Teleca proposes a rights issue to raise SEK 150 million to accelerate growth

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Teleca proposes a rights issue to raise SEK 150 million to accelerate growth

Teleca today announces that it proposes a rights issue to raise SEK 150 million
to support its ongoing transformation into a pure play provider of software
development services to the world's leading wireless communications companies.
The funding, which is proposed as a rights issue, is expected to support both
organic growth and selected strategic acquisitions. By responding to the needs
of its clients for strong out-sourcing partners capable of delivering leading
edge software around wireless technologies, and capable of delivering with
scale, fast response times and low cost from a global delivery platform Teleca
seeks a globally leading position in its domain. The rights issue will be fully
guaranteed by Symphony Technology Group. 
Over the past two years, Teleca has started a significant transformation. It has
exited non-core product businesses while achieving growth and profitability in
its services business. Today, Teleca is among the world's leading companies in
the field of software development services for the mobile communications
industry. Teleca serves leading wireless companies including Nokia, Ericsson,
Motorola and Kyocera. It also sells to leading technology companies focused on
the wireless industry including Microsoft, ST Microelectronics and UIQ. Teleca
competes by delivering a broad capability of wireless technology, including
services for most of the leading software platforms in the industry. The company
has substantial resources committed to helping its customers deliver mobile
internet capability to users around the globe. With engineers throughout Europe,
Russia, China and North America, Teleca can deliver the right capability with
fast response times and low costs to its customers. 

Teleca believes that the secular trends for the wireless industry are very
strong. Wireless penetration continues across the globe. In addition, mobile
phone manufacturers are responding to the demands of users for added mobile
phone capability by designing increasing amounts of functionality into phones
with every product cycle. This is particularly true in the area of mobile
internet, where the mobile phone is increasingly the internet access device of
choice. With all of these changes, industry players will continue to seek ways
to accelerate the pace of product development and to lower the cost of
delivering product improvements to their customers. As a result, Teleca expects
the market for wireless software development outsourcing to grow fast for those
vendors that can build broad technical capabilities at global scale. Teleca
expects outsourcing to further consolidate around the largest and most
experienced vendors and views these factors as presenting an opportunity to
strengthen its market position. 

Supported by this additional capital, Teleca will accelerate its ability to
build scale and create cost efficient offerings. It will also support a faster
growth of current off-shore capability, including the expansion into new
geographic areas where Teleca does not currently have operations. It will also
allow the company to respond to opportunistic acquisitions where it can either
enhance specific capabilities or grow geographically. 
In order to exploit all of these opportunities, the board of directors proposes
a rights issue at a level of SEK 150 million. The issue will be priced at SEK 11
per share, and be fully guaranteed by Symphony Technology Group (“STG”). STG is
a Silicon Valley-based investment company with over US $1 billion of assets
under management. STG invests exclusively in the software and services sector
and in companies that are undergoing substantial transformation. 

Carnegie and Vinge are Teleca's advisors in connection with the rights issue.
The board of Teleca will convene an extraordinary shareholders meeting to
resolve on the new issue. The board will provide full details with regard to the
contemplated new issue later this week.

For more information contact
René Svendsen-Tune, President and CEO, Teleca AB, mobile +45-40540068
Christian Luiga, CFO, Teleca AB, mobile +46-703751604
Mattias Stenberg, Investor Relations Manager, Teleca AB, mobile +46 706119616

Teleca is a world-leading supplier of software services to major players of the
mobile device industry. The company offers tailored solutions, systems design
and the integration of software and hardware for mobile phones. Teleca has more
than 2,000 employees in 11 countries in Asia, Europe and North America and is
quoted on the small cap list of the Nordic Exchange

Teleca is required under the Securities Markets Act to make the information in
this press release public. The information was submitted for publication at 8:30
CET on 12 February 2008.