10.13.1999|Corporate

FLAG TELECOM AND GTS ANNOUNCE AN INCREASE IN FLAG ATLANTIC-1 CAPACITY TO 2 X 2.4 TERABIT/S

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FLAG TELECOM AND GTS ANNOUNCE AN INCREASE IN
FLAG ATLANTIC-1 CAPACITY TO 2 X 2.4 TERABIT/S

NEWS RELEASE

FLAG TELECOM AND GTS ANNOUNCE AN INCREASE IN
FLAG ATLANTIC-1 CAPACITY TO 2 X 2.4 TERABIT/S

Initial 2 x 1.28 Tbps capacity system already committed

13 October 1999

For further information contact:  

FLAG Telecom:
Sierra Wireless, Inc.
Jane Windsor
Tel: +44 171 317 0811, Fax: +44 171 317 0808
GTS:
Investors and U.S. Media
Robert Capozzi
Tel.: +1 703 918 4548, Fax: +1 703 918 0371
pager: +1 800 331 4741

European Media:
Investors and U.S. Media
Lesley Young
Tel.: +44 (0) 118 918 4078, Fax: +44 (0) 118 918 4001
pager: +1 800 331 4741

Highlights:

  • Highly-reliable triple loop design offers 2.4 Tbps fully protected
    capacity, or nearly
  • 5 Tbps of raw capacity
  • Financing arrangements complete -- entire $1.2 billion initial
    project cost fully funded
  • Pre-sales ahead of target -- more than 50% of full system
    capacity already committed
  • GTS purchases dedicated fibre pair
  • Alcatel Submarine Networks to provide advanced fibre and
    optical transmission technology and systems

GENEVA -- FLAG Telecom and Global
TeleSystems Group Inc (GTS) (Nasdaq: GTSG; Frankfurt: GTS; Easdaq:
GTSG), today announced that the capacity of FLAG Atlantic-1 (FA-1), the
world's first terabit dual cable system connecting London, Paris and New
York, will be almost doubled to 2.4 terabits/second on each of FA-1's two
transatlantic cables. This is enough capacity to carry over two hundred
hours of digital video per second, 30 million clear voice channels, or over
two trillion bits of IP or data traffic per second. FA-1 will be built and
operated as a 50:50 joint venture between GTS and FLAG Telecom.

GTS will purchase a fibre pair on the cable for an undisclosed amount.
This will provide GTS with seamless connectivity of 400 Gbps of fully
protected capacity (or 800 Gbps unprotected) from New York directly into
its trans-European fibre network. The GTS fibre pair purchase is a
separate transaction from the FA-1 joint venture agreement. Disclosed
customers for FA-1 include Teleglobe, Singapore Telecom, Worldstar,
Broadband Chello, Tiscali and Telecom Malaysia.

Total investment in the project, which is fully funded, will be $1.2 billion
for initial system delivery. A non-recourse debt bank financing facility for
$600m has been arranged through Barclays Capital, Dresdner Kleinwort
Benson and Westdeustche Landesbank Girozentrale. FLAG Telecom
and GTS, as 50:50 partners in the FA-1 venture, will each invest $100m
in equity in the venture.

FA-1 enables FLAG Telecom and GTS to offer customers direct
connectivity between the New York area and telehousing facilities in
London and Paris, allowing seamless connections to numerous other
cities in the USA and South America, cities in Europe via GTS' trans-
European network, and other countries in the Middle East, Africa and
Asia via the FLAG Telecom network. The network will enable customers
to secure end to end circuits to almost all of the major world business
centres, offering a genuine "gateway to global connectivity".

FA-1 will be a dual cable system connecting the East Coast of the United
States -- with nodes in Manhattan and Newark, New Jersey - to two
landings in Europe. One will be at Saint Brieuc, France and the other in
Cornwall, UK, with city nodes in Paris and London respectively. The
system is planned to consist of three self-healing, high capacity loops
with twin terrestrial access points connecting to GTS' trans-European
network (Europe's first and most extensive cross-border fibre optic SDH
and IP network stretching over 15,000 route kilometres across 10
European countries), as well as to the existing FLAG Telecom cable
system, which stretches over 28,000 kilometres from the UK to Japan.
Customers on FA-1 will be able to interconnect either at the landing
stations or at the city nodes. The two sub-sea sections of the FA-1 cable
are approximately 6,000 kilometres and 6,500 kilometres respectively,
while the two terrestrial rings are approximately 120 kilometres and 1,850
kilometres in length. This gives an overall system network length of
around 14,500 kilometres.

Andres Bande, chairman and CEO of FLAG Telecom and co-chairman of
FLAG Atlantic Limited, commented at today's announcement: "The
architecture of the FA-1 system has been carefully designed to help us
meet the extremely demanding quality objectives of today's Internet
driven marketplace, while also delivering the lowest unit costs in the
Atlantic by far. The strategic investments made by our signed customers
validate our approach. With the addition of our interest in FA-1, FLAG
Telecom's undersea fibre optic cable network stretches almost 41,000
km, more than any other carriers' carrier today, giving us a leading
position in the future of this industry."

Robert Amman, president and chief operating officer of GTS and co-
chairman of FLAG Atlantic Limited said: "Market reaction to the FA-
1 cable has been extremely positive as evidenced by our customer sales
to date and further continuing customer interest. Only nine months ago
we announced the world's first terabit transoceanic cable system. With
advances in transmission technology and the restructure of the deal, we
are today able to announce roughly a doubling of capacity. And we add
just four months to the final 'ready for service' date.

"Regarding our fibre pair purchase on the cable, this is an historic
event for our company. T-- including seamless wavelength delivery across
Europe and the Atlantic -- that will meet the increasing global traffic flows
of IP, data, and voice traffic," he added.

The contract to build the submarine element of the FA-1 system has been
awarded to Alcatel Submarine Networks. Terms of the contract were not
disclosed.

Jean Godeluck, chief operating officer for the submarine networks activity
in Alcatel, stated: "We have already demonstrated our leading-edge
technology operating at 40 wavelengths over the same distance as the
longest section of FA-1. Alcatel Submarine Networks is now evolving its
optical transmission technologies to more wavelengths and higher line
rates, without any increase in the station equipment size or
complexity."

FA -1 will use laser-generated light to transmit digital information over six
fibre pairs and will be capable of carrying 2.4 terabit/s of information per
second on each of its two trans-Atlantic cables. The cable will be highly
resilient with no single point of failure throughout the system. FA-1 has
been designed specifically to meet the level and speed of service
demanded in today's marketplace and the needs of the Internet. FA-1 is
offering competitively priced capacity across the Atlantic and a single
network operations centre will proactively monitor the cable, handle
incidents and activate capacity 'on demand'.

Surveys and Studies
The route survey of the entire length of the cable system has been
completed. A survey is critical to identify all sea floor pitfalls and has a
direct bearing on the future maintenance of the cable system. For FA-1 a
three-part survey was carried out: a desktop study, followed by a
geophysical survey and a burial assessment survey (BAS).

  • The desk top study, which proposed the best cable route, used all
    available data from charts, data on ocean currents, seismic activity,
    fishing, shipping, existing cables and military activities.
  • The geophysical survey, conducted by specialist vessels using
    bathymetry, sub-bottom profilers and side-scan sonars, then analysed the
    sea floor along the proposed route.
  • The burial assessment determines which sections of the system need
    to be buried, and to what depth.

The strong in-service reliability record of the existing FLAG Telecom
Europe-Asia cable in some of the same waters that FA-1 will lie, shows
the importance of carrying out a BAS and always adopting an approach
to achieve best operational performance.

About GTS
Global TeleSystems Group is the most extensive network and service
operator across Europe today, serving businesses and carriers in 20
European countries with a range of broadband, Internet/IP, and voice
services. GTS operates the first and most extensive trans-European
broadband fibre network today, with current network points of presence in
over 50 European cities and stretching across more than 15,000 route
kilometres. Through the use of state of the art dense wave division
multiplexing technology (DWDM), GTS operates over 50,000 active
"wavelength" kilometres, making GTS a global pioneer in the
use of this technology. In addition, GTS has announced plans to build
FLAG Atlantic 1 (FA-1) - an advanced trans-Atlantic undersea dual cable
system -- in a 50:50 joint venture with FLAG Telecom. GTS is extending
its core network deeper into key European cities though development of a
number of City Enterprise Networks (CENs). GTS has rapidly grown
through the acquisitions of Hermes Europe Railtel, Ebone, Esprit
Telecom, Omnicom, NetSource, and InTouch Telecom. In addition, GTS
is the majority owner of Golden Telecom, which offers a variety of fixed-
line and mobile telecommunications services in Russia and the
Commonwealth of Independent States. For further information, visit
GTS's website at
www.gtsgroup.com

About FLAG Telecom
FLAG Telecom is a leading independent carriers' carrier. The FLAG cable
system, with 16 operational landing points in 13 countries, directly
connects landings in Japan (2) and the UK, via the Atlantic Ocean,
Mediterranean Sea, Red Sea, Indian Ocean, the South China Sea, and
the Pacific Ocean. En route, the cable lands at Spain, Italy, Egypt (2),
Jordan, Saudi Arabia, United Arab Emirates (UAE), India, Malaysia,
Thailand, China (2) and Korea. The cable is the longest man made
private cable system ever built and provides high-capacity digital services
to international carriers, resellers, and ISPs. Currently the company has
over 85 telecommunications operators as customers, including most of
the world's top carriers. The FLAG cable route spans many of the world's
fastest growing economies with direct connectivity to over 75 percent of
the world's population. Privately financed at a cost of $1.5bn, FLAG is
designed to meet the growing demand for international communications
services, providing carriers with a world-class broadband superhighway.
The single network operations centre (FNOC) is located in the Central
Time zone of the route, at Fujairah in the United Arab Emirates. The
FNOC manages all maintenance activity, performance monitoring and
activates capacity on demand. With the addition of FLAG Atlantic-1, the
world's first transoceanic terabit/s cable system, the FLAG Telecom
network will soon cover 41,000 km and the company will have laid
enough fibre to encircle the globe. www.flagtelecom.com.

This press release may include forward-looking statements that
involve risk and uncertainty. Although the companies believe its
expectations reflected in such forward-looking statements are
based on reasonable assumptions, no assurance can be given that
such projections will be fulfilled. Any such forward-looking
statement must be considered along with knowledge that actual
events or results may vary materially from such predictions due to,
among other things, political, economic or legal changes in the
markets in which GTS and FLAG Telecom do business, competitive
developments or risks inherent in the company's business plan.
Readers are referred to the documents filed by GTS with the U.S.
Securities and Exchange Commission, specifically the most recent
reports filed under the Securities Exchange Act of 1934 and
registration statements filed pursuant to the Securities Act of 1933,
which identify important risk factors.

####

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