Alcatel Outlines Its U.S. Transformation From Equipment Supplier to Network Architect.

ATLANTA--(BUSINESS WIRE)--June 8, 1999--

"Over the course of just nine months, Alcatel USA has transformed itself, through growth and acquisitions, from a telecom equipment supplier into a network architect", said Krish Prabhu, President and CEO of Alcatel USA (NYSE:ALA), in a press briefing today at SUPERCOMM 99. With U.S. revenues projected to exceed $4 billion in 1999, the U.S. is now Alcatel's single largest market.

According to Prabhu, Alcatel's investment of approximately $7 billion in U.S. acquisitions during this period enabled the company to gain the critical mass required to deliver next generation enterprise and carrier Internet and data solutions.

"The acquisition of DSC Communications, completed in September, provided critical mass in delivering new RBOC customers and new access and switching technology that complemented our strengths in transmission, optical networking and ADSL technology," said Prabhu. "Following in rapid succession with the acquisition of data technologies from Xylan, Assured Access and Packet Engines, Alcatel now has the key building blocks in place to complete our network vision."

"We are witnessing a global explosion in demand for bandwidth fueled by the insatiable appetite for broadband Internet access," said Prabhu. "Alcatel's strategic vision is to deliver broadband access to an emerging optical Internet. With this architecture for IP over an optical network, we can help customers stay ahead of the bandwidth capacity curve while delivering robust access technology to support the wealth of emerging broadband services. Today, Alcatel is unique in its ability to provide a complete optical network from broadband access to the core."

The three key components of Alcatel's view on the evolving network architecture outlined by Prabhu, are: broadband access, multi-service edge and optical core.

Broadband Access

With the Internet driving unprecedented demand for broadband services to both enterprise and residential customers, Alcatel has achieved a commanding lead in delivering broadband access with a greater than 50% share of the U.S. DSL marketplace. And with its Litespan product line, which enjoys an access footprint of more than 20 million subscribers, Alcatel seamlessly integrates data, voice and high capacity services on a single fiber optic system. At the SUPERCOMM show, Alcatel is introducing its New World Digital Loop Carrier(TM) product, which enables users to seamlessly migrate existing PSTN traffic to the new packet-based meshed network and provide full integration of DSL traffic. Also at SUPERCOMM, Alcatel is introducing its new APON technology (ATM-based Passive Optical Network) which works in conjunction with its Litespan product line to deliver ATM-based services to the customer premise and fulfills the promise of fiber to the home (FTTH).

Multi-Service Edge

At the network's edge, Alcatel provides a complete portfolio of multi-service edge products through its recent data acquisitions. These include wire-speed routing products from Packet Engines, IP aggregation products from Assured Access and data switching products from Xylan. At SUPERCOMM, Alcatel will be introducing a new voice over IP Universal Access Gateway product to support service providers offering customers integrated voice, fax and data services over the new public data network.

Optical Core

In the core of the network, through its OPTINEX product line, Alcatel offers end-to-end wavelength management over an optical network using dense wave division multiplexing (DWDM) and optical gateways for both traditional SONET and IP services. At SUPERCOMM, Alcatel is demonstrating its1650 OXC product, an optical cross-connect that allows operators the ability to transparently manage wavelengths.

Alcatel builds next generation networks, delivering integrated end-to-end voice and data solutions to established and new carriers, as well as enterprises and consumers worldwide. With 120,000 employees and sales of EURO 21.3 billion ($25.0 billion), Alcatel operates in more than 130 countries. For more information, visit Alcatel at http://www.alcatel.com or the US Web site at www.usa.alcatel.com. Contact for Alcatel Investor Relations, (US) Michael Haase, 972/519-6855, [e-mail].