Viatel agrees Multi Million Euro Network Deal with Global Voice

London, February 7th, 2006:

Viatel Holding (Bermuda) Limited, the pan-European provider of advanced data and IP communications services, today announced that it has entered into a memorandum of understanding (MOU) to sell 50% of its European long haul network to Global Voice Group Limited (GVG). GVG is currently the owner of 14 metropolitan networks in cities throughout Europe.

Under the proposed transaction, Viatel will receive:

• A cash payment of 25m Euros on closing
• 5 pairs of metro fibre in each of 7 European cities, Amsterdam, Utrecht, Rotterdam, Frankfurt, Hamburg and Dusseldorf and London (when complete) - totalling over 750 route kilometres, and
• Preferential pricing for up to 2 additional fibres and building access.

 

In turn, GVG will acquire half of Viatel's existing backbone network assets through an effective 100-year lease with an option to acquire ownership of the assets at a date to be agreed. Viatel will also assign to GVG existing wholesale customer revenues totalling approximately 2.6m Euros per year.

After an initial period of two years, GVG will also contribute 50% per year in respect of the network's operating costs. In addition, GVG and Viatel will enter into a 50/50 JV company to acquire new equipment ,as and when required, for the purpose of adding "state of the art" transmission equipment to the network.

Through this deal Viatel will be combining ownership of an advanced fibre optic backbone network with metro fibre reach into major business districts. Following closing, Viatel will be able to offer its business customers managed IP network services and Voice over IP direct to their premises without being dependent on local third party suppliers.

Viatel's CEO, Lucy Woods said; "This is an exciting deal for Viatel; our revenue growth has been strong, and with this additional network reach and substantial contribution to our network costs, we will have a platform to extend our addressable market and further improve our services to customers.

The MOU envisages completion of the transaction, following due diligence and full contract negotiation, by 31 March.

Note:

This will add to Viatel's infrastructure which currently consists of:

• A 6,800 kilometre pan-European fibre network connecting Germany, France, Belgium, Holland, Switzerland and the UK, built at a cost of 1.2 billion Euros
• Two undersea cross-channel cables linking Continental Europe to the UK
• Metropolitan fibre network infrastructure in each of Paris, London and Frankfurt

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