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Corporate Presentation NASDAQ: UTSI December 2011

Corporate Presentation NASDAQ: UTSI December 2011. Disclosure & Forward Looking Statements.

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Corporate Presentation NASDAQ: UTSI December 2011

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  1. Corporate Presentation NASDAQ: UTSI December 2011

  2. Disclosure & Forward Looking Statements This investor presentation contains forward-looking statements, including statements regarding the Company's strategy to reduce operating expenses, ability to achieve profitability, investment in selective products and certain geographic regions, diversification of business and customer base, transition to a new business model and anticipated or assumed future financial results. Forward-looking statements are based on current expectations, estimates, forecasts and projections about the Company, the Company’s future performance and the industries in which the Company operates as well as on the Company management's assumptions and beliefs. These forward-looking statements are only predictions and are subject to risks and uncertainties related to, among other things, the ability of the Company to realize anticipated results of operational improvements, increase bookings, successfully transition to a new management team and headquarters location and execute on its business plan, as well as risk factors identified in its latest Annual Report on Form 10-K, as amended, Quarterly Reports on Form 6K and 10-Q and Current Reports on Form 8-K, as filed with the Securities and Exchange Commission. Therefore, actual results could differ materially and adversely from the Company's current expectations. We undertake no obligation to update these forward-looking statements to reflect events or circumstances occurring after the date of this investor presentation. The Company is in a period of significant transition and in the conduct of its business is exposed to additional risks as a result. This investor presentation also includes financial guidance and information about the Company previously disclosed during the Company's 2009, 2010 and 2011 earnings conference calls, restructuring announcements on December 18, 2008 and November 9, 2009 and other filings with the Securities and Exchange Commission. Such guidance and information reflects the Company’s information and expectations as of those dates and this presentation is not intended to confirm or update that information and expectations.

  3. 1 2 3 Agenda Corporate Overview Market Dynamics & Growth Strategy Financial Overview and Outlook

  4. CORPORATE OVERVIEW

  5. Company Introduction • A leading provider of interactive, IP-based network solutions in iDTV, IPTV, Internet TV and Broadband for cable and telecom operators • Technology and services expand and help modernize communications networks, giving operator customers the capability to provide their subscribers with interactive communications experiences while opening up increased revenue opportunities for operator clients • The new service business represents a “business model innovation” that leverages UTStarcom’s current core technology and management background to generate more recurring, higher margin returns. Share Price: $1.37 (as of December 9, 2011) Shares Outstanding: 155.4 m Market Cap: $212.9 m (as of December 9, 2011) Legal Counsel: Wilson Sonsini Goodrich & Rosati Auditors: Price Waterhouse

  6. Investment Highlights • Focused on achieving breakeven in 2011 • Strong existing relationships with leading telecom, cable and media players in China and across the rest of Asia • Well positioned to benefit from China’s Three Network Convergence policy and development • Diversifying business model into high-margin new service business (“Operation Support Business”) with recurring revenues • Diversifying customer base to broaden profit opportunities • Strong cash position and no debt

  7. Our Positioning and Growth Strategy A leading provider of interactive, IP-based network solutions in iDTV, IPTV, Internet TV and Broadband to cable and telecom operators Strategy 1: Return to China Strategy 2: Telecom and Cable in Parallel Strategy 3: Equipment AND Service • Enables focus on Chinese and Asian markets • Leverage Three Network Convergence (TNC) policy in China • Senior management close to client decision-makers • Improved internal communication & lower costs • Core IP technology applied across different networks • Strong competitive edge and opportunity with both telecom and cable operator • Demand for interactive services creates opportunity for equipment AND services revenues with higher margin earnings • New service business model moves UTStarcom up the value chain and closer to interactive TV operators Our existing telecommunication equipment products, RollingStream technology and sales channels are the foundation of new service business, which taps a major opportunity in video content services over the broadband network and internet.

  8. RollingStream Technology Video Storage and Streaming Servers OSS IP STB Dual-mode STB

  9. Broadband and NGN Solutions TN725 TN705 NetRing 4K NetRing2500 BBS 4000 ONU Media Gateway Call server

  10. Leading Market Position China 10

  11. Leading Positioning on APAC Market (I) UTStarcom Confidential

  12. Leading Positioning on APAC Market (II) UTStarcom Confidential

  13. Market Dynamics & Growth Strategy

  14. China’s Three Network Convergence: a growth catalyst for UTStarcom • Three Network Convergence (TNC) is the Chinese government policy dedicated to integration of telecom, broadband and cable TV networks • Three Network Convergence related market will reach RMB 688B over the next three years, including RMB 249B on equipment and network buildout and RMB 439B from interactive media user demand Pilots concluded and expansion drives ahead Focused on cable / teleco two-way entrance National Implementation Pilots Conducted Policy Launched 2013—2015 2010 2010—2012 Source: iChina Research Center, 2010.4, “Analysis of Market Size, Industry and Region for Three-Network Convergence” and policy directives issued by China’s State Council.

  15. Strategy 2: Parallel Growth Opportunities • TNC will increase opportunities with cable and telecom operators because of infrastructure investment • Our Broadband, RollingStream video platform and mSwitch NGN solutions help meet the TNC needs of both sectors Interactive video services 4million (iDTV) 6.7million (IPTV) Broadband service <5million >100million Bi-directional network percentage <25% 100% Voice services none >1 billion TV and Digital TV service 187 million 88 million none Source: SARFT Report January 2011 and UTStarcom

  16. New Business Model of Cable Operators Revenue Structure of Cable Operators Traditional TV Channel (1) Basic Service Subscribed Channel Information Channel HD Channel ARPUComparison among Countries USD Video on Demand Service of Cable Operators Value-Added Service Time Shifting Over Cable Online Gaming & Shopping Broadband Network Service Data Service GDP per Person Private Network Service 16 UTStarcom Confidential 16

  17. Strategy 3: Our Operational Support Services • RollingStream platform allows our clients to provide end-to-end solutions including, video content service and other value added services like on-line gaming, on-line shopping and video phone service through their networks • Cable network operators need partners that can provide continued technological and operational support services for these platforms • Operational Support Services (OSS) expands our revenue stream with higher margin, recurring revenues Equipment Sales Related Service Business Enterprise Operators TV and Cable Operators Telecom Operators IP Signage Platforms iDTV Platforms IPTV, Internet TV Platforms

  18. An Overview of the New Service or “Operational Support Services” Business Content Producers /Providers Ad Management Solutions RollingStream Video Platform VAS Solutions Content Distribution Internet TV Platform by Stage Smart Acquisition Mobile TV Subscriber Base IPTV/iDTV Subscriber Base Internet TV Subscriber Base 18

  19. Recent Business Development • Successfully completed the construction of first Internet TV platform to support a cable TV network customer • Launched DOCSIS-EOC application (“EOC application”), Packet Transport Network 735 (“PTN 735”), MS 3005 server and several Wi-FI products at PT/EXPO COMM CHINA 2011 • Won IPTV integrated broadcasting control platform contract in Tianjin and Zhejiang Province • Won MSTP and PTN contracts from Taiwan’s Chunghwa Telecom, the largest integrated telecom operator in Taiwan • Entered into strategic revenue-sharing partnership agreement with Wasu Digital TV Media Group, one of the largest digital TV content providers in China • Won E-Town 12 square kilometers affordable housing area telecommunication network project 19

  20. iTV.cn: Internet TV for Chinese outside China Q3 2011 Q4 2011 Commercial launch in North Americaon October 1st • Provides Chinese language content targeting the Chinese-speaking population located in North America • Integrated multi-screen viewing from a single managed platform • Time and location shifting • Reliable HD streaming • Multi-language programming • Value-added interactive service, such as distance-learning, gaming and e-commerce Education Social Shopping Gaming Radio 20

  21. Financial Overview and Outlook

  22. Third Quarter 2011 Highlights Net Income of $8.0 million, or basic earnings per share of 5 cents; Revenues of $83.3 million, a 35.7% or $21.9 million increase, compared to the same period of 2010; Gross profit margin of 38.4%, compared to 19.7% in same period of 2010, 37.6% in Q2 2011 and 31.1% in Q1 2011; Operating income of $14.2 million; Cash balance of US$305.9 million in cash, cash equivalents, and short-term investments. 22

  23. Revenue Trend $83.3 million in Q3 2011, 35.7% or $21.9 million increase, compared to $61.4 million in Q3 2010. Nine months ended 2011 total revenue was $237.1 million, 10.1% or $21.7 million increase, compared to $215.4 million in the nine months ended 2010. Quarterly Booking Amount US$ (mm) 23

  24. Gross Margin Improvement Gross margin for the third quarter of 2011 was 38.4% as compared to 19.7% in the third quarter of 2010. Gross margin for the nine month ended 2011 was 36.2% as compared to 28.9% for the nine months ended 2010. US$ (mm) 24

  25. Continued Progress in Cost Cutting US$ (mm) Total OPEX of Q3 2011 included $4.2 million one time net gain on divestitures. 25

  26. Quarterly Profit Achieved Quarterly Operating Income of $14.2 million… US$ (mm) Quarterly Net Income of $8.0 million… US$ (mm) 26

  27. Strong cash balance of $305.9 million in cash, cash equivalents, and short-term investment Zero debt Balance Sheet & Deposits Cash Balance by Region Cash Balance by Currency 27

  28. Reiterating 2011 Financial Outlook Total revenue to be within the range of $300 – $320 million (includes PAS deferred revenue) Annualized operating expenses of less than $100 million Breakeven in 2011 on a full year basis OSS business comprising 10% of total sales in 2011 will be difficult due to the rigorous due diligence process, detail terms and condition negotiation with acquisition targets and revenue sharing partners 28

  29. Investor Relations Contacts UTStarcom, Investor Relations Jing Ou-Yang T: + 8610 8520 5153 E: jouyang@utstar.com Ogilvy Financial In China: Agustin Bautista Tel: +86-10-8520-6166 Email: utsi@ogilvy.com In the U.S.: Jessica Barist Cohen Tel: +1-646-460-9989 Email: utsi@ogilvy.com 29

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