LONDON -- FLAG Telecom Group Limited (OTC: FTGLF.PK), a leading provider of international wholesale network transport and communications services, today announced that it has entered into an Agreement and Plan of Amalgamation with Reliance Gateway Net Private Limited, a wholly owned subsidiary of Reliance Infocomm Limited, pursuant to which Reliance Gateway will acquire 100% of the company’s common shares on a fully diluted basis for an aggregate purchase price of $207 million, reflecting a per share price of $95.61. It represents a premium of more than 50% over yesterday’s closing price of FLAG’s shares.

The Amalgamation Agreement has been unanimously approved by the board of directors of both FLAG Telecom and Reliance Gateway.

Patrick Gallagher, Co-Chairman and CEO of FLAG Telecom, said: “We believe this premium offer by Reliance to acquire FLAG represents a strong endorsement of FLAG’s operating strategy and is in the best interests of our shareholders. Reliance is already a key customer on the FLAG global network, one of the most extensive in the world today. We believe that this agreement with Reliance underscores the confidence they have in the future of FLAG and we look forward to the successful consummation of the transaction.”

This agreement is an important first step towards concluding the acquisition of FLAG Telecom, which is subject to certain conditions, including the receipt of regulatory approvals and the approval of FLAG Telecom’s shareholders. A meeting of FLAG Telecom’s shareholders is expected to be held in December 2003 to approve the amalgamation.

Advisors to the Company are Akin Gump Strauss Hauer & Feld LLP, legal counsel, and Houlihan Lokey Howard & Zukin (UK) Limited, financial advisors.

FLAG Telecom Group Ltd.Reliance Infocomm Ltd.