FLAG Telecom and TyCom to Jointly Develop Transpacific System.

Business Editors

LONDON--(BUSINESS WIRE)--April 17, 2001

FLAG Telecom to own, manage and operate the system

TyCom to purchase four fibre pairs on the system

FLAG Telecom (Nasdaq: FTHL) (LSE: FTL), a leading global network services provider and independent carriers' carrier, and TyCom Ltd. (NYSE: TCM) (BSX: TCM) today announced that they have agreed in principle to develop their previously announced transpacific systems under a joint development arrangement, with TyCom building the complete transpacific ring, including all undersea cable, electronics and cable stations, for approximately $1.7bn.

FLAG Telecom has also selected TyCom to provide subsea maintenance for its Atlantic and Pacific cable systems.

"FLAG Telecom is building one of the largest and most extensive global IP networks, and implementing a high-capacity transpacific system is a key element in our worldwide plans," said Andres Bande, Chairman and Chief Executive Officer of FLAG Telecom. "This arrangement is consistent with our strategy of minimising capital at risk and reducing cash outlay in developing our global network. TyCom is an acknowledged technology leader in the undersea industry with a proven track record for on-time development, and we welcome the opportunity to work on this project together."

"These transactions with FLAG Telecom will take our solid working relationship to the next level. As a leader in the undersea network industry, TyCom is pleased to have been selected to build FLAG Telecom's transpacific system, as well as provide maintenance services for both their transatlantic and transpacific systems. Both TyCom and FLAG Telecom have a number of common interests and this joint development is an excellent way to achieve our mutual goals in the Pacific," said Neil Garvey, President and Chief Executive Officer of TyCom.

FLAG Telecom will own and manage the construction of the system with TyCom selected as the main contractor. The system will be approximately 24,100 km long and will connect Japan to the West Coast of North America, with landings in Guam and Hawaii on the Southern link. The 8-fibre pair architecture, which will use 64- or 96-channel DWDM (Dense Wave Division Multiplexing) transmission technology, will provide a state-of-the-art system having a maximum capacity up to 7.68 Tbps. The initial work that both FLAG Telecom and TyCom have already carried out on their respective systems will be pooled so that the ready for service (RFS) date for the system is expected to be achieved in Q2 2002, with an estimated total project cost of approximately $1.9bn. TyCom will purchase four fibre pairs on the system and will operate the TyCom Trans-Pacific portion of the TyCom global network. FLAG Telecom's four fibre pairs will be operated and marketed as FLAG Pacific-1 (FP-1).

FP-1 is expected to be the world's first eight fibre pair transoceanic cable linking Tokyo with the West Coast of North America. FLAG Telecom's own, fully redundant, initial lit capacity on FP-1 is expected to be 160 Gbps. FP-1 will be based on optical DWDM technology supporting the development of FLAG Telecom's next generation IP-over-optical services. The cable will span 24,100 km of route fibre, including integrated backhaul networks. Capacity products available on FP-1 will include fibre pairs, optical wavelengths and SDH services. FLAG Telecom expects to fund the cost of the system through a combination of cash on hand, TyCom and other presales, and bank financing.

With the addition of FP-1, FLAG Telecom will take another major step toward the completion of its global IP and transport network that will extend over 86,000 route km around the world by mid 2002. This fully integrated network will provide fibreoptic connectivity across a seamless global sub-sea platform comprising the FLAG Europe-Asia cable, stretching from the UK to Japan; FLAG Atlantic-1, the world's first transoceanic terabit cable system connecting Paris and London to New York; FLAG North Asian Loop, a multi-terabit intra-Asia system, and FLAG Pacific-1, connecting North America to Japan. With the recent announcement of a European network alliance with Verizon, FLAG Telecom will also be able to deliver next generation network services products over its global IP and transport platform to customers requiring connectivity to the major European business centres. By year end, FLAG Telecom's growing IP and transport network is expected to include over 30 PoPs in major business centres around the world.

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. 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 transoceanic terabit cable system connecting Paris and London to New York, is currently at an advanced stage of construction, and is scheduled to enter service as a fully restored loop system early in H2 2001. FLAG North Asian Loop is a multi-terabit intra-Asia system scheduled to enter service in Q2 2001. The FLAG Pacific-1 cable is expected to enter service in the second quarter of 2002. Leveraging this unique network, FLAG Telecom's rapidly growing 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 (NYSE: VZ) (USA) and Dallah Al Barakah Group (Saudi Arabia). 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. To identify forward-looking statements, look for words like "believes", "expects", "may", "will", "should", "seeks", "intends", "plans", "projects", "estimates" or "anticipates" and similar words and phrases. Discussions of strategy, plans or intentions often contain forward-looking statements. These, and all forward-looking statements, necessarily depend on assumptions, data or methods that may be incorrect or imprecise. 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, FLAG Pacific-1 and FLAG North Asian Loop 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.

The Company cautions readers not to rely on forward-looking statements. The Company disclaims any intent or obligation to update these forward-looking statements.