Moody's Slashes Alcatel

PARIS -- Today Alcatel's (Paris: CGEP.PA and NYSE: ALA) long term debt credit rating has been downgraded from Baa2 to Ba1 by Moody's. Inview of the fact that Alcatel has further strengthened its balance sheet and cash situation, today's decision appears to be mainly based upon the rating agency's negative outlook for the telecommunications market.As previously mentioned on July 3, 2002, rating trigger clauses wereremoved earlier this year when the Group's credit facilities weresuccessfully re-negotiated with several financial institutions. As of June30, 2002, Alcatel has more than 4 billion Euro cash on hand and its netdebt has been reduced well below 2 billion Euro. Total debt maturing withinthe next 12 months amounts to around 200 million Euro. Over the next 24months, total debt repayments represent only an additional one billion Eurowith the next significant repayment not due until September 2003. Alcatelhas generated positive operating cash flow both in Q1 and Q2 2002 andexpects full year operating cash flow to be positive as well.Alcatel SAMoody's Investors Service