FLAG TELECOM DOUBLES CAPACITY OF KEY SEGMENTS OF THE FLAG EUROPE.

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LONDON, March 31 PRNewswire-FirstCall-Asianet - FLAG Telecom Group Limited(OTC: FTGLF.PK) (the "Company" or "FLAG Telecom") today announced a capacity expansion to key segments of its FEA cable system, which links the telecommunications markets of Western Europe and Japan through the Middle East, India, Southeast Asia and China. This upgrade will double the system's capacity on key segments from the U.K. to the Middle East (from 10 Gigabits/s to 20 Gigabits/s). By applying Dense Wave Division Multiplexing (DWDM) technology, Fujitsu Limited, the contractor for this phase of the capacity expansion program, anticipates that FEA's original capacity can ultimately be increased by a factor of eight.

This project is a part of a three-phase capacity expansion program for FEA. In the first phase, which has been operational since February 15th 2003, the segments from Skewjack (U.K.) to Alexandria (Egypt) were upgraded from 10bps to 20Gbps. The second phase, for which coordination with FEA's landing partners has started, is anticipated to upgrade the segments from Alexandria to Fujairah, also from 10Gbps to 20Gbps. The third phase is expected to upgrade the segments from Fujairah to Hong Kong on an as needed basis. An aggressive plan to implement the first phase of the upgrade within three months was successfully achieved on schedule.

This program has demonstrated technically and operationally that FLAG Telecom is able to apply up to date technologies to upgrade a system that is carrying in-service traffic cost effectively, as dictated by demand, and with virtually no impact to current customers' service. This ability reinforces FLAG Telecom's position in the global carrier community and is expected to enable FLAG Telecom to meet the future capacity needs of, among others, the Middle Eastern region.

FLAG Telecom's Chief Technology Officer Andrew Evans stated, "Upgrading FEA enables FLAG Telecom to target future demand for high quality transport services especially in the Middle Eastern markets. By applying technology that is available today, we expect to be able to add capacity significantly in excess of the original design capacity of FEA in a cost effective manner, and with virtually no impact on our customers".

"We are delighted to have been awarded the contract for this phase of the FEA capacity upgrade program," commented Mr. Yukio Mizuochi, Group Vice President of Fujitsu's Submarine Networks Division. "FLAG Telecom is a respected and capable player in the industry. Even in the current challenging market conditions, FLAG continues to sell, driving a need for this additional capacity upgrade. We are proud to be providing an important part of FLAG Telecom's infrastructure".