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NEWS RELEASE FLAG
FOR IMMEDIATE RELEASE [WORLD MAP LOGO]
Telecom
FLAG TELECOM COMPLETES PURCHASE OF GTS'S 50% HOLDING IN
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FLAG ATLANTIC LIMITED
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INDUSTRY-LEADING SYSTEM FLAG ATLANTIC -1 ON SCHEDULE FOR RFS MARCH 2001
London, 7 December, 2000: FLAG Telecom (Nasdaq: FTHL; LSE: FTL), a leading
independent global carriers' carrier and network services provider, today
announced that it has completed the acquisition of Global TeleSystem's (GTS) 50%
holding in FLAG Atlantic Limited (FLAG Atlantic), the company that is building
the FLAG Atlantic-1 (FA-1) cable system. The acquisition takes FLAG Telecom's
ownership of the first city-to-city system linking New York to London and Paris
to 100%.
On 31 October, 2000 FLAG Telecom and GTS announced that they had agreed terms
for the acquisition of GTS's 50% holding in FLAG Atlantic in a transaction with
a total value to GTS of $175m. All outstanding conditions to the closing have
now been satisfied and ownership of GTS's 50% interest has transferred to FLAG
Telecom. Under the terms of the agreement the consideration payable to GTS is
comprised of $135m in cash, funded from FLAG Telecom's own cash resources, and
certain duct and dark fibre assets in France from FLAG Atlantic.
Andres Bande, Chairman and CEO of FLAG Telecom, commented: "The completion of
this transaction gives us full operational control of this valuable asset
offering seamless fibre connections between the business hubs of New York,
London, Paris and beyond. The strategic flexibility that 100% ownership brings
to us will also enable us to gain a strong competitive position on this
high-traffic route, while enhancing overall shareholder value.
"The system's three loop architecture is setting new standards in design across
the Atlantic and our ability to use DWDM technology to increase capacity at a
low marginal cost should enable us to be one of the lowest cost providers on
this
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route. We are seeing continued strong interest in our range of service offerings
over this route. With presales of $800m already made, FLAG Telecom will have
available an inventory of 1.2Tbps of protected capacity, equivalent to
approximately 7,680 STM - 1's.
"The competitive landscape on this route is also encouraging. Market prices
appear to have stabilised over the past two quarters and continue to be in line
with our expectations. In particular, the number of competing systems we had
expected to see has declined after the combination of two market players on to
one cable system."
FA-1 is on schedule and within budget. With all the shore end cables now landed,
marine installation activity is progressing with a total of five cable-laying
vessels being deployed in these operations. The first factory acceptance testing
of the submerged line terminal equipment has been carried out successfully.
Equipment installation is ongoing at the UK, French and US landing stations
involving both power feed and submerged line terminal equipment. Fit-out of the
network's PoPs in Paris, London and New York is progressing according to plan.
The day to day management of the project will continue to be carried out by FLAG
Telecom from its offices at Heathrow and members of GTS's project team will move
to FLAG Telecom. Sales activities will now be carried out solely through FLAG
Telecom's global salesforce and other dedicated distribution channels. The
products and services offered by FLAG Telecom across the route include:
o fibre pairs, offering up to 400 Gbps of protected capacity with colocation
options;
o 10 Gbps wavelengths, independent of protocol with protection options and
colocation available, and
o bandwidth at E-1, DS-3 and STM-1 to STM-64 levels providing city-to-city
connectivity with full SDH protection for resiliency.
The assets and liabilities of FLAG Atlantic will be consolidated as from the
date of completion of the transaction. Presales of $800m will be recognised as
revenue from the system's RFS date, expected to be in March 2001.
ABOUT FLAG ATLANTIC-1
FLAG Atlantic -1 is the world's first terabit trans-Atlantic cable system that
will offer direct connectivity between New York, London and Paris, with seamless
connections
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to numerous other cities in the US, Europe and countries in the Middle East and
Asia Pacific regions.
The trans-oceanic 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
Telecom cable network. The cable stretching over 14,500 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 provides an innovative range of carrier products and network
services to the international carrier community, ASPs and ISPs across a global
network platform optimized to support the next generation of IP over optical
data networks. Leveraging off this unique network, FLAG Telecom's rapidly
growing Network Services business markets a range of managed bandwidth and value
added services targeted at carriers, ASPs and ISPs worldwide. By 2002, FLAG
Telecom's unique operational network footprint is expected to stretch over
64,500 route km.
For further information, visit www.flagtelecom.com.
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FOR FURTHER INFORMATION, CONTACT:
Jane Windsor
FLAG Telecom - Director of
Communications
Voice: +44 20 7317 0811
Email: [email protected]
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Catherine Nash
FLAG Telecom, Director of Investor
Relations
Voice: +44 20 7317 0894
Email: [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 due to a number of factors, which include, but
are not limited to: the Company's ability to achieve revenues from products and
services that are in the early stages of development or operation, the Company's
completion of FLAG Atlantic-1 and FLAG Pacific-1 within budget and on time, the
Company's ability to deploy sophisticated technologies on a global basis, the
Company's ability to upgrade and expand its network and respond to customer
demands and industry changes, regulatory enactments and changes, competition and
pricing pressure, rapid technological change, adverse foreign economic or
political events and other factors that are discussed in the Company's
Registration Statements on Form F-1 and Form F-4 filed with the Securities and
Exchange Commission.
