific numbers let me highlight a few key [things] of the third quarter and the first nine months of 2013. We managed to do well in several important areas. First, revenue for growth in the third quarter and the first nine months increased incrementally on a year-over-year basis as we continue to experience stable demand for our broadband equipment products from our customers. Second, we continue to benefit from aggressive and focused cost reduction efforts as demonstrated by the significant decrease in operating expenses year-to-date. Moving forward, we will continue to monitor our OpEx and find ways to further improve our cost structure. Third, we generated positive operating cash flow and the improvement on the bottom line in the third quarter and year-to-date reflecting the positive performance on the top-line coupled with lower cost. Lastly, we ended the quarter in a strong financial position with no debt and approximately $120.4 million in cash on balance sheet. As we had said before we will continue to invest in our growth plan and other initiatives designed to enhance shareholder value. Moving to one of the challenges we had faced in 2013 gross profit and gross margin decreased from 2012 levels, which we had stressed…

Thank you Robert. If you would, please turn to slide 20 as we enter the last quarter of the year we are well along the path of transitioning our business. We continue to see healthy and improving trends in our financial and operating performance. These results from investments we have made divestiture of unprofitable and non-core businesses and (inaudible) to align our business with long term shifts in the market. Indeed, overheads in the third quarter was substantial as we increased our sales footprint with new customer wins we continue to develop a portfolio of market leading broadband products and to invest in a development of new services that will enable us (inaudible) our cable and broadband service customers to participate in the dynamic changes to shaping our industry such as cloud computing, mobility and on-demand delivery of which entertainment content. At the same time we are developing a base of subscribers that they can become customers for future value added services and most importantly we achieved ongoing financial improvement with generation of positive operating cash flow on net income, healthy top line growth and strengthening gross margin. Looking ahead to the balance of 2013 as we have said in the past the changes we are making will take time to complete and fully stabilize the business. Our gross margin may continue to experience headwinds from the depreciation on the Japanese yen against U.S. dollars. As sales in Japan account for a large portion of the company’s total revenues, but if the Japanese yen exchange rate remains stable and we maintained our progress on generating efficiencies from operations, we expect incremental improvement from 2012 in overall financial performance as we said at the end of the second quarter. Over the long term we expect that our balanced focus on strategic initiatives and continuing investment in our value added broadband business will result in a more profitable and comparative business model. We continue to expect profits from the new TV over IP services to become the majority contributor for UTStarcom by 2015, with gross margin in that part of the business exceeding 50%. In closing, we believe we have the right leadership. The operational and financial discipline and the right strategy to achieve our goals and move in sync with the market and customer’s demands. Indeed, we believe the results we are announcing today are a validation of our efforts and the strategy we are pursuing. And now that the outcome of the Going Private Proposal is determined, we can move forward with greater certainty to implement many of the plans that we have in progress. That concludes our remarks and now we would like to take any questions you have. Operator, please open the line for Q&A.

Thank you. We will now begin the question-and-answer session. (Operator Instruction). Our first question is from [Jim Bartolomeo], a Private Investor.

Good morning, good evening. I’m pleased with management’s decision to maintain UTStarcom as a public company. Assuming the financial numbers and business model have been honorably presented the actions taken should benefit all parties UTStarcom shareholders, UTStarcom employees and UTStarcom management and Mr. Shah. I believe these actions are also in line with President, Xi Jinping’s vision for Great China and will also be looked upon favorably by the National Development and Reforming Commission, the NDRC. For myself and other investors we will expect positive results from our company and its management. Future plans to make additional investments in UTStarcom or investments in other Great China companies will be subject to positive results. As for the $120 million in cash reserves, the only used for this money is to purchase other companies or parts of other companies that will complement UTStarcom’s business model and be, as a growth company and be accretive to sales and earnings. I am looking forward to your comments respectfully. Thank you.

I think as we said earlier, now that the Going Private Proposal cleared, we are certainly considering a very broad range of options including different capital allocation and strategic investments to further increase the shareholder value. And from the business perspective, we are spending a lot of effort in developing a new line of business – excuse me, a new line of products along the PTN area we have embarked on the development on the next-generation SDN products which is going to be a key element driving the future growth for the company. So, we are indeed going to continue on the various different directions to utilize the very valuable assets that we have in the company.

Thank you.

You’re welcome.

(Operator Instructions) Thank you, there are no further questions at this time. I would turn the conference back over to management for closing remarks.

Thank you for joining us on our third quarter earnings conference call. We look forward to updating you on our fourth quarter 2013 conference call in a few months. Feel free to get in touch with us anytime if you have further questions, concerns or comments. Thank you everyone.

The conference has now concluded. Thank you for attending today’s presentation. Please disconnect your lines.