AT&T Signs Agreement to Acquire Netstream - A Major Initiative to Become the Broadband Leader in Brazil's Business Communications Services Market - Company Business and Marketing

Cambridge Telcom Report, August 30, 1999

AT&T Tuesday announced an agreement to acquire Netstream, an emerging Brazilian carrier with an IP-based network providing advanced services to business customers over its own facilities in Sao Paulo, Rio de Janeiro and Belo Horizonte.

AT&T will acquire Netstream from Promon Tecnologia S.A., Brazil's leading engineering, design and construction management firm. In addition to its initial investment of approximately $300 million, AT&T will continue to expand Netstream's network to serve business customers in the major business centers of Brazil.

"Tuesday's agreement follows closely on our recently announced investments in Japan and Canada, and is another step by AT&T to better serve multinational customers by extending our network seamlessly around the world," said John Zeglis, president of AT&T. "Through our acquisition of Netstream, we are extending that reach to and through Brazil, the largest center of economic activity in Latin America."

Through Netstream, AT&T will offer broadband technology to business customers throughout Brazil to enhance and accelerate the delivery of advanced communications services, including voice, data, Internet and electronic commerce services.

Netstream, a telecommunications company, initiated operations in Brazil in October 1998; installing a network based on optical ATM/IP technology in the key cities of Brazil. Netstream already has more than 400 customers and 160 connected buildings, and in excess of 30,000 km of fiber optics. Coupled with AT&T's global reach and powerful brand, Netstream will provide business customers with significantly improved communications services in Brazil.

The acquisition of Netstream will continue AT&T's entry into local business markets in the region, which began with the investment of Alestra in Mexico. Alestra, AT&T's venture with Alfa and Bancomer, is the leading new long distance carrier in Mexico delivering global communications services to business and high-end residential customers.

"We believe this is good news for business customers in Brazil and the region. We will contribute to the fast changing telecom environment, bringing additional competition, providing customers with more and better choices at competitive prices and providing next generation technology," said George Foyo, president and managing director of AT&T -- Caribbean & Latin American Region. "This is a clear demonstration that AT&T intends to grow with the Brazilian market place."

Brazil is the largest business center in Latin America and it has the largest concentration of multinational corporations. The Brazilian telecommunications industry is undergoing a very exciting transformation making it a dynamic and growing industry. The telecommunications industry is a $14 billion market, with business representing $9 billion, and advanced data services growing in excess of 20% a year.

With the acquisition of Netstream, AT&T can provide business customers advanced, seamless, end-to-end services linked to the AT&T/BT Global Venture for regional and international connectivity to over 100 cities around the world.

"AT&T's investment in Netstream is a significant initiative that strengthens the global venture's ability to support the seamless, transborder communications needs of multinational customers to and from Brazil," said David Dorman, chief executive officer of the AT&T/BT Global Venture.

As a Brazilian operating entity, Netstream will continue to be managed by its current local leadership, which will work closely with AT&T global operations.

"The Netstream project is very special to Promon. As engineers and entrepreneurs, we have dedicated our best efforts and abilities to make it a success. Its sale to a communications company of the magnitude of AT&T is a natural consequence of its evolution and represents prospects of great success for Netstream in the future," said Carlos Siffert, chief executive officer Promon Tecnologia S.A.

Promon Tecnologia S.A. is one of the leading Brazilian corporations providing engineering solutions to the telecommunications, energy, petroleum, chemical, petrochemical, transportation and manufacturing industries.

During its 40 years of operation, Promon has been engaged in large-scale telecom projects and enterprises such as hydroelectric and thermoelectric power plants, and transmission systems, mining and petrochemical and transportation projects.

Promon Tecnologia S.A. ended 1998 with operating revenues of R$959 million, ranking it amongst the top 100 national conglomerates (as rated by the annual statement of Gazeta Mercantil and the list of Best & Greatest from Revista Exame). Promon is headquartered in Sao Paulo, Brazil and has offices in Rio de Janeiro, Campinas, Brasilia, Manaus and Bogota, Colombia. For more information about Promon Tecnologia S.A., please access web site www.promon.com.br.

AT&T is the world's premier voice and data communications company, serving more than 80 million customers, including consumers, businesses and government. With annual revenues of more than $53 billion and more than 108,000 employees, AT&T provides services to more than 280 countries and territories around the world.