CLSTE Cellstar (MM)

CellStar Boosts Activation Business in Mexico By Investing in Joint Venture CARROLLTON, Texas, April 5 /PRNewswire-FirstCall/ -- CellStar Corporation (NASDAQ:CLSTE) today announced that its subsidiary in Mexico, Cellular Express S.A. de C.V. ("CELEX"), has signed a definitive agreement to invest in a joint venture with Soluciones Inalambricas S.A. de C.V. ("Wireless Solutions") and its individual partners. The joint venture, which will operate under the name Comunicacion Inalambrica Inteligente, S.A. de C.V. ("CII"), will provide handset distribution and activation services for Radio Movil Dipsa S.A. de C.V. ("Telcel"), the largest cellular phone company in Mexico. CELEX will own 51% of CII and the other 49% will be owned by the individual partners of Wireless Solutions. Subject to conditions outlined in the agreement, the deal is expected to close during the second quarter of this year. CELEX and Wireless Solutions combined currently operate 43 kiosks inside Liverpool and Fabricas de Francia ("Liverpool") national department stores in Mexico, in which they sell handsets, air time and related accessory products, and provide activation services for Telcel. The two companies also provide electronic delivery of airtime for Telcel to any handset model in all 52 Liverpool department stores nationwide. These segments of business for both companies will be transferred to CII, the newly formed joint venture, making it the only Telcel agent with nationwide retail capabilities. Under a separate agreement between CELEX and CII, CELEX will be responsible for managing the handset distribution to all of the Liverpool retail locations. "In mid 2003 we announced our plans to restore our operation in Mexico to profitability," said Robert Kaiser, CEO and president of CellStar. "We believed increased activations would be one of the key factors to our success; we aggressively pursued that strategy and today we are pleased to announce a deal that we believe will significantly increase our activations. Over the last couple of years, we have significantly increased our activations business in Mexico to an average of approximately 12,000 per month. This new joint venture will allow us to more than double our current monthly activation rate and provide future opportunities to expand. We also believe it will further strengthen our relationship with Telcel and lead to increased handset distribution opportunities throughout Mexico." Latin America was CellStar's strongest performing region in 2004. The Company expects fourth quarter 2004 revenues in Latin America to be up approximately 40% to 45% compared to the third quarter, and fiscal 2004 revenues for the region to be higher than they have been in the last two years. Operating income in Latin America is expected to be up significantly for fiscal 2004 compared to 2003 when the Company reported an operating loss of $5.0 million. Wireless Solutions has been an authorized distributor for Telcel since 1991 and is among the top five distributors for Telcel in Mexico. Wireless Solutions currently has retail and wholesale operations in five of Mexico's nine cellular regions. "We are excited about joining forces with CellStar," said Miguel A. Kuri, general director of Wireless Solutions. "Our combined industry expertise and relationships should allow us to expand our Liverpool business model to other nation-wide department stores, pharmacies, supermarkets and convenience stores in Mexico." About CellStar Corporation CellStar Corporation is a leading global provider of value added logistics and distribution services to the wireless communications industry, with operations in the Asia-Pacific, North American and Latin American Regions. CellStar facilitates the effective and efficient distribution of handsets, related accessories and other wireless products from leading manufacturers to network operators, agents, resellers, dealers and retailers. CellStar also provides activation services in some of its markets that generate new subscribers for its wireless carriers. For the year ended November 30, 2003, the Company reported revenues of $1.8 billion. Additional information about CellStar may be found on its website at http://www.cellstar.com/ . This news release contains forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995. A variety of risk factors, including the Company's ability to implement its business strategies, to maintain its channels of distribution, continue to secure an adequate supply of competitive products on a timely basis and on commercially reasonable terms, improve its operating margins, secure adequate financial resources, maintain an adequate system of internal control, comply with debt covenants, and continually turn its inventories and accounts receivable, as well as changes in foreign laws, regulations and tariffs, new technologies, system implementation difficulties, competition, handset shortages or overages, terrorist acts, a decline in consumer confidence and continued economic weakness in the U.S. and other countries in which the Company does business and other risk factors, are discussed in the Company's Annual Report on Form 10-K and most recent Quarterly Report on Form 10-Q. Any one, or a combination of these risk factors could cause CellStar's actual results to vary materially from anticipated results or other expectations expressed in the Company's forward-looking statements. DATASOURCE: CellStar Corporation CONTACT: Sherrian Gunn of CellStar Corporation, +1-972-466-5031 Web site: http://www.cellstar.com/

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