LEVEL 3 TO BUILD TRANSATLANTIC TERABIT CABLE SYSTEM
Tyco Submarine Systems Signs Agreement to Design and Develop High Capacity Undersea Cable
OMAHA, NE, April 23, 1999 – Level 3 Communications, Inc. (Nasdaq: LVLT) today announced that it will build a transatlantic terabit cable system. The company has reached an agreement with Tyco Submarine Systems Ltd. (TSSL) for the design and development of the high capacity undersea cable. The cable system is already under development and is expected to be in service by September 2000. The cable will be upgradeable to a total capacity of 1.28 terabits per second. For reference, a 1.28 terabit cable system is capable of transporting the contents of the U.S. Library of Congress across the Atlantic in less than 16 seconds. The cable will run from Long Island, New York, the landing point on the East Coast of the U.S., to North Cornwall, the landing point on the West Coast of the UK. An option for construction of an additional cable has also been entered into with Tyco to provide for complete end-to-end redundancy.
Level 3 estimates that the total cost to build the first cable, including both the undersea and land-based portions of the system, will be between $600 million and $800 million. The total cost will depend on how the cable is upgraded over time. The company has prefunded the purchase of significant amounts of undersea capacity as part of its business plan, but may require additional funding depending on the cable's ultimate structure, pre-construction sales and ownership.
"Based on preliminary discussions regarding both on and off-balance sheet financing options, we are confident of Level 3's ability to secure incremental funding if necessary," said Douglas Bradbury, chief financial officer of Level 3. The system will provide a critical link in Level 3's international Internet Protocol (IP) network. In the U.S., the company is building a nearly 16,000 mile intercity, or long distance, network that will connect its 50 local U.S. city networks. Level 3 is also building an approximately 3,500 mile intercity network that will connect 15 local city networks in Europe. A total of 21 city networks are planned for financial centers across Europe and the Pacific Rim.
The company currently has purchased capacity on three transatlantic cables and is part of a consortium that is building a transpacific cable. "With this transatlantic cable system, Level 3 will have the vital link to connect our high capacity networks which are being built in the U.S. and Europe. We're excited at the prospect of providing end-to-end IP based services to our customers worldwide," stated Colin Williams, president of Level 3 International. "By significantly lowering our cost base between any city in Europe to any city in the U.S. we will be able to offer very aggressive price reductions over time, comparable to the reductions we expect to implement on our terrestrial networks. We intend to expand the market for capacity by continually seeking ways to reduce the underlying costs of capacity and passing those cost savings on to our customers." "This agreement with Tyco is a major milestone for both Level 3 and the international telecommunications community," said Williams.
"TSSL is a leader in their field and has great experience in this arena. The Level 3 transatlantic cable will incorporate the world's most advanced undersea communications technology designed for high bandwidth services. By linking the Level 3 U.S. and European networks, we will be able to connect our customers end-to-end, over a seamless international high capacity system." "Level 3 is a world class organization with proven professionals that is defining innovation and leadership in fiber optic telecommunications," stated Neil Garvey, president of TSSL. "Our two organizations have worked diligently to bring this project to reality, and the results will set new standards of achievement in the subsea fiber optic, telecommunications marketplace. We intend to work very closely with Level 3 to meet their undersea telecommunications needs for their international network."
About TSSL: Tyco Submarine Systems Ltd., a wholly owned subsidiary of Tyco International Ltd., is an independent supplier of undersea communications systems and services. TSSL owns and operates a fleet of world class cable ships for the installation and maintenance of undersea communication network systems. Leading edge fiber optic technology is provided by the internationally distinguished TSSL Labs located in Eatontown, New Jersey. The completely integrated manufacturing capabilities of TSSL are highlighted by cable, repeater and transmission equipment manufacturing facilities located in New Hampshire, New Jersey and Virginia. TSSL has combined these capabilities to successfully complete 85 undersea fiber optic networks, in excess of 350,000 kilometers of fiber optic cable connecting over 100 countries. For more information on TSSL or Tyco International, please visit the Web sites listed below. Tyco International Ltd.: www.tycoint.com and Tyco Submarine Systems Ltd.: www.submarinesystems.com.
About Level 3 Communications
Level 3 Communications, Inc. (NASDAQ: LVLT), an international communications company, operates one of the largest Internet backbones in the world, connecting 180 markets in 18 countries. The company serves a broad range of wholesale, enterprise and content customers with a comprehensive suite of services including: Internet Protocol (IP) services, broadband transport and infrastructure services, colocation services, voice and voice over IP services, content delivery and media distribution services. These services provide the building blocks to enable Level 3’s customers to meet their growing demands for advanced communications solutions. The company’s Web address is www.Level3.com.
"Level 3 Communications,” "Level 3," the red 3D brackets and the Level 3 Communications logo are registered service marks of Level 3 Communications, LLC in the United States and/or other countries. Level 3 services are provided by wholly owned subsidiaries of Level 3 Communications, Inc. Any other service, product or company names recited herein may be trademarks or service marks of their respective owners.
Forward-Looking Statement
Some of the statements that we make in this press release are forward looking in nature. These statements are based on management’s current expectations or beliefs. These forward looking statements are not a guarantee of performance and are subject to a number of uncertainties and other factors, many of which are outside our control, which could cause actual events to differ materially from those expressed or implied by the statements. The most important factors that could prevent us from achieving our stated goals include, but are not limited to our ability to: successfully integrate acquisitions; increase the volume of traffic on our network; defend our intellectual property and proprietary rights; develop new products and services that meet customer demands and generate acceptable margins; successfully complete commercial testing of new technology and information systems to support new products and services; attract and retain qualified management and other personnel; and meet all of the terms and conditions of our debt obligations. Additional information concerning these and other important factors can be found within Level 3’s filings with the Securities and Exchange Commission. Statements in this press release should be evaluated in light of these important factors. Level 3 is under no obligation to, and expressly disclaims any such obligation to, update or alter its forward-looking statements, whether as a result of new information, future events, or otherwise.
