Tokyo, Japan, July 10, 2007 - Sumitomo Electric Networks, Inc. (Head office: Shinagawa-ku, Tokyo; President & CEO: Tsuyoshi Kawano) today announced that it had signed a contract for investment in Wuhan Yangtze Optical Technology Co., Ltd, a manufacturer of FTTH (fiber-to-the-home) communication equipment in Wuhan City of Hubei Province, People's Republic of China.

Sumitomo Electric Networks, a member of the Sumitomo Electric Group, in 2004 started marketing its GE-PON* equipment that allows a maximum of 32 households to share a 1Gbps optical fiber, and since then has a solid delivery record in the Japanese FTTH equipment market. The Company is active in making sales efforts for the overseas FTTH equipment markets where future growth is expected, and in June 2007 received orders from Taiwan's Chunghwa Telecom Co., Ltd. for GE-PON equipment.

The most promising market for FTTH equipment outside Japan is China where further construction and expansion of information infrastructure is expected following such large-scale events as the Beijing Olympics and Shanghai World Expo. The number of FTTH subscriber lines in China is prospected to reach 20 million by 2011.

Sumitomo Electric Networks, who has long been considering entering into China's FTTH equipment market, decided to make investment in a Chinese FTTH equipment maker Wuhan Yangtze Optical Technology Co., Ltd. (YOTC). Under the agreement Sumitomo Electric Networks will invest 25 million Chinese yuan for an approximately 18.9% stake in YOTC, and the YOTC board will have two members from Sumitomo Electric Networks. The two companies will collaborate in expanding sales of GE-PON products in the Chinese market.

Sumitomo Electric Networks' investment in YOTC enables the two companies to form an optimum complementary relationship in developing, manufacturing and marketing FTTH communication equipment including GE-PON products for the Chinese market, thus allowing Sumitomo Electric Networks to powerfully advance into China's telecom carrier market.

Welcoming the agreement on Sumitomo Electric Networks' investment in YOTC, YOTC General Manager Mr. Yang Zhanbing commented "Sumitomo Electric Networks is a leading vendor of access network equipment who has exceptional performance in the Japanese FTTH equipment market. I am confident that this agreement will allow the two companies to build a strong partnership for success in China's FTTH equipment market where the growth potential is enormous."

  "Although YOTC is a young company established in 2006, it has excellent presence in the Chinese FTTH equipment market," said Mr. Tsuyoshi Kawano, President & CEO of Sumitomo Electric Networks. "YOTC has powerful sales forces that know the local market and also has advanced technological development capabilities for supporting local customer needs. For Sumitomo Electric Networks who has considerable experiences and achievements in the FTTH equipment market in Japan, YOTC is the best partner to enter the dynamically growing Chinese market. Sumitomo Electric Networks sees the investment into YOTC as a pillar that supports its overseas FTTH business, and will strive to support the growth of YOTC."

*GE-PON: Gigabit Ethernet-passive optical network. A standard for fiber optic networks suitable for FTTH applications. In Japan, GE-PON is a dominant standard for FTTH, but in China and other countries and regions, implementation of FTTH based on technologies other than GE-PON is also under consideration.