AMATI AND ALCATEL ANNOUNCE AGREEMENT FOR CROSS LICENSING STANDARDS-BASED ADSL AND VDSL TECHNOLOGY

SAN JOSE, CA, September 23, 1997 — ADSL pioneer and leader Amati Communications Corporation (NASDAQ : AMTX), today announced a cross-licensing agreement to share patented intellectual property and conduct interoperability testing of designs based on those patents with Alcatel, a leading and pioneering supplier of ATM-based ADSL access equipment.

Product compatibility and joint interoperability testing are crucial to widespread deployment of ADSL services to meet telecommunications industry requirements for services targeted at the SOHO (small office/home office) and residential market.

The shared intellectual property includes patents based on Amati’s implementation of the Discrete Multi-tone (DMT) technology, the established international standard for ADSL set by the American National Standards Institute (ANSI) and the European Telecommunications Standards Institute (ETSI).

The standard provides for transmission of up to 6.144 Mbps from a telephone company’s central location to a remote user, as well as a channel capable of transmitting 640 Kbps over existing telephone lines.

ADSL technology enables transmission of data services, such as high-speed Internet access, audio/video on demand, telecommuting for corporate private networks, and many other high-speed interactive applications, without affecting normal telephone service on the same connection. Currently, both companies have several DMT patents for ADSL networks.

« The agreement with Alcatel is a key relationship for both in the ADSL marketplaces, » said James Steenbergen, President and CEO of Amati. « Alcatel is a recognized leader in the development of ADSL solutions for service providers. Their commitment to DMT technology and their interest in working with Amati to ensure system interoperability substantiates not only Amati’s product development efforts over the past several years, but also demonstrates the excitement xDSL services are generating in the industry. »

The telecommunications industry requires that any service targeted at the residential market, such as ADSL, provide the consumer with a range of vendor products from which to choose. To supply competitive equipment and therefore support an economical service, the industry requires the development of a standard for equipment design and the formation of alliances intended for multiple vendor testing and evaluation of those products. The agreement signed by Amati and Alcatel meets both requirements by including the DMT standard for ADSL and the intent of both companies to work together to make their products compatible. DMT technology is a multicarrier modulation technique that enhances ADSL and VDSL product capabilities and development.

« This is another step forward in the interoperability of standard based ADSL DMT products from different vendors, » said Martin De Prycker, Vice President and General Manager, Access Systems Division for Alcatel. « Moreover it hastens the availability of standardized ADSL technology to other technology vendors. »

Amati Communications Corporation is a pioneer and leading developer of advanced transmission equipment utilizing DMT technology for the ADSL, Very High-Speed Digital Subscriber Line (VDSL) and xDSL markets. Amati is the holder of the ADSL/DMT patents and has licensed the technology to companies such as Alcatel, Analog Devices, Inc., Motorola and Nortel. The ADSL/DMT technology, recently selected by BC TEL, Canada for a proposed roll out of commercial ADSL services, is an effective means of transmitting high-speed data over existing copper phone lines, making Internet access, interactive services, broadcast quality video and video-on-demand realizable to many subscribers. Amati also provides network connectivity systems for the internetworking and OEM marketplaces. The company’s connectivity products include local area network gateways, client-based workstation software and network data communications interfaces. For more information about Amati Communications, see our website at www.amati.com.

Alcatel, the Telecom business of Alcatel Alsthom, designs, manufactures, and markets complete telecommunications systems. Activities include fixed public switching networks, mobile communications infrastructure, business networking, submarine cable networks, as well as radiocommunications, space, and defense systems. With operations in over 130 countries, Alcatel is a leading-edge supplier in the majority of its business. In 1996, the Telecom business of Alcatel Alsthom registered total sales of FF 71 billion (US$ 13.65 billion). In recent months, Alcatel has designed and installed ADSL equipment at Ameritech, BellSouth, Pacific Bell and Southwestern Bell in the United States, Singapore Telecom, and Telia (Sweden) and has signed contracts with many others to provide its Alcatel 1000 ADSL system. In addition, Alcatel provides end-to-end solutions, including data network adapters and service management capabilities. Alcatel Alsthom trades on the Bourse de Paris and the New York Stock For more informations, visit Alcatel via the web at : www.alcatel.com.

Statements made in this press release which are not historical, including statements regarding product development, demonstration, product capabilities, availability and markets, and the negotiation of definitive agreements are forward looking statements and as such are subject to a number of risks including that the market for ADSL Products is still under development, is highly competitive and is subject to rapid technological change. Please see the Companyís Annual Report and Form 10-K for the 1996 fiscal year and other reports filed with the Securities and Exchange Commission for additional disclosure regarding such factors.