EgyNet Acquires Managed Bandwidth Services and Internet Connectivity Using the FLAG Telecom Network.

Business Editors

LONDON--(BUSINESS WIRE)--July 12, 2001

FLAG Telecom (Nasdaq: FTHL; LSE: FTL), a leading global network services provider and independent carriers' carrier, today announced that EgyNet, the first privately owned public data network based in Egypt, has purchased Managed Bandwidth Services (MBS) and Internet connectivity between Cairo and New York to be carried on the FLAG Telecom network. This is made possible as a result of the establishment of a FLAG Telecom point of presence (POP) in Cairo under the terms of an agreement with Telecom Egypt to jointly provide network services to the international carrier community and ISPs supported by service level guarantees. FLAG Telecom is the only operator with the ability to offer customers advanced network services directly from the city centre PoP in Cairo to the world's other major business centres.

Dr Abdel Rahman El Sawy, Chairman of EgyNet, said: "We are experiencing an increasing demand for Internet capacity from Egypt. FLAG Telecom's Egypt POP provides us a one-stop shop for circuit provisioning, billing, customer care, network management and Internet connectivity backed by a very reliable Service Level Agreement. EgyNet has already finished building one of the most advanced data networks in the Middle East, and possibly one of the largest in the region. The MBS services over the FLAG Telecom network will significantly help us to position ourselves as the premier data carrier in Egypt."

Walid Irshaid, FLAG Telecom's Vice President for Middle East and Africa, noted: "EgyNet is the first MBS customer in the Middle East to take advantage of the POP arrangements, and the services to be provided to them further strengthens our positive relationship with Telecom Egypt. Like them, we have long believed in the value of the Egyptian market and share their objective to bring quality Internet service to Cairo. We understand that being able to reach the United States is critical to Internet Service Providers. The FLAG Telecom network is able to offer a diversity of routing as well as the industry leading service level guarantees that are necessary."

At the time of the signing of the Cairo POP arrangement in July 2000, Akil Beshir, Chairman of Telecom Egypt, commented: "Today's agreement with FLAG Telecom takes our partnership with the company to a new level. Many customers are looking for city-to-city connections around the world and service level guarantees. FLAG Telecom's network platform connects major business centers our customers want to reach. We are a landing partner on the FLAG Europe-Asia cable, and our facilities are already interconnected, allowing us to offer advanced network services to our customers and other leading carriers quickly. This is the first agreement of this type entered into by Telecom Egypt, and we are delighted to be working with FLAG Telecom. We expect this to evolve into the first and major Internet Exchange in the Middle East."

About FLAG Telecom

FLAG Telecom is a leading global network services provider and independent carriers' carrier providing an innovative range of products and 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. FLAG Telecom has the following cable systems in operation or under development: FLAG Europe-Asia; FLAG Atlantic-1; FLAG North Asian Loop, and FLAG Pacific-1. Leveraging this unique network, FLAG Telecom's Network Services business markets a range of managed bandwidth and value added services targeted at carriers, ISPs, and ASPs worldwide. Principal shareholders are: Verizon Communications Inc., Dallah Al Barakah Group (Saudi Arabia) and Tyco International Ltd. For further information, visit 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, those discussed in documents the Company files from time to time with the Securities and Exchange Commission, including the annual report on Form 10-K for the fiscal year ended December 31 2000. The Company cautions readers not to rely on forward-looking statements. The Company disclaims any intent or obligation to update these forward-looking statements.