Stock Exchange & Press Releases 2015

May 02, 2015

Elektrobit (EB) to develop mobile devices for the Mexsat satellite communication system in Mexico

Stock exchange release

Elektrobit (EB) to develop mobile devices for the Mexsat satellite communication system in Mexico

Elektrobit Wireless Communications Ltd (EB), a subsidiary of Elektrobit Corporation, and the Ministry of Mexican Communication and Transportation (Secreteria de Comunicaciones y Transportes, SCT) have signed an agreement regarding the development of three types of android-based L-band mobile devices: satellite-terrestrial smartphone, a satellite-terrestrial rugged enhanced phone and a satellite rugged basic phone, for the SCT's Mexsat program. These mobile devices will be based on EB's Specialized Device Platform, a customized Android-based platform designed especially for public safety and cyber security markets.

The value of this development agreement is approximately USD 21.9 million (approximately EUR 19.5 million as per exchange rate of May 1, 2015) with revenues recognized gradually in 2015 and 2016 depending on the progress of the development work. More than half of the contract value is expected to be recognized as revenue during 2016. The revenues expected to be generated under this agreement during 2015 have already been anticipated in EB's outlook for 2015 and will thus not cause changes to the 2015 outlook published on February 19, 2015 in EB's Financial Statement Bulletin 2014.

The development agreement includes a delivery of a small quantity of prototypes of the three mobile devices.  Assuming that the development work proceeds as planned, these mobile phone variants are expected to be ready for actual product deliveries from the beginning of 2017. However, orders for actual product deliveries are not included in this development agreement but remain subject to separate agreement between the parties.

The Mexsat program is a Mexican Government program to provide satellite communication services over Mexico and its patrimonial seas, including the Gulf of Mexico and the Pacific Ocean. The Mexsat System comprises two types of services: a Mobile Communications Service System, served by two dedicated satellites with their complete terrestrial components; and a Fixed Communications Service System, including one dedicated satellite and specific carrier monitoring equipment. The communication system and devices are targeted to Mexican government offices and agencies primarily for public safety and defense purposes.

"To have been chosen by the SCT to develop these new mobile devices is a proof of our unique product platforms and competence to provide small hand-held mobile devices with both satellite and terrestrial connectivity. The devices will have features from the commercial smartphones, and are based on EB's device platform having enhanced security. Our specialized mobile device solutions with a variety of connectivity options make EB an attractive partner for companies and authorities in the public safety and cyber security markets. Exactly for those markets we are also bringing to the market EB Tough Mobile, a secure android smartphone" says Hannu Huttunen, the president of EB's Wireless Business Segment.

Under the development agreement, SCT and EB have agreed that any intellectual property rights arising from the development work by EB will be owned by EB but can be utilized by SCT through a licensing agreement. The development agreement contains termination conditions customarily applied in the industry, providing for example, SCT a possibility to terminate the agreement with a short notice by paying a ramp down fee. More about risks related to EB's business at
 http://www.elektrobit.com/investors/corporate_governance/internal_control_and_risk_management

Oulu, May 2, 2015,

Jukka Harju
CEO
Elektrobit Corporation

Further information:
Hannu Huttunen
President of Wireless Business Segment
Tel. +358 40 344 3507

Distribution:
NASDAQ OMX Helsinki
Principal media

Elektrobit Corporation (EB)
EB creates advanced technology and turns it into enriching end-user experiences. EB is specialized in demanding embedded software and hardware solutions for wireless and automotive industries. The net sales in 2014 totaled EUR 224.1 million and operating profit was EUR 16.8 million. Elektrobit Corporation is listed on NASDAQ OMX Helsinki. www.elektrobit.com

About EB Specialized Device Platform
EB's Specialized Device Platform is a versatile device platform leveraging latest mass market mobile device hardware and software technologies. The platform enables companies to roll-out fully customized mobile devices in various form factors (incl. module, smartphone, tablet and smart watch) faster and with lower development risks. In 2011, EB Specialized Device Platform was awarded as "Technology of the Year" by the Wireless Innovation Forum. The platform has been productized to public safety, security, industrial and smart watch markets. http://www.elektrobit.com/special_device_platform . One of the major products based on this platform is the EB Tough Mobile, secure Smartphone. http://www.elektrobit.com/EBToughMobile

About Mexsat program
The Mexsat program is a Mexican Government program to provide satellite communication services over Mexico and its patrimonial seas, including the Gulf of Mexico and the Pacific Ocean. The Mexsat System comprises two types of services: a Mobile Communications Service System, served by two dedicated satellites (Centenario and Morelos 3, respectively) with their complete terrestrial components; and a Fixed Communications Service System, including one dedicated satellite (Bicentenario) and specific carrier monitoring equipment. Satellite Bicentenario was launched in December 2012, and satellites Centenario and Morelos 3 are expected to be launched within 2015 and 2016.