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EXHIBIT 99.1 FLAG Atlantic-1
a joint venture between FLAG Telecom and GTS
PRESS RELEASE
FOR IMMEDIATE ISSUE
FLAG TELECOM ACQUIRES GTS'S 50% HOLDING IN THE FLAG ATLANTIC
JOINT VENTURE - GTS RETAINS A FIBRE PAIR
London, 31 October 2000: FLAG Telecom (FLAG) and Global TeleSystems (GTS)
announced today that they have reached an agreement whereby GTS will sell to
FLAG its interest in FLAG Atlantic Limited (FLAG Atlantic), the 50/50 joint
venture that is building the FLAG Atlantic-1 (FA-1) system, while retaining
ownership over certain infrastructure including a trans-Atlantic fibre pair.
The total value of the transaction to GTS is $175 million. Under the terms of
the agreement, GTS will receive $135 million in cash from FLAG Telecom. In
addition, GTS will receive additional duct and dark fibre assets in France and
will retain the right to acquire backhaul fibres from FLAG Atlantic on
favourable terms going forward. GTS's fibre pair purchased on the system, with a
total design capacity of 400 Gbps, will now have an initial lit capacity of 80
Gbps (8 x 10 Gbps).
The transaction will have no impact on either the project's scheduled first
quarter 2001 Ready For Service (RFS) date or on the project's budget. Funding
arrangements for the project, including all pre-sale proceeds of $800 million,
are likewise unaffected.
Andres Bande, Chairman and CEO of FLAG Telecom, commented: "We are very happy to
have concluded this transaction with GTS, which we believe makes great strategic
sense for both sides, and we look forward to the benefits of full ownership of
this technologically advanced 2.4 Tbps system. With full ownership, we gain
greater operational flexibility and secure a strategic competitive advantage on
one of the world's busiest routes, while enhancing overall shareholder value."
"The FA-1 system will support our fast developing network services business,
delivering IP and network services across our global platform for carriers, ASPs
and ISPs. Demand for capacity across the Atlantic continues to grow, and this
agreement enables FLAG to increase its ownership of highly resilient capacity,
and at a very attractive cost base. We
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will continue to offer a range of products, including 10 Gbps wavelengths,
between the three world hubs of New York, London and Paris, and provide
connectivity to the rest of Europe and beyond. "
Robert Amman, Chairman and CEO of GTS said: "I am pleased that we have reached
the successful conclusion of the FLAG Atlantic JV in a manner that is beneficial
to both parties. We set out to acquire premier trans-Atlantic network facilities
at the lowest industry cost and that is exactly what we have now achieved. This
expands upon our core optical and IP networking business and enhances our
position as the leading network service provider with multi-gigabit optical and
IP service connecting North America to the largest pan-European network. As a
major stakeholder in the project, our support of FA-1 remains undiminished."
FLAG Telecom will fund the cash consideration for the transaction out of its own
cash resources. On completion of the transaction, FLAG Atlantic Limited will
become a wholly-owned subsidiary of FLAG Telecom Holdings Limited and its
financial results will be consolidated with those of the parent company. Subject
to certain conditions being fulfilled, completion is expected to take place
before the end of the year 2000.
FLAG Atlantic-1 continues on schedule with the UK, French and New York (North)
landing stations completed, all shore-end cables landed and marine installation
underway. Over 50% of the system capacity has been purchased by leading carriers
and the cable remains the architecture of choice for Internet traffic.
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ABOUT FLAG ATLANTIC-1
FLAG Atlantic -1 is the world's first multi terabit trans-Atlantic cable system
which will offer direct connectivity between New York, London and Paris, with
seamless connections to numerous other cities in the US, Europe and other
countries in the Middle East and Asia Pacific.
The transoceanic network is being built as a loop system. The entire FA-1 system
is planned to consist of three self-healing, high-capacity loops with twin
terrestrial access points connecting seamlessly to the existing FLAG cable
system. The cable stretching over 14,000 kilometres from Europe to the USA will
provide secure end to end circuits to almost all major world business centres.
FA-1 will use laser-generated light to transmit digital information using Dense
Wavelength Division Multiplexing (DWDM). Each cable will be capable of carrying
over two trillion bits of IP or data traffic per second (2.4 Tbps), making the
system highly resilient with no single point of failure.
ABOUT FLAG TELECOM
FLAG Telecom is a leading independent global carriers' carrier providing an
innovative range of products and services to the international carrier
community, ASPs and ISPs across an international network platform designed to
support the next generation of IP over optical data networks. The FLAG
Europe-Asia cable stretches from the UK to Japan and entered commercial service
in November 1997. FLAG Atlantic-1, the world's first transoceanic terabit cable
system, is currently under construction and is scheduled to enter service in Q1
2001. The FLAG Pacific-1 cable is the longest DWDM system announced to date and
is expected to enter service in 2002.
Telecommunications is one of the fastest growing industries and FLAG Telecom is
well positioned to be a world leader in a critical segment of this market. By
2002 FLAG Telecom's technologically advanced cable network is expected to
stretch over 64,500 route km from New York City across the Atlantic to London,
Paris, and all major European business centers; through the Mediterranean to the
Middle East, Africa and onto Asia. From Tokyo it will run across the Pacific to
the Internet hub cities of Vancouver, Seattle, San Francisco and Los Angeles.
Leveraging off this unique network FLAG Telecom's rapidly growing Network
Services division markets a range of managed bandwidth and value added services
targeted at carriers, ISPs, and ASPs worldwide.
www.flagtelecom.com
ABOUT GTS (www.gtsgroup.com)
Global TeleSystems, Inc., is the leading provider of e*Business and borderless
broadband services across Europe, serving businesses and carriers with a range
of broadband, hosting, Internet/IP and voice services. As an industry leader in
Europe, the company has the largest cross-border fiber optic network; the
largest Tier-1 IP backbone
(GTS Ebone); the most widely deployed pan-European e*Business sales and service
staff; and the largest pan-European customer base. GTS's first and most
extensive
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trans-European broadband fiber network includes on-net points of presence in 38
European cities (50 cities planned) and stretches across 17,500 route kilometres
(25,000 route kilometres planned) with six city enterprise networks (CENs) (16
CENs planned), providing intra-city bandwidth. The company has its European
operating headquarters office in London; additional corporate offices in
Washington, D.C., Brussels and Cork, Ireland; and sales and service operations
in 20 countries.
For further information, contact:
FLAG TELECOM:
MEDIA:
Jane Windsor, Director of Communications
Tel: + 44 (0) 20 7317 0811; fax: + 44 20 7317 0808
E-mail: [email protected];
Website: www.flagtelecom.com
INVESTORS:
Catherine Nash, Director, Investor Relations
Tel: +44 (0) 20 7317 0894; fax: +44 20 7317 0808
E-mail: [email protected]
GTS:
EUROPEAN MEDIA
Glenn Manoff, GTS
Tel: +44 (0) 20 769 8290; fax +44 02 7769 8084; email: [email protected]
Christine Fisk, Noiseworks
Tel: +44-(0)-1628-628-080; fax +44-(0)-1628-779-999;
e-mail: [email protected]
INVESTORS
Jim Shields, Director, Investor Relations
Tel.: +44 (0) 207 769 8264; fax: +44 (0) 207 769 8068
e-mail: [email protected]
Patti Grohs, Senior Manager, Investor Relations
Tel.: +1-703-236-3170; fax: +1-703-236-3606; e-mail: [email protected]
Statements contained in this Press Release which are not historical facts may be
forward-looking statements, as the term is defined in the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements are subject to
risks and uncertainties which could cause actual results to differ materially
from those currently anticipated.
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