MediaOne Group and Cable & Wireless Agree Sale of One 2 One To Deutsche Telekom for Total 8.4 Billion British Pounds - Company Business and Marketing

Cambridge Telcom Report, August 16, 1999

MediaOne Group, Inc. (NYSE: UMG) and Cable and Wireless plc (NYSE: CWP) have announced (6 August 1999) that they have agreed to sell One 2 One, the United Kingdom mobile telecommunications operator, to Deutsche Telekom (NYSE: DT). The transaction places a total enterprise value of 8.4 billion British pounds on One 2 One.

Gary Ames, President & CEO of MediaOne International, said: "We are delighted with this transaction. This is a great price for a great business. For our shareowners, this deal represents an excellent return on our approximately 300 million British pounds investment. As we continue to extract value from our international joint ventures, the successful sale of One 2 One further proves the increasing value of our high growth international interests in Europe and Asia."

Graham Wallace, Chief Executive of Cable & Wireless, said: "This transaction is a further step in delivering our strategy to reposition Cable & Wireless by focusing on data and IP services to business customers, simplifying the corporate structure and strengthening our financial position. One 2 One is a very successful business and a sale at 8.4 billion British pounds represents excellent value for our shareholders."

Deutsche Telekom will pay the joint venture partners 6.9 billion British pounds in cash for 100 per cent of the equity ownership interest in One 2 One including the repayment of 237 million British pounds of shareholder loans, and will assume approximately 1.5 billion British pounds of third-party debt. Cable & Wireless will use its share of the sale proceeds to reduce borrowings and to fund its ongoing capital expenditure program.

One 2 One is a 50 per cent / 50 per cent joint venture partnership between Cable & Wireless and MediaOne Group. Since its launch in September 1993 as the world's first 1800-GSM Personal Communications Network, One 2 One has achieved significant growth in terms of customers and network coverage. Its subscriber base has increased approximately 90 per cent per year over the last two years and stood at 2,650,000 by 30 June 1999. One 2 One's network coverage recently achieved parity with its competitors, with coverage of 97 per cent of Great Britain's population and currently has more capacity per customer than any other UK operator. It handles in excess of 130 million calls per week over the network. One 2 One customers can use their phones in 55 territories on five continents.

For the year to 31 March 1999, One 2 One reported EBITDA of 112 million British pounds on revenues of 781 million British pounds, an operating loss of 52 million British pounds, and had net liabilities (excluding shareholders' loans) of 394 million British pounds.

It is expected that the transaction will be completed by the end of September 1999. Completion is subject to clearance under the EC Merger Control Regulations and approval by the Supervisory Board of Directors of Deutsche Telekom.

Lehman Brothers and Merrill Lynch International acted as financial advisers to MediaOne Group and Cable & Wireless, respectively.

MediaOne Group (NYSE: UMG) is one of the world's largest broadband communications companies, bringing the power of broadband and the Internet to customers in the United States, Europe and Asia. The company also has interests in some of the fastest-growing wireless communications businesses outside the U.S. For 1998, the businesses that comprise MediaOne Group produced $7.1 billion in proportionate revenue. On 6 May, 1999, the company entered into an agreement to merge with AT&T.

With customers in 70 countries, Cable & Wireless is a major global telecommunications business with revenue of around 8 billion British pounds in the year ended March 1999 and over 50,000 employees. Its businesses around the world offer a range of services spanning broadband data and Internet access, fixed and mobile voice, as well as interactive entertainment and information. Cable & Wireless' priority for expansion is the fast growing market of data and IP (Internet Protocol) services for business customers. Since November 1998, it has announced major investments in advanced networks in the US and Europe, the restructuring of Cable & Wireless Communications in the UK and has acquired full control of Cable & Wireless IDC in Japan to support this strategy. Cable & Wireless now holds a unique position in terms of global coverage and services to business customers.