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| Summary: Global
Telesystems Group H. Brian Thompson, Chairman and CEO 
Biography Under Thompson's leadership, LCI advanced from an annual revenue run rate of US$220 million in 1991 (which had declined by 15 percent over the previous year) to a rate of over US$2 billion in 1998, and from a negative net worth to an enterprise value of more than US$5 billion at the time of LCI's merger with Qwest. The company came to serve all segments of the market - residential, business and government - providing long-distance voice and data services in the U.S. and to more than 230 international locations. With operations in more than 60 locations, the company also began offering local telephone service in 1997 in key U.S. markets. Thompson previously served as executive vice president of MCI Communications Corporation from 1981 to 1990, with responsibility for the company's eight operating divisions, including MCI International. During his 10 years with MCI as a senior executive, he contributed greatly to that company's growth from $230 million to $8 billion in revenue and to the internationalization of the company. Prior to MCI, Thompson was a management consultant with the Washington, D.C. offices of McKinsey & Company for nine years, where he specialized in the management of telecommunications and technology enterprises. His clients included ATT, GTE, Comsat and Intelsat. He currently serves as a member of the board of directors of Bell Canada International Inc., Williams Communications Group, Inc., and DynCorp, and as a member of the management committee of Paging Brazil Holding Co., LLC. He formerly served on the board of Comcast UK Cable Partners Limited, and is a former chairman of the U.S. Competitive Telecommunications Association (CompTel). He is also a member of the Chancellor's Executive Committee of the University of Massachusetts and a trustee of Capitol College in Laurel, Maryland. Thompson serves as the U.S. co-chairman of the Global Information Infrastructure Commission, a multinational organization launched in Brussels in 1995 to chart the role of the private sector in the developing global information and telecommunications infrastructure. He also serves as a member of the Irish Prime Minister's Ireland-America Economic Advisory Board, served as chairman of the Advisory Committee for Telecommunications for Ireland's Department of Public Enterprise, and for the period January-March 1999 he also served as non-executive chairman of Telecom Eireann, Ireland’s incumbent telephone company. Thompson received his MBA from Harvard's Graduate School of Business and holds an undergraduate degree in chemical engineering from the University of Massachusetts.
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| Evolution of a
Company Our history is unlike that of any other company that serves the European market. We started in 1983 as part of an effort to allow Moscow to talk with Washington, D.C. In the beginning we were a non-profit company whose mission was to bring X.25 communications capabilities to bear on the U.S.-Soviet relationship. In 1986 because of successful relationships built with the Soviet hierarchy, the company was given the grant of a license to enter a supporting activity and reform itself as a profit-making entity. The rest is an interesting history but as late as two years ago, the percent of revenue of the company derived from the former Soviet states was 45%. Through a series of 10 different acquisitions and investment in a project called Hermes in Western Europe, we became a carrier's carrier company while providing data overlay services in Russia. We recently spun off all the Russian assets as a separate IPO and we have 62%. It's gone from $12 to $41 a share. There's a great deal of interest in what's happening in Russia. Positioning and
Strategy
Our business services organization is focused on business to business communications needs in Europe and beyond. Our customers have been mostly small and medium businesses but include pan-European corporations as well. Most customers come from the SME area but that's mostly history, not the future. The key vision in assembling these acquisitions was to take revenue streams, put them on the backbone of this company, improve the gross margins of those businesses, and structure a widely deployed pan-European sales and service organization. Our mission is not to be a voice-centric company. We have over 800 sales and service people in 81 offices the breadth of Europe. We have over 100,000 customers. We are also a significant carrier services company with the largest deployed pan-European network. We have the largest ISP-based backbone, or E-bone in Europe. Beyond that, we are serving carriers. We have grown by becoming a partner with data-intensive and multimedia companies. Finally, last fall, we announced our strategy to move aggressively into the e-business sector, employing the strength we have consolidated in all of our assets and acquisitions. The
Underlying Capability: The Pan-European Network
Business
to Business Services
e-Business: Data and IP
Carrier
Services
Results
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H. Brian
Thompson was elected chairman and chief executive officer of Global
TeleSystems Group, Inc. in March 1999. As a veteran senior executive of the
telecommunication industry, Thompson has been instrumental in impacting the
rise of competitive telecommunications both in the U.S. and abroad. Thompson
previously served as chairman and CEO of LCI International. He joined LCI in
1991, and with his team, led the turnaround of the company and its emergence
as one of the fastest growing telecommunications companies in the U.S.
Subsequent to the merger of LCI with Qwest Communications International Inc.
in June 1998, Thompson became vice chairman of the board for Qwest until his
resignation in December 1998. 
We operate the largest pan-European
network in existence. It's an entirely GTS backbone. It consists of 17,000
miles of lit fiber and a second fiber that's being lit. In every city pair,
we will have a full terabit capacity on two fibers. Because we have a mesh
network, we will enter each city at 3 or 4 locations (5 in Paris, or 5
terabits of capacity serving Paris). That's lit capacity, not a promise of a
build. We serve over 30 cities today. We've announced four new data centers
in addition to the one that we just acquired with the acquisition of the ISP
Netcom in the UK. They have an 8,000sf facility that's almost full. We have
end-to-end connectivity in the five city enterprise networks that are
operating, and we'll be in 16 by the end of the year. In the cities we are
bringing our network down to the customer where the customer lives. Those
are loops that have 150 fibers each capable of carrying 2.5gigabits
throughout the city. Finally, we have the FLAG FA-1, a 2.4 terabit
transatlantic fiber with two fibers. It's one of the leading capabilities
that will be operational this time next year. Our e-bone is the leading tier
one European ISP. We interconnect our traffic at the IP space at an
optically switched base. We are merging the entire switch base and
optimizing the network as we go forward. That will be completed in the next
4-6 months. That represents a very important transition of 46 switches into
a physical facility that can deal with the transmission of voice traffic and
with traffic on the broadest band and highest usage backbone that exists in
Europe. Because there are six companies digging trenches all over Europe, we
thought it was time to expand our capacity on a parallel basis. We will
acquire duct and fiber on that duct to serve the six major cities of Europe
where most of the traffic is. 
We have 25% market share of
European e-bone, and 350% volume growth between 3rd and 4th quarter. There
were 113 ISP's connected at the end of the year in 21 countries. We have a
premier pairing relationship back to the US-25 STM-1's, about 75% of which
is Internet data traffic. We have 58 carrier POPs in 30 cities and 16 IP
nodes in 15 cities. We have 5 city enterprise networks and will be growing
to 16 by the end of this year. We own 46 voice switches in 38 cities. The
number of switches will be reduced to optimize the network as we move to
voice over IP. 
Ten percent of our revenues are
pure data. We will seek broadband local access solutions that will interact
with our backbone. Last year was a year of restructuring, branding new
products, bringing together our management team, developing new products. We
are focusing on rolling out a series of data and IP activities. We are
operating in broadband networking, in managed connectivity services, in
communication services using ISP capabilities, in web-hosting and
e-commerce, and in web-based applications. These are the service packages we
have identified. We are in the process of implementation. Moving forward, we
will build data and web-hosting facilities. We will announce more on the
data centers in the next few days. They will all be operational by July of
this year. With the acquisition of Netcom in the UK, we are already
operating and delivering data services to the British community. We will
assemble city enterprise networks that will provide us with rings in each of
the cities. A city network is a CLEC in the sense of being connected to the
customer in the marketplace. Those connections will include fixed wireless
and DSL as those technologies roll into Europe. We do have direct
connections to all our customers. We will put our data centers directly on
our network in these city enterprise areas. There will also be locations
where we manage data networks for other companies, taking the capability
directly to their telehouses. Over 200 people in our sales force are focused
on the IP and data space. This focus is a major development activity and
shift for us. It must be done because our future is in the data and IP
business. The Netcom acquisition is a jewel. They have a full sweep of data
and IP products. They maintain a solid base of customers including 3,600
web-hosting customers, 600 dedicated high-speed customers, and 14,000
dial-up businesses and professionals. They are joined at the hip with many
consulting organizations that are taking them into business to business
applications. Finally, these data and IP, product and service initiatives
are not going to be done only organically. We're negotiating partnerships
and relationships with names you'd all recognize.