Press Release

Paris, July 11th, 2002 - Alcatel (Paris: CGEP.PA and NYSE : ALA), the world leader in optical networking and point-to-point microwave radios, announced it has signed a multi-million Euro frame agreement with H3G - a subsidiary of Hong Kong's Hutchison Whampoa, one of the world's leading operators of telecommunications and Internet infrastructures - to implement H3G's backbone and metropolitan transmission networks in Italy. Under the terms of the agreement, Alcatel will supply its DWDM and SDH multi-service transport systems, as well as its new generation of SDH microwave radio systems, on a turn-key basis. Their deployment will secure H3G's transmission platform the degree of flexibility required to support a wide range of broadband and UMTS-based services, while maximizing savings in network's total cost of ownership.

Spanning about 6,000 km from Turin in the North to Palermo in the South of Italy, the national backbone will deploy Alcatel's DWDM system - supporting up to 32 channels working up to 10Gbit/s - and SDH Optical Multi-Service Node (OMSN) systems. OMSNs for metro applications, together with Alcatel's SDH high-capacity urban microwave radio systems, will also be implemented in the metro rings planned in the major Italian cities. H3G's overall network will be supervised by Alcatel's unified network management solution, able to monitor both SDH fiber and radio as well as DWDM transport infrastructures.

"The agreement with Alcatel is another step in our strategy to carry out high-quality infrastructures and technological platforms. Joined with the exclusive content we have acquired, it will let us present a winning offer to the market," said Bob Fuller, H3G Ceo.

"We are pleased to support H3G in preparing the advent of Italy's new third-generation mobile world" said Christian Reinaudo, President of Alcatel's optics activities. "Our commitment to speeding up high-tech transmission innovations will allow H3G to make communications faster and easier for its customers."

The selection further consolidates Alcatel's recognized reputation as a reliable technological partner for its customers, based on hundreds thousands of innovative solutions deployed for the main service providers worldwide.

Alcatel's terrestrial transmission product portfolio

Alcatel supplies a complete product portfolio of world-class managed transmission solutions, for both backbone and metropolitan applications, to help operators move traffic efficiently throughout the network, while minimizing capital and operational expenditures. Designed with distinctive and enduring features, Alcatel's transport systems enable carriers to offer a full range of revenue-generating broadband services to business and residential users with differentiated Quality of Service. A flexible platform efficiently allocating bandwidth in minutes, the Alcatel Core Solution integrates the best of Alcatel's optical cross-connects, DWDM systems that support up to 160 channels @10Gbit/s, upgradable to 240 channels, for long/very long/ultra long-haul applications and 10Gbit/s TDM systems. The Alcatel Metro Solution - including metro DWDM systems and data-aware Optical Multi-Service Nodes (OMSNs) and Optical Multi-Service Gateways (OMSGs) - brings high-bandwidth capacity to metro networks at low-cost, delivering diversified services (Storage Area Networks, ATM services, Ethernet and Gigabit Ethernet services, optical Virtual Private Networks, ADSL and UMTS transport, video-conferencing and web-hosting) that make the most from carriers' investments. Equipped with ISA (Integrated Service Adapter) plug-in cards, OMSNs extend the already-rich range of PDH/SDH TDM interface ports available to ATM switching, IP/MPLS routing, Ethernet (10, 100, 1000 Mbit/s) rate-adaptive transport and transparent Gigabit Ethernet capabilities. Both Solutions incorporate proven modular expansion capabilities that allow service providers to expand or upgrade their networks in service, thus optimizing bandwidth usage and reducing both transport infrastructure costs and time-to-market for the introduction of new data services in the network.

A variety of network configurations, including multiple rings and mesh structures, can be implemented together with different protection and restoration mechanisms, to fit operators' requirements concerning traffic matrix, traffic availability, bandwidth usage, physical network topology.

Efficient traffic control and routing throughout all network levels, bandwidth-on-demand and virtual private networks (VPN) are made available by Alcatel's integrated Network Management solution, also supporting evolution towards the Generalized Multi-Protocol Label Switching (GMPLS) protocol.

About Alcatel's wireless transmission activities

In wireless transmission, Alcatel's full-range catalogue comprises high, low-medium capacity microwave systems - based on PDH (Plesiochronous Digital Hierarchy), SDH (Synchronous Digital Hierarchy) and North American standard technologies - for business, mobile broadband distribution and private network applications. All the mentioned radio systems are managed by one common and fully integrated network management platform. Alcatel has installed more than 250.000 radios in more than 150 countries.

About H3G

Upon obtaining a UMTS license in Italy in November 2000, with an offer of 3,253 million Euro, H3G is now aiming at becoming the first Multimedia Mobile Operator of the Italian market. Hutchison Whampoa is the majority shareholder with 88.2% of the corporate capital, and is joined by first-rate Italian and international players in telecommunications, Internet and new media, publishing and banking, like S. Paolo Imi, CIR, HDP, BMI, Gemina and Tiscali.
For further information: www.h3g.it

About Alcatel

According to leading telecom market research firm RHK, Alcatel was the 2001 world leader in global optical transport - encompassing terrestrial and submarine applications - with 17% market share, in terrestrial optical transport with 14.2% market share and in submarine optical transport with 41% market share, an unprecedented achievement in the telecom industry. Alcatel's optics business comprises optical components, optical fibers, SDH/SONET and DWDM systems, cross-connects, microwave radio links, network intelligence, and services for both terrestrial and submarine applications.

Alcatel designs, develops and builds innovative and competitive communications networks, enabling carriers, service providers and enterprises to deliver any type of content, such as voice, data and multimedia, to any type of consumer, anywhere in the world. Relying on its leading and comprehensive products and solutions portfolio, stretching from end-to-end optical infrastructures, fixed and mobile networks to broadband access, Alcatel's customers can focus on optimizing their service offerings and revenue streams. With sales of EURO 25 billion in 2001 and 99,000 employees, Alcatel operates in more than 130 countries. For more information, visit Alcatel on the Internet: http://www.alcatel.com

For more information