EXFO Acquires Navtel Communications

    - Navtel offers highest-performance test solutions for rapidly growing
      IMS and VoIP markets
    - Complementary customer base focused on Network Equipment Manufacturers
      and NSP labs
    - Strengthens EXFO's position in high-growth Protocol test business

    QUEBEC CITY, March 26 /CNW Telbec/ - EXFO Electro-Optical Engineering
Inc. (TSX:EXF)(NASDAQ:  EXFO) announced today that it has acquired all the
shares of Navtel Communications Inc., a leading provider of Internet Protocol
Multimedia Subsystem (IMS) and Voice-over-Internet Protocol (VoIP) test
solutions for Network Equipment Manufacturers (NEMs) and Network Service
Provider (NSP) labs.
    Consideration paid consists of C$11.0 million in cash, subject to
adjustments on working capital. The deal is expected to be neutral to EXFO's
earnings for the remainder of fiscal 2008 and accretive in fiscal 2009,
excluding amortization of intangible assets to be accounted for in the
    Navtel Communications, a privately held company in the Toronto area,
specializes in testing next-generation IP networks that are increasingly
combining wireline and wireless technologies. Its InterWatch(R) platforms,
offering the highest performance in the industry, are fully scalable
simulation and analysis test stations available in rack-mountable and portable
formats. These solutions can perform several critical tests - capacity,
performance, stress and load testing - on various network devices to assure
their ability to perform under real-life, IP-based, multi-media traffic
conditions. Test modules can be hosted inside Navtel's platforms for
characterizing next-generation switches, routers, session border controllers
and media gateways.
    IMS, which is being touted as the new technology that will merge the
Internet with the telecom world, allows wireline and wireless carriers to use
a common IP application system to deliver new multi-media services that can be
combined with legacy services across a number of different access
technologies. IMS has been developed to become the overlaying architecture
that will enable the efficient management and deployment of quadruple (voice,
video, data and mobile) IP services.
    Navtel has positioned itself as a leading-edge supplier of IMS test
solutions. It also offers a comprehensive suite of VoIP and Generalized
Multi-Protocol Label Switching (GMPLS) test solutions, as well as a wide range
of legacy test protocols that have been developed over its 30 years of
    Frost & Sullivan, a global growth consulting company, estimates that the
IMS test and monitoring market will grow from an estimated $274.1 million in
2007 to $1.2 billion in 2013 for a compound annual growth rate of 27.9%.
Navtel currently addresses approximately $130 million of this market.
    "This acquisition fits strategically with our long-term plan to deliver
strong growth in our Protocol test business, which posted a compound annual
growth rate of 64% in the last two years and continues to deliver solid growth
at the mid-point of fiscal 2008," said Germain Lamonde, EXFO's Chairman,
President and CEO. "Navtel's cutting-edge technology strengthens our offering
for NEMs and NSP labs which, in turn, have a significant influence on product
selections made by NSPs."
    "This acquisition also enables us to expand into the high-growth IMS and
VoIP test markets, whose technologies are currently in their early stages,"
Mr. Lamonde added. "We intend to leverage these technologies throughout their
entire lifecycle, especially as they mature into portable test solutions for
the NSP market in which EXFO is the world's second-largest supplier. We also
plan to take advantage of Navtel's strong relationships with Tier-1 NEMs and
leverage our own worldwide sales presence with NSPs to accelerate sales
growth, while positively impacting earnings since Navtel's software-intensive
test solutions generate high gross margins."
    Navtel Communications posted sales of C$5.7 million in calendar 2007. Joe
Sutherland, founder and CEO of Navtel Communications, and his senior
management team will ensure a seamless integration into EXFO. No restructuring
is planned with all 35 Navtel employees expected to remain with the company.
"We are pleased to become an integral part of the EXFO family," Mr. Sutherland
said. "Our technological leadership in IMS and VoIP testing is a good fit with
EXFO's protocol test strategy. Combined with EXFO's global sales channels,
market positioning and brand equity, we envision a bright future with strong
synergies lifting our product offering and market presence to the next level."

    Conference Call

    EXFO will host a conference call at 8:30 a.m. (Eastern time) on Thursday,
March 27, 2008, to discuss the details of the Navtel Communications
acquisition. To listen to the conference call and participate in the question
period via telephone, dial (416) 620-2406. An audio replay of the conference
call will be available one hour after the end of the event until 10:30 a.m. on
April 3, 2008. The replay number is (402) 977-9141 and the reservation number
is 21379627. The live audio Webcast and replay of the conference call will
also be available at www.EXFO.com/investors.

    About Navtel Communications Inc.

    Navtel Communications was founded in 1976 and is a leading supplier of
test solutions for IMS and VoIP networks. Navtel's products are used by
network equipment manufacturers and operators to validate core functions and
perform feature, negative, load, interoperability and regression testing of
the network elements and services. A single Navtel InterWatch test chassis can
emulate up to 384,000 unique subscribers (IP addresses) and generate over
10 million BHCAs with 192,000 simultaneous RTP streams, while performing
real-time measurements. This unique capability allows Navtel's customers to
test carrier-class networks in a controlled environment.

    About EXFO

    EXFO is a Tier-1 test and measurement expert in the global
telecommunications industry, especially in the portable test market segment.
The Telecom Division, which represents about 85% of the company's business,
offers a full suite of test solutions and monitoring systems to network
service providers, cable TV operators, telecom system vendors and component
manufacturers in approximately 70 countries. EXFO is the global market leader
for portable optical test solutions with an estimated 25.5% market share in
2006 and a leading supplier of protocol and access test solutions to enable
triple-play deployments and converged IP networking. Its Windows-based modular
AXS-200, FTB-200, FTB-400 and IQS-600 test platforms host a wide range of
modular test solutions across optical, physical, data and network layers,
while maximizing technology reuse across several market segments. The Life
Sciences and Industrial Division offers value-added light-based solutions in
high-precision medical device and opto-electronics assembly sectors, and
advanced fluorescence microscopy and electrophysiology solutions for the life
sciences sector. For more information about EXFO's Telecom Division, visit
www.EXFO.com, and for its Life Sciences and Industrial Division, visit

    Forward-Looking Statements

    This news release contains forward-looking statements within the meaning
of the U.S. Private Securities Litigation Reform Act of 1995, and we intend
that such forward-looking statements be subject to the safe harbors created
thereby. Forward-looking statements are statements other than historical
information or statements of current condition. Words such as may, will,
expect, believe, anticipate, intend, could, estimate, continue, or the
negative or comparable terminology are intended to identify forward-looking
statements. In addition, any statements that refer to expectations,
projections or other characterizations of future events and circumstances are
considered forward-looking statements. They are not guarantees of future
performance and involve risks and uncertainties. Actual results may differ
materially from those in forward-looking statements due to various factors
including consolidation in the global telecommunications test and measurement
industry; capital spending levels in the telecommunications, life sciences and
high-precision assembly sectors; concentration of sales; fluctuating exchange
rates and our ability to execute in these uncertain conditions; the effects of
the additional actions we have taken in response to such economic uncertainty
(including our ability to quickly adapt cost structures with anticipated
levels of business, ability to manage inventory levels with market demand);
market acceptance of our new products and other upcoming products; limited
visibility with regards to customer orders and the timing of such orders; our
ability to successfully integrate our acquired and to-be-acquired businesses;
the retention of key technical and management personnel; and future economic,
competitive and market conditions. Assumptions relating to the foregoing
involve judgments and risks, all of which are difficult or impossible to
predict and many of which are beyond our control. Other risk factors that may
affect our future performance and operations are detailed in our Annual
Report, on Form 20-F, and our other filings with the U.S. Securities and
Exchange Commission and the Canadian securities commissions.
    We believe that the expectations reflected in the forward-looking
statements are reasonable based on information currently available to us, but
we cannot assure you that the expectations will prove to have been correct.
Accordingly, you should not place undue reliance on these forward-looking
statements. These statements speak only as of the date of this document.
Unless required by law or applicable regulations, we undertake no obligation
to revise or update any of them to reflect events or circumstances that occur
after the date of this document.

For further information:

For further information: Vance Oliver, Manager, Investor Relations, 
EXFO Electro-Optical Engineering Inc., (418) 683-0913, Ext. 3733,
vance.oliver@exfo.com; www.EXFO.com

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