FLAG Telecom and GTS Announce FLAG Atlantic-1 Capacity Increasing to 2 X 2.4 Terabits Per Second; Initial 2 X 1.28 Tbps Capacity System Already Committed.

GENEVA--(BUSINESS WIRE)--Oct. 13, 1999--

FLAG Telecom and Global TeleSystems (Nasdaq:GTSG)(Frankfurt:GTS)(Easdaq:GTSG)

Highlights:

-- Highly-reliable triple loop design offers 2.4 Terabits per second

(Tbps) fully protected capacity, or nearly 5 Tbps of raw capacity

-- Financing arrangements complete--entire $1.2 billion initial

project cost fully funded

-- Pre-sales ahead of target--more than 50% of full system capacity

already committed

-- GTS purchases dedicated fiber pair

-- Alcatel Submarine Networks to provide advanced fiber and optical

transmission technology and systems

FLAG Telecom and Global TeleSystems Group, Inc. (GTS) (Nasdaq: GTSG; Frankfurt: GTS; Easdaq: GTSG), today announced that the capacity of FLAG Atlantic-1 (FA-1), the world's first terabit cable system connecting London, Paris and New York, will be almost doubled to 2.4 Tbps on each of FA-1's two trans-Atlantic cables.

This is enough capacity to carry over two hundred hours of digital video per second, 30 million clear voice channels, or over 2 trillion bits of IP or data traffic per second. FA-1 will be built and operated as a 50:50 joint venture between GTS and FLAG Telecom.

GTS will purchase a fiber pair on the cable for an undisclosed amount. This will provide GTS with seamless connectivity of 400 Gbps of fully protected capacity (or 800 Gbps unprotected) from New York directly to its trans-European fiber network. The GTS fiber pair purchase is a separate transaction from the FA-1 joint venture agreement.

Disclosed customers for FA-1 include Teleglobe, Singapore Telecom, Worldstar, Broadband Cello, Tiscali and Telecom Malaysia.

Total investment in the project, which is fully funded will be $1.2 billion for initial system delivery. A non-recourse debt bank financing facility for $600 million has been arranged through Barclays Capital, Dresdner Kleinwort Benson and West Deutsche Landesbank Girozentrale. FLAG Telecom and GTS, as 50:50 partners in the FA-1 venture, will each invest $100 million in equity into the venture.

FA-1 enables FLAG Telecom and GTS to offer customers direct connectivity between the New York area and telehousing facilities in London and Paris, allowing seamless connections to numerous other cities in the United States and South America and in European cities via GTS's trans-European network, and other countries in the Middle East, Africa and Asia via the FLAG Telecom network.

FA-1 will be a dual cable system connecting the East Coast of the United States (with nodes in Manhattan and Newark, New Jersey) to two landings in Europe. One of these will be in Saint Brieuc, France, and the other in Cornwall, United Kingdom, with city nodes iork--Europe's first and most extensive cross-borometers from the United Kingdom to Japan.

ers, respectively, while the twin terrestrial rings are approximately 120 kilometers and 1,850 kilometers inecutive officer of FLAG Telecom and co-chairman of FLAG Atlantic Ltd., commented at today's announcement: "Ty's Internet-driven marketplace, while also delivering the lowest unit cost in the Atlantic by far. The stratTS and co-chairman of FLAG Atlantic Ltd., said: "Market reaction to the FA-1 cable has been extremely positild's first terabit transoceanic cable system. Wiice' date.

"Regarding our fiber pair purch the Atlantic--that will meet the increasing global traffic flows of IP, data and voice traffic," he added.

The contract to build the submarine element of the FA-1 system has been awarded to Alcatel Submarine Networks (ASN). Terms of the contract were not disclosed.

Jean Godeluck, chief operating officer for the submarine network activity of Alcatel, stated: "We have already demonstrated our leading-edge technology operating at 40 wavelengths over the same distance as the longest section of FA-1. ASN is now evolving its optical transmission technologies to more wavelengths and higher line rates without any increase in the station-equipment size or complexity."

FA-1 will use laser-generated light to transmit digital information over six fiber pairs and will be capable of carrying 2.4 Tbps of information on each of its two trans-Atlantic cables. The cable will be highly resilient with no single point of failure throughout the system.

FA-1 has been designed specifically to meet the level and speed of service demanded in today's marketplace and the needs of the Internet. FA-1 is offering competitively priced capacity across the Atlantic, and a single network operations center will proactively monitor the cable, handle incidents and activate capacity "on demand."

Surveys and Studies

The route survey of the entire length of the cable system has been completed. A survey is critical to identify all sea-floor pitfalls and has a direct bearing on the future maintenance of the cable system. For FA-1 a three-part survey was carried out: a desktop study, followed by a geophysical survey and a burial assessment survey (BAS).

-- The desktop study, which proposed the best cable route, used all

available data from charts, data on ocean currents, seismic

activity, fishing, shipping, existing cables and military

activities.

-- The geophysical survey, conducted by specialist vessels using

bathymetry, sub-bottom profilers and side-scan sonars, then

analyzed the sea floor along the proposed route.

-- The burial assessment determines which sections of the system

need to be buried and to what depth.

The strong in-service reliability record of the existing FLAG Telecom Europe-Asia cable, in some of the same waters that FA-1 will lie, shows the importance of carrying out a BAS and always adopting an approach to achieve best operational performance.

About GTS

Global TeleSystems Group is the most extensive network and service operator across Europe today, serving businesses and carriers in 20 European countries with a range of broadband, Internet/IP and voice services.

GTS operates the first and most extensive trans-European broadband fiber network today, with network points of presence in over 50 European cities and stretching across more than 15,000 route kilometers.

Through the use of state-of-the-art dense wavelength division multiplexing technology (DWDM), GTS operates over 50,000 active "wavelength" kilometers, making GTS a global pioneer in the use of this technology. In addition, GTS hropean cities through the development of a numbon, GTS is the majority owner of Golden Telecom,a and with European headquarters in London, GTS has offices in over 70 European cities, including Brussels, .

About FLAG Telecom

FLAG Telecohe Atlantic Ocean, Mediterranean Sea, Red Sea, I (2) and Korea. The cable is the longest manmade private cable system ever built and provides high-capacity ds as customers, including most of the world's t of $1.5 billion, FLAG is designed to meet the stem, the FLAG Telecom network will soon cover 41,000 kilometers, and the company will have laid enough fiber to encircle the globe. For further information, visit FLAG's website at www.flagtelecom.com.

This press release may include forward-looking statements that involve risk and uncertainty. Although the companies believe its expectations reflected in such forward-looking statements are based on reasonable assumptions, no assurance can be given that such projections will be fulfilled.

Any such forward-looking statement must be considered along with knowledge that actual events or results may vary materially from such predictions due to, among other things, political, economic or legal changes in the markets in which GTS and FLAG Telecom do business, competitive developments or risks inherent in the company's business plan.

Readers are referred to the documents filed by GTS with the U.S. Securities and Exchange Commission, specifically the most recent reports filed under the Securities Exchange Act of 1934 and registration statements filed pursuant to the Securities Act of 1933, which identify important risk factors.