Advanced Fibre Communications, Inc. and Marconi Communications Announce Distribution Agreement and Settlement - Company Business and Marketing

Cambridge Telcom Report, Feb 14, 2000

Advanced Fibre Communications, Inc. of Petaluma, California and Marconi Communications, headquartered in Pittsburgh, Pennsylvania, announced Monday that they have entered into an agreement under which Marconi will distribute AFC's UMC1000 Multi Service Access Platform in the following countries: People's Republic of China, Hong Kong, Singapore, South Korea, Taiwan, Indonesia, Malaysia, Philippines, Thailand, Vietnam, India, Brazil, Russia, Subsaharan Africa (excluding South Africa), Croatia, Slovenia, Romania, Albania, Hungary, Bulgaria, Latvia, Estonia, Lithuania, Turkey, Greece, Czech Republic, Slovakia, Norway, Sweden, Finland, and Denmark for a period of three (3) years. The distribution agreement allows Marconi to offer a broader line of products to its current and prospective customers in these countries. At the same time, AFC will benefit from Marconi's established presence in these countries.

The distribution agreement does not preclude AFC from direct sales or development of additional sales channels in these countries. Pursuant to the agreement, Marconi expects to purchase for resale $110 million of AFC's UMC1000 product line as follows: $30 million in 2000, $40 million in 2001 and $40 million in 2002. If these amounts are exceeded in any given year Marconi will receive credits for sales in future years. If Marconi does not achieve these amounts in any of the three years, Marconi will pay AFC certain amounts in lieu of product purchases.

In recognition of this agreement and a cash payment of $32.75 million by Marconi, AFC and Marconi have agreed to settle the lawsuit between AFC and RELTEC Corporation, which has since been acquired by Marconi.

AFC's UMC1000 offers service providers a high-density, multi-band (narrowband, wideband, and broadband) access solution for residential and business customers. The UMC1000 has been designed for urban, suburban, and rural applications and is well suited for the growing network providers in these identified countries. The UMC1000 will be distributed through Marconi's existing sales channels and offered as part of combined network solution packages to customers as well as being offered as individual components. John Schofield, President and CEO of AFC summarized the terms of the agreement by saying, "This agreement provides benefits for both companies."

Marconi is the world's number one supplier of SDH systems and is extending this leadership into all optical photonic networks and ATM switching. These elements of the new broadband next generation networks are complemented by a complete range of access technologies. Dudley Sheffler, President of Marconi North America said, "Marconi has a long heritage of providing industry leading telecommunications solutions, which continues with both our own developments and business relationships like this one. We look forward to our new relationship with AFC."

AFC is a leading manufacturer of end-to-end distributed multi-service access solutions for the local loop. Its Universal Modular Carrier (UMC1000) product family consists of a variety of industry-leading multi service access platforms with integrated optics and intelligent CPE. The platform utilizes a hybrid ATM/TDM architecture which provides a variety of loop interfaces for POTS, Dataports, ISDN, Coax, T1, HDSL, and ADSL services over various feeder transmission options, including T1, HDSL, fiber, and wireless.

Marconi plc (London: MNI) is one of the world's fastest growing communications and IT companies with a strong record of innovative and technological breakthroughs. It is a world leader in smart broadband and optical networks and it supplies the key technologies for the New Public Network and the Internet. With 45,000 employees worldwide and sales in over 100 countries, it is listed on the London Stock Exchange. The headquarters of Marconi Communications is in Pittsburgh, Pennsylvania.