Covad Introduces Global Expansion Strategy; Investment in Japan's ACCA Networks With NTT Com and Ignite Showcases Covad's Entrance Into the International Market.

Business Editors/High-Tech Writers

SANTA CLARA, Calif.--(BUSINESS WIRE)--Aug. 14, 2000

Covad Communications (Nasdaq:COVD), the leading national broadband DSL services provider, today introduced the formation of Covad Communications International B.V., a wholly-owned subsidiary, and unveiled its strategy to expand internationally and bring broadband services to homes and businesses in major markets throughout the world. The global strategy features a market by market approach and leverages Covad's experience, technology and operational assets.

"Now is the time to get a foothold outside the U.S., and we are doing it in a very careful, thoughtful way, while continuing to focus on our core business domestically," said Robert E. Knowling, chairman, CEO and president of Covad. "We are only getting involved in major markets where we have strong management, significant strategic influence and where it is financially prudent."

Covad Communications International Organization

Covad International will be headed by Robert Davenport, who has been appointed president and CEO. His previous position as executive vice president of Corporate Development is filled by Mike Lach, who was most recently executive vice president of Business Integration. Davenport is building a dedicated team drawn from the current employee base and augmented by outside hires, that will be focused on building Covad's international business. The subsidiary will develop operating companies as required in each served market and provide strategic, corporate finance, regulatory, marketing, technical, operational and legal support.

Strategic Investments

In a joint announcement with NTT Communications, a subsidiary of Nippon Telephone and Telegraph Corporation, and Japan-based venture capital firm, Ignite Japan KK, Covad, through its subsidiary, Covad Communications Investment Corp., introduced a strategic alliance and investment in ACCA Networks, Co., Ltd, a newly formed Japanese broadband local access company. ACCA will pursue the business of providing broadband network services using DSL in major metropolitan areas in Japan. In addition, Covad will license to ACCA its world-class Operational Support System (OSS). The OSS will enable ACCA to streamline and automate the DSL ordering and provisioning process so that end users throughout Japan can quickly and easily get high speed, "always on" Internet access via DSL service.

For Covad, this is an equity investment without additional commitments, requiring no additional expenses in its financial model, outside of the equity ownership and cash investment on the balance sheet. ACCA will continue to raise private and ultimately public funding as it grows, in which Covad has the right of first refusal to participate in subsequent financing rounds. Covad will also hold two seats on the ACCA board.

The Japanese venture follows Covad's previously announced investment in Dishnet DSL, India's leading broadband Internet service provider (ISP). The investment was made by Covad's subsidiary, Covad Communications Investment Corp. Dishnet has also licensed Covad's world-class OSS so that they can grow their business more rapidly and efficiently.

Global Expansion Strategy

"We will continue to take a financially disciplined approach as we evaluate opportunities to expand our footprint internationally," said Robert Davenport, president and CEO of Covad International. "We will look for opportunities where the regulatory framework is opening up and where Covad can provide real value with our technical, regulatory and operational expertise, without creating a distraction for our core business."

Covad plans to continue to grow its business globally through strategic investments, alliances and acquisitions. By contributing its proven expertise and experience in broadband DSL deployment, operations and marketing, Covad intends to assist its international affiliates in bringing high-speed, "always-on" Internet connections to significant numbers of consumers and businesses.

A key operational asset that Covad expects to contribute through licensing agreements to its affiliates is its premier Operational Support System. Covad's OSS is a tool that has strategically equipped the company to quickly scale its business and become the United State's leading national broadband DSL services provider in less than four years. Covad designed its OSS to fully automate the processes between Covad, the phone companies, Internet Service Providers (ISPs) and end users. It will enable Covad to fully automate and streamline the installation and provisioning processes so that consumers and small businesses can quickly and simply get broadband DSL service.

About Covad

Covad is the leading national broadband services provider of high-speed Internet and network access utilizing Digital Subscriber Line (DSL) technology. It offers DSL, IP and dial-up services through Internet Service Providers, telecommunications carriers, enterprises, affinity groups, PC OEMs and ASPs to small and medium-sized businesses and home users. Covad services are currently available across the United States in 96 of the top Metropolitan Statistical Areas (MSAs). By the end of 2000, Covad services are expected to be available in 165 MSAs (which includes MSAs that will be added as a result of the acquisition of BlueStar Communications). At that time Covad's network is targeted to reach more than 45 percent of all U.S. homes and 50 percent of all U.S. businesses. Corporate headquarters is located at 4250 Burton Drive, Santa Clara, CA 95054. Telephone: 888/GO-COVAD. Web Site: www.covad.com.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995

The statements contained in this release which are not historical facts may be deemed to contain forward-looking statements, including but not limited to statements regarding the intention to deploy our network in new and existing MSAs, the timing and breadth of coverage in each MSA, our intent to make strategic investments and acquisitions, our ability to drive DSL deployment in other countries, and our ability to fully automate and streamline the installation and provisioning processes. Actual results may differ materially from those anticipated in any forward-looking statements as a result of certain risks and uncertainties, including, without limitation, the company's dependence on incumbent local exchange carriers for collocation, unbundled network elements, transport and other facilities, development of necessary technologies and operations, ability to manage growth of our operations, and the need to raise additional capital. For other risks and uncertainties applicable to our business refer to the Company's Securities and Exchange Commission filings.

Note to Editors: For more details on the investment in Japan-based ACCA Networks, please see Covad's website (www.covad.com) for the press release between Covad, NTT Com, Ignite Japan and ACCA Networks.