Acquisition of Infonet

BT Group PLC
08 November 2004


                                                              November 8, 2004

              BT TO ACQUIRE INFONET TO STRENGTHEN GLOBAL POSITION

   •BT to acquire Infonet for $965m (£520m). Net of Infonet's net cash
    balance, the aggregate value of the acquisition is $575m (£310m)
   •Acquisition boosts BT's position as a global leader for IT and networking
    services
   •BT to benefit from extended global reach, wider customer base and
    specialist skills
   •BT's position enhanced in key markets including North America and Asia
    Pacific
   •Cash synergies of $150m (£80m) in third year following the acquisition

BT announced today it has signed a definitive agreement to acquire Infonet, one
of the world's leading providers of international managed voice and data network
services. The transaction values Infonet at $965m (£520m). Excluding Infonet's
net cash balance of $390m (£210m), the aggregate value of the deal is $575m
(£310m). The deal is subject to Infonet shareholder approval and regulatory
clearances and is expected to complete in the first half of 2005. Shareholders
representing 97 per cent of Infonet's voting share capital have committed to
support the transaction.

The acquisition of Infonet marks a significant step forward in BT's strategy of
addressing the IT and networking services needs of multi-site companies and
organisations. It will greatly extend BT's global reach and will deepen the
company's presence in North America and Asia Pacific. Infonet's recognised
strengths in innovation, product quality and customer service will complement
BT's strengths in the managed network services market.
Infonet's $620m of revenue, from the provision of cross-border services to 1,800
multinational corporate customers, significantly increases that element of BT
Global Services' business.

Commenting on the deal, BT chief executive Ben Verwaayen said: "This is another
milestone in BT's transformation into a leading global provider of IT and
networking services. It is our goal to be the first choice for multi-site
organisations around the world as they address their increasingly complex
communications needs."

BT Global Services CEO Andy Green added: "Infonet brings us specialist skills, a
great customer base, increased global reach and additional local presence where
we need it. By combining the strengths of both companies, we will substantially
improve our ability to help our new and existing customers address the
challenges and opportunities of the digital networked economy."
Jose A. Collazo, Infonet chief executive, commented: "This transaction is great
news for Infonet's customers, employees and partners. Our combination with BT
will improve our ability to supply mission-critical services to our customers,
by bringing a commitment to the long term development of IP-based services
backed by financial strength and true global scale. While continuing to take
full advantage of our existing services and delivery platform, our customers
will also be able to access the whole breadth of BT's product and solutions
capabilities. The company, its management and its employees are excited by the
opportunities that the combination brings, and we look forward to joining the BT
family."

BT expects to realise significant cost savings from combining the two
businesses. Overlapping global network elements will be eliminated and
efficiencies will be achieved, in part through the rationalisation of country
operations, back-office and administrative functions. Already identified actions
are expected to reduce the annual cash costs of the combined businesses by $150m
(£80m) in the third year following the acquisition. Infonet's net tax asset of
£100m will add further value.

The transaction is expected to be cashflow neutral for BT in the first year
following acquisition and positive thereafter. In the first year it will be
dilutive to BT's net earnings by around 0.5 pence per share; thereafter it will
be accretive.

Infonet has local operations in 70 countries. Together with network access in
about another 180 countries, points of presence in about 3,000 cities and strong
sales and support partnerships around the world, Infonet greatly enhances the
reach provided by BT to its corporate customers. As well as a substantial
European business, Infonet brings a significantly improved market presence in
the Americas, a key market for global IP-based services, with $182m of sales. It
also strengthens BT's existing operations in the rapidly expanding economies of
Asia Pacific.

Infonet's recognised market-leading product quality, performance levels and
customer service will complement BT's already strong capabilities. In
particular, Infonet has recognised strengths in value-added services, such as
mobile data, network security and multimedia products
Infonet customers will benefit from BT's scale, financial strength and focus on
global IT and networking services. BT will enhance Infonet's offering to include
broader solutions and services, outsourcing and systems integration, as well as
BT's domestic managed network service portfolio in major markets around the
world.

The integration of Infonet and BT Global Services will be phased to ensure
service quality is maintained during a seamless evolution for customers. Whilst
the transport networks of the two businesses will be combined rapidly, BT will
continue to run the two product sets separately for a period, allowing the best
of each to be incorporated as the service offering is combined. Infonet's
experienced management team, led by its chief executive, Jose A. Collazo, will
remain in place to manage the business, maintain continuity for customers and
assist in the integration of the two customer bases and product sets.
Simultaneous with the acquisition of Infonet, BT will enter into a strategic
relationship with KDDI (a major distributor of Infonet services) to address
network-centric outsourcing opportunities for BT customers in Japan, and also
for KDDI customers outside Japan.

BT is being advised in relation to the transaction by Rothschild and Allen and
Overy LLP.

  A conference call with analysts and investors will be held today at 1000 UK
time. Interested parties should dial in on [phone] (pin code 946404#).
A replay of the call will be available on [phone] (pin number 568831).
Inquiries about this news release should be made to the BT Group Newsroom on its
 24-hour number: 020 7356 5369. From outside the UK dial + 44 20 7356 5369. All
  news releases can be accessed at our web site: http://www.bt.com/newscentre


 Rationale for the Transaction

 BT is at the heart of the digital networked economy and aims to be the first
    choice for multi-site organisations around the world as they address their
    increasingly complex IT and networking services needs. By combining its
    capabilities with Infonet, BT substantially improves its ability to help
    large corporations address the whole spectrum of challenges and
    opportunities of the digital networked economy across all geographies.

 The acquisition of Infonet is a very significant step forward, bringing BT
    1,800 multinational customers with complex cross-border communications
    requirements. Infonet today services customers in six continents with
    award-winning products and highly regarded networking skills.


 A key strength of Infonet is its global reach. With local operations in
    close to 70 countries, its worldwide presence allows customers to rely on it
    for a seamless and effective service, wherever their sites are based.

 Infonet has a strong market presence in the Americas, a strategic market in
    which BT has steadily been building its presence. Infonet's $182m of revenue
    in this region grew last year by more than 30 per cent reflecting a strong
    relationship with such customers as DHL and Nestle.

 Infonet also brings to BT new scale in other regions identified as important
    for international companies - particularly the key European economies and
    Asia Pacific. Its customers in these markets include Siemens, Nokia, Bayer
    AG International, IBM and Hilton International.

 Infonet has a history of 35 years in the international data communications
    industry. It has established highly regarded product sets and service
    levels. It has also recently earned its 10th consecutive overall "Best in
    Class" distinction from Telemark, outperforming Telemark's benchmark for
    each of the ten most important service provider attributes. BT's existing
    customers will benefit from Infonet's cutting edge fault management, order
    management, pricing and billing systems and tools.

 BT expects to see significant benefits from the combination of the product
    sets and customer bases of the two companies. BT's financial strength and
    its commitment to the development of IP-based solutions will enhance
    Infonet's offering to its corporate customers. Infonet customers will for
    the first time be able to acquire in-country, as well as international,
    managed network services from a single truly global source. In addition, BT
    expects to offer its portfolio of IT services, outsourcing solutions and its
    voice communications products to the Infonet customer base.

Recognising the quality of both product sets and their importance to both
    sets of customers, BT intends to operate both platforms in parallel for some
    time. The integration and harmonisation of these will be managed so as to
    continue the best of both for the combined business and its customers.

Notwithstanding this, BT intends to combine the two companies' transport
    networks rapidly and to rationalise their local assets where possible,
    without inconvenience to customers.

Infonet customers will be in a position to benefit from BT's scale,
    financial strength and focus on global IT and networking services. BT will
    enhance Infonet's offering to include broader solutions and services,
    outsourcing and systems integration, as well as BT's domestic managed
    network service portfolio in major markets around the world.

The management team and employees of Infonet, led by President and Chief
    Executive, Jose A. Collazo, will join BT and will share the responsibility
    for ensuring a successful integration and rationalisation process. The
    combination is expected to create exciting opportunities for the employees
    of both organisations.

Financial Profile

Infonet has reported average annual growth in core revenues of 11 per cent
    over the past two years to $620m in 2003/04. It has indicated that it
    expects to be cashflow positive by the end of the current financial year.

BT expects the transaction to be cashflow-neutral in the first year and
    positive thereafter, after financing costs but before restructuring costs.
    It will be dilutive to net earnings by around 0.5 pence per share in the
    first year but will increase BT's earnings per share thereafter.

BT expects to realise significant cost savings through the combination of

    both companies. Already identified savings include the elimination of
    overlapping network leasing, operating and maintenance costs, the reduction
    of Infonet's in-country access costs through BT's scale and purchasing
    power, and the generation of efficiencies in sales costs, administrative
    functions and back-office operations. These savings are expected to reduce
    the annual cash costs of the combined businesses by $150m (£80m) in the
    third year following the acquisition. Infonet's net tax asset of £100m will
    add further value.

Transaction Structure

Upon completion of the transaction, BT will pay consideration to the
    stockholders of Infonet on the following basis:

      For each outstanding Infonet A Share or B Share$2.06 in cash.

This values the entire outstanding share capital of Infonet at $965m
    (£520m). Net of Infonet's net cash balance as at 31 March 2004 of $390m
    (£210m), the aggregate value of the acquisition is $575m (£310m).

The offered price represents a premium of 23 per cent to the average price
    per Infonet share over the past three months of $1.68.

The Transaction is subject to the approval of Infonet's shareholders. The
    Board of Directors of Infonet and Infonet's Special Committee representing
    the interests of Class B shareholders have unanimously approved the
    transaction. Infonet's six Class A shareholders, who together hold 97% of
    the voting rights of the company, have signed irrevocable undertakings to
    vote in favour of the transaction. Each of the Executive Officers of Infonet
    has irrevocably undertaken to vote in favour of the transaction.

Infonet's shareholders will receive a proxy statement containing full
    details of the transaction in the coming weeks.

The completion of the transaction, which is conditional upon regulatory
    approvals, is expected in the first half of 2005.

Notes to Editors

About BT

BT Group plc is the holding company for an integrated group of
    communications businesses and is listed on stock exchanges in London and New
    York. BT Telecommunications plc (BT) is a wholly-owned subsidiary of BT
    Group and encompasses virtually all businesses and assets of the BT Group.

BT is one of the world's leading providers of communications solutions
    serving customers in Europe, the Americas and Asia Pacific. Its principal
    activities include network centric Information and Communications Technology
    (ICT) solutions, local, national and international telecommunications
    services, and higher-value broadband and internet products and services.

BT consists principally of three lines of business:
•   BT Retail, providing fixed and mobile communications services and
    solutions to over 20 million business and residential customers in the UK.
    It is also a leading UK internet services provider.

•   BT Wholesale, providing network services and solutions within the UK to
    more than 600 fixed and mobile operators and service providers including the
    provision of broadband, private circuits and PSTN.

•   BT Global Services, providing ICT services internationally to meet the
    needs of multi-site organisations with European operations. BT Global
    Services operates in 136 countries and also offers international carrier
    services.

In the year ended 31 March 2004, BT Group's turnover was £18,519 million
    with profit before goodwill amortisation, exceptional items and taxation of
    £2,013 million.

For more information, visit www.btplc.com



About Infonet

Infonet Services Corporation, known for its quality of service, is a
    leading provider of managed network communications services for thousands of
    multinational corporate entities.

Employing a unique consultative approach, Infonet offers integrated
    solutions optimizing the complex relationship between enterprise
    applications and the global network. Extensive project management
    capabilities are the foundation for the services and solution offerings
    (broadband, Internet, intranet, multimedia, videoconferencing, wireless/
    remote access, local provisioning, application and consulting services)
    positioning Infonet as a single-source partner for its customers. In
    particular, Infonet IP VPN solutions offer multinationals a unique
    combination of private and public internet protocol services as well as a
    full set of managed security and mobility services.

Rated "Best in Class" overall in Telemark's annual survey of Global Managed
    Data Network Services, Infonet has also won "Best Customer Care" and "Best
    Carrier" at the World Communication Awards. Founded in 1970, Infonet owns
    and operates The World Network, accessible from more than 180 countries, and
    provides local service support in over 70 countries and territories.

Infonet reported revenue in 2003/04 of $620m. Infonet expects to be
    cashflow positive by the end of the current financial year.

Infonet's stock is traded on the New York Stock Exchange under the symbol
    IN. Additional information about the company is available at
    www.infonet.com.

    Forward Looking Statements

    Statements about the expected effects on BT of the acquisition of Infonet,
    statements about the expected timing, certainty and scope of the acquisition
    and all other statements in this release other than historical facts are
    forward-looking statements. Forward-looking statements include information
    about possible or assumed future financial results and usually contain words
    such as "believes," "intends," "expects," "anticipates," "estimates", or
    similar expressions. These statements are subject to risks and uncertainties
    that may change at any time, and, therefore, actual results may differ
    materially from expected results due to a variety of factors, including, but
    not limited to, the satisfaction of the conditions to closing of the
    acquisition. We caution investors not to place undue reliance on the
    forward-looking statements contained in this press release. These statements
    speak only as of the date of this press release, and we undertake no
    obligation to update or revise the statements, risks or reasons. All
    forward-looking statements are expressly qualified in their entirety by this
    cautionary statement.

    In connection with the merger, Infonet will be filing a proxy statement with
    the US Securities and Exchange Commission. Investors and security holders
    are urged to read the proxy statement concerning the proposed transaction
    when it becomes available because it will contain important information.
    Investors and security holders may obtain a free copy of the proxy statement
    when it becomes available and other documents filed or furnished by Infonet
    with the SEC at the SEC's website at www.sec.gov. The proxy statement and
    other documents filed or furnished by Infonet may also be obtained for free
    by directing a request to Infonet at [phone].
    Investors may obtain a detailed list of names, affiliations and interests of
    participants in the solicitation of proxies of Infonet stockholders to
    approve the merger at the following address: Infonet, 2160 East Grand
    Avenue, El Segundo, CA 90245 USA

N M Rothschild & Sons Limited and Rothschild Inc.

"Rothschild" refers collectively to N M Rothschild & Sons Limited and Rothschild
Inc.

N M Rothschild & Sons Limited, which is authorised and regulated by the
Financial Services Authority in the United Kingdom, is acting for BT and no one
else in relation to the transaction and will not be responsible to anyone other
than BT for providing the protections afforded to clients of N M Rothschild &
Sons Limited nor for providing advice in relation to the proposed transaction.




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