Level 3, Flag Telecom Partner For Asia Cable System

[ASIA] Broadband infrastructure provider, Level 3 and London-based network service
provider Flag Telecom Tuesday announced an agreement to integrate their submarine cable
systems in North Asia.

The submarine cable system is expected to consist of two legs: the eastern leg, which is Level 3’s
existing North Asian cable system connecting Hong Kong, Taiwan and Japan. Flag Telecom will
develop the western leg, connecting Hong Kong, Korea and Japan.

The entire submarine cable system is expected be 10,000 kilometers in length, providing an initial
capacity of 320 Gbps, which is upgradeable to 2.5 to 3.8 Tbps. The total cost of the system is
estimated to be $900 million.

Although the system is expected to be managed and operated by Flag Telecom, Ed McCormack,
chief operating officer of Flag Telecom refused to disclose the breakdown of the cost. He said no
revenue sharing is involved in the agreement, as the companies will have independent ownership of their cable system and market their product independently.

“The partnership allows us to build a full, diverse ring system at half the total development cost by
sharing the construction and operating expenses with an industry partner,” said Steven Liddell,
chief executive officer of Level 3 Asia.

Liddell added the agreement allows the company to enjoy first-mover advantage to partner with
other cable developers to jump-start the extension of their new target markets in Taiwan and

For Flag Telecom, the system is expected to increase demand for Flag Pacific-1 (FP-1), a cable
system connecting U.S. and Japan. With a total cost of $2.1 billion, FP-1 is expected to be
available in service by 2002, after the entire cable system in North Asia is in service.

As Level 3 has begun construction of its cable system, and landed in Hong Kong last month, the
service on the eastern leg is expected to be operational in the second quarter of 2001.
McCormack said construction of the western leg will start shortly and is expected to land the
system in Taiwan and Korea by the end of 2001.

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