Acquisition of GTS CE Group

22.12.07

GTS to be acquired by Consortium of private equity funds led by Columbia Capital, M/C Venture Partners and Innova Capital

GML’s subsidiary, the shareholder of GTS Central Europe ("GTS CE"), has entered into an agreement to sell 100% of the shares in GTS CE to a consortium of private equity funds, led by Columbia Capital, M/C Venture Partners and Innova Capital (the "Consortium"). The transaction is expected to close in the first quarter of 2008.

GTS CE operates a group of alternative telecom service providers in Czech Republic, Poland, Hungary, Romania and Slovakia. Its focus is primarily on the business customer segment. In addition GTS CE provides service to customers in Ukraine, Latvia, Slovenia, Bulgaria, Croatia and Serbia. GTS CE expects to achieve consolidated revenues of approximately EUR 393m and EBITDA of approximately EUR 69m in 2007.

The Consortium is a group of private equity investors led by Columbia Capital and M/C Venture Partners, both US-based groups focused on investing in the telecommunication and information technology sectors, and Innova Capital, one of the leading private equity groups focused on Central Europe. Other members of the Consortium include Bessemer Venture Partners and other selected private equity investors.

ABN AMRO Corporate Finance Ltd. was sole financial advisor to the Consortium and KBC Securities acted as a sole financial advisor to the Seller. Squire Sanders & Dempsey LLP acted as legal counsel to the Consortium and Clifford Chance acted as counsel to GML.

"We are delighted to have the opportunity to work with investors of such international profile and reputation. We believe the GTS CE will benefit significantly from the telecommunication experience and capabilities of the new shareholders in order to further cement GTS’s position as the leading alternative provider of communications solutions in Central and Eastern Europe." commented Tamas Polgar, CEO of GTS CE.

Krzysztof Krawczyk, Partner at Innova Capital commented: "We view GTS CE as a highly attractive opportunity given its dense metro and long haul fibre footprint which is unique in the Central and Eastern European region and offers attractive growth prospects. This acquisition is a significant investment for all the leading members of the Consortium and we are looking forward to further developing this asset."