1
Exhibit 99.1
[On GTS Letterhead]
FOR IMMEDIATE RELEASE
GTS AND FLAG TELECOM SIGN AGREEMENT FOR TRANSOCEANIC CABLE VENTURE - FLAG
ATLANTIC-1
JV Will Build and Market the World's First Terabit Transoceanic Cable Offering
Direct City-to-City Connection between New York City, London and Paris
MCLEAN, Va., U.S., LONDON, U.K., and BRUSSELS, Belgium, January 13, 1999 -
Global TeleSystems Group, Inc. (GTS) (Nasdaq and Easdaq: GTSG) and FLAG Telecom
today announced an agreement to establish a 50:50 joint venture (JV) to build
and operate the world's first transoceanic dual cable system designed to carry
voice, high-speed data and video traffic at speeds up to 1.28 terabits/s. The
high-capacity fiber optic link between Europe and the United States (U.S.), to
be known as FLAG Atlantic-1, is expected to offer service in 2000, or in
approximately 21 months. The JV plans to offer a direct link between New York
City, London and Paris, with seamless connections to numerous other cities in
the U.S., Europe and other countries in the Middle East and Asia Pacific. The
project is subject to financing, the execution of related agreements and other
conditions.
Construction of the initial 160 Gbps portion of FLAG Atlantic-1 will cost
approximately US$1 billion. Financing will be provided by a combination of
equity contributions by the parties, customer sales, and non-recourse bank
debt. A contract to build the cable has been awarded to Alcatel Submarine
Networks (ASN) as prime supplier. The system's design allows for 160 Gbps
incremental upgrades as demand warrants.
FLAG Atlantic-1 will be a loop system, connecting the East Coast of the U.S. -
with two nodes in Midtown and Downtown Manhattan - to two landings in Europe,
one in Brittany, France and the other in Cornwall, U.K. The entire FLAG
Atlantic-1 system is planned to consist of three self-healing, high-capacity
loops with twin terrestrial access points connecting to the Hermes Europe
Railtel (HER) network as well as to the existing FLAG cable system, stretching
over 27,000 kilometers from the U.K. to Japan. Customers on FLAG Atlantic-1
will be able to add traffic either at the landing stations or at the city
nodes.
The two subsea sections of the cable are approximately 5,900 kilometers and
6,350 kilometers respectively, with an overall system length of approximately
12,500 kilometers. The JV will provide backhaul links from the European
landings to the cities of Paris and London, respectively, where plans are for
customers to be able to interconnect seamlessly to GTS Carrier Services and its
HER network and to other networks that customers may choose.
Andres Bande, chairman and chief executive officer, FLAG Telecom, said, "A
transatlantic link is the natural next step for FLAG Telecom. FLAG Atlantic-1
is designed to operate at 1.28 terabits/s, or about 25 times the capacity of
current transatlantic cable technology. It will be highly resilient, with
great reliability throughout the system. The network has been designed
specifically to meet the level and speed of service demanded in today's
marketplace and the needs of the Internet. The cable system is privately
financed, so operators get all the benefits of cost-effective pricing and
capacity on demand. We see a complementary fit for FLAG Telecom with GTS
Carrier Services and are pleased to have concluded this joint venture."
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GTS and FLAG Agreement
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"The interconnection with FLAG Atlantic-1 is designed to allow GTS Carrier
Services to provide its customers with high- capacity cable access from all
major European cities to New York City," said Jan Loeber, president, GTS
Carrier Services and managing director, HER. "This is the first transoceanic
partnership for GTS Carrier Services. Important for our carrier and Internet
service provider (ISP) customers, it is designed to provide an extension of
HER's 99.9-plus-percent service level agreements across the Atlantic."
FLAG Atlantic-1 will use laser-generated light to transmit digital information
over four fiber pairs and is capable of carrying over one trillion bits of
information per second. This equates to one hundred hours of digital video per
second, a 25-fold increase on the current transatlantic cable systems. The
cable system will be based on synchronous digital hierarchy (SDH) and use dense
wave division multiplexing (DWDM) technology. The all-digital system should
deliver high-speed, clear, secure throughput, as weather conditions or
electromagnetic interference should not affect the cable. Broadband capacity
accommodates new data-rich applications such as those emerging on the Internet,
videoconferencing, multimedia and medical and business imaging.
Spanning 9,200 kilometers across Europe, the HER network currently serves
telecommunications carriers and ISPs in 20 cities with the ability to activate
four more cities along the network routes on short notice, depending on
customer demand. The HER network is planned to exceed 18,000 kilometers in the
future.
The existing FLAG cable system entered commercial service in November 1997 and
stretches over 27,000 kilometers from the U.K. to Japan. With 14 operational
landing points in 11 countries, FLAG provides high-capacity digital services to
international carriers, resellers and ISPs. The cable route spans many of the
world's fastest growing economies and offers direct connectivity to 75 percent
of the world's population. Privately financed at a capital cost of US$1.5
billion, FLAG was designed to meet the soaring demand for international
communications services and provide customers with a world-class broadband
superhighway. FLAG today carries traffic for over 75 of the world's leading
carriers, including more than 20 of the top 30 international operators in the
world.
Global TeleSystems Group is a leading independent owner and operator of
telecommunications companies throughout Europe. GTS has five primary lines of
business: GTS Carrier Services, which provides cross-border transport in Europe
to other telecommunications companies; GTS Access Services, which provides
facilities-based access services to businesses throughout Europe; GTS Business
Services - Western Europe, which offers voice, data, Internet and other
telecommunications services to businesses; GTS Business Services - Commonwealth
of Independent States (CIS), where GTS is a leading alternative provider of
high quality telecommunications services in Moscow, Kiev, St Petersburg and
other cities in Russia and the CIS; and GTS Mobile Services - CIS, which
operates cellular businesses in Russia and Ukraine.
Headquartered in the metropolitan Washington, D.C. area, GTS's affiliates have
offices in London, Brussels, Moscow, Budapest, Kiev, Prague and Paris.
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GTS and FLAG Agreement
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HER, which began commercial operations in late 1996, today serves more than 50
customers representing virtually every major segment of the telecommunications
industry.
FLAG is a leading carriers' carrier, not a telecommunications operator. The
group, which will undergo a corporate restructuring in connection with this
project, is privately financed and its shareholders are: Asian Infrastructure
Fund (HK), AT&T Capital (USA), Bell Atlantic (USA), Dallah Albaraka (Saudi
Arabia), General Electric Capital Corporation (USA), Gulf Associates Inc (USA),
Marubeni Corporation (Japan) and Telecom Holding Co (Thailand). FLAG Limited
has its headquarters in Bermuda and regional offices in Dubai, Hong Kong, New
York and London. The existing FLAG network operation center is located in
Fujairah, UAE, which is responsible for system performance monitoring,
isolating and handling incidents along the cable route, proactive maintenance
of the system and activating capacity. With the addition of the interest in
FLAG Atlantic-1, the FLAG cable system network will cover nearly 40,000
kilometers and provide direct access to the two largest telecommunications and
Internet markets on earth, the USA and Japan. With its blend of traditional
and competitive market characteristics, tailored to both the established and
emerging operators, FLAG is the carriers' carrier for the 21st century.
For further information, contact:
Worldwide queries: Europe only:
Jane Windsor Dave Scott
FLAG Telecom Limited GTS Carrier Services and HER
T: +44 171 317 0811 T: +32-2-658-54-62
F: +44 171 317 0808 F: +32-2-658-51-08
www.flagtelecom.com www.her.com
GTS Investors and U.S. Press:
Robert Capozzi
GTS
T (U.S.): +1-703-918-4548
T (Europe): +44-171-497-3001
F: +1-703-918-0371
P: +1-800-331-4741
www.gtsgroup.net
THIS PRESS RELEASE INCLUDES FORWARD-LOOKING STATEMENTS THAT INVOLVE RISK AND
UNCERTAINTY. ALTHOUGH THE COMPANIES BELIEVE THEIR EXPECTATIONS REFLECTED IN
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FILED BY GTS WITH THE SEC, SPECIFICALLY THE MOST RECENT REPORTS FILED UNDER THE
SECURITIES AND EXCHANGE ACT OF 1934, WHICH IDENTIFY IMPORTANT RISK FACTORS.