FLAG Telecom (Nasdaq: FTHL; LSE: FTL), a global network services provider and independent carriers' carrier, announced it has been advised that a subsidiary of Verizon Communications Inc. (Verizon) has exercised an option to sell 15 million of its shares in FLAG Telecom to TGN Holdings Ltd, a subsidiary of Tyco International Ltd. (Tyco). Following the sale, Verizon owns approximately 18.6 percent, and Tyco owns approximately 11.2 percent, of FLAG Telecom's outstanding common stock.

As a result of the sale, Alfred Giammarino and David Riffelmacher, two of Verizon's three designees to the FLAG Telecom Board of Directors, have resigned, and Tyco has waived its right to designate a Director under FLAG Telecom's bylaws. The two vacancies in FLAG Telecom's Board created by these resignations and waiver will create additional casual vacancies pursuant to FLAG Telecom's bylaws, which the Board of FLAG Telecom intends to fill at a later date.

Verizon and FLAG Telecom continue a close commercial relationship, which was strengthened recently with an agreement to jointly develop a pan-European terrestrial network linking the major business centers in Continental Europe. FLAG Telecom also remains a primary supplier of international subsea capacity to Verizon. As an 18.6 percent shareholder Verizon remains the largest shareholder in FLAG Telecom and will continue to designate one person to FLAG Telecom's Board of Directors.

FLAG Telecom and TyCom Ltd., a subsidiary of Tyco, have worked together since 1995 on the construction of the FLAG Europe-Asia cable. In April 2001, FLAG Telecom and TyCom announced an agreement in principle to jointly develop their previously announced trans-Pacific systems, with TyCom being awarded the subsea construction and maintenance contract and FLAG Telecom, who will own, manage and operate the system, selling four fiber pairs to TyCom.

About FLAG Telecom:

FLAG Telecom is a global network services provider and independent carriers' carrier providing products and services to the international carrier community, ASPs and ISPs across an international network platform designed to support the next generation of IP over optical data networks. For more information, visit www.flagtelecom.com.