CHINA TELECOM SELECTS FLAG TELECOM FOR 30GBITS/S CAPACITY.

In one of the largest cash deals this year, China Telecom, one of the leading operators in China, has awarded FLAG Telecom, a leading provider of international wholesale network transport and communications services, a multi-million dollar contract for multiple STM-16s providing a substantial 30Gbits/s capacity between China and the United States. The STM-16s will provide full-circuit, high quality connectivity to carry large volumes of voice, data and Internet traffic between China and the US West Coast. In meeting China Telecom's requirements FLAG Telecom is providing an integrated solution based on its FLAG North Asia Loop (FNAL) system and Tyco Telecommunications' TGN Trans-Pacific cable.

This contract is expected to satisfy mid- to long-term forecast demand and positions FLAG Telecom as a major supplier to China Telecom. The demand for connectivity is being driven primarily by the continuing rapid growth of IP traffic and bandwidth-hungry Internet applications. The number of Internet subscribers reached 11 million by the end of June 2004, growing by 50% over the figure at the end of 2003. The user base is expected to expand at 100% in the year of 2004 and grow at an average of 50% annually in the next three years.

Chang Siu Ping, the deputy general manager of China Telecom, said: "At present, the driving forces for growth are Internet and Broadband. This agreement with FLAG enables us to meet the burgeoning demands of our customers and ensures we meet the anticipated growth in new broadband services. China Telecom selected the bid by FLAG as it offered an extremely high quality, scaleable solution at a cost-effective price. Our connectivity will be carried entirely on the latest generation of terabits/s loop cable systems, providing additional resilience. Our two organizations have enjoyed a long-standing relationship dating back to 1997 when China Telecom provided the landing station at Shanghai for the world's first private international cable - the FLAG Europe-Asia system. FLAG is one of our major long-term suppliers and we look forward to continuing our close working relationship with them."

Patrick Gallagher, CEO, FLAG Telecom, said: "China Telecom has now put in place a fast, reliable and scaleable international platform to deliver advanced services and meet forecast demand for high-speed connectivity. This is much more than a supplier agreement and demonstrates China Telecom's confidence in FLAG's ability to meet their exacting quality requirements; in our experience in the marketplace and our assured future with the support of our parent, Reliance. Together with Reliance and our partner suppliers we are able to provide a global one-stop shop both for bandwidth and innovative products and services - all at extremely cost-effective pricing for customers."

Owen Best, president, Asia Pacific, FLAG Telecom, commented: "Broadband subscribers in China grew by more than 14 per cent to 2.85 million in the first quarter of this year. However, although China today has the largest number of broadband users in Asia, we have yet to see the market penetration rates achieved in Korea and Japan. Over the next couple of years, as the broadband demand starts to bite with the continued roll-out of fibre to the home (FTTH), we anticipate an enormous impact on the market."

About Reliance Infocomm

Reliance Infocomm Ltd., India's largest mobile service provider, is a part of the Reliance Group founded by Shri Dhirubhai H. Ambani (1932-2002). Reliance Infocomm has established a pan-India, high-capacity, integrated (wireless and wireline) and convergent (voice, data and video) digital network, to offer services spanning the entire Infocomm value chain - infrastructure, services for enterprises and individuals, applications and consulting. The Reliance Group is India's largest business house with total revenues in the financial year ended March 2003 of Rs 800 billion (US$16.8 billion), cash profit of over Rs 98 billion (US$2.1 billion), net profit of over Rs 47 billion (US$990 million), market capitalisation Rs 974 billion (US$21.7 billion) and exports of Rs 119 billion (US$2.5 billion).

About FLAG Telecom

FLAG Telecom, a member company of the Reliance Group, has an established customer base of more than 180 leading operators, including all of the top ten international carriers. FLAG owns and manages an extensive optical fibre network spanning four continents and connecting key business markets in Asia, Europe, the Middle East and the USA. FLAG also owns and operates a low latency global MPLS based IP network, which connects most of the world's principal international Internet exchanges. FLAG offers a focused range of global products, including global bandwidth, IP, Internet, Ethernet and Co-location services. In the first international acquisition by the Group, FLAG Telecom became a Reliance Group company on 12 January 2004.

For more information, visit http://www.flagtelecom.com.