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John Legere

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Today's appointments underscore our commitment to energize and build our direct sales channels as demand from enterprises for high-quality IP services grows. As we build on our recent successes and seek to grow our business, these leaders will enable the enterprise sales force to serve our core market of enterprise and collaboration services customers with even greater success.

Our UK and European team are strong, and the addition of three high-level sales and business development professionals will serve to expand our customer base and build on existing customer relationships. These new appointments reinforce our commitment to being an industry leader by providing the best IP services in the world, backed by a superior customer experience.

Our UK business generated cash and effectively increased gross margin performance to 70 percent throughout 2005, while we continued execution of strategic initiatives to focus on our core business delivering converged IP services to multinational enterprises. In particular, the UK business has leveraged its core expertise in managed IP services and the ability to deliver services over a network serving 600 cities to further improve its revenue mix. Enterprise customers now account for 92 percent of revenues.

We continue to invest in our global, high-bandwidth network, a key enabler for businesses worldwide. By leveraging Alcatel's next-generation DWDM submarine terminal, we're ensuring the ongoing delivery of our comprehensive suite of solutions, including our advanced converged IP services, to our worldwide customers and partners.

We're focused on managing our capacity for maximum effectiveness, in order to best serve our customers with a broad range of solutions, including our suite of converged IP services. Alcatel continues to be a valued partner and contribute strongly to our industry-leading network performance and global capabilities.

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