GTS to Acquire Netcom Internet Ltd., One of the U.K.'s Leading Internet Service Providers

Global TeleSystems (GTS) (NYSE: GTS; Easdaq: GTSG; Frankfurt: GTS), the leading provider of e-Business and borderless broadband services across Europe, today announced that it has entered a definitive agreement with Providence Equity Partners L.P. to acquire Netcom Internet Limited (Netcom), one of the United Kingdom's leading Internet Service Providers focusing on the business-to-business market, for GTS common stock valued at $91.5 million.

The addition of Netcom's award-winning Internet and e-Business product and service set, highly skilled workforce, blue-chip customer base and established Internet infrastructure - including a successful Web hosting center in the heart of the U.K.'s high-tech corridor near London - will accelerate GTS's rapid development into a complete pan-European e-Business leader.

Netcom currently serves over 3,600 Web hosting customers, nearly 600 dedicated and high-speed Internet access customers and 14,000 subscriptions-based dial-up customers who are mostly business and professional users seeking quality access, value-added services and customer support.

The company's extensive range of services includes dedicated and shared Web hosting; server co-location; e-commerce and security solutions; dedicated and dial-up Internet access; Internet protocol virtual private networks (IP VPNs); business-to-business exchanges; on-line data back-up; statistics collection and monitoring; and service-level monitoring. Netcom's annualized revenues are $15 million (unaudited).

Often cited for service excellence, Netcom was selected as "ISP of the Year" by PC Pro magazine in 1998, 1999 and 2000 and has received several other awards for quality and service since the company was founded in 1996. These awards are based on user readership surveys. The company's extensive list of well-known, blue-chip customers includes Virgin, Siemens and Cap Gemini.

H. Brian Thompson, GTS's chairman and chief executive officer, commented on the strategic importance of the deal: "Netcom's exceptional management and sales teams have created an Internet business that clearly stands out as one of the best in the U.K. Adding this prized asset to our existing e-Business network and service capabilities immediately gives us greater depth and strength by increasing the range of services we can offer and by enhancing our IP sales channels and skills."

"In addition," Thompson continued, "we expect to generate significant network synergies by shifting Netcom's European and trans-Atlantic traffic to our Ebone network and by offering additional e-Business and borderless broadband services to Netcom's large and impressive base of customers. By adding Netcom to GTS's unrivaled set of pan-European assets, I believe we are creating significant additional value for both our shareholder groups."

Rod Attwooll, Netcom's managing director, said, "We have succeeded in creating a highly successful business that stands out in a competitive market by sticking to the fundamentals - excellent customer service, innovative products and value for money. GTS shares these values and joining with them introduces an exciting new growth phase for Netcom. Being part of GTS should not only accelerate our growth but provide the essential pan-European network, customer support and product development infrastructure required to continue to innovate and flourish in this market."

He added: "GTS's recent announcement of its pan-European dedicated Internet access service and plans for new Web hosting centers are excellent examples of the kind of initiatives that will create significant future revenue growth potential for our customers."

Netcom employs a staff of about 100 (of which 45 are sales, marketing and customer support personnel). With its principal offices in Bracknell, Netcom is located in the heart of the U.K.'s high-tech corridor. GTS will seek to integrate network operations by the end of this year and will immediately begin integration of sales channels in order to capitalize fully on cross-selling opportunities. All Netcom's senior management are expected to stay with the combined entity.

Netcom was formally affiliated with Netcom, Inc. The company was acquired by affiliates of Providence Equity Partners L.P. in March 1999.

GTS management stated that revenues from Netcom will be reported in GTS's Business Services revenue line and that Netcom's financial results are not expected to materially affect GTS's earnings before interest, taxes, depreciation and amortization, or EBITDA, positively or negatively in 2000.