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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


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


  • 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

    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

    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

    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.

    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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