Alcatel and SDGI Create Joint Venture to Produce Optical Fiber in China.

Business Editors/High-Tech Writers

DALLAS--(BUSINESS WIRE)--July 10, 2000

Alcatel (NYSE: ALA), the world leader in optical networking, and SDG Information Company (SDGI), one of China's leading optical fiber and cable manufacturers, have signed a joint venture agreement to manufacture optical fiber in China. The joint venture will be established in Shenzen and will play a key role in developing and providing optical fiber to satisfy the quickly growing demand for optical fiber in China and potentially other parts of Asia.

"Alcatel has always been an active player in China, and this joint venture agreement continues to emphasize the strategic importance of China to us," said Yvon Raak, president of Alcatel's Telecom Products Division. "SDGI is a highly reputable and strong player in the market."

The total investment in the joint venture will be $US 28 million, with Alcatel taking a 55 percent stake. Alcatel's primary responsibility will be to provide the process technology. The remaining 45 percent of ownership will be held by SDGI. The joint venture is expected to initially employ about 120 people and expects to produce more than one million kilometers of fiber by 2002.

SDGI has been in the optical fiber and cable business for more than ten years. According to SDGI Chairman Ji de Jun, "The opportunity for us to combine our local knowledge and industry expertise with the technical innovation of Alcatel in optical fibers will be a great asset for China."

The joint venture will be focused on producing Alcatel's singlemode fiber (G652), which supports high bandwidth demands on a global basis. This highly reliable fiber has Alcatel's revolutionary AFC3 fiber coating. AFC3 provides superior durability and robustness even in harsher environments. Alcatel's Colorlock process further enhances the fiber. Colorlock combines the color with the coating, ensuring consistent, distinguishable and dependable color over the life of the fiber.

SDGI is a high-tech enterprise in Shenzen, concentrating on research, development, production and sales of optical transmission and digital communication equipment, optical fiber, optical cable, wireless information service and electronic components. The main products of SDGI include optical digital transmission equipment, access equipment, optical fiber and cable. The company has more than 1600 employees. Up to April 2000, the total assets of SDGI were RMB1.24 billion with net assets of RMB0.81 billion.

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. Information about Alcatel is available on the Internet at http://www.alcatel.com.