360networks and Alcatel Announce Strategic Alliance in Global Optical Networking.

Business Editors

PARIS & VANCOUVER--(BUSINESS WIRE)--October 31, 2000

Alcatel and 360networks today announced an alliance to extend 360networks' global optical network. Combining their respective expertise in the development and implementation of optical networking technologies, Alcatel and 360networks will capitalize on their strengths to accelerate the development of 360networks' seamless, cost-efficient, optical network infrastructure.

The non-exclusive alliance includes the following arrangements:

-- Alcatel will purchase up to $1 billion of 360networks convertible preferred
stock.

-- 360networks will build 360pacific, a transpacific submarine cable with
Alcatel as the supplier.

-- 360networks announced its intention to build an additional transatlantic
submarine cable to mesh with 360atlantic, awarding the supply contract to
Alcatel.

-- 360networks will award to Alcatel a supply contract for at least $100
million to provide optical networking equipment for terrestrial networks.

-- A joint technical advisory group will be formed to support further
collaboration between Alcatel and 360networks.

Serge Tchuruk, chairman and chief executive officer of Alcatel, stated: "We are delighted to have entered into an alliance with 360networks, a leading global telecom provider. The partnership will enable Alcatel to have a better understanding of market trends as we develop new products and solutions, increase our business as global network architects, and elevate our position in the telecommunications value chain."

"This is an incredible opportunity for 360networks," said Greg Maffei, president and chief executive officer of 360networks. "We are partnering with one of the world's leading telecommunications equipment suppliers. We will leverage our relationship with Alcatel to deploy the most advanced technology, getting the benefits of vertical integration with more flexibility and lower costs. With 360pacific, we will complete our footprint and have an unparalleled global network."

Christian Reinaudo, president of Alcatel's Optics Group stated, "Thanks to our leading offerings in terrestrial and submarine turnkey optical networking, Alcatel is uniquely positioned to develop a new kind of alliance with carriers and service providers. We favor this non-exclusive approach with partners rather than a total vertical integration, which would result in competing with our customers."

Larry Olsen, vice-chairman and chief financial officer of 360networks, said, "The agreements that we are announcing today will significantly increase our value to customers and shareholders. As has been our practice, we remain conservatively capitalized and our business plan is fully-financed."

Alcatel Investment -- Alcatel has committed to purchase up to $1 billion of 360networks convertible preferred stock due in 2012 in two tranches. The first tranche of $700 million will be funded immediately; the second tranche of $300 million can be drawn by 360networks upon the signing of the contract for a transatlantic submarine cable and the placement of purchase orders for a minimum of $100 million of Alcatel terrestrial products. The convertible preferred stock will accrete at 7.25% per year. The first tranche will be will be convertible into 360networks common stock at a price of $21.72 per share. The second tranche will be convertible into 360networks common stock at a 22.5% premium to the average market price prior to the announcement that 360networks will close on the second tranche.

360pacific - 360pacific will be a 22,000 kilometer (13,600 mile), six-fiber pair, 4.8 terabit-per-second, submarine cable that will connect the United States, Canada and Japan. Alcatel will be responsible for the network design, as well as the supply and installation of submarine transmission and protection equipment, including cable, repeaters and terminal equipment in a contract worth approximately $1.1 billion. C2C, a subsidiary of SingTel, has indicated it will acquire at least half of a fiber pair on the system for more than $200 million. 360pacific construction will begin in November with the cable scheduled to be ready for service (RFS) by April 2002. 360pacific will join 360asia, a 16,300 kilometer (10,200 mile) submarine cable with a RFS date of September 2001 that will link Japan, South Korea, Taiwan, the Philippines, Hong Kong, Singapore, and China with 360networks' 38,600-kilometer (24,000 mile) North American terrestrial network.

360atlantic2 -- 360networks intends to build an additional transatlantic cable, 360atlantic2, to mesh with 360atlantic. 360atlantic is a 1.92 terabit-per-second cable that is under construction and scheduled to be RFS by March 2001. This will be the world's first transoceanic mesh network and will dramatically change the way capacity is sold and used in the undersea cable market. With a traditional ring architecture only 50% of the installed capacity can be sold for working traffic, with 50% reserved for redundant protection. With a mesh architecture, which is enabled by the implementation of optical switches, less capacity is required for protection. As a result, availability, route diversity, and quality of service (QOS) are enhanced, and 360networks will have the lowest-embedded costs in the Atlantic.

The 360atlantic2 undersea cable is expected to have landings in the New York area and the west coast of the United Kingdom. Desktop studies and system engineering will commence immediately and the cable is anticipated to be in service in 2002.

Technical Advisory Group - The technical advisory group (TAG) will be comprised of two senior technical executives from each of 360networks and Alcatel. The TAG will review 360networks' technology needs, Alcatel's optical networking products and technology developments on a regular basis.

360networks and Alcatel are currently working together to develop the undersea segments of 360americas, a 29,000 kilometer (18,000 mile) network linking North and South America. Earlier this month, the companies completed the installation and lit the first segment between the United States and Brazil. This network is the first fiber optic cable to provide high-speed connectivity between South America and North America. In August 2000, 360networks also selected Alcatel for the marine maintenance service of 360americas.

About Alcatel Optics

In November 1999, RHK, a leading telecommunications analyst firm, said that Alcatel holds a 23% share - the number one position - of the world's total transport market, which comprises submarine and terrestrial transmission systems. RHK noted that Alcatel's market-leading 37% market share in the submarine networks segment helped secure the top position in the total transport market. In addition, RHK found that Alcatel commands a 37% share of the digital cross-connect systems (DCS) segment. Cross-connect systems contain the enabling technology for operators to offer high bandwidth services.

About Alcatel

Alcatel builds next generation networks, delivering integrated end-to-end voice and data networking solutions to established and new carriers, as well as enterprises and consumers worldwide. With 120,000 employees and sales of EURO 23 billion in 1999, Alcatel operates in more than 130 countries. For more information, visit Alcatel on the Internet: http://www.alcatel.com

About 360networks

360networks offers broadband network and co-location services to telecommunications and data-centric organizations. 360networks is developing one of the largest and most technologically advanced fiber optic mesh networks in the world. By mid-2002, the planned network will span 136,500 kilometers (85,000 miles) and link more than 100 major cities with terrestrial routes and submarine cables joining North America, South America, Asia and Europe. 360networks is also developing nearly 3.7 million square feet of network co-location space. More information is available at www.360.net.

Forward looking statements: This document may contain statements about expected future events and financial results that are forward looking in nature, and, as a result, are subject to certain risks and uncertainties. Scheduled completion of network segments may not be met because of factors, such as construction, permitting or licensing delays. Actual results may differ materially from those projected by management. For such statements, we claim the safe harbor for "forward looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995.