ETISALAT Purchases STM-1 -155Mbps- Broadband Capacity On Flag Europe-Asia Cable Between UAE and Japan.

Business Editors/High-Tech Writers

LONDON--(BUSINESS WIRE)--July 11, 2000

Initial Capacity Activated to Hong Kong to Meet

Immediate Demand for Internet Access

FLAG Telecom (Nasdaq: FTHL: LSE: FTL), a leading independent global carriers' carrier, today announced that ETISALAT (Emirates Telecommunications Corporation has purchased STM-1 level (155Mbit/s) capacity between the United Arab Emirates and Japan.

ETISALAT has previously stated their intention of becoming a regional hub for Internet traffic and this additional capacity will be used to meet the needs of its customers for advanced communication services of its Internet traffic and Emirates Internet Exchange (EMIX). FLAG Telecom provides an innovative range of carrier services and network services to the international carrier community, ASPs and ISPs. The company is building a Global Network Infrastructure and aims to achieve a network of over 100,000 km by 2003. Terms of the multi-million dollar contract were not disclosed.

Mr Ali Salim Al Owais, President & CEO, ETISALAT, said: "We have long stated our aim of becoming a regional hub for Internet traffic and since the FLAG Europe-Asia cable entered service in 1997, we have planned to use FLAG Europe-Asia cable for our increased Internet traffic and EMIX customers. We already have over STM-1 level capacity westwards between the UAE and UK and the additional capacity announced today allows us not only to keep pace with Internet demand from our customers, but provides additional flexibility as we can now access the United States, westwards or eastwards."

"ETISALAT's Emirates Internet Exchange (EMIX) is designed to meet Carriers' and Internet Service Providers (ISPs) requirements for high performance and reliable access to the Internet and it offers Symmetric, Asymmetric and Simplex (one way receiving) services to ISPs in the region. www.emix.net. Data traffic is soon expected to overtake voice traffic as the preferred means of communication to and from the region and we are pleased that we enjoy a long-standing relationship with FLAG Telecom," he added.

Walid Irshaid, Vice President for Middle East and Africa, FLAG Telecom, said: "ETISALAT was a founding customer on the FLAG Telecom cable network and is a key partner in the region. We have provided additional capacity as customer demand has grown, and we are delighted to have met this additional requirement, some of which has already been activated between Fujairah and Hong Kong. With this latest purchase, ETISALAT now owns an STM-1 along the entire 28,000 km Europe-Asia cable and the built-in flexibility of the FLAG Telecom network allows ETISALAT to add and drop traffic at any landing station along the route."

The FLAG Europe-Asia cable, with 16 operational landing points in 13 countries, lies along what is considered the most difficult route of any cable system in the world. It took 27 months and required approximately 4,000 permits to design and install. It spans many of the world's fastest growing economies and offers direct connectivity to over 75 percent of world's population. Privately financed at a cost of $1.6bn, the cable is designed to meet the growing demand for international communications services, providing carriers with a world-class broadband superhighway. Currently the company has over 100 telecommunications operators as customers, including most of the world's top carriers.

The landing station at Fujairah in the United Arab Emirates is managed in partnership with ETISALAT. Fujairah, located in the central time zone of the Europe-Asia route, is also the strategic location of the primary FLAG network operations center (FNOC). The FNOC manages all maintenance activity, performance monitoring and activates capacity on demand.

FLAG Telecom provides carrier services and network services to the international carrier community, ASPs and ISPs across an international network platform designed to support the next generation of IP over optical data networks. The FLAG Europe-Asia cable stretches from the UK to Japan and entered commercial service in November 1997. FLAG Atlantic-1, the world's first dual transoceanic terabit cable system, is currently under construction and is scheduled to enter service in Q1 2001. The FLAG Pacific-1 cable is the longest DWDM system announced to date and is expected to enter service in early 2002.

Telecommunications is one of the fastest growing industries and FLAG Telecom is well positioned to be a world leader in a critical segment of this market. By 2002 FLAG Telecom's technologically advanced cable network is expected to stretch over 64,500 route km from New York City across the Atlantic to London, Paris, and all major European business centers, through the Mediterranean to the Middle East, Africa and onto Asia. From Tokyo it is expected to run across the Pacific to the Internet hub cities of Vancouver, Seattle, San Francisco and Los Angeles. www.flagtelecom.com.

Statements contained in this Press Release which are not historical facts may be forward-looking statements, as the term is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties which could cause actual results to differ materially from those currently anticipated due to a number of factors, which include, but are not limited to: the Company's ability to achieve revenues from products and services that are in the early stages of development or operation, the Company's completion of FLAG Atlantic-1 and FLAG Pacific-1 within budget and on time, the Company's ability to deploy sophisticated technologies on a global basis, the Company's ability to upgrade and expand its network and respond to customer demands and industry changes, regulatory enactments and changes, competition and pricing pressure, rapid technological change, adverse foreign economic or political events and other factors that are discussed in the Company's Registration Statements on Form F-1 and Form F-4 filed with the Securities and Exchange Commission.