TELESTE CORPORATION INTERIM REPORT 1.1.-31.3.2007

TELESTE CORPORATION STOCK EXCHANGE RELEASE 24.4.2007

TELESTE CORPORATION INTERIM REPORT 1.1.-31.3.2007

The stated data is unaudited. This interim report has been compiled in
compliance with IFRS IAS 34. Recognition and valuation principles are identical
with those used in the Annual Report.

- Net sales improved significantly by 37.7% over the previous year amounting to
EUR 31.4 (22.8) million
- Operating profit stood at EUR 2.8 (2.2) million, an increase of 29.9% over the
previous year; undiluted result per share equalled EUR 0.11 (0.09) per share
- Orders received improved by 34.9% over the previous year standing at EUR 36.4
(27.0) million
- Year-on-year orders received by Broadband Cable Networks grew by 35.5%
amounting to EUR 32.7 (24.2) million; the operating profit increased
- Orders received by Video Networks grew by 29.5% over the previous year
amounting to EUR 3.6 (2.8) million, but the operating profit decreased

Growth in Net Sales and Profitability

Year-on-year net sales increased by 37.7% standing at EUR 31.4 (22.8) million.
Over the previous year operating profit grew by 29.9% standing at EUR 2.8 (2.2)
million making 8.9% (9.4%) of net sales. Undiluted result per share equalled EUR
0.11 (EUR 0.09). Orders received improved by 34.9% from the previous year
standing at EUR 36.4 (27.0) million. Order backlog totalled EUR 33.3 (27.0)
million. Thanks to our increased assembly capacity there were no significant
delays in deliveries at the end of the period under review.

Business Areas

Broadband Cable Networks' net sales grew significantly, that is by 47.7%, year
on year standing at EUR 28.0 (19.0) million. This growth can be attributed to
the started Ethernet to the Home (EttH) deliveries to South Korea and the
favourable situation regarding deliveries in HFC products. Operating profit
stood at EUR 3.3 (2.0) million making 11.8% (10.6%) of net sales. The improved
profitability was brought about by increased net sales. Orders received by the
Broadband Cable Networks increased by 35.5% over the previous year amounting to
EUR 32.7 (24.2) million. Order backlog totalled EUR 31.5 (24.1) million.

Net sales of Video Networks shrank by 11.6% from the previous year standing at
EUR 3.4 (3.9) million. Due to the reduced volume operational profit was clearly
EUR 0.5 million in the red (EUR 0.15 million in the black). Orders received by
Video Networks increased by 29.5% over the previous year to EUR 3.6 (2.8)
million. Order backlog totalled EUR 1.9 (2.9) million.

Significant Short-Term Risks and Uncertainty Factors for the Business Areas

Ownership rearrangements among clientele may slow down the folding out of some
investments in the business of Broadband Cable Networks. Strengthening of order
backlog for Video Networks is dependent on timing of public sector decisions.
Introduction to the market of new competing technologies is a characteristic
risk factor for both of our business areas.

Personnel

At the end of March, the Group employed 639 people (569), 448 (405) of them in
Finland. The stated number does not include temporary labour of 78 (25) at the
end of March.

R&D and Investments

The number of persons working in R&D related assignments was 145 (124). The R&D
expenditure for the review period totalled EUR 2.9 (2.1) million making 9.5%
(9.4%) of net sales. Activated R&D expenses stood at EUR 0.5 (0.3) million and
depreciation on previous activation items equalled EUR 0.3 (0.3) million.
Investments for the Group totalled EUR 2.5 (0.4) million. The main items
included a new SMT line, product development, air conditioning for the
production premises and IT. The effect of the final price of S-Link shares on
the investments for the period under review amounted to EUR 0.1 million.

Finance

Operating cash flow stood at EUR 1.0 (-0.3) million. In Q1, the short-term
receivables increased by EUR 5.4 million. Circulation rate of accounts
receivable remained on the established level. Inventories grew by EUR 1.6
million and non-interest bearing debt by EUR 4.5 million. At the end of March,
interest-bearing debt for the Group stood at EUR 12.3 (3.9) million. Liquid
funds increased by EUR 2.1 (-0.6) million standing at EUR 8.9 (7.9) million. At
the end of the period under review, in addition to liquid funds the company's
unused stand-by credits amounted to EUR 20 (27) million.
The Group's gearing ratio was 8.4% (-11.8%) and the equity ratio was 50.5%
(58.3%). Teleste hedges main exchange rate risks of forecasted currency flows
for six months ahead.

Shares and Shareholders

In the period under review the trading price of shares fluctuated between EUR
9.99 (6.46) and EUR 12.34 (11.17). At the end of March the closing price was EUR
11.50 (10.79). According to the Finnish Central Security Depository the number
of shareholders at the end of the period was 5401 (6146). Foreign ownership
accounted for 20.5% (16.1%). The value of shares traded on the Helsinki
Exchanges was EUR 24.7 (46.0) million while the number thereof equalled 2.2
(5.2) million.

At the end of March, Teleste held 444,820 of the company's own shares. In the
period under review 10,180 own shares were conveyed to the Management Team share
bonus scheme.

Decisions by the Annual General Meeting

The Annual General Meeting (AGM) on 3 April 2007 confirmed the financial
statements for 2006 and discharged the Board and the CEO from liability for the
financial period. The AGM confirmed the dividend of EUR 0.20 per share as
proposed by the Board of Directors. The dividend was paid out on 17 April 2007.

Composition of Teleste's Board remained unchanged. Mr. Tapio Hintikka was
re-elected as Chairman whilst Mr. Tero Laaksonen, Mr. Pertti Raatikainen, Mr.
Timo Toivila and Mr. Pekka Vennamo continued as members on the Board of
Directors.

Authorised Public Accountants KPMG Oy Ab continue as the auditor until the next
AGM.

The AGM authorised the Board to acquire the maximum of 1,290,000 of the
company's own shares and to convey the maximum of 1,730,000 company's own
shares. Based on authorisations of 2001 and 2002 the company is in the
possession of 444,820 of its own shares. The AGM also authorised the company to
issue 4,500,000 new shares. The maximum number of shares that may be subscribed
with the special rights granted by the Company is 1.730.000 shares. These
authorisations will be valid until the AGM to be held in 2008. Nominal value of
the company share was renounced. The AGM accepted a share option plan involving
key personnel. The plan authorises a subscription of 840,000 new shares.

Events after the End of the Period

Offering of products and services delivered by Broadband Cable Networks was
strengthened on 4 April 2007 through acquisition of 100% holding of the Belgian
DINH Telecom S.A. The company is the leading provider of house network
technology and network maintenance services for the cable and phone operators in
Belgium. The acquired company specialises in the design and manufacturing of
house networks customized to specific operator requirements and the offering of
network maintenance and repair services.

Net sales of DINH-Telecom for 2006 amounted to approximately EUR 8 million with
good business profitability. The effect on Teleste's net sales in the second
half of 2007 is estimated round EUR 6 million. The deal boosts Teleste's
profitability for the current year while having no essential effect on Teleste's
equity ratio or gearing. The acquisition increases the number of Teleste
personnel by 20. The consolidated equity of the acquired companies at the time
of the deal equals about EUR 4.4 million with the balance sheet total amounting
to approximately EUR 5.8 million. The minimum contract price for the capital
stock stands at EUR 6 million. This price may increase depending on the
development of the net profit in the next two years. As to the contract price,
one million euro was paid using Teleste's own shares and five million euro
through a bank loan. Acquisition cost and the values recorded on the merger will
be reported in the Interim Report 1 January to 30 June 2007, whereby the
acquisition cost has been allocated to the acquired assets and liabilities.

Outlook

Broadband Cable Networks will continue to develop favourably. Along with control
over costs of material, positive development of profitability for the rest of
the year will be ascertained by the sustained favourable level of deliveries
under frame agreements.

The continued strong prospect list of Video Networks in traffic control and
urban area surveillance solutions supports our view that the profitable growth
of the business area will be maintained in 2007.

In our view Teleste's net sales for 2007 will grow and the profitability improve
in comparison with the previous year.

Teleste's interim report for the January - June period will be published on
17.07.2007.

24 April 2007

Teleste Corporation Jukka Rinnevaara
The Board of Directors President and CEO

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| CONSOLIDATED STATEMENT OF | 1-3/2007 | 1-3/2006 | Change % | 1-12/2006 |
| INCOME (tEUR) | | | | |
--------------------------------------------------------------------------------
| Turnover | 31 415 | 22 811 | 37.7 % | 101 773 |
--------------------------------------------------------------------------------
| | Change in inventories | -616 | 27 | n/a | 6 066 |
| | of finished goods | | | | |
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| | Other operating income | 42 | 703 | -94.0 % | 2 158 |
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| | Materials and services | -15 568 | -10 138 | 53.6 % | -54 743 |
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| | Personnel expenses | -7 263 | -6 688 | 8.6 % | -27 100 |
--------------------------------------------------------------------------------
| | Other operating | -4 502 | -3 968 | 13.5 % | -16 006 |
| | expenses | | | | |
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| | Depreciation | -710 | -593 | 19.6 % | -2 393 |
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| Operating profit | 2 797 | 2 153 | 29.9 % | 9 755 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| | Financial income and | -236 | -23 | 926.1 % | -467 |
| | expenses | | | | |
--------------------------------------------------------------------------------
| Profit after financial | 2 561 | 2 130 | 20.2 % | 9 288 |
| items | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Profit before taxes | 2 561 | 2 130 | 20.2 % | 9 288 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| | Taxes | -694 | -574 | 20.9 % | -2 408 |
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| Net profit | 1 867 | 1 556 | 20.0 % | 6 879 |
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| Attributable to: |
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| | Equity holders of the | 1 867 | 1 556 | 20.0 % | 6 879 |
| | parent | | | | |
--------------------------------------------------------------------------------
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| Earnings per share for profit of the year attributable to the equity holders |
| of the parent(expressed in Eur per share) |
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| | Basic | 0.11 | 0.09 | 19.4 % | 0.41 |
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| | Diluted | 0.10 | 0.09 | 19.8 % | 0.38 |
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| BALANCE SHEET (tEUR) | 31.3.2007 | 31.3.2006 | Change % | 31.12.2006 |
--------------------------------------------------------------------------------
| Non-current assets |
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| | Property,plant,equipme | 7 224 | 5 648 | 27.9 % | 5 578 |
| | nt | | | | |
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| | Goodwill | 12 271 | 9 205 | 33.3 % | 12 127 |
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| | Intangible assets | 3 628 | 2 344 | 54.8 % | 3 614 |
--------------------------------------------------------------------------------
| | Investments | 1 116 | 1 116 | 0.0 % | 1 116 |
--------------------------------------------------------------------------------
| | 24 239 | 18 313 | 32.4 % | 22 435 |
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| Current assets |
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| | Inventories | 18 206 | 11 911 | 52.8 % | 16 604 |
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| | Other current assets | 27 778 | 20 166 | 37.7 % | 22 409 |
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| | Short-term investments | 0 | 1 700 | n/a | 0 |
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| | Liquid funds | 8 913 | 6 207 | 43.6 % | 6 789 |
--------------------------------------------------------------------------------
| | 54 897 | 39 984 | 37.3 % | 45 802 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total assets | 79 136 | 58 297 | 35.7 % | 68 236 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Shareholder's equity and liabilities |
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| Share capital | 6 967 | 6 935 | 0.5 % | 6 955 |
--------------------------------------------------------------------------------
| Other equity | 32 866 | 27 053 | 21.5 % | 30 706 |
--------------------------------------------------------------------------------
| | 39 833 | 33 988 | 17.2 % | 37 661 |
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| Non-current liabilities |
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| Provisions | 425 | 515 | -17.5 % | 425 |
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| Non interest bearing | 368 | 60 | 513.3 % | 368 |
| liabilities | | | | |
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| Interest bearing | 1 743 | 688 | 153.3 % | 742 |
| liabilities | | | | |
--------------------------------------------------------------------------------
| | 2 536 | 1 263 | 100.8 % | 1 535 |
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| Short-term liabilities |
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| Trade payables and other | 25 150 | 18 488 | 36.0 % | 20 920 |
| s-t liabilities | | | | |
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| Provisions | 1 106 | 1 343 | -17.7 % | 850 |
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| S-t interest bearing | 10 511 | 3 215 | 226.9 % | 7 270 |
| liabilities | | | | |
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| | 36 767 | 23 047 | 59.5 % | 29 040 |
--------------------------------------------------------------------------------
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| Total shareholder's equity | 79 136 | 58 297 | 35.7 % | 68 236 |
| and liabilities | | | | |
--------------------------------------------------------------------------------
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| Cash-flow (tEUR) | 1-3/2007 | 1-3/2006 | Change % | 1-12/2006 |
--------------------------------------------------------------------------------
| Cash-flow from operation | 951 | -270 | n/a | 2 675 |
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| | Cash in | 26 088 | 21 358 | 22.1 % | 103 931 |
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| | Cash out | -25 136 | -21 627 | 16.2 % | -101 256 |
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| Cash-flow from investments | -1 794 | -288 | 522.5 % | -5 136 |
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| | Cash in | 0 | 315 | n/a | 376 |
--------------------------------------------------------------------------------
| | Cash out | -1 794 | -603 | 197.5 % | -5 512 |
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| Cash-flow from finance | 3 024 | -58 | n/a | 731 |
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| | Cash in | 3 099 | 0 | n/a | 4 161 |
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| | Cash out | -75 | -58 | 29.3 % | -733 |
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| | Paid dividend | 0 | 0 | n/a | -2 697 |
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| Other items | -57 | -1 | n/a | -5 |
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| | Effect of currency | -57 | -1 | n/a | -5 |
| | rates | | | | |
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| Change in liquid funds | 2 124 | -617 | n/a | -1 735 |
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| KEY FIGURES | 1-3/2007 | 1-3/2006 | Change % | 1-12/2006 |
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| | Earnings per share, | 0.11 | 0.09 | 19.4 % | 0.41 |
| | EUR | | | | |
--------------------------------------------------------------------------------
| | Earnings per share | 0.10 | 0.09 | 19.8 % | 0.38 |
| | fully diluted, EUR | | | | |
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| | Shareholders' equity | 2.35 | 2.02 | 16.4 % | 2.22 |
| | per share, EUR | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| | Return on equity | 19.3 % | 18.8 % | 2.5 % | 19.7 % |
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| | Return on capital | 22.9 % | 23.7 % | -3.6 % | 24.3 % |
| | employed | | | | |
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| | Equity ratio | 50.5 % | 58.3 % | -13.4 % | 55.3 % |
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| | Gearing | 8.4 % | -11.8 % | n/a | 3.2 % |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| | Investments, tEUR | 2 526 | 378 | 568.3 % | 6 160 |
--------------------------------------------------------------------------------
| | Investments % of net | 8.0 % | 1.7 % | 385.2 % | 6.1 % |
| | sales | | | | |
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| | Order backlog, tEUR | 33 345 | 27 018 | 23.4 % | 28 120 |
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| | Personnel, average | 633 | 565 | 12.0 % | 608 |
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| | Number of shares | 17 394 | 17 340 | 0.3 % | 17 363 |
| | (thousands) | | | | |
| | including own shares | | | | |
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| | Highest share price, | 12.34 | 11.17 | 10.5 % | 12.75 |
| | EUR | | | | |
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| | Lowest share price, | 9.99 | 6.46 | 54.6 % | 6.46 |
| | EUR | | | | |
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| | Average share price, | 11.43 | 8.88 | 28.8 % | 9.83 |
| | EUR | | | | |
--------------------------------------------------------------------------------
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| | Turnover, in million | 2.2 | 5.2 | -58.3 % | 14.2 |
| | shares | | | | |
--------------------------------------------------------------------------------
| | Turnover, in MEUR | 24.7 | 46.0 | -46.3 % | 138,9 |
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| Treasury shares | Number | Nominal | % of | % of |
| | of shares | value eur | share | votes |
| | | | capital | |
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| | Parent company owns | 444 820 | 177 928 | 2.6 % | 2.6 % |
| | own shares 31.3.2007 | | | | |
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| Contingent liabilities and pledged assets (tEUR)  |
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| For own debt |
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| | Guarantees | 432 | 659 | -34.4 % | 819 |
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| | Other securities | 440 | 0 | n/a | 731 |
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| Leasing and rent | 2 672 | 1 829 | 46.1 % | 2 865 |
| liabilities | | | | |
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|    | 3 544 | 2 488 | 42.4 % | 4 415 |
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| Derivative instruments (tEUR)  |
--------------------------------------------------------------------------------
| | Value of underlying | 12 590 | 15 517 | -18.9 % | 9 980 |
| | forward contracts | | | | |
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| | Market value of | 12 377 | 15 440 | -19.8 % | 10 124 |
| | forward contracts | | | | |
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Taxes are computed on the basis of the tax on the profit for the period.

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| Primary segments | 1-3/2007 | 1-3/2006 | Change % | 1-12/2006 |
| information (tEUR) | | | | |
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| Broadband Cable Networks |
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| | Order intake | 32 743 | 24 168 | 35.5 % | 92 821 |
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| | Net sales | 28 008 | 18 959 | 47.7 % | 85 551 |
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| | EBIT | 3 305 | 2 003 | 65.0 % | 9 055 |
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| | EBIT % | 11.8 % | 10.6 % | 11.7 % | 10.6 % |
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| Video Networks |
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| | Order intake | 3 620 | 2 795 | 29.5 % | 14 380 |
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| | Net sales | 3 407 | 3 852 | -11.6 % | 16 222 |
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| | EBIT | -508 | 150 | n/a | 700 |
--------------------------------------------------------------------------------
| | EBIT % | -14.9 % | 3.9 % | n/a | 4.3 % |
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| Total |
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| | Order intake | 36 363 | 26 963 | 34.9 % | 107 201 |
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| | Net sales | 31 415 | 22 811 | 37.7 % | 101 773 |
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| | EBIT | 2 797 | 2 153 | 29.9 % | 9 755 |
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| | EBIT % | 8.9 % | 9.4 % | -5.7 % | 9.6 % |
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| Information per | 1-3/07 | 10-12/0 | 7-9/06 | 4-6/06 | 1-3/06 | 4/2006- |
| guarter (tEUR) | | 6 | | | | 3/2007 |
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| Broadband Cable Networks |
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| | Order intake | 32 743 | 29 777 | 20 441 | 18 435 | 24 168 | 101 396 |
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| | Net sales | 28 008 | 23 844 | 23 627 | 19 121 | 18 959 | 94 599 |
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| | EBIT | 3 305 | 1 849 | 3 294 | 1 909 | 2 003 | 10 357 |
--------------------------------------------------------------------------------
| | EBIT % | 11.8 % | 7.8 % | 13.9 % | 10.0 % | 10.6 % | 10.9 % |
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| Video Networks |
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| | Order intake | 3 620 | 4 162 | 4 428 | 3 045 | 2 795 | 15 255 |
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| | Net sales | 3 407 | 4 579 | 4 243 | 3 548 | 3 852 | 15 777 |
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| | EBIT | -508 | 313 | 197 | 40 | 150 | 42 |
--------------------------------------------------------------------------------
| | EBIT % | -14.9 | 6.8 % | 4.6 % | 1.1 % | 3.9 % | 0.3 % |
| | | % | | | | | |
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| Total |
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| | Order intake | 36 363 | 33 939 | 24 869 | 21 480 | 26 963 | 116 651 |
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| | Net sales | 31 415 | 28 423 | 27 870 | 22 669 | 22 811 | 110 376 |
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| | EBIT | 2 797 | 2 162 | 3 491 | 1 949 | 2 153 | 10 399 |
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| | EBIT % | 8.9 % | 7.6 % | 12.5 % | 8.6 % | 9.4 % | 9.4 % |
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| Attributable to equity | Share | Share | Translatio | Retained | Total |
| holders of the parent | capital | premium | n | earnings | |
| (tEUR) | | | difference | | |
| | | | s | | |
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| Shareholder's equity | 6 955 | 1 417 | 65 | 29 224 | 37 661 |
| 1.1.2007 | | | | | |
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| | Translation | | | -57 | | -57 |
| | differences | | | | | |
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| | Profit of the period | | | | 1 867 | 1 867 |
--------------------------------------------------------------------------------
| | Share-based payments | 12 | 87 | | 263 | 362 |
--------------------------------------------------------------------------------
| Shareholder's equity | 6 967 | 1 504 | 8 | 31 354 | 39 833 |
| 31.3.2007 | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Shareholder's equity | 6 935 | 1 276 | 70 | 24 025 | 32 306 |
| 1.1.2006 | | | | | |
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| | Translation | | | -1 | | -1 |
| | differences | | | | | |
--------------------------------------------------------------------------------
| | Profit of the period | | | | 1 556 | 1 556 |
--------------------------------------------------------------------------------
| | Share-based payments | | | | 127 | 127 |
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| Shareholder's equity | 6 935 | 1 276 | 69 | 25 708 | 33 988 |
| 31.3.2006 | | | | | |
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| Sector Dispersion | Shares | % |
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| Companies | 1,673,078 | 9.61 % |
--------------------------------------------------------------------------------
| Financial institutions | 5,277,468 | 30.30 % |
--------------------------------------------------------------------------------
| Public institutions | 2,718,250 | 15.61 % |
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| Nonprofit organisations | 1,005,000 | 5.77 % |
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| Private individuals | 3,176,247 | 18.24 % |
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| Foreign and nominee-registered | 3,567,289 | 20.48 % |
--------------------------------------------------------------------------------
| Total | 17,417,332 | 100.00 % |
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| Major Shareholders | Shares | % |
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| 1 | Sampo Life Insurance Company Ltd | 1,624,200 | 9.33 % |
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| 2 | Ilmarinen Mutual Pension Insurance | 1,277,050 | 7.33 % |
| | Company | | |
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| 3 | Kaleva Mutual Insurance Company | 785,900 | 4.51 % |
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| 4 | FIM Fenno Mutual Fund | 542,639 | 3.12 % |
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| 5 | Aktia Capital Mutual Fund | 521,450 | 2.99 % |
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| 6 | Varma Mutual Pension Insurance Company | 521,150 | 2.99 % |
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| 7 | State Pension Fund | 500,000 | 2.87 % |
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| 8 | Op-Suomi Pienyhtiöt | 478,289 | 2.75 % |
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| 9 | Teleste Corporation | 444,820 | 2.55 % |
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| 10 | Fondita Nordic Small Cap Placfond | 360,000 | 2.07 % |
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ADDITIONAL INFORMATION:
CEO Jukka Rinnevaara, tel +358 2 2605 866 or +358 400 747 488

DISTRIBUTION:
Helsinki Exchanges
Media
www.teleste.com