Dialog Telekom Chooses Ditech Networks VQA™ for Improved GSM Network Voice Quality

Ditech Networks Continues International Expansion with Latest Network Deployment

Mountain View, California, June 5, 2006 – Ditech™ Networks (Nasdaq: DITC), a leader in voice quality delivery solutions for mobile and VoIP networks, announced today that Dialog Telekom, Sri Lanka’s leading wireless telecommunication service provider and a subsidiary of Telekom Malaysia, has chosen to deploy Ditech Networks’ VQA™, voice quality assurance technology in its GSM mobile phone network. The deployment signifies Dialog’s commitment as a premier provider of high quality domestic and international voice services in Sri Lanka, and is the most recent in a series of new deployments for Ditech Networks in Asia.

Using Ditech’s flagship VQA™ voice quality technology embedded on Ditech’s BVP™ Flex and QVP™ voice processing platforms, Dialog gains the ability to provide a consistently clear and high-quality calling experience for subscribers across its mobile network. VQA™ addresses a broad scope of voice quality issues associated specifically with mobile networks and provides a superior customer experience by significantly improving the sound quality of voice calls in noisy environments. In addition, VQA™ enables carriers that can utilize lower bit rate vocoders such as GSM Half Rate, a cost effective alternative to expensive network build outs. With VQA, carriers can increase network capacity during peak calling periods while maintaining excellent voice quality.

“As a premier provider of wireless telecommunications services, Dialog pursues a strategy of innovation and excellence,” said Pradeep De Almeida, Head of Network Operations and Head of Fundamental Network Coordination of Dialog Telekom. “Ditech’s VQA will help to keep us in the forefront of service quality for our traditional mobile voice services, as well as in future mobile offerings for consumers and business customers.”

“We are very pleased to be chosen by Dialog Telekom for its GSM network,” said Tim Montgomery, president and chief executive officer of Ditech Networks. “A clear, trouble- free calling experience is a key differentiator in today’s mobile networks as the rapidly growing subscriber base demands high service quality. We commend Dialog Telekom on its commitment to superior customer service and are honored to be chosen as part of its strategic technology portfolio.”

About Dialog Telekom

Dialog Telekom, an ISO 9001 certified company, is a subsidiary of Telekom Malaysia. It operates Dialog GSM, a 2.5G GSM Network supporting the very latest in multimedia and mobile Internet services. Its local coverage spans all nine provinces while international roaming is provided in 190+ countries. Dialog Telekom, the largest and fastest growing cellular service in Sri Lanka, serves a subscriber base in excess of 2.2 million Sri Lankans.

About Ditech Networks

Ditech Networks supplies voice processing equipment for telecommunication networks around the world. Ditech Networks' solutions incorporate advanced voice processing, SIP, and security technologies delivered on carrier-grade scalable platforms to enhance the delivery of communications services over mobile, Voice over IP, and wireline networks. Ditech Networks' customers are premier network operators including Verizon Wireless, AT&T, Orascom Telecom, and others that collectively serve more than 150 million subscribers. Ditech Networks is headquartered in Mountain View, California. For more information, visit www.ditechnetworks.com.

Forward Looking Statement

The statements in this news release regarding the benefits that carriers will receive from deploying VQA, and that voice quality is becoming an even more important service differentiator, are forward-looking statements subject to a number of risks and uncertainties, including the risk that alternative and cheaper voice quality technologies may be developed that become widely deployed. Other risks relating to Ditech are detailed in the section entitled “Future Growth and Operating Results Subject to Risk” in Ditech’s Quarterly Report on Form 10-Q for the quarter ended January 31, 2006 (filed March 9, 2006 with the Securities and Exchange Commission).