##### 



As filed with the Securities and
Exchange Commission on July 1, 2002

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549



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FORM 20-F

|     |  |                                                                                               
|---- |  | ----------------------------------------------------------------------------------------------
|[  ] |  | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g)
OF THE SECURITIES EXCHANGE ACT OF 1934
|     |  | OR                                                                                            
|[x]  |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934          
|     |  | For the fiscal year ended: December 31, 2001                                                  
|     |  | OR                                                                                            
|[  ] |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934      
|     |  | For the transition period from N/A to N/A                                                     

Commission file number: 1-14844

Equant N.V.
(Exact name of Registrant as specified in its charter)
Equant N.V.(Translation of Registrants name into English)The Netherlands(Jurisdiction of incorporation or organization)Gatwickstraat 21-23
1043 GL Amsterdam-Sloterdijk, The Netherlands(Address of principal executive offices)

Securities registered or to be registered pursuant to Section 12(b) of the Act.

|                                                   |  |                                          
|-------------------------------------------------- |  | -----------------------------------------
|Title of each class                                |  | Name of each exchange on which registered
|Ordinary Shares, nominal value Euro 0.01 per share |  | New York Stock Exchange                  

Securities registered or to be registered pursuant to Section 12(g) of the Act.None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.None

Indicate the number of outstanding shares of each of the issuers classes of
capital or common stock as of the close of the period covered by the annual
report:

|                                                                 |  |            
|---------------------------------------------------------------- |  | -----------
|Ordinary Shares, nominal value Euro 0.01 per share               |  | 282,704,149
|                                                                 |  |            
|Convertible Preference Shares, nominal value Euro 0.01 per share |  | 10,000,000 

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [x] No [  ]

Indicate by check mark which financial statement item the registrant has
elected to follow.
Item 17 [  ] Item 18 [x]



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##### 



TABLE OF CONTENTS

|                                                                                      |          |        |     |  |  | 
|------------------------------------------------------------------------------------- | -------- | ------ | --- |  |  | 
|Forward-looking statements                                                            |          |        | 2   | 
|Presentation of financial information                                                 |          |        | 2   | 
|                                                                                      |          | PART I |     |  |  | 
|Item 1. Identity of Directors, Senior Management and Advisers                         |          |        | 3   | 
|Item 2. Offer Statistics and Expected Timetable                                       |          |        | 3   | 
|Item 3. Key Information                                                               |          |        | 3   | 
|Item 4. Information on the Company                                                    |          |        | 13  | 
|Glossary of Selected Telecommunications Terms                                         |          |        | 37  | 
|Item 5. Operating and Financial Review and Prospects                                  |          |        | 39  | 
|Item 6. Directors, Senior Management and Employees                                    |          |        | 84  | 
|Item 7. Major Shareholders and Related Party Transactions                             |          |        | 91  | 
|Item 8. Financial Information                                                         |          |        | 94  | 
|Item 9. The Offer and Listing                                                         |          |        | 95  | 
|Item 10. Additional Information                                                       |          |        | 96  | 
|Item 11. Quantitative and Qualitative Disclosures About Market Risk                   |          |        | 116 | 
|Item 12. Description of Securities Other than Equity Securities                       |          |        | 117 | 
|                                                                                      | PART II  |        |     |  | 
|Item 13. Defaults, Dividend Arrearages and Delinquencies                              |          |        | 118 | 
|Item 14. Material Modifications to the Rights of Security Holders and
Use of Proceeds |          |        | 118 | 
|Item 15. [Reserved]                                                                   |          |        | 118 | 
|Item 16. [Reserved]                                                                   |          |        | 118 | 
|                                                                                      | PART III |        |     |  | 
|Item 17. Financial Statements                                                         |          |        | 118 | 
|Item 18. Financial Statements                                                         |          |        | 118 | 
|Item 19. Exhibits                                                                     |          |        | 118 | 

1



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##### 



In this document, the Company, Equant, we, us, and our refer to
Equant N.V. The Network refers to the network we operate and which is
described in Item 4. Information on the Company  Business Overview  the
Network and Operations.

FORWARD-LOOKING STATEMENTS

Some of the statements in this document are forward-looking. These
forward-looking statements include statements in Item 4. Information on the
Company relating to competition, trends and anticipated developments in the
industry and the data network services market. These forward-looking statements
also include statements in Item 11. Quantitative and Qualitative Disclosure
About Market Risk and statements relating to our performance in Item 5.
Operating and Financial Review and Prospects. In addition, we may make
forward-looking statements in future filings with the Securities and Exchange
Commission, and in written material, press releases and oral statements issued
by or on behalf of us. Forward-looking statements include statements regarding
our intent, belief or current expectations or those of our officers
(including statements preceded by, followed by or that include forward-looking
terminology such as may, will, should, believes, expects,
anticipates, estimates, continues or similar expressions or comparable
terminology) with respect to various matters.

It is important to note that our actual results could differ materially from
those anticipated in these forward-looking statements depending on various
important factors. These important factors include (i) our failure to obtain
additional funding in a timely manner; (ii) continued deterioration of the
global economy or prolonged delay in the anticipated global economic
turnaround; (iii) our failure to successfully integrate Global Ones business
with ours; (iv) adverse effects from our relationship with France Telecom, SITA
or other indirect sales channels; (v) the adverse effects of the vulnerability
of the Network to intentional or unintentional disruption; (vi) the effect of,
and changes in, regulation and government policy; (vii) the effects of
competition; (viii) the timely development and acceptance of our new products
and services; (ix) the effect of technological changes in communication and
information technology; and (x) our success at managing the risks of the
foregoing.

All forward-looking statements in this document are based on information
available to us on the date hereof. We do not undertake to update any
forward-looking statements that may be made by us or on our behalf, in this
document or otherwise. In addition, please note that the matters set forth
under the caption Risk Factors constitute cautionary statements identifying
important factors with respect to these forward-looking statements, including
certain risks and uncertainties, that could cause actual results to differ
materially from those in such forward-looking statements.

PRESENTATION OF FINANCIAL INFORMATION

We publish our consolidated financial statements in U.S. dollars. As used in
this document, U.S. dollar, dollar or $ means the currency of the United
States of America, and Euro or  means the Euro, the common currency of
twelve member states of the European Union. Unless otherwise indicated, the
financial information relating to Equant contained in this annual report has
been prepared in accordance with accounting principles generally
accepted in France (French GAAP), which differs in certain
significant respects from accounting principles generally accepted in
the United States (U.S. GAAP). See Note 30 to our audited
consolidated financial statements for the years ended December 31, 2001, 2000
and 1999 (together with the notes thereto, the Consolidated Financial
Statements) included elsewhere in this annual report on Form 20-F for a description of the
significant differences between French GAAP and U.S. GAAP, as they relate to
us, and a reconciliation to U.S. GAAP of net income and shareholders
equity. Certain financial information relating to Global One which is contained
in this annual report has been prepared in accordance with U.S. GAAP.

Some financial data appearing in this document is prepared on a pro forma
basis. The French GAAP financial data we identify as being on a pro forma basis assumes
that our acquisition of Global One from France Telecom and our integration of
the SITA Equant network Joint Venture had occurred on January 1, 2000. These
transactions were some of a series of transactions consummated in June 2001,
including the acquisition by France Telecom of a majority interest in us. The
presentation of the pro forma financial information complies with French
practice unless otherwise stated, but does not comply with Article 11 of
Regulation S-X of the Exchange Act. The basis for the presentation of these
financial statements is set out in Note 5 of the Consolidated Financial
Statements. There can be no guarantee that Equant would have achieved results
similar to those presented in the pro forma financial information had the
business combination in fact taken place on January 1, 2000. The unaudited pro
forma financial information is not intended to be a substitute for, and should
be read in conjunction with, the Financial Statements included in Item 18,
including the notes thereto.

2



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##### 



PART I

Item 1.   Identity of Directors, Senior Management and Advisers



| |                             
| | ----------------------------
| | This item is not applicable.

Item 2.   Offer Statistics and Expected Timetable



| |                             
| | ----------------------------
| | This item is not applicable.

Item 3.   Key Information

SELECTED FINANCIAL DATA

You should read the following selected consolidated financial data in
conjunction with Item 5. Operating and Financial Review and Prospects, the
Consolidated Financial Statements and the Global One combined financial
statements, including the notes thereto, found elsewhere in this document.

The following tables present selected financial and other data as of and for
each of the years in the three-year period ended December 31, 2001.

We report our results in accordance with French
GAAP, which differs in certain significant respects
from U.S. GAAP.
Note 30 to the Consolidated Financial Statements provides a description of the
significant differences between French GAAP and U.S. GAAP as they relate to our
business and a reconciliation to U.S. GAAP of our net income and shareholders
equity prepared in accordance with French GAAP as of and for the year
ended December 31, 2001. We are unable to present our
financial results for 1997 and 1998 under French GAAP without unreasonable
effort or expense.

The selected French GAAP consolidated financial data for each of the years
ended December 31, 1999, 2000 and 2001 have been derived from the Consolidated
Financial Statements and the notes thereto found elsewhere in this document.
The financial statements for the years ended December 31, 1999 and 2000 were
audited by PricewaterhouseCoopers, independent accountants, as indicated in
their report found elsewhere in this document. The financial statements for
the year ended December 31, 2001 were audited by PricewaterhouseCoopers and
Ernst & Young LLP, independent accountants, as indicated in their joint report
found elsewhere in this document. The selected U.S. GAAP combined consolidated
financial data for the year ended December 31, 2001 has been derived from Note
30 to the Consolidated Financial Statements.

While under French GAAP our combination with Global One is treated as an
acquisition of Global One by us, under U.S. GAAP the transaction is accounted
for as a reverse acquisition of Equant by Global One. Under U.S. GAAP the
historical financial data relate to Global One alone (rather than Equant) in
the periods prior to the date of the business combination. The data for 1999
and 2000 include those business lines of Global One that were not contributed
to Equant in the combination, principally Global Ones carrier and calling card
businesses and therefore is not comparable to the 2001 data, which exclude
these business lines beginning on June 30, 2001 as well as including the
results of Equant from that date.

The selected U.S. GAAP combined financial data for the years ended December 31,
1999 and 2000 have been derived from the combined financial statements of
Global One and the notes thereto found elsewhere in this document. The combined
financial statements of Global One for the year ended December 31, 1999 were
audited by Ernst & Young Audit, independent accountants, as indicated in their
report found elsewhere in this document. The combined financial statements of
Global One for the year ended December 31, 2000 were audited by RSM Salustro
Reydel and Ernst & Young Audit, independent accountants, as indicated in their
report found elsewhere in this document.

3



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##### 



Selected Financial Data presented in accordance with French GAAP:

|                                                    |                                          |   |                                                                        |      |         |   |             |       |   |   |             |       |  
|--------------------------------------------------- | ---------------------------------------- | - | ---------------------------------------------------------------------- | ---- | ------- | - | ----------- | ----- | - | - | ----------- | ----- | -
|                                                    |                                          |   | At or for the year ended December 31,                                 
|                                                    |                                          |   |                                                                       
|                                                    |                                          |   | 1999(1)                                                                |      | 2000(1) |   | 2001(2)    
|                                                    |                                          |   |                                                                        |      |         |   |            
|                                                    |                                          |   | (U.S. dollars in millions, except share and per share amounts or data)
|Consolidated statement of operations data:          |                                          |   |                                                                        |      |         |   |             |       |   |   |             |      
|Sales of services and products                      |                                          | $ | 1,031.3                                                                |      |         | $ | 1,473.4     |       |   | $ | 2,390.7     |      
|Operating profit/(loss)                             |                                          |   | 22.3                                                                   |      |         |   | 15.5        |       |   |   | (267.0      | )    
|Net profit/(loss) from continuing operations        |                                          |   | 12.2                                                                   |      |         |   | (47.6       | )     |   |   | (387.2      | )    
|Discontinued operations                             |                                          |   | (0.2                                                                   | )    |         |   | (0.3        | )     |   |   | 10.8        |      
|Net profit/(loss)                                   |                                          | $ | 12.0                                                                   |      |         | $ | (47.9       | )     |   | $ | (376.4      | )    
|Basic and diluted net income/(loss) per
share (5)   |                                          |   |                                                                       |      |         |   |            |       |   |   |            |      
|                                                    | Income/(loss) from continuing operations |   |                                                                        | 0.06 |         |   |             | (0.24 | ) |   |             | (1.56 | )
|                                                    | Discontinued operations, net of tax      |   |                                                                        |     |         |   |             |      |   |   |             | 0.04  |  
|Net income/(loss) per share                         |                                          | $ | 0.06                                                                   |      |         | $ | (0.24       | )     |   | $ | (1.52       | )    
|                                                    |                                          |   |                                                                        |      |         |   |             |       |   |   |             |      
|Weighted average number of shares, basic (5)        |                                          |   | 201,477,046                                                            |      |         |   | 201,503,333 |       |   |   | 247,985,649 |      
|Weighted average number of shares, diluted (5)      |                                          |   | 203,467,643                                                            |      |         |   | 201,503,333 |       |   |   | 247,985,649 |      
|                                                    |                                          |   |                                                                        |      |         |   |             |       |   |   |             |      
|Consolidated balance sheet data:                    |                                          |   |                                                                        |      |         |   |             |       |   |   |             |      
|Cash and cash equivalents                           |                                          | $ | 205.9                                                                  |      |         | $ | 53.5        |       |   | $ | 385.8       |      
|Accounts receivable and other current assets        |                                          |   | 354.7                                                                  |      |         |   | 547.2       |       |   |   | 1,561.9     |      
|Non-current assets                                  |                                          |   | 588.3                                                                  |      |         |   | 1,106.2     |       |   |   | 1,771.4     |      
|Total assets                                        |                                          |   | 1,148.9                                                                |      |         |   | 1,706.9     |       |   |   | 3,719.1     |      
|Current liabilities                                 |                                          |   | 289.3                                                                  |      |         |   | 445.9       |       |   |   | 1,305.8     |      
|Long-term liabilities                               |                                          |   | 45.6                                                                   |      |         |   | 519.0       |       |   |   | 135.4       |      
|Minority interests                                  |                                          |   | 0.6                                                                    |      |         |   | 0.4         |       |   |   | 0.4         |      
|Total shareholders equity                          |                                          |   | 813.4                                                                  |      |         |   | 741.6       |       |   |   | 2,277.5     |      
|Total liabilities and shareholders equity          |                                          |   | 1,148.9                                                                |      |         |   | 1,706.9     |       |   |   | 3,719.1     |      
|                                                    |                                          |   |                                                                        |      |         |   |             |       |   |   |             |      
|Other financial data:                               |                                          |   |                                                                        |      |         |   |             |       |   |   |             |      
|Net cash provided by/(used in) operating
activities |                                          | $ | 96.4                                                                   |      |         | $ | 69.2        |       |   | $ | (117.4      | )    
|Net cash used in investing activities               |                                          | $ | (352.0                                                                 | )    |         | $ | (620.4      | )     |   | $ | (129.2      | )    
|Net cash provided by financing activities           |                                          | $ | 4.9                                                                    |      |         | $ | 400.9       |       |   | $ | 574.8       |      
|EBITDA (6)                                          |                                          | $ | 158.4                                                                  |      |         | $ | 177.1       |       |   | $ | 135.3       |      

4



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Selected Financial Data presented in accordance with U.S. GAAP:

|                                                                                           |                                     |   |                                                                        |   |         |   |            |   |  |   |             |      | 
|------------------------------------------------------------------------------------------ | ----------------------------------- | - | ---------------------------------------------------------------------- | - | ------- | - | ---------- | - |  | - | ----------- | ---- | 
|                                                                                           |                                     |   | At or for the year ended December 31,                                 
|                                                                                           |                                     |   |                                                                       
|                                                                                           |                                     |   | 1999(3)                                                                |   | 2000(3) |   | 2001(4)   
|                                                                                           |                                     |   |                                                                        |   |         |   |           
|                                                                                           |                                     |   | (U.S. dollars in millions, except share and per share amounts or data)
|Consolidated combined statement of operations data:                                        |                                     |   |                                                                        |   |         |   |            |   |  |   |             |     
|Sales of services and products                                                             |                                     | $ | 1,057.0                                                                |   |         | $ | 1,131.7    |   |  | $ | 2,102.5     |     
|Operating loss                                                                             |                                     |   | (832.6                                                                 | ) |         |   | (793.7     | ) |  |   | (8,653.2    | )   
|Net loss from continuing operations                                                        |                                     |   | (904.3                                                                 | ) |         |   | (839.0     | ) |  |   | (8,726.8    | )   
|Discontinued operations                                                                    |                                     |   |                                                                       |   |         |   |           |   |  |   | 14.5        |     
|Net loss                                                                                   |                                     | $ | (904.3                                                                 | ) |         |   | (839.0     | ) |  |   | (8,712.3    | )   
|Basic and diluted net income/(loss) per share (5)
Income/(loss) from continuing operations |                                     |   | (11.22                                                                 | ) |         |   | (10.41     | ) |  |   | (46.27      | )   
|                                                                                           | Discontinued operations, net of tax |   |                                                                        |  |         |   |            |  |  |   |             | 0.08 | 
|Net income/(loss) per share                                                                |                                     |   | (11.22                                                                 | ) |         |   | (10.41     | ) |  |   | (46.19      | )   
|                                                                                           |                                     |   |                                                                        |   |         |   |            |   |  |   |             |     
|Weighted average number of shares, basic (5)                                               |                                     |   | 80,617,348                                                             |   |         |   | 80,617,348 |   |  |   | 188,614,419 |     
|Weighted average number of shares, diluted (5)                                             |                                     |   | 80,617,348                                                             |   |         |   | 80,617,348 |   |  |   | 188,614,419 |     
|                                                                                           |                                     |   |                                                                        |   |         |   |            |   |  |   |             |     
|Consolidated balance sheet data:                                                           |                                     |   |                                                                        |   |         |   |            |   |  |   |             |     
|Cash and cash equivalents                                                                  |                                     | $ | 74.4                                                                   |   |         | $ | 40.6       |   |  | $ | 385.8       |     
|Accounts receivable and other current assets                                               |                                     |   | 476.7                                                                  |   |         |   | 916.6      |   |  |   | 1,560.3     |     
|Non-current assets                                                                         |                                     |   | 870.7                                                                  |   |         |   | 4,908.0    |   |  |   | 4,294.7     |     
|Total assets                                                                               |                                     | $ | 1,421.8                                                                |   |         | $ | 5,865.2    |   |  | $ | 6,240.8     |     
|Current liabilities                                                                        |                                     | $ | 1,273.1                                                                |   |         | $ | 1,392.3    |   |  | $ | 1,288.5     |     
|Long-term liabilities                                                                      |                                     |   | 17.6                                                                   |   |         |   | 21.5       |   |  |   | 234.4       |     
|Total shareholders equity                                                                 |                                     |   | 131.1                                                                  |   |         |   | 4,451.4    |   |  |   | 4,717.9     |     
|Total liabilities and shareholders equity                                                 |                                     | $ | 1,421.8                                                                |   |         | $ | 5,865.2    |   |  | $ | 6,240.8     |     
|Other
financial data:                                                                      |                                     |   |                                                                        |   |         |   |            |   |  |   |             |     
|Net cash used in operating activities                                                      |                                     | $ | (556.1                                                                 | ) |         | $ | (555.3     | ) |  | $ | (937.7      | )   
|Net cash used in investing activities                                                      |                                     | $ | (369.6                                                                 | ) |         | $ | (342.0     | ) |  | $ | (33.9       | )   
|Net cash provided by financing activities                                                  |                                     | $ | 914.4                                                                  |   |         | $ | 869.7      |   |  | $ | 1,313.1     |     

|                              |  |                                       |         |      |  |      |         |  |  |  |         | 
|----------------------------- |  | ------------------------------------- | ------- | ---- |  | ---- | ------- |  |  |  | ------- | 
|                              |  | At or for the year ended December 31,
|                              |  |                                      
|                              |  | 1999                                  |         | 2000 |  | 2001
|                              |  |                                       |         |      |  |     
|Selected operating data:      |  |                                       |         |      |  |      |         |  |  |  |         | 
|Total Network connections (7) |  |                                       | 183,543 |      |  |      | 182,760 |  |  |  | 188,658 | 



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|(1) |  | Includes the results of Equant only.                                                                                                                                                                                                                  
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Includes the results of Equant for the twelve months ending December 31,
2001 and Global One for the period from June 30, 2001 to December 31,
2001.                                                                                                  
|   
|(3) |  | Includes the results of Global One which included the excluded
businesses.                                                                                                                                                                            
|   
|(4) |  | Includes the results of Global One for the twelve months ending December
31, 2001, including the excluded businesses for the period from January 1,
2001 through June 29, 2001 and Equant for the period from June 30, 2001
through December 31, 2001.
|   
|(5) |  | Basic net loss per share is calculated by dividing net loss by the
weighted average number of shares outstanding                                                                                                                                      

5



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##### 





|    |  | during each period. Under U.S. GAAP the weighted average number of shares
outstanding in 1999 and 2000 is deemed to be the actual number of shares
issued by Equant in exchange for the contribution of Global One on June 29, 2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(6) |  | EBITDA is defined as earnings before finance charges, income taxes,
share plan costs, non-recurring charges, depreciation and amortization.
EBITDA should be considered only in conjunction with all of the
information in the Selected Financial Data as well as the Consolidated
Financial Statements. You should not consider EBITDA to be an alternative
to operating profit/loss as an indicator of our performance or as an
alternative to cash flows as a measure of our liquidity. Although
many companies calculate measures of EBITDA and include these in
their financial statements, EBITDA is not a measure of performance
calculated in accordance with U.S. GAAP and may not be presented on the face of a
U.S. GAAP income statement. EBITDA is used in
the telecommunications industry as a measure of financial performance
by excluding certain variables that affect net income (including asset
bases, depreciation policies, financing activities and tax regimes) but
may not be directly related to all financial aspects of the
operations of a telecommunications company. As we define it, EBITDA may
not be comparable to other similarly titled measures used by other
companies.
|   
|(7) |  | Total Network connections for 1999 and 2000 include
connections of both Equant and SITA and include non-customer connections of 22,607 for 1999 and 19,480 for 2000. Total Network
connections for 2001 exclude non-customer
connections.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

RISK FACTORS

You should carefully consider the risk factors described below in addition to
the other information presented in this document. This document also contains
forward-looking statements that involve risks and uncertainties. Our actual
results may differ materially from those anticipated in these forward-looking
statements as a result of certain factors, including the risks we face.

We Will Require Additional Funding From France Telecom Or External Sources

At December 31, 2001, we had $385.8 million of cash and cash equivalents,
including amounts deposited with France Telecom of
$237.5 million. Amounts on deposit with France Telecom are accessible to us on
demand. In addition, under the terms of the contribution agreement relating to
our transaction with France Telecom, Atlas Telecommunications S.A.
(now called Atlas Services Belgium, S.A. Atlas) and SITA S.C. (SITA), France Telecom committed
to reimburse us 50% of the costs of integrating Equant, Global One and the SITA Equant
network Joint Venture, subject to the limits we describe in Item 5. Operating
and Financial Review and Prospects  Factor Affecting our Business  France
Telecom Transactions, Restructuring and Integration.

We have signed a $250 million revolving credit
facility agreement and a $50 million treasury management
agreement with France Telecom. The terms
of these agreements are set forth in Item 5  Financial and
Operating Review and Prospects  Liquidity and Capital Resources.

We believe that our existing cash resources, the credit facility and treasury
agreement from France Telecom will be sufficient to fund our
operations beyond
the end of 2002. However, should our expectations regarding our income and
expenses prove incorrect we may require further cash at an earlier time, and we
do not have financing options in place other than those described above. If we
are unable to generate enough cash from our operations, or to raise cash from
France Telecom or external sources, our financial condition would be materially
adversely affected and we might need to reduce our operations.



6



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##### 



The Interests Of France Telecom, Our Largest Shareholder, May Differ From The
Interests Of Our Other Shareholders.

France Telecom, through its subsidiary, Atlas, holds
approximately 54.2% of our voting share capital. Accordingly, France Telecom
has the ability to control us , and to determine matters submitted for a vote
of shareholders. France Telecom also reserves the right to control the
appointment and removal of members of the Management Board and the majority of
the members of the Supervisory Board. Through its control of the Supervisory
Board, France Telecom can also require the Management Board to submit specific
matters not specified by the Articles of Association to the Supervisory Board.
France Telecoms interest in exercising these powers may not be consistent with
the interests of our minority shareholders.

We have adopted certain corporate governance procedures intended to protect the
interests of minority shareholders, such as requiring the approval of our
independent directors for us to enter into material transactions with France
Telecom or its affiliates. France Telecoms interests as a controlling
shareholder may differ from your interests, and these corporate governance
measures may not adequately protect your interests.

We Have A History Of Operating Losses

Global One and we have had a history of operating and net losses. In 2000, we
had revenues of $1.5 billion, operating profit of $16 million and net losses of
$48 million. In 2001, we had revenues of $2.4 billion, operating losses of $267
million and net losses of $376 million.

As reported under U.S. GAAP, in 2000 Global One had revenues of $1.1 billion,
an operating loss of $794 million and a net loss of $839 million. As reported
under U.S. GAAP, our 2001 revenues are $2.1 billion, we incurred operating
and net losses of $8.7 billion.

We cannot guarantee that we will achieve or maintain profitability by any
measure. We projected positive EBITDA, as defined in note (6) on page 6 of
$200 million for 2002, provided that the global economic turnaround we expect
actually takes place. If this economic turnaround does not occur, or if the
other risks we describe in this document occur, including the failure to
successfully integrate Global One, we may not achieve positive EBITDA or
profitability or, if we do achieve profitability, we may be unable to sustain
or increase it on a quarterly or annual basis in the future.

Failure To Successfully Integrate Global Ones Operations With Our Operations
Could Materially And Adversely Affect Our Financial Position And Results Of
Operations.

Upon completion of the France Telecom transaction, we began to integrate the
former Global Ones operations into ours with the twin goals of reducing costs
and achieving economies of scale without disrupting service to our customers.
We have not previously undertaken an integration project as large or as complex
as the integration plans associated with the Global One merger and much work
remains to fully integrate the two companies.

The integration requires significant efforts on our part and the part of the
Global One companies, including the coordination of our operations and sales
and marketing efforts. In order to succeed, we also need to identify and
realize cost savings in the combined businesses on a timely basis. We may be
unable to integrate these operations without encountering difficulties, and the
benefits we expect from the integration may be delayed or not be realized at
all. These difficulties we may encounter in the integration process include:



| |  | the interruption or slowdown of the activities of Equant and the former Global One;                                                             
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | our customers perception that we are adversely changing our customer service standards, business focus, billing practices
or service offerings;
| 
| |  | costs and delays in implementing common systems and procedures or in the integration of management information and
reporting systems;           

7



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| |  |  | any inability to acquire or transfer licenses to operate in each of the countries in which we do business, or delays in
those acquisitions or transfers;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | technical and administrative challenges integrating the former Global One network with ours;                                                            
|
| |  |  | problems associated with, or delays in implementation of, our integration and restructuring plans; and                                                  
|
| |  |  | our employees perceptions of uncertainties in their career opportunities and future benefits.                                                          

Even if we take appropriate measures, some of these factors may be outside of
our control. Any of these difficulties could increase our operating costs,
harm our business and financial position, cause the loss of customers or oblige
us to extend service credits to SITA under the terms of our new network
arrangements to compensate SITA for material interruptions or other declines in
service quality.

We may not be able to carry out the integration in accordance with our current
plans, and we may not be successful in realizing expected benefits from the
transactions. Failure to complete the integration in a timely fashion may
result in lower earnings, inefficient operations and weakened market position.

We may be required to record additional impairment charges against our goodwill

Despite having recognized an impairment loss of
approximately $7.5 billion in
2001, our balance sheet prepared in accordance with U.S. GAAP as at December 31, 2001 includes goodwill and
other intangible assets totaling $2.6 billion. We are required to carry
out an impairment review on a periodic basis to assess the recoverability of
these assets. If, as a result of this review, an impairment charge is taken, it
could be significant and would reduce the amount of shareholders equity in our
financial statements prepared in accordance with U.S. GAAP.

SFAS 142, Goodwill and Other Intangible Assets, requires that goodwill be tested for impairment at least annually using a prescribed two-step process. The
first step is a screen for potential impairment, while the second step measures the amount of impairment, if any.

Since we are a single reporting unit, when we screen for potential
impairment we will be required to use our share price to determine
the implied fair value of our business. If the implied fair value is
less than the carrying value, we may be required to write down the
carrying value of our goodwill.

When we performed our impairment review on December 31, 2001 our share price was $11.65, compared to $4.41
on June 24, 2002. We are required to carry out another impairment
review prior to December 31, 2002.

We Are Currently Dependent Upon Sales Through Indirect Channels

Indirect channel sales are a key element of our business. The term indirect
channels refers principally to SITA, Radianz, France Telecom and its
subsidiary, Transpac and Sprint and other incumbent operators. These indirect
channel entities sell our services in specified regions or market sectors,
generally under rebranding arrangements. Sales through indirect channels
accounted for approximately $1.4 billion, or 47%, of our pro forma revenues in
2001, including approximately $730 million from SITA, $85 million from Radianz,
and an aggregate $600 million from other indirect sales channels. Although SITA
has committed to minimum revenue guarantees through June 2002 and June 2003,
we may be unable to sustain our revenues from SITA beyond this timeframe. In
addition, revenues from our other indirect sales channels may fail to grow or
continue at current levels, and may decline.

We May Face Difficulties With Customer Relationships And Operational
Integration, Or With The Implementation Of New Business Arrangements In Certain
Countries

The conduct of our network businesses necessitates day-to-day contact with
customers. Any difficulties encountered in the transition and integration
process of the business and customer relations teams or the implementation of
new business arrangements, particularly in France, could cause some of our
customers to take their business to competitors, by either terminating or not
renewing their network services agreements with us. In addition, some
customers may have selected both us and the former Global One for their network
services in order to reduce reliance on a single service provider. Some of
these companies may either take a portion of their business to our competitors
upon termination of their existing contracts with us, or attempt to negotiate
better pricing conditions or receive other benefits to remain with us. Any of
these events would result in a loss of revenues.

We Are Dependent On SITA, Our Largest Customer

In 2001, SITA accounted for approximately 27%, or $ 654 million, of our
revenues. SITA is by far our largest customer. Our next largest customers are
France Telecom, which accounted for approximately 6%, or $135 million, of our revenues,

8



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Radianz, which accounted for approximately 4%, or
$85 million of our revenues and Sprint, which accounted for
approximately 3% or $75 million of our revenues.
None of our other customers accounted for more
than 3% of our revenues in 2001.

SITA derives its revenues almost exclusively from the air transport community.
Ties between SITA and the air transport community are strong, since members of
that community own SITA. Also, SITA has developed various airline-specific
protocols and applications, and the Network reaches all significant
airline-related destinations. Nevertheless, the commercial airlines are not
required to use SITA for their communications needs. Our contract with SITA
provides minimum revenue guarantees for a two year period. However, a
downturn in the air transport industry or any failure of SITA to honor its
contractual agreements with us may adversely affect our business, financial
condition or results of operations.

We Do Not Control Radianz, Our Joint Venture With Reuters, To Which We Have
Certain Obligations

We have equal representation on the board of Radianz with Reuters and the
provisions of the shareholders agreement we entered into with Reuters regarding
Radianz suggest that operating decisions are jointly controlled. However, in
practice, (and principally due to Radianzs start-up nature), we are unable to
invoke joint control because Reuters remains both the dominant supplier and
customer of Radianz, and accordingly is in a position to affect significantly
the operations of Radianz without our prior approval.

We have contributed $225 million to Radianz and have agreed to provide a credit
of up to $125 million in services to Radianz over a period of up to ten years
from the date we entered into these arrangements in July 2000. We also
contributed customer contracts, which generated revenues of approximately $17
million in 1999, to Radianz. Over time, Radianz may connect additional
customers who are, or might have become, our customers directly.

Our ability to affect Radianzs performance is limited as our ability to
influence its operations is limited. Moreover, our ability to generate revenues
from Radianz may be limited if Radianz and we develop conflicting network
strategies in the future. In addition, our agreement with Radianz obligates us
to migrate portions of Radianzs backbone network onto our network by July
2003. We have agreed to deliver substantial cost savings to Reuters as a
result of our operation of the migrated network. Under the terms of
our current agreement with Reuters, we are required to compensate
them in cash for any shortfall in the cost savings anticipated in the
agreements (which are calculated using detailed formulae). The migration and
cost reductions are currently behind due to a number of operational
factors relating to the joint venture. Both Reuters and we have
expressed interest in revising our arrangements to alleviate
disadvantages each party perceives under the current agreements.
Accordingly, we are currently renegotiating portions of the agreement
with Reuters, including those relating to network configuration,
migration and cost savings. If these negotiations are unsuccessful or
are concluded on terms not more advantageous to us than the current
terms, we may be required to compensate Reuters under the cost
savings provisions. While we cannot now quantify the amounts we may
have to pay, they could be material and could adversely affect our
result of operations and financial position, including our cash
position.

As a result of these factors, we may fail to recover our investment in Radianz,
and may have additional costs related to Radianz in the future. This could
adversely affect our results of operations and financial condition.

We Are Dependent Upon Our Suppliers

We lease transmission capacity from a wide range of suppliers, both to link
customer premises to the Network and for other transmission. We have at times
experienced delays in receiving the transmission capacity we need from
suppliers. We may not be able to obtain these services in the future at a
reasonable cost and within a reasonable time. If we fail to obtain transmission
capacity on a timely basis and at an affordable price in a particular
jurisdiction, or if there is any prolonged interruption to local access
services, our business, financial condition or results of operations could be
adversely affected. We seek to negotiate with a variety of suppliers in order
to reduce our dependency on individual vendors. These negotiations might not
be successful, and we expose ourselves to the risk that our capacity provider
may fail to honor their obligations to us. As a result of the recent KPN Qwest
N.V. bankruptcy filing, we recently migrated a significant portion of our
traffic to our affiliate France Telecom Long Distance and others.

We rely on a small number of suppliers (mainly Nortel Networks and Cisco) for
the network assets such as routers and switches we need to operate the Network.
We use networking components that are based on industry standards so that
alternate sources of comparable equipment exist. However, our suppliers also
sell products to our competitors and may become competitors themselves. Our
suppliers also might enter into exclusive arrangements with our competitors or
might stop selling their products to us on commercially reasonable terms or at
all. If we are required

9



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to seek alternate suppliers, we would likely experience delays in obtaining the
requisite equipment and pay higher prices for such equipment. We believe that
it is unlikely that delays caused by switching to alternate suppliers or by the
suppliers themselves would adversely affect the provision of services to our
customers. However, we do believe that such delays would be likely to increase
the costs of expanding and maintaining the Network.

We purchase capacity on major international routes where it is economic to do
so. The agreements we enter into (known as Indefeasible Rights of Use or IRUs)
are similar in nature to capital leases but typically involve the prepayment of
all lease costs. These payments are included in intangible assets in our
balance sheet. IRUs do not provide the same level of protection as leases or
outright ownership. Should the owner of the capacity cease providing that
capacity, we would be required to write down the asset and be left with a claim
for the as yet unamortized portion of our payment but would, in any event, lose
the capacity. This could result in our inability to service customers in part
or in full, as well as the write off of the unamortized portion of the upfront
payment.

We Are Subject To Network Security Risk

Despite the implementation of security measures, the network is vulnerable to
computer and other disruptions. Like many other data network services
providers, we have in the past experienced, and may in the future experience,
interruptions in service. Such interruptions could be caused either
accidentally or intentionally. Unauthorized use of the network could also
potentially jeopardize the security of confidential information that our
customers store or transmit. In such instances, we may be liable to our
customers, although our customer contracts generally relieve us from liability
for consequential damages. The threat of unauthorized use may also deter
potential customers. We continue to implement what we believe to be
industry-standard security and service continuity protection measures,
including the physical protection of our plant and equipment. Our competitors
and we have taken similar measures in the past, but these measures have from
time to time have been circumvented. Our security measures could be circumvented in
the future. Addressing security problems may require interruptions, delays or
cessation of services to our customers, and additional resources. If
customers perceive our Network as more vulnerable than others, or if we
experience substantial disruptions, our customers could take their business
elsewhere

Changing Technology Creates Risk For Us

Our ongoing success will depend, in part, on our ability to service changing
customer requirements. The data network services industry is characterized by:



| |  |  | rapidly changing technology;                                   
| | - |  | ---------------------------------------------------------------
|
| |  |  | evolving industry standards;                                   
|
| |  |  | high levels of competition;                                    
|
| |  |  | frequent new product and service introductions; and            
|
| |  |  | changes in the marketing and delivery of data network services.

We may not successfully identify new product opportunities, bring new products
to market in a timely manner, keep abreast of our customers innovations or
adapt our business to alternate delivery systems. An inability on our part to
meet evolving industry standards and customer requirements could have a
material adverse effect on our business, financial condition or operational
results. Furthermore, we depend on our indirect sales channels ability and
willingness to upgrade their technologies consistently in coordination with us.
Their failure to do so may adversely affect our ability to service our
customers effectively and lead to the loss of customers and revenues.

Our Industry Is Highly Competitive

We expect that competition in the data network services market will continue
to increase as:

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| |  |  | nations further liberalize their telecommunications regimes;                             
| | - |  | -----------------------------------------------------------------------------------------
|
| |  |  | our industry consolidates;                                                               
|
| |  |  | new technologies emerge; and                                                             
|
| |  |  | excess domestic and international transmission capacity continues to saturate the market.

We expect these factors will continue to place severe downward pressure on
prices of transmission capacity used to deliver our services. In addition, we
will likely face greater competition from competitors with greater financial
and other resources.

To compete successfully, we must continue to make our operations more efficient
and find new ways to bring value to our customer base. There is a risk that we
may be unable to maintain or expand our market share as competitive pressures
increase. Failure to do so could harm our revenues and our margins, and
adversely affect our results of operations.

We Face Uncertain And Changing Regulatory Restrictions

Various restrictive laws, policies, and licensing requirements in the
telecommunications and data network services industries affect our business
operations because they establish regulatory and market access barriers. In our
major revenue-generating markets, our current and planned services are now open
to competition and, in some cases, no license is required. In most of the
jurisdictions in which we operate, however, we generally must obtain licenses
or enter into arrangements with locally licensed operators. Our ability to
provide services in those jurisdictions depends on the continued effectiveness
of those licenses or arrangements.

In addition, some restrictive telecommunications laws and practices give rise
to constraints, risks and uncertainties. Uncertainty regarding the regulatory
status of managed data network and other services and of our status affects our
ability to offer our full portfolio of services in certain jurisdictions,
particularly in emerging markets. In these jurisdictions, we also face the risk
of a change in the regulatory environment or in our regulatory profile as our
activity level increases. As a consequence, we may be subject to fines or other
enforcement actions or onerous licensing obligations. We may also be required
to disconnect customers or introduce new services at a more cautious pace than
might otherwise be the case. Our business, financial condition, or results of
operations could be materially adversely affected if any of these events were
to occur.

Currency Fluctuations Affect Our Results

Currency fluctuations can significantly affect our results of operations and
financial condition. We prepare our Consolidated Financial Statements in U.S.
dollars. Although the numerous currencies in which we operate have not moved
uniformly, the U.S. dollar appreciated against most European currencies,
including the British pound, during 1999, 2000 and 2001. The effect of this
appreciation was most pronounced on the Euro, with an appreciation of 5.2% in
exchange rates during 2001 and 13% during 2000. The comparable U.S.
dollar appreciation against the British pound was 6.0% in 2000 and 3.0% in
2001.

In addition, translation adjustments have and will continue to materially
impact our balance sheet. These adjustments resulted in decreases in our
shareholders equity of $33.0 million in 1999, $25.2 million in 2000 and $42.4
million in 2001. The decrease in shareholders equity in those years resulted
primarily from the translation of local Network assets, held in the currency of
the countries in which they are located, into U.S. dollars. We seek to hedge
our exposure to the effect of exchange rate movements on our results of
operations, which itself leads to the risks associated with these strategies,
including the risk that we might not effectively hedge our risks and that our
use of derivative financial instruments will not have the intended effects.
See Item 5. Operating and Financial Review and Prospects - Financial Overview
- Impact of Changes in Exchange Rates.

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We May Lose Key Employees

Our continued success will depend upon the continued efforts of our senior
management team and technical, financial, marketing and sales personnel, as
well as our ability to attract, train, retain and motivate additional highly
skilled and qualified personnel.

Competition for qualified employees in the Internet and telecommunications
industries is intense. Only a limited number of persons have the required
knowledge and experience in the particular sectors and countries in which we
operate. If we lose the services of key personnel or are unable to attract
additional qualified personnel, this could materially adversely affect our
business, financial condition and results of operations.

We May Face Difficulties In Protecting Your Shareholder Rights

Our Articles of Association and Dutch corporate law govern our corporate
affairs. The rights of our shareholders and the responsibilities of our
Supervisory Board directors are distinct from those established under the
statutes or judicial precedent in U.S. jurisdictions. Therefore, our public
shareholders might find it more difficult to protect their interests against
actions of our management, supervisory directors or controlling shareholders
than they would as shareholders of a corporation incorporated in the United
States.

Under our Articles of Association, once the general meeting of shareholders
adopts our annual financial statements, the supervisory and management boards
will not be liable with respect to the performance of their duties during the
financial year concerned. This is the case unless the general meeting of
shareholders makes an explicit reservation without prejudice to the Dutch law
provisions. These provisions include those relating to the liability of members
of supervisory and management boards upon the bankruptcy of a company under the
Dutch Civil Code.

Our Stock Price May Be Volatile

Our stock price may be volatile due to a number of factors, including:



| |  |  | actual or anticipated fluctuations in our operating results or those of comparable companies;
| | - |  | ---------------------------------------------------------------------------------------------
|
| |  |  | regulatory developments;                                                                     
|
| |  |  | technological evolution;                                                                     
|
| |  |  | general conditions in the telecommunications sector or regional economies; or                
|
| |  |  | price and volume fluctuations in the global stock markets.                                   

France Telecom Could Sell Shares Of Ours That It Owns.

France Telecom currently owns about 54.2% of our shares. It could sell shares
at any time, subject to the restrictions to which it agreed in the Contribution
Agreement relating to our transactions with France Telecom, Atlas and SITA in
June 2001.

The Contribution Agreement generally prohibits France Telecom from selling or
otherwise disposing of more than an aggregate of 3% of our shares before June
29, 2002 or more than an aggregate of 25% of our shares between that date and
June 29, 2005. France Telecom can dispose of shares beyond these limits if our
independent directors approve, or if our public shareholders can participate,
or if the transaction would combine us with another company and France Telecom
would hold at least 34% of the voting rights in the new entity. The
Contribution Agreement also prohibits France Telecom from knowingly permitting
a third party to acquire or accumulate an interest in us that makes that third
party our largest shareholder at a level of 34% or more, unless all of our
shareholders are treated the same as France Telecom.

12



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France Telecom could sell shares as permitted in the Contribution Agreement in
several ways, including public sales or private sales to strategic or other
investors. In addition, because France Telecom controls us, it may be able to
cause us to waive or amend the restrictions of the Contribution Agreement,
although this would require the consent of our independent directors. Any
proposed or actual sale of our shares could cause our share price to decline.

Item 4.   Information on the Company

HISTORY AND DEVELOPMENT OF THE COMPANY

Introduction

We provide customized global IP and data services as well as network
integration and applications services to multinational businesses such as
DuPont, Henkel, Hyatt International, Groupe ETAM, LG-EDS, LVMH, Microsoft,
Fontera, Nortel Networks and Nokia. Using our portfolio of value-added
services and the seamless geographic reach of the network, our customers can
access their own companys information and applications, and applications
available from the Internet, anywhere in the world through direct connections
or dial-up from portable computers or other network access interfaces. Our
product portfolio includes:



| |  |  | managed data network services, outsourcing and Internet Protocol (IP) networking;
| | - |  | ---------------------------------------------------------------------------------
|
| |  |  | network design and integration services, professional and managed services; and  
|
| |  |  | security services, managed groupware services, and hosting services.             

Equant N.V. is a corporation organized under the laws of The Netherlands. Our
principal executive office is located at Gatwickstraat 21-23, 1043 GL
Amsterdam-Sloterdijk, The Netherlands, and its telephone number is (31) 20 581
83 83. We also maintain executive offices in Atlanta, Georgia and Reston,
Virginia in the United States and Paris, France. Our registered office is in
Amsterdam, The Netherlands. Our agent in the United States is Michael Berg,
Senior Vice President and General Counsel, 12490 Sunrise Valley Drive, Reston,
Virginia 20196-0001. We define a number of the telecommunications related
terms we use in this document on page 37 in
 Glossary of Selected
Telecommunications Terms.

Our History

Our origins date back to 1949, when major airline companies from all over the
globe formed Société International de Télécommunications Aéronautiques S.C.
(SITA S.C. or SITA) to provide communications and data processing services
to the air transport industry. On March 3, 1995, SITA formed SITA
Telecommunications Holdings N.V. (which we call STH). Later in 1995, SITA
restructured its holdings in STH, distributing its stock in STH to a newly
established Dutch foundation, called the SITA Foundation, which held at that
time 85.7% of this stock for the benefit of the SITA member airline companies
and 14.3% of this stock for the benefit of a trust established for eligible
employees of STH and SITA under an employee share award plan. In October 1995,
SITA and STH also entered a joint venture agreement providing for joint
ownership, operation and management of the network and giving each of SITA and
STH indefeasible and exclusive rights of access to the network. Under the joint
venture agreement, STH was given the exclusive right to provide network
services to customers outside the air transport community, while SITA retained
the exclusive right to provide network services to the air transport community.

Early in 1998, we changed our name from STH to Equant N.V. We first offered
our shares to the public in July 1998, with a listing on the New York Stock
Exchange and the Bourse de Paris.

In the second quarter of 2000, Equant and Reuters formed Radianz, a new company
that is 51% owned by Reuters and 49% owned by Equant. Radianz, which commenced
operations on July 1, 2000, provides secure IP network services to the
financial services industry. We contributed $225 million, in addition to some
of our customer contracts, to Radianz and agreed to provide $125 million in
services to Radianz over a period of up to ten years.

13



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On November 19, 2000, as part of a wider set of separate but interrelated
transactions, we entered a contribution agreement with France Telecom and its
wholly owned subsidiary, Atlas, which owned Global One.
Global One was a provider of data, voice and IP telecommunications services
with its own backbone network that reached more than 850 cities worldwide.
Global One, which maintained its joint global headquarters in Reston, Virginia
and Paris, France, focused primarily on multinational businesses and their
suppliers, distributors and customers. On completion of these transactions on
June 29, 2001, France Telecom acquired a controlling interest in us. Pursuant
to the execution of numerous contracts among France Telecom, its subsidiary,
Transpac, SITA, SITA Information Networking Computing N.V. (a SITA subsidiary)
and us:



| |  |  | We acquired 100% of Global One in exchange for 80,617,348
newly issued Equant shares; and                                                                                                                                                       
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | France Telecom subscribed for 10 million newly issued Equant
convertible preference shares for $1 billion in cash and also
acquired the SITA Foundations 67,950,000 shares in Equant in
exchange for 30,886,364 existing France Telecom shares.

France Telecom issued to our shareholders (other than the SITA Foundation) one
Contingent Value Right for each ordinary share held on June 28, 2001. Each CVR
entitles its holder to receive a cash payment from France Telecom of up to 15
at maturity on the third anniversary of the closing of these transactions,
depending on the market value of our ordinary shares at that time. Immediately following these transactions, France Telecom owned approximately
54.3% of our voting share capital with the balance held by the public.



At the same time, we terminated the Joint Venture Agreement with SITA and
replaced it with the agreements we describe in detail in Item 7  Major
Shareholders And Related Party Transactions and Item 10  Material Contracts
below. A Strategic Relationship Umbrella Agreement establishes the general
principles that govern the relationship between us. A Network Services
Agreement establishes the terms and conditions that govern our delivery of
network services to SITA. A Transition and Management Agreement establishes
the terms and conditions for the transfer over time of assets, staff and
network from SITA to us and our management of the Network. Under our current
arrangement with SITA, we control and manage the Network. We provide our
portfolio of products and services to SITA who delivers those services to the
Air Transport Community, globally.

On June 29, 2001, we also entered into a number of agreements with
France Telecom, through its Transpac subsidiary, that establish the legal
arrangements with France Telecom relating to the sale and support of Equant
services in France. For a further description of all of these France Telecom
arrangements, see Item 7  Major Shareholders and Related Party Transactions.

Because of the numerous transactions that resulted in the merger with Global
One, we began an internal reorganization in 2001. We now offer our products
and services through one centralized organization instead of three operating
divisions. In addition, following the France Telecom transactions, we now
report our results under French GAAP instead of U.S. GAAP, as we did
previously.

Capital Expenditures

For a discussion of our capital expenditures, see Item 5. Operating and
Financial Review and Prospects  Liquidity and Capital Resources  Capital
Expenditures.

BUSINESS OVERVIEW

We are a leader in global IP and data services for multinational businesses
offering network and integration services. We assist customers in using data
networks to effectively manage their businesses, both by reducing their costs
and by exploiting data communications to provide new services. We offer global
reach with a seamless data network,

14



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connecting key business centers in over 220 countries and territories, with
local support in 145 countries. The Network allows users access to their own
companys information and applications, and those available from the Internet
anywhere in the world, through direct connections or through dial-up from
portable computers or other network access interfaces. Increasingly, we are
focusing on helping customers explore ways of using IP technologies by
providing new services or using services available from intranets, extranets,
or the public Internet. We are a member of the France Telecom Group.

We offer a broad portfolio of IP-based end-to-end managed network services, an
extensive range of traditional end-to-end managed data network services and a
series of advanced value-added voice and mobile services, as well as innovative
integration and managed services. We also offer a range of service management
products that permit customers to monitor network performance, availability and
fault rectification. Among our leading service offerings, our MPLS-based IP VPN
service is now used by more than 400 businesses and is fully operational in
more than 140 countries, our international frame relay service offering Equant
Frame Relay is provided in 125 countries and our Equant ATM offering is
provided in 55 countries.

Competitive Strengths

Todays corporate communications networks are able to connect essential
operations within business organizations on a global scale. Multinational
companies demand constant access to business critical applications and rely on
high levels of customization, performance, reliability and security of all the
supporting infrastructure. We believe that our service offerings and network
footprint, or international coverage, are uniquely positioned to meet these
demands. Specifically our competitive strengths include:

Global Network Footprint.The Network spans more than 220 countries and
territories and 1,500 cities and towns. We believe our ability to provide
services in locations where our competitors cannot is a key selling point.

Network Strength.The Network is designed to support high bandwidth,
multimedia applications and is continually upgraded to take advantage of new
technology. We have full operational control of the network, rather than
providing service through a patchwork of interconnected alliances. We believe
that this provides a key advantage over our competitors.

Global Support Infrastructure.Many of our customers operate on a global
basis and require us to provide local support to the entirety of their
operations, and not just to their headquarters. We operate five Global Customer
Service Centers, nine Hosting Centers and 280 Fault Repair Units,
with staff based in a total of 145 countries. All staff must speak English. We
also provide local language support to our customers in 32
languages, in addition to English. We believe that our ability to provide direct support to customers
in such a wide range of locations further distinguishes us from our
competitors.

International Business and Data Focus.While the technology of the network
is designed to support the increasing convergence of data, voice and video,
allowing these to be integrated over a single IP connection, our business is
focused on data transmission in an international environment. By contrast, many
of our competitors have traditionally focused on voice telephony within
national markets. Our target customer demands an international service and a
high level data networking expertise. We believe that our significant
experience in these areas provides us with a competitive advantage.

Provision of Customized Services.We provide our customers with a wide
range of services that complement our key network-based Data & IP Products but
do not rely on the Network for their provision. With our local support
expertise across 145 countries, we are able to deliver integration services,
messaging, hosting and security services, consulting, project management,
installation, maintenance and technical support and fulfillment to our
customers both globally and locally. The provision of many of these services
capitalizes on our relationships with Cisco, Nortel and Microsoft and we have
obtained formal accreditation from each of these companies.

Strong Customer Base.We have a broad and stable base of customers across
a wide range of industries. We serve approximately 3,700 large business
customers, including nearly two-thirds of the top 100 companies in Business
Weeks Global 1000 list for 2001, such as: DuPont, Henkel, Hyatt
International, Groupe ETAM, LG-EDS,

15



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LVMH, Microsoft, Fontera, Nortel Networks and Nokia. Our focus on
building long term relationships with blue chip organizations has resulted in
both high levels of customer retention and ongoing expansion of the level of
business with these customers.

Our Company Today

Our new organizational structure consists of direct functional reporting to the
CEO with a focus on customer facing activities in the Markets and Sales
organization, the Products organization and the Customer Service and Network
organization. In addition to these functional areas, we have also established
strong infrastructure support organizations to ensure that our
revenue-generating activities are consistent with and advance our strategy.

We continue to focus our corporate attention on a broad portfolio of data
network products and services designed to meet the needs of multinational
corporations. We also continue to support a voice business, most of which was
acquired in the merger with Global One. France Telecom has agreed to assume
the operation, management and financial responsibility for our switched voice
business and switched voice platform by the end of 2005. In the interim, we
engage in a joint business planning and monitoring process with France Telecom
to ensure that the switched voice business does not materially affect our
profitability. We expect to gradually migrate our voice business to a Voice
over IP platform by the end of 2005.

Strategy

The transactions with France Telecom, resulting in the merger with Global One
and integration of the Network, has significantly expanded our customer base
and has enhanced our service capabilities and network efficiencies. Our goal
is to become the leader in global IP and data services for multinational
businesses. To achieve this strategic objective, we aim to:



| |  |  | increase customer penetration and market share;          
| | - |  | ---------------------------------------------------------
|
| |  |  | integrate and develop direct and indirect sales channels;
|
| |  |  | integrate and develop our product portfolio;             
|
| |  |  | integrate our back office
systems;                       
|
| |  |  | continue to improve customer relationships; and          
|
| |  |  | integrate and continue to develop the Network.           

Industry Background

Technology Overview

Data networks use packet switching technology to transmit both data and voice
as opposed to the circuit switching technology most voice networks employ.
Packet switching technology is particularly suited to the bursty,
error-intolerant nature of data transmission. Compared to circuit switching, it
provides data networks with better bandwidth utilization, improved congestion
control, error detection and correction, powerful addressing facilities and
higher availability in the case of node and line failures. Packet-switching
divides data into segments, each of which is enclosed in an individual data
envelope. These data packets contain user data plus information such as
addressing, sequencing and error control. A typical user message can consist of
one or more packets. Packet switching technology today has developed to include
frame and cell switching technology.

Data protocols or network languages permit computers to exchange information
using a common software algorithm. Protocols are the critical technology in
data networking because they dictate the speed and flexibility with which data
can be exchanged between computers. Numerous protocols have been developed over
the years which support digital data transmission. These protocols are deployed
within a network and at the network access level. They fall into two

16



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categories: those conforming to agreed international standards known as open
protocols, and others developed by companies as proprietary protocols. The
development of open protocols permits the seamless migration and integration of
different protocols.

The most common data network protocols are:



| |  |  | Internet Protocol (IP),a set of network access standards that
enable efficient communication across data networks, particularly the
Internet and most Local Area Networks (LANs). IP is used in our IP
Dial; IP VPN; Internet Direct; and Managed Router CPE services;                                                                         
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Frame Relay,a high-speed open protocol offering both access to a
network and carriage of data across a network. This protocol is used by
customers who have significant amounts of data traffic;                                                                                                                                                   
|
| |  |  | Asynchronous Transfer Mode (ATM),a high-speed open protocol that
has been developed for very high transmission rates. This is deployed
both within core networks and as an access technology. Many Wide Area
Networks (WANs) use this common protocol to aggregate efficiently
traffic, giving better linking for multimedia type services; and
|
| |  |  | X.25/X.28,a set of open standard packet switching protocols that
allow low to medium speed terminals to have either dial-in or permanent
access to a network from the users premises and operate on a network.                                                                                                                                    

The most significant development in the data
network industry is the
proliferation of the Internet Protocol. IP standards can be used to create
Intranets, which are closely managed networks that operate like the Internet
but are designed for internal corporate use with more consistent performance
and better security. The widespread deployment of IP standards facilitated the
growth of Extranets that link IP-based corporate networks. The development of
IP is especially important, as suppliers of applications increasingly offer
their services to companies across the so-called public Internet. By public
Internet, we mean the services available to anyone via the Internet, as
opposed to intranet and extranet services that only authorized users can
access.

Among available protocols, IP is experiencing very strong growth as the
protocol of choice for new networks, while Frame Relay continues to grow at a
steady pace. X.25 is used in developing countries that lack the
telecommunications infrastructure of the quality necessary to deliver high
speed and high quality service, while in most technologically advanced
countries X.25 is used as a legacy WAN service. For companies doing business in
developing countries, X.25s superior error correcting abilities are critical.
ISDN is a popular access protocol because of its ability to meet bandwidth
needs for remote LAN connectivity and on-line access applications. It is often
used in a dial back up situation to provide connectivity in the event of a
failure of an access circuit.

17



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Access to the network is by definition local. To
establish a permanent connection,
leased lines are traditionally employed for ingress and egress to and
from the Network. Leased lines are a proven means of access. They are widely
available, but they can also be expensive. Other network access options
include:



| |  |  | Digital Subscriber Line (DSL). DSL is a broadband access
technology that telecommunications providers are deploying to make
more efficient use of existing copper infrastructure, and Wireless
Local Loop, especially in countries lacking a copper infrastructure;
and                                                                                                                                                                                                                                                                                             
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Dial-up connections that rely on Public Switched Telephone
Network (PSTN), ISDN or Very Small Aperture Terminal (VSAT).
With mobile data traffic expected to account for more than 40% of
the total mobile traffic by 2004, mobile access is bound to become
one of the major methods for accessing the network. The current
second generation of GSM Data has significant speed limitations, but
this should diminish with newer technologies such as Generalized
Packet Radio Services (GPRS) and the upcoming 3G, the third
generation of mobile telephony.

The Business Data Networking Market

According to estimates of Gartner Consulting, the global data networking
services market will grow to over $34 billion in 2004. Growth in the global data
networking services market is driven by several factors:



| |  |  | The growth of traffic due to the continuous growth of Internet
usage and e-business, and the increasing demand for media-rich
applications. These translate to increasing intranets, extranets,
e-mail messaging, collaborative applications, electronic data
interchange and other applications to facilitate electronic
transactions.                                                                                                                                                                                                                                                                                                                                   
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | The continuing convergence of multiple network infrastructures for
voice, data and video. Multiple network infrastructures have
significantly increased the complexity of implementing and maintaining,
as well as the cost of operating such networks. Together with the
shortage of skilled employees, the impetus toward converged networks
will continue.                                                                                                                                                                                                                                                                                                               
|
| |  |  | Deregulation and liberalization of the worldwide telecommunications
industry. New competition is not limited to domestic providers, as
increasingly companies are seeking new sources of revenue in foreign
markets. These trends have led to the growth of global service
providers and industry consolidation. Increased competition has forced
decreasing and flexible pricing. Increased competition is also
evidenced through the availability of more and varied services, and the
increasing variety of service providers, for example, internet exchange
carriers, internet service providers, broadband providers, content
delivery providers or storage providers.
|
| |  |  | Businesses require sophisticated connectivity for geographically
dispersed locations resulting from the globalization of trade. This
trend is driving the growth of and demand for enterprise WANs.                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| |  |  | The growth in the number of telecommuters and mobile workers that
need to collaborate on projects using company resources has created the
need for reliable remote connectivity for multi-national, large,
domestic and even small companies.                                                                                                                                                                                                                                                                                                                                                                                                                               

Business customers network requirements include:



| |  |  | connecting multiple national or international locations;                                                                               
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------
| |  |  | managing diverse and technically complex network application functionality;                                                            
| |  |  | managing frequently changing and complex networks, accommodating
relocations, additions and removal of sites and staff reorganizations;
| |  |  | requiring increasing network reliability and availability;                                                                             
| |  |  | managing increasing complex disaster control and recovery capability;                                                                  
| |  |  | managing with decreasing networking budgets; and                                                                                       
| |  |  | handling increasing telephone fraud and network security concerns.                                                                     

18



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Another trend in the data networking business is customer migration towards a
hybrid of public and private IP services to reduce the cost of transmitting
increasing volumes of data. Business customers are also concerned with the
quality of service and the need for service level agreements as a means of
addressing scalability, availability, latency and guarantees against loss of
data during the transmission process.

To meet the expanding customer expectations and requirements, network service
providers are continuing to build or acquire network infrastructure with
improved technology. These networks are often referred to as next-generation
optical networks. These networks reduce the high cost and complexity of
traditional backbone networks, by providing a more efficient way to transmit
large amount of data as well as coping well with dynamic capacity demands. MPLS
is used in many of these networks to provide virtual private networking
capability.

Managed services represent an increasingly important part of the data
networking business model. The hosting of content and applications, such as the
provision of rack space for servers or the provision of a full messaging
application management service, forms a significant element of this new
paradigm. For network service providers, the ability to support e-business
depends increasingly upon the ability of the network to support applications.
This application-in-the-network concept is also applicable to security.

The security market is driven by the need for trust between customers and
suppliers. The growth of e-business applications and increased awareness of
potential threats have resulted in enterprises being more attuned to security
issues. The enterprise IT security market is broadly carved into five areas:



| |  |  | Virtual Private Networking (VPN) includes the creation of secure
tunnels in a network, usually the public Internet.                                        
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | The firewall market encompasses all premise-based solutions for
controlling and monitoring the flow of data to specific external
destinations.                 
|
| |  |  | Intrusion detection systems enable the enterprise to monitor and
detect external attacks on the corporate network, and help prevent
fraud and/or network abuse.
|
| |  |  | Authentication and encryption solutions ensure that data is
securely delivered after a users credentials have been authorized.                                
|
| |  |  | Content inspection deals with the protection of data, such as
anti-virus protection for messaging services.                                                    

The Network

The focal point of our business, and our key competitive strength, is the
Network. We offer our entire portfolio of managed data, voice, integrated
voice and data and other value added network services through a single global
network. The Network currently reaches over 220 countries and territories with
local support in 145 countries. We offer IP in 142 countries, Frame Relay in
930 locations in 176 countries, ATM in 123 locations in 55 countries and dial
up services in 178 countries. Overall, the network serves
approximately 3700 large business
customers, with approximately 39,500 customer routers and 182,500 customer
connections.

Since the closing of the France Telecom transactions in June 2001, we now
operate and manage the Network. SITA, with whom we previously operated the
Network under a joint venture agreement prior to the France Telecom
transactions, has become our exclusive partner for delivering our services to
the air transport community, which generally consists of airlines, airport
operators and related businesses. In some countries, SITA continues to operate
the Network locally in accordance with policies designed to ensure the orderly
and seamless operation of the Network globally. We are responsible to SITA for
the costs of operating in those countries. SITA will continue to operate
locally in countries until we can assume full ownership of all of the local
network assets. We will assume ownership as soon as it becomes possible in each
of the affected countries.

19



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As part of our merger with Global One, we acquired Global Ones network, much
of which was fiber-optic based with a top capacity of one terabit per second
and with a global reach to over 120 countries and territories. Following the
merger, we initiated a process of integrating Global Ones network into the
Network.

Equipment and Systems.The Network was originally a data transmission network
designed to support both the messaging and interactive host reservation
services requirements of SITAs airline members. To support a broader base of
commercial services, SITA upgraded the Network by building a high speed
backbone. The Network makes extensive use of large capacity communications
circuits, including STM-1 and other wide-band circuits with capacities of up to
155 Mbps. The infrastructure deployed to support our customer connections
includes more than 290 Core routers, 1,450 Data switches, 1,500 X.25/Frame
Relay nodes, 12,000 PPP Dial ports and 18,000 X.28 Dial ports. The Network
supports customer traffic with international bandwidth and domestic bandwidth
of more than 10 Gigabits per second.

The configuration of the Network provides many alternate paths for data packets
to travel to connect points on the Network. This approach is fault tolerant,
since a fault, such as a broken line or switch, will not interrupt traffic, as
intelligent switches in the mesh can sense the failure and dynamically reroute
the flow using alternate routes. The Network also uses switches that are
themselves fault tolerant, containing redundant elements that can be brought
into service if one element fails. The Network equipment is principally
supplied by Nortel Networks and Cisco. The following graphic is a simplified
illustration of our network architecture.



Local Access.Customers can access the Network either directly or through dial
access services. Dial access service offers access to the Network through the
local public switched telephone network. Direct access is arranged through the
LNO in each country where the customer desires a service. Direct access is
usually arranged through a dedicated facility such as a leased line.

We offer different access methods, and adapt them to our network backbone for
greater efficiency. Among those offered are ATM at the access layer for
customers requiring high speed access for multimedia operations. We also offer
SDSL and IDSL access in the United States

Network Development and Integration. We are in the process of integrating the
Network with the former Global One network with the goal of achieving economies
of scale by increasing volume and capacity utilization in the network. The
integration of the networks is being implemented in distinct phases, including
transmission layer integration, core network integration, service platform
integration and site integration. During the second half of 2001, we were able
to rapidly eliminate overlapping circuit capacity. At the end of the
integration process in December, 2002, we will be operating a single unified
network and back office tools for all of our new and existing customers.
Unification of the two networks is expected to generate significant
savings. The operating savings are derived from synergies in the areas of network staff,
third-party contracts and circuit capacity.

20



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The staff synergies are made possible by the consolidation of the main common
network functions that resided in both companies, such as customer service
centers, provisioning centers and network monitoring centers. The third-party
contract savings stem primarily from renegotiating and bundling existing local
PTT and maintenance vendor contracts, achieving higher volume discounts.

We continue to invest in capacity acquisition. We are deploying a large
capacity optical infrastructure, which is expected to support both of its main
traffic flows: ATM and IP. However, we will progressively separate ATM and IP
traffic in order to:



| |  |  | Enable our IP traffic to grow beyond the foreseen limits of the ATM platform;                    
| | - |  | -------------------------------------------------------------------------------------------------
|
| |  |  | Reduce the overhead caused by the addition of the ATM layer for transport of pure IP traffic; and
|
| |  |  | Converge our IP and Optical platforms.                                                           

Global Operations.

The following table shows our revenues by geographic region. Revenues are
attributed to the region in which the services are invoiced.

|                               |                             |   |                                                |     |      |   |         |      |   |   |         |      |  
|------------------------------ | --------------------------- | - | ---------------------------------------------- | --- | ---- | - | ------- | ---- | - | - | ------- | ---- | -
|                               |                             |   | At or for the year ended December 31,         
|                               |                             |   |                                               
|                               |                             |   | 1999                                           |     | 2000 |   | 2001   
|                               |                             |   |                                                |     |      |   |        
|                               |                             |   | (U.S. dollars in millions, except percentages)
|Americas                       |                             | $ | 342.6                                          |     |      | $ | 570.4   |      |   | $ | 801.7   |     
|                               | As a percentage of revenues |   |                                                | 3.2 | %    |   |         | 38.7 | % |   |         | 33.5 | %
|Europe, Middle East and Africa |                             |   | 63.3                                           |     |      |   | 746.6   |      |   |   | 1,348.6 |     
|                               | As a percentage of revenues |   |                                                | 4.6 | %    |   |         | 50.7 | % |   |         | 56.4 | %
|Asia Pacific and Japan         |                             |   | 25.4                                           |     |      |   | 156.4   |      |   |   | 240.4   |     
|                               | As a percentage of revenues |   |                                                | 2.2 | %    |   |         | 10.6 | % |   |         | 10.1 | %
|                               |                             |   |                                                |     |      |   |         |      |   |   |         |     
|Total                          |                             | $ | 1,031.3                                        |     |      | $ | 1,473.4 |      |   | $ | 2,390.7 |     
|                               |                             |   |                                                |     |      |   |         |      |   |   |         |     

Seasonality.While our quarterly revenues may vary, we do not believe that
there are any major seasonal trends in our markets.

Products and Services

We offer network, integration and other services. Our network services
include traditional managed data network services (MDNS) and Frame Relay and
IP services. Our integration services include hosting, application and
fulfillment services. Other services we offer include circuit switched voice
services. The following tables show revenues from the provision of network
services, integration services and other services.

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|                                               |                                                  |   |                                                |       |      |   |         |       |   |   |         |      |  
|---------------------------------------------- | ------------------------------------------------ | - | ---------------------------------------------- | ----- | ---- | - | ------- | ----- | - | - | ------- | ---- | -
|                                               |                                                  |   | At or for the year ended December 31,         
|                                               |                                                  |   |                                               
|                                               |                                                  |   | 1999                                           |       | 2000 |   | 2001   
|                                               |                                                  |   |                                                |       |      |   |        
|                                               |                                                  |   | (U.S. dollars in millions, except percentages)
|Network services:                              |                                                  |   |                                                |       |      |   |         |       |   |   |         |     
|Frame Relay and IP                             |                                                  | $ | 337.9                                          |       |      | $ | 530.7   |       |   | $ | 1,107.4 |     
|                                               | As a percentage of Network Services revenues     |   |                                                | 61.3  | %    |   |         | 74.0  | % |   |         | 88.0 | %
|Traditional MDNS (X.25/SNA/SDLC/X.28)          |                                                  |   | 181.8                                          |       |      |   | 186.3   |       |   |   | 151.1   |     
|                                               | As a percentage of Network Services revenues     |   |                                                | 33.0  | %    |   |         | 26.0  | % |   |         | 12.0 | %
|Other (1)                                      |                                                  |   | 31.1                                           |       |      |   |        |       |   |   |        |     
|                                               | As a percentage of Network Services revenues     |   |                                                | 5.7   | %    |   |         |       |   |   |         |      |  
|                                               |                                                  |   |                                                |       |      |   |         |       |   |   |         |     
|Total                                          |                                                  | $ | 550.8                                          |       |      | $ | 717.0   |       |   | $ | 1,258.5 |     
|                                               |                                                  |   |                                                |       |      |   |         |       |   |   |         |     
|Integration services:                          |                                                  |   |                                                |       |      |   |         |       |   |   |         |     
|Fulfillment & System Sales                     |                                                  | $ | 91.3                                           |       |      | $ | 129.0   |       |   | $ | 121.5   |     
|                                               | As a percentage of Integration Services revenues |   |                                                | 29.1  | %    |   |         | 29.7  | % |   |         | 27.2 | %
|Hosting and applications                       |                                                  |   |                                               |       |      |   | 47.9    |       |   |   | 91.3    |     
|                                               | As a percentage of Integration Services revenues |   |                                                |      | %    |   |         | 11.0  | % |   |         | 20.4 | %
|Other Services                                 |                                                  |   | 222.8                                          |       |      |   | 257.8   |       |   |   | 234.3   |     
|                                               | As a percentage of Integration Services revenues |   |                                                | 70.9  | %    |   |         | 59.3  | % |   |         | 52.5 | %
|                                               |                                                  |   |                                                |       |      |   |         |       |   |   |         |     
|Total                                          |                                                  | $ | 314.1                                          |       |      | $ | 434.7   |       |   | $ | 447.1   |     
|                                               |                                                  |   |                                                |       |      |   |         |       |   |   |         |     
|Other services:                                |                                                  |   |                                                |       |      |   |         |       |   |   |         |     
|Convergence solutions                          |                                                  | $ | 2.8                                            |       |      | $ | 10.3    |       |   | $ | 101.0   |     
|                                               | As a percentage of Other revenues                |   |                                                | 100.0 | %    |   |         | 100.0 | % |   |         | 71.0 | %
|Services provided to France Telecom affiliates |                                                  |   |                                               |       |      |   |        |       |   |   | 41.3    |     
|                                               | As a percentage of Other revenues                |   |                                                | 0.0   | %    |   |         | 0.0   | % |   |         | 29.0 | %
|                                               |                                                  |   |                                                |       |      |   |         |       |   |   |         |     
|Total                                          |                                                  | $ | 2.8                                            |       |      | $ | 10.3    |       |   | $ | 142.3   |     
|                                               |                                                  |   |                                                |       |      |   |         |       |   |   |         |     
|SITA Network Contract (2)                      |                                                  | $ | 163.6                                          |       |      | $ | 311.4   |       |   | $ | 542.8   |     
|                                               |                                                  |   |                                                |       |      |   |         |       |   |   |         |     
|Total                                          |                                                  | $ | 1,031.3                                        |       |      | $ | 1,473.4 |       |   | $ | 2,390.7 |     
|                                               |                                                  |   |                                                |       |      |   |         |       |   |   |         |     

In addition to our network services, we provide our customers with a wide range
of services, which complement our key network-based Data & IP Products but do
not rely on the Network for their provision.



1 Other relates to a sales category that has been reallocated to various
other categories since December 31, 1999 and data is not available to
reallocate the 1999 revenues.


2 Sales of Network Services to SITA are not broken down by product line.

Network Services

We provide a full range of managed data network services, or MDNS, using all
the major protocols, including high speed data protocols. MDNS is the generic
name given to wide area network data transport services managed by a supplier
with a higher degree of functionality, security, reliability and cost
effectiveness than data transport services traditionally provided by public
telecommunications organizations through leased lines. For any customer, the

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availability of a particular access method, transmission speed or service is
dependent upon a combination of factors, including:



| |  |  | the nature of the customer premises equipment;             
| | - |  | -----------------------------------------------------------
|
| |  |  | the local telecommunications infrastructure;               
|
| |  |  | regulatory considerations in the relevant jurisdiction; and
|
| |  |  | other individualized factors.                              

We provide both direct access (i.e.,fixed and continuous connections between
different sites) and dial access (i.e.,connections initiated and terminated by
a remote user). Our managed data network services comprise Frame Relay and IP
and Traditional MDNS.

Frame Relay Service and IP Services.

Frame Relay.Frame relay is particularly suited to customers who transmit high
volumes of data intermittently in bursts and, as such, is a cost-effective
means of connecting geographically dispersed LANs such as those for a
multi-site business. We offer frame relay services in a large number of city
locations and countries, including all major business centers in North America,
Europe and the Pacific Rim, with access speeds of up to 45Mbps. Frame relay
continues to be a key WAN service. Customers who have highly centralized
applications and whose network requirements are very stringent typically select
managed Frame Relay.

Future Developments.We continually enhance our portfolio of WAN services. In
2002, we plan to launch higher speed services (155Mbps and 622Mbps) based on
SDH technology. We are also evaluating the potential use of Optical Ethernet
and Wavelength technologies as the next step in the evolution of our managed
data services portfolio. We also intend to increase the number of access speed
options for Frame Relay, introduce ATM Switched Virtual Circuits (SVC),
enhance ATM/Frame Relay interworking, and adopt usage-based
billing across our Frame Relay and IP services.

Equant IP VPN.Equant IP VPN, which we launched in December 2001, provides a
private and secure, IP VPN with a MPLS-based architecture as a core component
to enable global enterprises to achieve business success. The key features are:



| |  |  | IP VPN Plug  Equant provides an IP Plug, which delivers all IP
services to the customer through a simple any-to-any connection.                                        
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Fully secured VPN  The MPLS technology affords the customer a unique
and fully secured closed user group, as secure as in a frame relay or
leased line network.          
|
| |  |  | Variety of access methods including native IP leased line, Frame Relay,
ATM, dial access, and Internet access (bundled with IPSec) and DSL.                               
|
| |  |  | Class of service (CoS) management (application awareness) allows
prioritization of customer applications between multimedia and data
traffic with four levels of priority.

Future Developments.Using our MPLS
infrastructure, we intend to continue to
deliver virtual private networking with differentiated class of service
backed by strong service level agreements. MPLS allows private networks to
operate seamlessly over our shared global IP infrastructure, and, together with
usage-based billing and mission-critical sites options, allows our customers to
select the service performance that meets the needs of their applications. We
also intend to expand the range of our IP services to include solutions for the
remote branch and small office market, bundled with DSL to benefit from the
competitive price of these newer access services. We intend to introduce more
hybrid solutions, including scalable network-based services, to extend further
cost savings to our customers. We also intend to offer integrated
Intranet/Internet access to satisfy our customers need for efficient usage of
bandwidth.

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ATM Service. We launched ATM access services in May 1999, and have entered into
ATM access services contracts with a number of major corporations. ATM access
services provide enterprises with access speeds of up to 155 Mbps which is
suitable for transmitting high volume data applications, as well as integrated
voice and video. Our ATM service is selected by customers who have high speed,
mission critical networking requirements and who use this service to provide
full multimedia integration. For example, our ATM service was used to provide
the communications transport to France Telecom in connection with the worlds
first remote medical surgery, Operation Lindbergh, where a surgeon physically
based in the United States, successfully operated, using robotics, on a patient
in France.

Equant Internet Direct .Equant Internet Direct has been designed for customers
who use the Internet as a strategic resource and require a high level of
Internet reliability and services on a worldwide basis. In the future we will
introduce Integrated Internet / IP VPN access which provides cost reduction for
customers.

Managed Customer Premises Equipment Services.This managed CPE option, whereby
we manage a portfolio of Cisco routers or Nortel switches on the customers
premises, is increasingly preferred by customers as they evaluate their total
cost of ownership. Taking a managed CPE option avoids the need for customers
to invest in, maintain and upgrade their own hardware.

Service Management Tools.We have consolidated our range of service management
tools into one single tool called Equant WebVision. This real-time tool is
intended to permit our customers to monitor both performance of the services we
provide and progress on resolving problems. Equant WebVision is a real time
monitoring tool that provides customers with information on traffic,
connections and configurations and is a PC based on-line browser tool. Equant
WebVision also allows customers to view trouble tickets, or reports of
problems or errors. It provides on-line visibility of the number and status of
trouble tickets from their inception through to their resolution.

Traditional MDNS.We offer direct access services, providing LAN to LAN
connectivity, employing the X.25 protocol. These services provide flexible,
cost-effective connections in a wide number of locations. Although customers in
the United States, Western Europe and Japan are migrating to more rapid, higher
capacity services, X.25 and SNA/SDLC usage continues to grow in emerging
markets in Eastern Europe, Asia and Africa. X.25 WAN services continue to be
used, especially in developing countries that lack a high grade
telecommunications infrastructure and providing the quality required for most
modern data-communications transport protocols. X.28 is an enhanced version of
the X.25 protocol.

Integration Services

Our integration services comprise the deployment, monitoring and maintenance of
customers equipment. Our facilities allow us to manage the customers desktop
remotely, including application delivery, monitoring and diagnostics. The
Integration Services portfolio is currently comprised of the following
services:

Fulfilment

Fulfillment services comprise the supply and distribution of
desktop and network equipment.

Hosting services and Applications

Many companies are considering locating their IT servers in hosting centers to
achieve benefits in terms of level of service, total cost of ownership and
information system infrastructure optimization. We provide server hosting
services in our seven hosting centers around the world. This infrastructure is
especially relevant for disaster recovery plans and back up of main data center
located at customer premises. We provide application hosting services and
partner with consulting firms to answer requirements of clients that want to
fully outsource the infrastructure of their e-business initiatives.

Other Integration Services

We also offer the following integration services:

Deployment Services.Implementing international projects using internal
resources can place a heavy burden on a customers internal team. We focus on
three types of projects: LAN Deployment, Cisco Deployment and Nortel

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Integration Services. Deployment includes resale of network equipment and
staging and installation of LAN and WAN infrastructure worldwide.

Maintenance Services.We provide local support with global coordination
delivered by more than 3,000 support professionals in more than 50 countries
and 200 service locations. Our Global Customer Support Centers manage any
reported incidents, supported by Atlas, our global service management system.

Enterprise Remote Management.We provide remote management capabilities to
address the network, servers and applications. Enterprise Network Management
provides an outsourced solution for customers seeking 24-hour proactive fault
management of their data network and servers. Performance Management
additionally provides performance data, reports and analysis.

Professional Services.We provide project management and technical consulting
services to take responsibility for every aspect of the deployment of a
customers solution.

Security services.The secure gateway opens intranets to customers and
partners. The secure gateway includes a set of service options: managed
firewall (based on Nokia products), managed antivirus (based on Trendmicro
products), caching and URL filtering. The managed authentication service
reinforces the security of dial access to intranets with non-replayable two
factor passwords (based on SecurID products).

Messaging services.We provide one stop management messaging services,
including the necessary network infrastructure to more than 700,000 users
worldwide, around Microsoft Exchange, Lotus Notes and iPlanet SMTP
technologies.

Future Developments. During 2002, we plan to launch
several important new services.



| |  |  | Consulting, deployment, maintenance and monitoring services
for IP Telephony in the LAN environment.
| | - |  | ----------------------------------------------------------------------------------------------------
|
| |  |  | Analysis and reporting on the behavior and bandwidth requirements of customers applications.       
|
| |  |  | Extending our fault and performance management services to the desktop environment.                 

Other Services

Convergence Solutions

Our convergence solutions are as follows :

Equant Voice VPN: We offer managed voice services in more than 30 countries.
Equant Voice VPN relies on a switched voice network, managed by France Telecom,
that uses a virtual private network technology to provide our customers with
the functionality of a dedicated private network combined with the flexibility,
resiliency and cost effectiveness of a shared global network.

The services formerly known as Integrated Voice and Data (iVAD) have been
re-packaged as Equant Voice for IPVPN, Equant Video for IPVPN and Equant Call
Center for IPVPN. These comprise an enhanced alternative to traditional
switched voice services.

Future developments:We intend to focus on developing a managed video
conferencing service for IPVPN. We also intend to deliver complete voice
offerings for IPVPN to support customers in migrating from a traditional
switched voice infrastructure to a converged infrastructure. Our goal is to
deliver converged voice and video services over IP networks.

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Marketing and Distribution

We sell our products and services both directly and through indirect sales
channels. As of December 31, 2001, we had over 650 direct and indirect sales
staff. We actively hire sales and technical personnel experienced in data
communications and related sectors, and incentivize them through a competitive
sales compensation scheme. We summarize below the key elements of our
marketing and distribution strategy.

Global Account Management:We have established a dedicated global account
management program for our largest customers and those customers who have
indicated that they wanted to build sustained long-term relationships with us.
The program is initially focused on 50 companies. The account managers are
responsible for developing sustainable commercial relationships with these
customers and coordinating sales and support activity across all regions.

The direct sales force and account managers work together with technical staff
in each location to provide cost-effective solutions specifically tailored to
customer needs. This provides our direct sales force with detailed knowledge of
how local services can be matched to customer requirements, enabling them to
provide more effective solutions.

Indirect Sales:Our major indirect sales channels complement our direct sales
force and are an integral part of our strategy. These channels include SITA,
which addresses the air transport community, Transpac (a subsidiary of France
Telecom), that resells our products in the French market, our Radianz joint
venture with Reuters, that uses our network and provides us enhanced access to
the financial services industry, and market specific joint ventures (such as
China Netcom in China), and distributors (such as Sprint in the United States
and Deutsche Telekom in Germany). In total, indirect channels generated
approximately $1.4 billion, or 47%, of our pro forma revenues in 2001.

We have over 90 indirect sales and support staff dedicated to managing and
expanding our indirect channel sales. Our strategy is to focus our resources
and efforts on deepening the relationships with our top indirect sales
partners. Outside of these core strategic relationships, other distributor
relationships are being continually reviewed, assessed and developed.

We intend to broaden and increase our revenue streams from indirect sales
channels. In some of the locations where we currently operate, we plan to
revitalize and redirect our existing indirect sales channels and select new
indirect sales channels such as value added resellers, distributors and agents.
Where we cannot procure independent authority to operate, we plan to negotiate
commercial arrangements with local licensed providers. We also plan to pursue
new revenue opportunities through specific market channels such as mobile
providers and to develop cross-selling relationships via systems integrators,
professional or consultancy firms, telecommunications equipment manufacturers,
and related channels.

Integration of Global One Sales Force.Through the merger with Global One, our
expanded direct sales force capabilities allows us to focus on generating new
business in our primary geographic markets of North America, Western Europe and
selected countries in the Asia-Pacific region. We intend to focus our efforts
on selected high growth countries with specific strategies for low penetration
markets, while evaluating other markets on a case by case basis. The merger has
also brought enhanced global coverage with partnerships with local providers to
provide increased local capillarity. We also intend to work with indirect sales
channels in challenging markets, strengthening existing relationships in some
countries and building new relationships in key countries with identified
opportunities.

The former Global One and our sales organizations were integrated during the
third and fourth quarters of 2001. To drive productivity closer to
our pre-merger levels, we reduced total sales and marketing headcount from over 2,500
to under 2,000. Reductions occurred at all levels, with the bulk of the
reductions coming from general management, support and administrative
functions. Additionally, unprofitable direct sales offices in over a dozen
small country branch office operations were closed including Hungary, Czech
Republic, Slovak Republic, Ivory Coast, Nigeria, Saudi Arabia, Syria, Israel,
Honduras, Guatemala, Costa Rica, Puerto Rico, Peru, and Vietnam.

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Customer Service

We operate five Global Customer Service Centers, 20
Satellite Customer Service Centers,
nine Hosting Centers and 280
Fault Repair Units with staff
based in a total of 145 countries. In recognition of our global customer base,
we provide local language support to our customers in 32 languages in addition
to English. The breadth of geography over which we can provide direct support
to our customers is unmatched within our industry and represents a significant
distinguishing factor.

We view excellence in customer service as the cornerstone of our product
portfolio. Customer care is focused on the effective delivery of our products
to the customer and the active support of those products on a global basis. We
evaluate our performance in each of these areas on an ongoing basis, both
internally by benchmarking and externally through a Customer Satisfaction
Survey. Our focus is to offer the broadest range of choices in our portfolio
and deliver the highest quality and most reliable products and services to our
customers.

We believe that quality customer care and high levels of customer satisfaction
are a prerequisite to the retention and growth of revenues from existing
customers, and to winning new customers. Our customer service organization is
comprised of customer service centers as well as customer service managers. The
customer service centers are responsible for ensuring that customers receive
professional, courteous and excellent service when a fault occurs on a given
customer connection. Customer service centers use the best technologies
available on the market for troubleshooting and faults correction. They can
rely on IP experts support when needed and have the ability to dispatch field
technicians around the world.

We intend to continue our focus on customer care through our Customer Service
Centers. Customer calls may be forwarded to one of several locations that have
staff available who speak the desired language. As a result, customers are
directed to call a local number that will then forward them to the appropriate
Customer Service Center. We currently support the following 32 languages: Arabic, Bahasa, Bengali,
Bulgarian, Burmese, Cantonese, Czech, Dutch, Farsi, French, German,
Greek*, Hebrew, Hungarian, Italian, Japanese, Korean*, Laotian*, Mandarin*,
Mongolian*, Polish*, Portuguese, Romanian*, Russian, Serbian*, Slovak*,
Spanish, Thai*, Turkish*, Urdu*, and Vietnamese*(* denotes language support by
remote Customer Service Center). Languages in addition to those listed may be
supported on a local basis consistent with the language skills of the
staff at a particular location.

Customers

In 2001, our ten largest customers accounted for 45% of our revenues, with the
largest customer, SITA, accounting for approximately 27% of revenues. Our
second largest customer, France Telecom accounts for only 6% of our revenues.
Radianz accounts for almost 4% of revenues and Sprint accounts for
approximately 3% of our revenues. We also recognized $146 million of
other income from France Telecom for acting as France
Telecoms agent and distributor of certain businesses. See Item 5. Operating and Financial Review and Prospects  Results
of Operations for the Year ended December 31, 2001  Other Operating
Income for more details. Our target customers are global
multi-nationals and other large national corporations requiring multi-year,
multi-service contracts. Our target customers typically have some of the
following characteristics:



| |  |  | Global 1000 companies                                                                            
| | - |  | -------------------------------------------------------------------------------------------------
|
| |  |  | Companies operating in globalized industries (including finance and mining)                      
|
| |  |  | Smaller, high profile businesses with significant international communications                   
|
| |  |  | Companies with a large number
of international locations and highly complex business applications
|
| |  |  | A few strategic suppliers meeting our requirements across all locations                        
|
| |  |  | A desire to minimize the
number of internal staff by outsourcing their managed services        

The multinational organizations that make up our target customer base typically
source their telecommunications needs through competitive bidding. Since the
merger our typical contract for communications services is for four years,
although a few of our larger contracts have terms of up to seven years.

Competition

We operate in a very dynamic, highly competitive and fragmented market that is
in a constant state of change. The wave of recent bankruptcy filings highlights
the transition the industry is currently experiencing. We face competition
from both established global service providers and increasingly from
competitors outside the traditional telecommunications

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realm. We face competition from four principal types of companies:



| |  |  | The Global Service Providers
| | - |  | ----------------------------

Our established competitors in the pure network service market include the
following companies: WorldCom, Cable & Wireless, Infonet, AT&T and BT Ignite
(operating independently following the termination of BT and AT&Ts Concert
joint venture). The established global service providers provide a range of
data services, alongside their more entrenched voice services, nevertheless,
they are becoming more competitive in the fast growing data services market.
This is evidenced by AT&T, BT and WorldComs efforts to separate their slower
growing voice services from the faster growing business data and wireless
services organizations.



| |  |  | New Bandwidth Providers
| | - |  | -----------------------

Newer entrants such as Global Crossing (which declared bankruptcy in January
2002), COLT Telecom, and Level 3 Communications, have entered the market, but
do not necessarily offer end-to-end solutions with the same geographic scope.
These newer competitors are focused on point-to-point or IP-based network
services as well as providing bandwidth to other carriers.



| |  |  | National Voice & Data Service providers
| | - |  | ---------------------------------------

In the jurisdictions in which we offer services, we also compete with incumbent
providers, such as local public telecommunication organizations (PTOs), some
of which still have special regulatory status and the exclusive rights to
provide certain services, and virtually all of which have historically
dominated their local telecommunications markets.



| |  |  | New Providers
| | - |  | -------------

In the managed hosting and application market, we compete with companies such
as Corio, Akamai, Opsware Inc. (formerly Loudcloud), and Cable and Wireless. Even though the business model of these new providers is fluctuating,
most of these companies are focused on offering application services rather
than infrastructure services.

We also compete with equipment vendors and installers and communications
software developers as they move into data networking. We believe that
competitiveness in the data network services sector is largely a function of
the ability to offer a broad variety of reliable products and services tailored
to customer needs and an effective support structure. As the market becomes
more competitive, we believe that price, end-to-end solutions and a
concentration on customer service plays a more important role.

Customers also require design, implementation and support services for network
and desktop technologies, as well as supply and distribution of desktop and
network equipment. The marketplace for fulfillment, desktop and network
integration services is fragmented both geographically and in terms of
competitor organizations. The main categories of competitors for these
services include computer service companies, outsourcers, computer
manufacturers and network integrators. Competitors include companies such as
AT&T, Electronic Data Systems Corporation, IBM, BT, NCR Corporation, Unisys
Corporation and Getronics N.V. Competition in fulfillment services is
principally price driven while competition in desktop and network integration
services is more a function of the ability to provide additional services
including design, implementation and support services.

REGULATION

As with any international network services provider, we face regulatory and
market access barriers in various countries resulting from restrictive laws,
policies and licensing requirements. In our major markets, in terms of revenue,
all of our current and planned data network services are now open to
competition, and in some cases no license at all is required. In most other
countries with significant revenue potential, licenses or arrangements with a
local licensed operator make it possible for us to offer our full range of data
network services. Nevertheless, some restrictive telecommunications laws and
practices in certain countries give rise to constraints, risks and
uncertainties which will for a time affect our ability to develop and market
our full portfolio of existing and future services.

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We believe we are substantially in compliance with applicable
telecommunications regulations in our primary revenue-generating markets. In
the remaining countries, some or all telecommunications services are subject to
restrictive or monopoly regimes. We are unauthorized to provide services in
such countries without entering into an arrangement
with the incumbent telecommunications operator. As a result, compliance issues
exist for certain services in a number of these countries. We cannot guarantee
that we will be able to either enter into or maintain the requisite
arrangements with the incumbent provider or will be able to comply with local
regulatory requirements at a reasonable cost or at all.

WTO Agreement and Its Implications

On February 15, 1997, 69 countries at the World Trade Organization (WTO)
reached agreement to liberalize market access and introduce national treatment
in basic telecommunications services. In February 1998, the commitments of the
signatory countries became formally binding on their governments. By the end of
2001, 84 countries had made commitments with respect to basic services.

The Doha Round of negotiations, which includes telecommunications services, is
now underway but is not due to be completed until 2004 at the earliest.
Although the WTO agreement on telecommunications services is an encouraging
development, it does not overcome continuing regulatory obstacles in many
countries. By way of example, the accession of China was the most significant
development in the WTO in 2001. However, in telecommunications, China has only
committed to phased geographic and foreign investment liberalization
culminating in country wide access in basic services within 6 years, subject to
a cap of 49% on ownership by foreign investors. With respect to value added
services, China will liberalize within two years subject to a 50% foreign
investment cap.

Generally, most of the countries that maintain telecommunications monopolies
have not participated in the WTO negotiations. Other countries have made only
limited commitments such as excluding voice services or postponing the opening
of any type of voice competition for many years. Moreover, in less developed
countries that are not well prepared for competition or for effectively
regulating a liberalized market, gaining the requisite experience and expertise
is likely to be a long and difficult process. Finally, even in liberalized
countries, there remain considerable post-liberalization red tape, such as
complicated licensing rules, some foreign ownership limits, high fees and
undeveloped competition and interconnection safeguards.

Corporate Presence

In a number of jurisdictions, we are permitted to provide service to local
customers only after first establishing a corporate presence, either through
the incorporation of a subsidiary or the registration of a branch or
representative office. We generally establish such a local presence in each of
the jurisdictions where such a presence is legally required. In jurisdictions
where we have not yet established a corporate presence, we usually rely on
indirect channels such as an arrangement with the incumbent PTO.

Regulatory Analysis by Service Type

Managed Data/ IP Network Services

The core of our network services business is the provision of managed data/IP
network services to corporate customers on an intra-corporate basis. These
services are generally characterized for licensing purposes as data
transmission services or value added services. We are authorized by law or by
license (either individual or class license) to provide these services in the
major and material revenue-generating countries in which we provide network
access. In the European Union, these services may be provided upon a simple
registration, notification or authorization procedure.

Countries in which we operate, but are not formally licensed or authorized to
provide managed data/IP services, can be grouped into three categories:



| |  | countries in which we temporarily rely on indirect channels pursuant
to contractual arrangements with other operators, pending the approval
of our applications for authority to operate;
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | countries in which we have established arrangements with an incumbent
or local licensed network operator or service                                                                      

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|  |  | provider; and                                                                                                                                                                               
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | countries in which we are not prohibited from offering certain
services and do so with the acquiescence of the local
authorities, but without holding any formal telecommunications license.

This third category of countries generally includes only lower revenue
generating countries. For countries that fall into this category, we only
offer service where the relationships with local authorities and operators are
strong and where we determine that the authority to operate, even where
informal, is reliable. A risk nevertheless exists that local authorities in a
country could deny requests for new Network connections to our customers or
require that customers be disconnected. We believe that this risk is remote and
will diminish over time further with the advance of liberalization.
Furthermore, the impact on our revenues and operating ability would not be
material.



| |  |  | Corporate Voice Services
| |  |  | ------------------------

We provide our international corporate voice services ( IP VPN for Voice)
only in those countries where the regulatory regime permits us to do so. Most
countries laws fall generally within one of the following four regulatory
categories (in order of the most restrictive to the least restrictive):



| |  |  | corporate voice services, however defined, are expressly
prohibited, except by the local incumbent telecommunications operator.
(In some of these countries, exceptions may exist for private networks
and closed user groups, enabling SITA, for example, to provide global
voice services to companies in the air transport community);
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | corporate voice services are permitted, but only insofar as the
calls both originate and terminate on leased circuits (on-net to
on-net);                                                                                                                                                                                              
|
| |  |  | corporate voice services are permitted, but only insofar as calls
either originate or terminate on leased circuits, with or without the
need to restrict the numbers that can be accessed on the public
switched telephone network (PSTN); and                                                                                         
|
| |  |  | corporate voice services that involve both break-in and break-out
on the PSTN are permitted provided that such services do not have a
public nature.                                                                                                                                                                                   

We believe that in jurisdictions in which we are providing corporate voice
services, we are doing so in accordance with applicable regulatory
requirements.



| |  |  | Corporate Internet Services
| |  |  | ---------------------------

With limited exceptions, the corporate Internet services that we provide do not
require any authorization beyond that we already hold for managed data/IP
network services. The exceptions (which apply to all companies in this sector)
are those countries that expressly restrict or prohibit the provision of public
Internet access, in particular, certain countries in Asia, the Middle East and
Africa. These countries in aggregate account for a very small percentage of our
revenues. Because the regulation of Internet access is ill-defined or in flux
in some countries, there is a risk that customers are using the Network to
access the Internet in countries that may prohibit (or wish to prohibit) such
access. We minimize this risk by proactively discontinuing such access when we
become aware of any legal requirements to block such access. The offering of
voice services over the Internet, and the use of the Internet by customers to
conduct voice communications, continues to grow. The regulatory status of these
activities is developing and we are carefully monitoring regulatory
pronouncements on this subject to ensure future compliance.

Substantive Regulation in Key Markets



| |  |  | United States
| |  |  | -------------

The regulatory framework governing the offering of telecommunications services
in the United States permits us to offer

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our complete portfolio of products and
services without significant legal constraints. We may provide these services
either on a facilities or resale basis. To the extent that a future service
requires prior authorization, either by the Federal Communications Commission
(FCC) or by a state public utility commission (PUC), we believe there is no
significant
risk that such an application would be denied or that we would face processing
delays that would adversely affect us. Nonetheless, the regulatory
classification and treatment of Internet-based services have not been
authoritatively resolved in the United States or Europe. Certain
Internet-related services may be subject to regulation in the future.

The offering of basic telecommunications services on a common carrier basis
is subject to regulation in the United States. Entities that provide such
services are classified as telecommunications carriers. Interstate and
international common carrier services provided by a telecommunications carrier
are subject to the FCCs jurisdiction under Title II of the Communications Act.
Intrastate telecommunications services (i.e., services that originate and
terminate within the boundaries of a single state or the District of Columbia)
are subject to regulation by the relevant state regulatory body.

Equant Operations, Inc., our wholly owned subsidiary, is authorized to provide
interstate and international common carrier services on both a facilities and a
resale basis between the United States and foreign locations, pursuant to its
FCC authorization. Under this authorization, Equant Operations is subject to
classifications and restrictions on certain international routes because of its
affiliation with France Telecom. Specifically, we are classified as a dominant
carrier on the international routes between the United States and France,
Argentina, Jordan, Poland and Mauritius. As a dominant carrier on these
routes, we have special reporting and compliance obligations. In addition, on
the international routes between the United States and the Central African
Republic, Chad, Cote dIvoire, Djibouti, El Salvador, French Guiana, French
Polynesia, Guadeloupe, Madagascar, Martinique, Mayotte, Reunion Island, New
Caledonia, Saint Pierre and Miquelon, Senegal and Wallis and Futuna, Equant can
only provide international switched services through the resale of an
unaffiliated U.S. facilities-based carriers international switched services.
To the best of our knowledge, we are in compliance with this authorization.

In addition to common carrier services, we also provide customized private
carrier services and enhanced or information services that are not subject
to regulation by the FCC. To the extent we are subject to statutory and
regulatory requirements for telecommunications carriers at the federal level,
we are, to the best of our knowledge, in compliance.

Agreement with FBI/DOJ

In order to obtain regulatory approval of the Global One/Equant merger, Equant
entered into an agreement with the Federal Bureau of Investigation (FBI) and
the Department of Justice (DOJ) substantially similar in content to the
agreements that telecom companies operating in the United States are generally
required to execute. The agreement imposes a number of obligations on us
relating to law enforcement and national security concerns related to the
future operation of the merged network. We have has taken steps to comply with
the obligations imposed by this agreement and we are, to the best of our
knowledge, in compliance.

Consent Decree

Because of the merger with Global One, we are also now subject to certain
obligations previously applicable to Global One under the consent decree
originally entered into to permit the establishment of Global One in the United
States. In 1995, the DOJ filed a complaint alleging that the proposed joint
venture arrangements between Sprint, France Telecom and Deutsche Telekom
relating to the formation of Global One would violate U.S. antitrust law.
Prior to the merger, the consent decree remained in effect and applicable to
France Telecom and Global One .

Under the Consent Decree, we were subject to a number of provisions covering:
restrictions on the transfer of employees from France Telecom to Equant;
restrictions on obtaining confidential information from France Telecom which
they obtained as a result of their relationships with other U.S. telecom
providers; reporting obligations pertaining to our previous relationship with
Deutsche Telekom; all references to Sprint and the purchase of products and
services from France Telecom.

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Upon consummation of the merger, we filed a request with the DOJ to modify the
consent decree to reduce our obligations under it. The DOJ has agreed to
modify the consent decree and it has been approved by the United
States District Court for the District of Colombia. Our
remaining obligation under the consent decree is limited to some reporting
requirements related to our purchase of products and services from France
Telecom, including pricing, terms and conditions, and special discounts. The consent
decree will expire by its terms on January 1, 2003.



| |  |  | European Union
| |  |  | --------------

Since the adoption of the European Commissions Green Paper on the Development
of a Common Market for Telecommunications Services and Equipmentin 1987, the
process of opening up national telecommunications markets in the EU has
proceeded gradually. All of the Member States must incorporate principles of EU
law into their respective domestic legal frameworks. Countries such as Poland,
the Czech Republic and Hungary, in order to become members of the European
Union by 2003 (or soon thereafter), are modeling their regulatory frameworks on
the EU regulatory framework.

The twin legislative goals of liberalization and harmonization are reflected in
a number of measures, which have a direct impact on our operations in the
European Union. These include (in chronological order):



| |  |  | Directive 90/388 (the Services Directive) opened up to
competition all telecommunication services (with the exception of
satellite, mobile and telex) as long as those services did not fall
within the narrowly defined concept of public switched voice
telephony. The services opened to competition under the Services
Directive in 1990 cover our entire current portfolio of services.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Directive 92/44 (the ONP Leased Lines Directive), as amended by
EU Directive 97/51, requires that Member States ensure that a minimum
set of leased lines is made available, and that minimum standards are
satisfied with respect to the provision (by notified operators) of
leased lines in terms of quality, duration and capacity.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| |  |  | Directive 96/19 (the Full Competition Directive), amending the
Services Directive, liberalized the provision of both public voice
services and the infrastructure supporting the provision of such
services as from January 1, 1998.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| |  |  | Directive 97/13 (the Licensing Directive), effective as of
December 31, 1997, harmonizes the key licensing criteria for
telecommunications services and infrastructure. Under the terms of the
Licensing Directive, telecommunications services must be licensed or
authorized throughout the European Union on the basis of open,
proportionate and non-discriminatory criteria. License fees should
reflect the degree of administrative costs incurred in the issue,
management, control and enforcement of the license or general
authorization. The portfolio of network services we currently provide
is subject to a general authorization requirement (i.e.simple
notification, declaration or authorization procedures, or a class
license). As a result of the European Commissions ongoing review of
the state of telecommunications liberalization under its 1999 Review
process, the offering of electronic communications networks and service
shall be subject only to a general authorization (subject to necessary
grants of individual rights of use for spectrum and numbers), from
2003.
|
| |  |  | In June 2000, the European Commission issued a consultative
communication reviewing its 1998 decision entitled Status of Voice
Communications on Internet under European Community Law Communication
which stated that the provision of voice communications over the
Internet qualified as a fully liberalized service under the terms of
the Services Directive, because it did not satisfy the cumulative terms
of the legal definition of public switched voice telephony. In
December 2000, following responses to that consultative communication,
the European Commission announced that the characteristics of voice
over the Internet were still not such that it could be defined as voice
telephony, and should therefore continue not to be regulated as such.
However, the Commission has left open the possibility that voice over
the Internet may over time evolve into a recognized form of public
voice service. Nevertheless, such a characterization will become
increasingly immaterial after the new regulatory package comes into
force in 2003.                                      

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| |  |  | Access to the customers or services of other network operators is
regulated throughout the European Union by Directive 97/33 (the
Interconnection Directive), Directive 98/10 (the Voice Telephony
Directive), and Regulation 2887/2000 (the Local Loop Unbundling
Regulation), which came into effect on January 3, 2001. The combined
effect of the Interconnection Directive and the European Commissions
Notice on the Application of Competition Rules to Access Agreements in the
Telecommunications Sector(to the extent that it reflects current
jurisprudence) is that, as of January 1, 1998, a harmonized regulatory
framework is in place for the operation of interconnection and access
agreements throughout the European Union. Moreover, the terms of the
Voice Telephony Directive mandate the provision of special network
access by operators with significant market power. This means that such
operators must deal with reasonable requests for access to their network
at network termination points other than the commonly provided
termination points, at cost-oriented prices. Special network access has
recently been elaborated upon by the Local Loop Unbundling Regulation
that requires that incumbent operators provide other operators with
shared and full access to their local access networks at cost-oriented
prices.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | The access and interconnection regulatory regime that has developed
out of the 1999 Review, and which will come into force in 2003,
adopts a different approach. The underlying right (and obligation) to
negotiate interconnection remains, but it is now imposed on all
operators of public communications networks. Access and
interconnection must be offered on terms that are consistent with
obligations imposed by regulatory authorities. In particular,
regulators may impose obligations on entities that control access to
end users to ensure end-to-end connectivity. In addition, where an
operator is designated as having significant market power (a concept
now approximating that of dominance) on a specific market as a result
of a quantitative market analysis, regulatory authorities may impose
one or more of the following obligations, as appropriate: transparency
(requiring specified information to be made public);
non-discrimination; accounting separation; access to, and use of,
specific network facilities (including interconnection, access to
operational support systems, collocation and other forms of facility
sharing, open access to technical interfaces, the provision of specific
wholesale services and access to specified network elements and/or
facilities).                                               
|
| |  |  | The Commissions 1999 Review is now complete, and the major
package of new Directives will be provided to the Presidents of the
Council and European Parliament on February 6, 2002 for signature.
Member States must adopt and publish the laws, regulations and
administrative measures necessary to comply with the new package within
15 months of the publication of the package in the Official Journal.
The new package should reduce barriers to entry (through the even
greater emphasis on general authorizations), will remove some historic
technology-based regulatory asymmetries (through the use of the
concepts electronic communications networks and electronic
communications services and should facilitate the introduction of more
proportionate regulatory measures.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| |   |  | United Kingdom                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

The Telecommunications Act (1984) (the Act) provides the regulatory framework
for the provision of telecommunications services in the United Kingdom. The
authorization regime established by the Act is largely infrastructure-based
(i.e., systems are licensed, with licenses for the provision of specific
services being the exception), and is based on licenses, rather than
regulations or other generally applicable instruments. There are two broad
types of licenses, individual and class. Finally, with minor exceptions,
regulatory treatment under the Act does not hinge on whether the license
applies to voice or data.

We provide our MDNS and VAS on an international basis under the
Telecommunication Services class license (the TSL). This authorizes the
provision of telecommunications services of any description, other than
international switched voice, broadcasting and conditional access services. The
TSL allows the connection of the licensees telecommunications system to
essentially any other licensed UK system, and allows the commercial supply of
services to third parties.

EGN B.V., our wholly owned subsidiary, is allowed to own and operate
international transmission facilities, such as transatlantic IRUs, originally
authorized under an International Facilities License. This license was
converted in 1999 into a license for Public Telephone Operator with
international facilities (a combined PTO/IFL license) as part of the

33



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rationalization of the United Kingdom licensing system. This license
authorizes full rights to national and international interconnection. Our GVS
and iVAD services are provided under this license.

Prior to the merger, Global One was providing a similar portfolio of voice and
data services under its own individual
PTO license. We currently hold and will continue to hold both PTO licenses
until the Network and corporate integration is completed. We will then
consider terminating one of the licenses. Internet access services are not
subject to service-specific regulation in the United Kingdom. Most Internet
service providers operate under the TSL class license (i.e., on the basis that
it is a break-out only at one end or a variant of MDNS, which is not so
restricted).



| |  |  | France
| |  |  | ------

As a result of the adoption of the 1996 Telecommunications Act, which came into
effect on July 28, 1996, and subsequent decrees on interconnection, universal
service, numbering, licensing, rights-of-way and most recently local loop
unbundling, the French regulatory regime is now one of the most comprehensively
liberalized in the European Union. Only the provision of public voice telephony
services or the operation of infrastructure requires individual licenses. Our
MDNS, GVS, iVAD and Internet access services currently do not require any form
of authorization. However through our subsidiary Equant Telecommunications SA,
we do also hold individual licenses L33-1 (network infrastructure for the
Ile-de-France region) and L34-1 (public voice telephony  national coverage).



| |  |  | Germany
| |  |  | -------

The legal framework for regulation in the telecommunications sector was
transformed with the entry into effect on August 1, 1996 of the
Telecommunications Act of 1996 (the TKG) and its implementing ordinances
adopted during the course of 1996 and 1997. The TKG has liberalized all
telecommunications services (including public voice services from January 1,
1998) subject to a licensing regime that is fundamentally in conformity with
European Community law. For fixed telecommunications, individual licenses are
only required for the ownership and operation of transmission lines (a Class 3
License), or the provision of Public Voice Telephony (a Class 4 License). All
other service activities are subject only to notification to the regulatory
authority: Our full portfolio of services has been notified.

Additionally Equant holds a Class 3 license, allowing for the use of dark fiber
for selected intra-network links in the vicinity of Frankfurt, and a Classe 4
license in the same area. The merger with Global One makes available an
additional Classe 3 license and also a nationwide Class 4 license. This latter
provides Equant with the right to interconnect with DT and consequently
cost-based call origination and termination throughout the German PSTN

On the basis of the Teleservices Act of 1997, Internet services are not subject
to licensing requirements.

Regulatory Assessment of Other Markets

Currently, we are able to offer services in many Asia Pacific, South and
Central American and central and eastern Europe jurisdictions, and the
regulatory regimes in many of these countries are liberalizing rapidly. We
cannot guarantee, however, that changes in the regulatory environment in these
and other regions will not result in our being subject to fines or other
enforcement actions or being further limited in the services we offer, which
could individually or in the aggregate have a significant adverse effect on us.

Asia Pacific.Regulatory regimes vary greatly in character throughout the Asia
Pacific region. At the liberalized end of the range, Japan, Hong Kong,
Singapore, Australia and New Zealand have deregulated both international data
and voice services, which we provide currently in all five countries. Korea,
where we are authorized to provide data services, has opened MDNS to
competition for some time, and at the beginning of 2001 removed all foreign
ownership restrictions on the provision of voice services. Similarly, the
Taiwanese government opened up the voice market in mid 2001, providing
opportunities for us to expand beyond our current MDNS and intra-corporate
voice VPN license coverage. We intend to apply for voice licences in both
countries in 2002.

In other countries in the region, such as India, Indonesia, the Philippines and
Thailand, we have for some time provided various services in our portfolio
pursuant to agreements with licensed local operators, since in these countries
licenses

34



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are unavailable or difficult to obtain by foreign service providers.
We also recently concluded similar agreements with licensed local operators in
China and Vietnam that formally authorize us to provide MDNS and VAS in those
countries. Some of these markets such as India and Indonesia are expected to
open further in 2002 and licenses should more readily be available for our core
portfolio of services, such that our current agreements with local operators
could be supplemented or replaced.

South and Central America.Corporate data and voice network services are
relatively liberalized in the major South American countries, including
Argentina, Brazil, Chile, Colombia, Peru and Venezuela, and in parts of Central
America. We currently provide MDNS, switched and packet voice in these
countries, to the extent permitted under our own licenses, through our
arrangements with licensed local operators or through SITA authorizations.

Central and Eastern Europe .Telecommunications services are liberalized in
varying degrees in a number of the major countries.

The new Swiss telecommunications law is designed to be in harmony with the
European Union framework. In these countries we hold licenses to provide the
full range of our service portfolio, including voice services.

Our operations also involve all of the Eastern Europe countries, some of which
are aligned with the Western Europe regulatory environment and may be joining
the European Union in the near future. For example, in the Czech Republic and
the Slovak Republic, where the telecommunications markets have been fully
liberalized, and in Poland and Hungary, we are authorized to provide our full
data service portfolio. In Russia, we hold the necessary licenses for
providing our full service portfolio, including voice.

Elsewhere, the Baltic States are on course for membership of the European Union
and their telecommunications markets are almost fully liberalized. In Latvia,
we provide data and corporate voice services; in Estonia and Lithuania we are
in the process of establishing legal entities to enable us to provide services
under our own name.

ORGANIZATIONAL STRUCTURE

As of June 29, 2001, when France Telecoms wholly-owned subsidiary, Atlas
acquired a 54.3% interest in Equant, N.V., we became
a member of the France Telecom group. For a description of our arrangements
with France Telecom, see Item 7. Major Shareholders and Related Party
Transactions.

Our significant subsidiaries are as follows:

|                                  |  |                          |  |                            |  |            
|--------------------------------- |  | ------------------------ |  | -------------------------- |  | -----------
|                                  |  |                          |  | Shareholder within the     |  |            
|Name of subsidiary                |  | Country of incorporation |  | Group                      |  | % ownership
|Equant Finance B.V.               |  | The Netherlands          |  | Equant N.V.                |  | 100%       
|EGN B.V.                          |  | The Netherlands          |  | Equant Finance B.V.        |  | 100%       
|Equant Network Services
Ltd.      |  | U.K.                     |  | Equant Holdings UK
Ltd.    |  | 100%       
|Equant Network Services,
Inc.     |  | Delaware, U.S.A.         |  | Equant Holdings
U.S., Inc. |  | 100%       
|Equant U.S., Inc.                 |  | Delaware, U.S.A.         |  | Equant Holdings
U.S., Inc. |  | 100%       
|Equant Integration
Services, Inc. |  | Georgia, U.S.A.          |  | Equant Holdings
U.S., Inc. |  | 100%       

35



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|                                              |  |                      |  |                                      |  |     
|--------------------------------------------- |  | -------------------- |  | ------------------------------------ |  | ----
|Equant Network Services
International Corp.   |  | Delaware, U.S.A.     |  | Equant Holdings
U.S., Inc.           |  | 100%
|Equant S.A.S                                  |  | France               |  | Equant Finance B.V.                  |  | 100%
|Equant Proton Holdings
Ltd.                   |  | Grand Cayman, B.W.I. |  | Equant Finance B.V.                  |  | 100%
|Equant Network Services
Pte. Ltd.             |  | Singapore            |  | Equant Holdings UK
Ltd.              |  | 100%
|Equant Integration
Services, S.A.             |  | Switzerland          |  | Equant Finance B.V.                  |  | 100%
|                                              |  |                      |  |                                      |  |     
|Global One
Communications Holding
Limited     |  | UK                   |  | Global One
Communications
Holding BV |  | 100%
|Equant Network Services
International Limited |  | Ireland              |  | Equant Network
Systems Ltd.          |  | 100%

PROPERTY, PLANTS AND EQUIPMENT

At December 31, 2001, the total net book value of our property, plant and
equipment was $1,077.4 million, of which Network assets, such as packet
switches and routers, accounted for approximately 68%. We lease node sites and
other facility locations and sales and administrative offices throughout the
world. Our principal properties are our executive offices in Atlanta and
Amsterdam and other administrative offices and facility locations in Paris,
Reston, Virginia and in Slough, England, all of which are leased. We believe
that, taken as a whole, our properties are in good operating condition and are
suitable and adequate for our operations. For a description of our Network, see
 Business Overview  The Network.For a discussion of our capital expenditure
plans, see Item 5. Operating and Financial Review and Prospects  Liquidity
and Capital Resources  Capital Expenditure.

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GLOSSARY OF SELECTED TELECOMMUNICATIONS TERMS



| |                                                                                                                                                                                    
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The following explanations are not intended as technical definitions, but
rather are intended to assist the general reader in understanding certain terms
as used in this document.

|                  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|----------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Term              |  | Definition                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|Asynchronous      |  | A method of data transmission in which data is transmitted one character at a time.                                                                                                                                                                                                                                                                                                                                                                                                        
|ATM               |  | Asynchronous Transfer Mode, a switching and transmission technology that is one of
a general class of packet technologies that relay traffic by way of an address
contained within the first five bits of a standard fifty-three bit long packet or
cell. ATM-based transport was specially developed to allow switching and
transmission of mixed voice, data and video at varying rates. The ATM format can be
used by many different information systems, including Local Area Networks.
|Bandwidth         |  | The capacity of a communications channel measured in bits per second.                                                                                                                                                                                                                                                                                                                                                                                                                      
|Broadband         |  | A generic term for high speed or high capacity connections.                                                                                                                                                                                                                                                                                                                                                                                                                                
|Capillarity       |  | Local network presence within a country.                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|Character         |  | A unit equal to one byte (or 8 bits), used as a measurement of data traffic.                                                                                                                                                                                                                                                                                                                                                                                                               
|Circuit Switching |  | A process that, on demand, connects two or more data or voice terminal equipment
and permits the exclusive use of a circuit between them until the connection is
released.                                                                                                                                                                                                                                                                                                                 
|Connections       |  | A dedicated link from the customer to the Network using a variety of access and
network protocols.                                                                                                                                                                                                                                                                                                                                                                                         
|CoS               |  | Class of service                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|CPE               |  | Customer Premises Equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|Extranets         |  | Managed networks that operate like the Internet but are designed for
inter-corporate use with more consistent performance and better security.                                                                                                                                                                                                                                                                                                                                             
|Frame Relay       |  | A wide area transport technology that organizes data into units called frames
instead of providing fixed bandwidths as with private lines. Typically used to
connect dispersed LANs.                                                                                                                                                                                                                                                                                                      
|GSM               |  | Global system for mobile communications.                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|GPRS              |  | Generalized Packet Radio Services, data services over GSM                                                                                                                                                                                                                                                                                                                                                                                                                                  
|IDSL              |  | ISDN Digital Subscriber Line, which provides line speeds of 128/144 Kbps.                                                                                                                                                                                                                                                                                                                                                                                                                  
|Intranets         |  | Managed networks that operate like the Internet but are designed for internal
corporate use with more consistent performance and better security.                                                                                                                                                                                                                                                                                                                                          
|IP                |  | Internet Protocol, an internetworking standard that enables ready communication
across data networks regardless of the hardware and software used.                                                                                                                                                                                                                                                                                                                                         
|IPSec             |  | IP security, a set of standards that provides confidentiality and authentication of
packets at the IP layer, which includes a tunneling mode that may be used to build
encrypted, authenticated tunnels in a VPN.                                                                                                                                                                                                                                                                          
|IRU               |  | Indefeasible Right of Use. Someone owning an IRU has the right to use the cable for
the time and bandwidth the IRU applies to.                                                                                                                                                                                                                                                                                                                                                             
|ISDN              |  | Integrated Services Digital Network, a generic term for a digital system that
allows a variety of telecommunications services to be carried over the same digital
network.                                                                                                                                                                                                                                                                                                                 
|Kbps              |  | One thousand bits per second, a rate used to measure transmission speeds.                                                                                                                                                                                                                                                                                                                                                                                                                  
|LAN               |  | Local Area Network. The interconnection of computers for the purpose of sharing
files, programs and peripheral devices such as printers and high speed modems. LANs
may include dedicated computers or file servers that provide a centralized source
of shared files and programs. LANs are generally confined to a single customers
premises and may be extended or interconnected to other locations through the use
of bridges and routers.                                           
|LNO               |  | Local Network Operator.                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

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|                       |  |                                                                                                                                                                                                                                                                                                                                                                                                                         
|---------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Managed Authentication |  | Adding a further layer of security management for clients, by hosting the servers
and managing the process by which our clients remote users can gain access to
their corporate networks.                                                                                                                                                                                                                              
|Managed firewall       |  | Managed firewalls provide security for a customers application from unauthorized
access.                                                                                                                                                                                                                                                                                                                               
|Mbps                   |  | One million bits per second, a rate used to measure transmission speeds.                                                                                                                                                                                                                                                                                                                                                
|MDNS                   |  | Managed Data Network Services is the generic name given to wide area network direct
and dial access data transport services managed by a supplier and given a higher
degree of functionality and security, and cost effectiveness than data transport
services traditionally provided by public telecommunications organizations through
leased lines.                                                                  
|MPLS                   |  | Multi protocol label switching, a set of technologies that optimizes IP switching
by adding features of traffic, VPN and class of service management.                                                                                                                                                                                                                                                                   
|Node                   |  | In a network, a point in which a functional unit connects channels or data circuits.                                                                                                                                                                                                                                                                                                                                    
|Packet Switching       |  | A method of switching used in data communications which divides data into segments,
each of which is enclosed in individual data envelopes called packets. Packet
switching has developed to include cell switching and frame switching.                                                                                                                                                                              
|PPP                    |  | Point to Point Protocol                                                                                                                                                                                                                                                                                                                                                                                                 
|PSTN                   |  | Public Switched Telephone Network.                                                                                                                                                                                                                                                                                                                                                                                      
|PTO/PTT                |  | Public telecommunications organization/ Post, Telephone and Telegraph
administration.                                                                                                                                                                                                                                                                                                                                   
|Router                 |  | An interface between two networks often used in wide area or enterprise wide
networks, designed to find the best route between any two networks and to provide
network management capabilities such as load balancing, partitioning of the
network, use statistics, communication priority, and trouble shooting tools that
allow network managers to detect and correct problems even in a complex network
environment.
|SDLC                   |  | Synchronous Data Link Control, a protocol enabling host and terminals using the IBM
SNA protocol to communicate transparently over networks.                                                                                                                                                                                                                                                                            
|SDSL                   |  | Symmetric Digital Subscriber Line, on which line speeds are the same in both
directions.                                                                                                                                                                                                                                                                                                                                
|SDH                    |  | Synchronous Digital Hierarchy                                                                                                                                                                                                                                                                                                                                                                                           
|SLA                    |  | Service Level Agreement                                                                                                                                                                                                                                                                                                                                                                                                 
|SNA                    |  | System network architecture, the network architecture developed by IBM that defines
the protocols used by IBM computers and communication devices.                                                                                                                                                                                                                                                                      
|STM1.                  |  | A digital transmission link with a capacity of 155 Mbps.                                                                                                                                                                                                                                                                                                                                                                
|SVC                    |  | Switched Virtual Circuit                                                                                                                                                                                                                                                                                                                                                                                                
|VoIP                   |  | Voice over IP, a set of technologies for providing integrated voice traffic over an
IP based infrastructure.                                                                                                                                                                                                                                                                                                            
|VPN                    |  | Virtual Private Network.                                                                                                                                                                                                                                                                                                                                                                                                
|VSAT                   |  | Very Small Aperture Terminal                                                                                                                                                                                                                                                                                                                                                                                            
|WAN                    |  | Wide Area Network, a network connecting devices over long distance, often extending
one Local Area Network to another.                                                                                                                                                                                                                                                                                                  
|X.25.                  |  | A standard for synchronous access to packet switched networks.                                                                                                                                                                                                                                                                                                                                                          
|X.28.                  |  | A standard for asynchronous access to packet switched networks over public switched
telephone networks.                                                                                                                                                                                                                                                                                                                 

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Item 5.   Operating and Financial Review and Prospects

You should read the following discussion in conjunction with the Consolidated
Financial Statements, including the Notes thereto, found elsewhere in this
document. The Consolidated Financial Statements have been prepared in
accordance with French GAAP, which differ in significant respects from U.S.
GAAP. Note 30 to the Consolidated Financial Statements provides a description
of the significant differences between French GAAP and U.S. GAAP as they relate
to our business and a reconciliation to U.S. GAAP of our net income and
shareholders equity prepared in accordance with French GAAP. Note 30 also
provides condensed combined consolidated statements of operations and cash
flows for the year ended December 31, 2001 prepared in accordance with U.S.
GAAP to assist the reader in assessing our results of operations and cash flows
presented under U.S. GAAP. Global Ones Historical Combined Consolidated
Financial Statements for the years ended December 31, 2000 and 1999 and the
related notes are included elsewhere in this document.

Given the fundamental difference in the treatment of the combination of Equant
and Global One under French GAAP and U.S. GAAP, we discuss our results of
operations under U.S. GAAP as well as French GAAP. While under French GAAP the
combination is treated as an acquisition of Global One by Equant, under U.S.
GAAP the transaction is accounted for as a reverse acquisition of Equant by
Global One. A discussion of the results of operations for the last three
financial years under U.S. GAAP therefore requires a review of the historic
performance of Global One (rather than Equant). The discussion of the results
of operations of Global One for the years ended December 31, 1999 and 2000 was
provided to us by the former Global One in connection with the France Telecom
transactions. It includes Global Ones carrier and calling card business
lines, which we did not acquire, and accordingly is not comparable to the
businesses that we did acquire. The excluded businesses are included in the
results of Global One from January 1, 1999 to June 29, 2001.

The presentation of
financial information on a pro forma basis complies with
French practice unless otherwise stated, but does not comply with Article 11 of Regulation S-X of the
Exchange Act. The basis for the presentation of these financial statements is
set out in Note 5 to the Consolidated Financial Statements. There can be no
guarantee that we would have achieved results similar to those presented in the
pro forma financial information had the business combination in fact
taken place on January 1, 2000. The unaudited pro forma financial information
is not intended to be a substitute for, and should be read in conjunction with,
the Financial Statements included in Item 18, including the notes thereto.

Operating and Financial Review under French GAAP

Overview

Equant is a leading provider of seamless international data network services to
multinational businesses. The network may be connected directly to the desktop,
or it may be accessed remotely from portable computers or other network access
interfaces. The network, which spans over 220 countries and territories, is
the worlds largest commercial international data network in terms of
geographic coverage.

Our operations and assets are spread throughout the world, with revenues and
costs billed and incurred in more than 50 countries. The following table sets
forth our revenues, by country, for the three countries accounting for the most
revenues in the year ended December 31, 2001 based on the jurisdiction in which
we invoice for our services. The table does not necessarily reflect the country
in which revenue is earned. For example, one of our UK subsidiaries sends bills
covering most of our European revenues. This revenue is categorized as revenue
from the United Kingdom.

39



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|                     |                |       |   |                            |         |      |   |       |         |  |   |       |         | 
|-------------------- | -------------- | ----- | - | -------------------------- | ------- | ---- | - | ----- | ------- |  | - | ----- | ------- | 
|                     |                |       |   | Year ended December 31,   
|                     |                |       |   |                           
|                     |                |       |   | 1999                       |         | 2000 |   | 2001 
|                     |                |       |   |                            |         |      |   |      
|                     |                |       |   | (U.S. dollars in millions)
|Revenues by country: |                |       |   |                            |         |      |   |       |         |  |   |      
|                     |                |       |   |                            |         |      |   |       |         |  |   |      
|                     | United Kingdom |       | $ | 364.3                      |         |      | $ | 455.7 |         |  | $ | 609.8 |        
|                     | United States  |       |   | 323.4                      |         |      |   | 528.7 |         |  |   | 636.5 |        
|                     | Ireland        |       |   | 18.9                       |         |      |   | 68.5  |         |  |   | 573.0 |        
|                     | Rest of World  |       |   | 324.7                      |         |      |   | 420.5 |         |  |   | 571.4 |        
|                     |                |       |   |                            |         |      |   |       |         |  |   |       |        
|                     |                | Total |   | $                          | 1,031.3 |      |   | $     | 1,473.4 |  |   | $     | 2,390.7 | 
|                     |                |       |   |                            |         |      |   |       |         |  |   |       |        

Factors Affecting Our Business

France Telecom transactions, Restructuring and Integration.

On June 29, 2001, we completed a number of transactions with France Telecom:



| |  | We acquired 100% of Global One in exchange for the issue of 80,617,348 Equant shares;                                                             
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | France Telecom, through Atlas, subscribed for 10 million of our convertible preference
shares for $1 billion in cash;                             
| 
| |  | We, France Telecom and SITA entered into a new agreement providing for a new
relationship between us and SITA in relation to network services; and
| 
| |  | France Telecom, through Atlas, acquired the Foundations 67,950,000 shares in Equant in
exchange for 30,886,364 existing France Telecom shares.   

France Telecom issued to our shareholders (other than the SITA Foundation) one
Contingent Value Right for each ordinary share held on June 28, 2001. Each CVR
entitles its holder to receive a cash payment from France Telecom of up to 15
at maturity on the third anniversary of the closing of these transactions,
depending on the market value of our ordinary shares at that time.

Following completion of the transactions, we terminated the joint venture
agreement with SITA, which previously governed our relationship, and replaced
it with the agreements we describe below under Item 7.  Major Shareholders
and Related Party Transactions and Item 10. Additional Information 
Material Contracts. The resulting relationship is one whereby we assume
operational control and management of the network and use it to provide global
telecommunications services to SITA to support the Air Transport Community.

On June 29, 2001, we also entered into a number of agreements with Transpac, a
subsidiary of France Telecom, which establish the legal arrangements with
France Telecom relating to the sale and support of our services in France.
For a description of the France Telecom agreements, see Item 7. Major
Shareholders and Related Party Transactions and Item 10. Additional
Information  Material Contracts.

We began an internal reorganization in mid-2001. We now offer our products and
services through one centralized organization. Prior to January 1, 2001 we
were comprised of three operating divisions. The new organizational structure
consists of direct functional reporting to the CEO with a focus on customer
facing activities in the Markets & Sales and Products organizations and network
services in the Customer Service and Network organization. Results have been
presented for all periods to give effect to this reorganization.

During the second half of 2000, the SITA/Equant Joint Venture Entity that
managed the network underwent restructuring to create a process driven, rather
than regionally focused, organization. As a result of this restructuring, we
recorded restructuring charges of $14.0 million in 2000 and $5.1 million in
2001. SITA did not share the restructuring charge as we are the sole
beneficiaries of this restructuring. The restructuring was completed in the

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first half of 2001.

During the last quarter of 2000, we initiated a plan to integrate our two
larger divisions, Equant Network Services and Equant Integration Services, into
a single organization. This integration became effective on January 1, 2001.
As a result of this reorganization, we recorded restructuring charges of $4.9
million in 2000 and $0.4 million in 2001, primarily for severance costs, and
other costs related to headcount reduction.

Following completion of the France Telecom transactions in June 2001, we began
to integrate our business with Global One and the SITA/Equant network Joint
Venture. Under the terms of the Contribution Agreement between France Telecom
and us, we are sharing certain restructuring and integration costs for a period
of two years following June 29, 2001. France Telecom has agreed to reimburse us
for half the costs of employment and termination of the first 2,500 of our
employees (including employees to be transferred from SITA to us pursuant to
the SITA/Equant network Joint Venture) or Global One employees that we identify as not
necessary for our long-term operation. For a period of two years following
June 29, 2001, the Contribution Agreement obligates France Telecom to
participate in the non-personnel related integration and restructuring costs we
expect to incur with respect to the integration of Global One and the SITA
network and the realization of related synergies. France Telecom is to bear,
or reimburse us for, 50% of the first $240 million of these costs and 100% of
the next $90 million of these costs.

The integration of the networks is being implemented in distinct phases,
including transmission layer integration, core network integration, service
platform integration and site integration. During the second half of 2001, we
were able to rapidly eliminate overlapping circuit capacity. At the end of the
integration process in December, 2002, we will be operating a single unified
network and back office tools for all of our new and existing customers.
Unification of the two networks is expected to generate significant savings. Network
integration initiatives continue into 2002.

The operating savings are expected to be derived from synergies in the areas of
network staff, third-party contracts and circuit capacity. The staff synergies
will be made possible by the consolidation of the main common network functions
that resided in both companies, such as customer service centers, provisioning
centers and network monitoring centers. The third-party contract savings are
expected to stem primarily from achieving higher volume discounts on existing
local PTT and maintenance vendor contracts,.

We also aim to reduce costs by replacing multiple lower-speed connections, such
as E-1/T-1s, with STM-1 or other high-capacity lines, especially in the worlds
major financial centers where the two former companies maintained a large
network presence. In addition, we are integrating our formerly separate fiber
capacity and leveraging the fiber assets of France Telecom, which has major
stakes in the principal underseas cable ventures and operates continental fiber
optic backbones in Europe and North America.

In addition, site costs will drop substantially as the two networks become one
and the total number of network sites is reduced. To date, we have identified
approximately 90 redundant network sites in cities with multiple access points.
We plan to close approximately 50 of these by the end of 2002 without reducing
coverage or network resilience. Moreover, the rapid progress on network
integration and savings based on synergies enabled us to increase the level of
our projected reduction in capital spending to $150 million per year from the
initial projection of $75 million per year.
We expect to incur substantial future costs to restructure and integrate
Equant, Global One and SITA/Equant network Joint Venture.

Pricing Policies

The prices we charge for our services vary depending on the nature of the
service being provided, service speed, geographic location and committed
utilization of our capacity. In general, prices are set as either one-time
charges (typically installation charges) or monthly charges. The type of
monthly charges varies due to the nature of the product or service being sold.
Monthly charges may be volume sensitive, such as for our voice transmission
Internet dial-up service, or flat rate, such as for Frame Relay Private Virtual
Circuits or for Ports. The amount of flat rate monthly charges typically varies
according to the bandwidth and customer geographies. Depending on the service,
pricing can be aggregated, offering customers fully packaged solutions. In such
circumstances, the price may include a variety of

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components, such as managed routers and network services.

Once we establish base service prices, we take further factors into account,
such as charges for additional network services. The pricing decision is then
subject to further adjustment depending on the breadth of the service package.
We also sometimes offer discounts to larger volume customers who are prepared
to guarantee revenue levels over a designated period. In addition, some of our
customer contracts have pricing review clauses to reflect benchmarking against
market prices.

Long Contract Durations

Our customer contracts generally have terms of between three and four years,
although some of the larger contracts may run for periods of up to seven years,
while Global One contracts usually ran for periods between 12 and 24 months.
We typically include price validation clauses and other performance
benchmarking provisions in many of our contracts. These clauses may cause us to
adjust the price up or down in response to changes in market prices. The effect
of these clauses is usually to reduce prices, given generally declining prices
for network equipment and bandwidth on a per unit basis. The length of our
contracts introduces an element of predictability into our revenues. In
addition, we are frequently able to extend the scope of existing contracts when
customers increase the number of locations through which they access the
network, the speed of that access or the sophistication of the products and
services they use, or extend the term for existing services.

Exchange Rates

We receive revenues and incur costs in more than 50 countries and, as such, we
are exposed to the risks associated with movements in currency exchange rates.
See Impact of Changes in Exchange Rates on page 71.

Radianz, Our Joint Venture With Reuters

In the second quarter of 2000, Reuters and we formed Radianz, a new company
which is 51% owned by Reuters and 49% owned by us. Radianz, which commenced
operations on July 1, 2000, plans to develop the worlds largest secure IP
network for the financial services industry. Radianz customers include Knight
Trading Group, Inc., Computershare, and LIFFE.

We have equal representation on the board of Radianz with Reuters and the
provisions of the shareholders agreement we entered into with Reuters regarding
Radianz suggest that operating decisions are jointly controlled. However, in
practice, (and principally due to Radianzs start-up nature), we are unable to
invoke joint control because Reuters remains both the dominant supplier and
customer of Radianz, and accordingly is in a position to affect significantly
the operations of Radianz without our prior approval.

We have contributed $225 million to Radianz and have also agreed to provide
$125 million in services to Radianz over a period of up to ten years. In
addition, we agreed to contribute a number of customer contracts, which in 1999
generated approximately $17 million of annual revenue, to Radianz, and agreed
not to pursue new customers in the extranet financial services industry. Over
time, Radianz will seek to connect customers who may be, or may otherwise have
become, our customers.

We have transferred approximately 70 employees to Radianz. Reuters has
transferred telecommunications network assets and approximately 400 employees
to Radianz. Reuters has also sold Reuters Connect Services, its
telecommunications business serving the financial community, to Radianz.
Radianz has been loss making since inception and is not expected to make a
profit in 2002.

We account for our 49% interest in the venture on the equity basis since we are
unable to exercise joint control over Radianz, and our share of the results are
shown as a single line item Equity in loss of affiliate. We provide
supplementary summary information in the Note 15 of the Consolidated Financial
Statements, which includes an explanation of why we are unable to exercise
joint control in addition to showing our share of the net income of
Radianz, as well as the gross revenues and costs of the joint venture company.

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Radianz will utilize Reuters network which currently has more than 60,000
connections to financial services customers sites worldwide. Our agreement
with Radianz obligates us to migrate portions of Radianzs backbone network
onto our network by July 2003. We have agreed to deliver cost savings on the
operation of the migrated network. Under the terms of
our current agreement with Reuters, we are required to compensate
them in cash for any shortfall in the cost savings anticipated in the
agreements (which are calculated using detailed formulae). The migration and
cost reductions are currently behind due to a number of operational
factors relating to the joint venture. Both Reuters and we have
expressed interest in revising our arrangements to alleviate
disadvantages each party perceives under the current agreements.
Accordingly, we are currently renegotiating portions of the agreement
with Reuters, including those relating to network configuration,
migration and cost savings. If these negotiations are unsuccessful or
are concluded on terms not more advantageous to us than the current
terms, we may be required to compensate Reuters under the cost
savings provisions. While we cannot now quantify the amounts we may
have to pay, they could be material and could adversely affect our
result of operations and financial position, including our cash
position.

Other Factors Affecting Costs

In addition to the effect on expenses of the growth-related factors increasing
our revenues, several further factors tend to affect our costs. We realize
reductions in unit costs of our network activities as speed and bandwidth
increase and as increased deregulation and competition in local markets and
technological advancement drive prices downwards.

Critical Accounting Policies

A companys choice of accounting policies can affect its reported results of
operations and financial position significantly. Two companies entering into
the same transaction can show quite different results depending on the way they
apply accounting rules.

Since becoming a member of the France Telecom group, we now prepare our
financial statements in accordance with French GAAP. French GAAP differs in a
number of respects from U.S. GAAP, and a detailed description of the more
significant differences that apply to us is provided in Note 30 to the
Consolidated Financial Statements.

Revenue recognition

Like many companies in the telecommunications industry, revenue recognition is
the accounting policy that most affects our results of operations and financial
position. This policy is critical in two respects: it determines whether a
transaction is treated as an increase in revenues or a reduction in costs; and
it dictates when to record revenue in the income statement.

We only recognize cash inflows as revenues when we act as principal in the
underlying transaction. We act as France Telecoms agent on a limited risk
basis for its pre-paid and post-paid calling cards in various countries. We are
also the distributor for France Telecoms carrier business outside France. In
light of this limited risk to the Company of providing these services, the
Company earns a fee of 0.5 percent. The amounts invoiced are passed through to
France Telecom less the Companys fees. Both of these commercial relationships
derive from distribution agreements originally executed by France Telecom and
Global One. We also perform certain administrative and support services for
France Telecom, for which we are reimbursed by France Telecom at cost. These
arrangements had a significant effect on our results of the $332 million of
transactions with members of the France Telecom group that took place between
July 1 and December 31, 2001, only $135 million were recognized as revenues
since we were acting as agent in the remainder of the transactions.

Our network services contracts may last for up to seven years, with cash being
receivable at various stages over that period. We defer both revenues,
including one-off connection fees, and the related costs of providing our
services and spread them over the contract life. Even if we have entered into a
binding contract with a customer and have received cash in advance, we defer
recognition of revenue until we render our services or physically deliver a
product. Revenues from the sale of technical equipment to customers that meet
the criteria of sales-type-lease accounting are recognized immediately upon
transfer of the rights and obligations of ownership to the purchaser. If a
sale of equipment does not meet these criteria the revenue is deferred and
amortized.

Capacity transactions

The decision whether to classify certain cash outflows as capital expenditures
or expenses also has a significant

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effect on our financial statements. We purchase capacity on major
international routes where it is economic to do so. The agreements we enter
into (known as Indefeasible Rights of Use or IRUs) are similar in nature to
capital leases and are accounted for as such only when all qualifying
conditions are satisfied. These agreements typically involve the prepayment of
all lease costs. These payments are recorded within intangible assets in the
balance sheet, with an annual amortization charge passing through the income
statement.

Property, plant and equipment

Under the terms of our relationship with SITA for the management of the
network, both under the former Joint Venture Agreement and the current Network
Services Agreement, we are required to fund all capital expenditures on the
network, except for those assets that are to be used solely for SITAs
customers. Although we manage the entire network and approve all network
capital spending, we do not legally own SITAs Local Network Operators, which
we call LNOs, where some of these assets are deployed. For these
assets, our accounting reflects
the economic reality of the transactions and accordingly we treat these expenditures as equipment purchases. If this treatment had not been
adopted, approximately $125 million of our network assets as at December 31,
2001 would have been classified as loans to SITA. There would be no change in
the statement of operations nor the statement of cash flows as we are charged
for the related depreciation expense by the SITA LNOs, the liability for which
is offset by reduction of the SITA loan.

The new arrangements that replaced our joint venture with SITA give us control
over the entire network without legal ownership of some of the underlying
assets. This now requires us to recognize all costs of the SITA LNOs on the
basis of our contractual control of their operations. Aside from our
investment in Radianz, all of our activities are fully consolidated.

Business combinations and Impairment

The difference between the French GAAP and U.S. GAAP treatment of our
acquisition of Global One has a fundamental effect on our results of operations
and financial position. Under French GAAP, we are not required to take into
account the series of transactions that resulted in France Telecom acquiring
majority control of us. The transaction is regarded as an acquisition by us of
Global One, and the results of Global One are included in the income statement
from June 30, 2001. Under U.S. GAAP (EITF 90-13 Accounting for Simultaneous
Common Control Mergers), the acquisition must be accounted for as a reverse
acquisition in which Global One acquired us, since France Telecom became the
majority shareholder in the combined entity. Global One is viewed as the
predecessor entity, and our results for the period January 1 to June 29, 2001
are excluded from the income statement for the year ended December 31, 2001.

We have chosen to apply the purchase method of accounting under paragraph 215
of Rule 99-02 of the Comité de la Réglementation Comptable. Under this method,
we carry over the historical carrying value of Global One in our financial
statements because we acquired over 90% of Global One in a single transaction
through the issue of shares. If we had not applied this accounting treatment
we would have been required to recognize approximately $500 million of goodwill
as an asset, rather than writing it off directly to equity. Using an economic
life of 20 years, this would have resulted in recognition of approximately
$12.5 million of amortization in 2001.

The U.S. GAAP treatment requires recognition of approximately
$10.2 billion of goodwill and
other intangible assets, of which some $6.7 billion arises from the
acquisition itself and approximately $3.5 billion arises from the push down
by France Telecom of goodwill generated on the purchase of the interests of
Sprint and Deutsche Telekom in Global One. We have amortized this goodwill
using an economic life of 20 years, which reflects our view of its useful life.
If the useful life were reduced by one year, our consolidated net loss as
reported under U.S. GAAP for the year ended December 31, 2001 would have
increased by approximately $13 million.

Under both French and U.S. GAAP long-lived assets, including goodwill, are subject
to an impairment review when events or circumstances occur indicating
that impairment might exist. Such events or circumstances include
significant falls, other than temporary, in the market price of our
ordinary shares. The need for recording an impairment is determined
by reference to the sum of undiscounted cash flows based on economic
assumptions and forecasted operating activities approved by our
management. When a write-down is deemed necessary, it is calculated
by reference to the difference between the carrying value and the fair value. The
determination of the fair value is based on valuations which differ depending on the
method used. Significant management judgment is involved in the
valuation process. Valuation methods we use include discounted cash
flows using appropriate rates and considering other opportunities
related to the acquisition such as synergies resulting from the
integration as well as the strategic value of the acquired company to
us, or by reference to quoted market prices. These estimates, as well
as the use of certain valuation methods, are the basis for the
evaluation of the value in use of goodwill and therefore the amount
of any impairment.

We recorded a U.S. GAAP impairment charge of
$7.5 billion against goodwill in 2001 as a result of the significant
deterioration of the telecommunications market. If the control
premium used in our assessment of the fair value of long lived assets
as at December 31, 2001 was reduced by 5% the impairment loss would
have risen by approximately $150 million.

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Control of affiliates

Companies which we own, or which we control, are fully consolidated.
Investments in businesses which we do not control, but have the ability to
exercise significant influence over operating and financial policies, are
accounted for using the equity method.

French GAAP requires the proportional consolidation of entities which are under
the joint control of two or more parties. (Proportional consolidation is not
permitted under U.S. GAAP except in certain very specific circumstances that do
not apply to Equant). Our investment in Radianz has been accounted for under
the equity method of accounting because we are currently unable to exercise
joint control over its operations. Reuters is both the dominant supplier and
customer of Radianz and therefore is in a position to affect significantly the
operations of Radianz without our prior approval.

If we had not accounted for Radianz using the equity method our revenues for
the year would have increased by approximately $170 million and our operating
loss would have increased by approximately $30 million. There would have been
no effect on our net loss for the year.

Use of unaudited data to record our share of the results of affiliates

The preparation of financial statements requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the balance sheet date and
the reported amounts of revenues and expenses in the year. The 2001 financial
statements of Radianz have not yet been audited and we have based the amount of
loss we recognize on unaudited information. The audited financial statements
of Radianz may differ from this unaudited information, and our share of the
loss for the year could therefore change. We would recognize the effect of any
such change in the year ended December 31, 2002.

Non-recurring charges

Non-recurring charges represent amounts arising from significant
reorganizations of the Company and are shown as an operating cost on a separate
line of the Consolidated Statement of Operations. Under French GAAP it is
possible to classify non-recurring charges as either operating or
non-operating  if we had chosen to classify our restructuring activities as
non-operating our operating loss for 2001 would have been reduced by $110
million.

Amounts recoverable from France Telecom under the Contribution Agreement in
respect of restructuring and integration of Equant, Global One and the SITA
Equant network Joint Venture are shown as a reduction to non-recurring charges.
French GAAP also permits these amounts recoverable to be treated as revenue 
adopting such treatment would have increased revenues and non-recurring charges
for 2001 by $79 million. Under U.S. GAAP, amounts recoverable are accounted for as
capital contributions and recorded as additional paid-in capital  this
difference is included in the reconciliation of French GAAP to U.S. GAAP in
Note 30 to the Consolidated Financial Statements.

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Share based compensation

We have on various occasions granted awards of our shares to our employees
under an employee share award plan, as well as issuing share options to
management and employees. Under French GAAP Share Plan Costs reflect the
income or expense arising from the repurchase of shares on the open market, the
issue of shares held in treasury, and social charges payable by the Company on
share option and share award plans. If we issue new shares to satisfy the
exercise, then the difference between the par value and the exercise price is
recorded as an addition to Additional paid-in capital, a component of
Shareholders Equity, with no impact to the Statement of Operations. If we
repurchase shares on the open market or issues shares held in treasury, then
difference between the repurchase price of the shares and the exercise price is
recorded as a charge to income on the Statement of Operations, within Share
Plan Costs. Social charges payable by the Company on the fair value of shares
granted are accrued over the period between the dates of granting and vesting,
based on the expected exercise rates, and are charged to Share Plan Costs.

Under U.S. GAAP, as permitted by SFAS No. 123 Accounting for Stock-based
Compensation, the Company applies Accounting Principles Board Opinion No. 25
(APB 25) Accounting for Stock Issued to Employees. Under APB 25,
compensation expense is recognized as the difference between the quoted market
price of the stock, at the measurement date, and the exercise price of the
award. Any compensation cost is charged to expense over the period in which
the related services are provided. The compensation expense under US GAAP does
not include social charges until such time that such charges are payable upon
exercise of the awards.

Our choice of this accounting policy has an effect on our reported results of
operations and financial position  if we had instead accounted for stock-based
compensation using the fair value method as permitted by SFAS No. 123 the
charge for the year would have increased by approximately $7 million.

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Results of Operations for the Year Ended December 31, 2001, Compared to the
Year Ended December 31, 2000 based on French GAAP

The following table sets forth our statement of operations for the years ended
December 31, 2000 and 2001 and the percentage change between the two periods:

|                                                                                        |  |                                      |         |                      |  |      |          |   |  |  |         |   
|--------------------------------------------------------------------------------------- |  | ------------------------------------ | ------- | -------------------- |  | ---- | -------- | - |  |  | ------- | --
|                                                                                        |  | At or for the year endedDecember 31, |         | % changefrom 2000 to
|                                                                                        |  | 2000                                 |         | 2001                 |  | 2001
|                                                                                        |  |                                      |         |                      |  |     
|                                                                                        |  | (U.S. dollars in millions, except    |         |                      |  |     
|                                                                                        |  | percentages)                         |         |                      |  |     
|Revenues                                                                                |  | $                                    | 1,473.4 |                      |  | $    | 2,390.7  |   |  |  | 62.3    | % 
|Cost of products and services                                                           |  |                                      | (989.0  | )                    |  |      | (1,847.0 | ) |  |  | 86.8    | % 
|Other operating income                                                                  |  |                                      |        |                      |  |      | 146.4    |   |  |  | n/a     |   
|                                                                                        |  |                                      |         |                      |  |      |          |   |  |  |         |   
|Gross profit                                                                            |  | $                                    | 484.4   |                      |  | $    | 690.1    |   |  |  | 42.5    | % 
|Selling                                                                                 |  | $                                    | (174.9  | )                    |  | $    | (255.1   | ) |  |  | 45.9    | % 
|General and Administrative                                                              |  |                                      | (132.4  | )                    |  |      | (299.7   | ) |  |  | 126.4   | % 
|EBITDA (1)                                                                              |  |                                      | 177.1   |                      |  |      | 135.3    |   |  |  | (23.6   | %)
|Depreciation and amortization, excluding goodwill                                       |  |                                      | (166.8  | )                    |  |      | (299.2   | ) |  |  | 79.4    | % 
|Share plan costs (2)                                                                    |  |                                      | 24.1    |                      |  |      | 7.1      |   |  |  | (70.5   | %)
|Non-recurring charges (3)                                                               |  |                                      | (18.9   | )                    |  |      | (110.2   | ) |  |  | 483.1   | % 
|                                                                                        |  |                                      |         |                      |  |      |          |   |  |  |         |   
|Operating profit/loss                                                                   |  | $                                    | 15.5    |                      |  | $    | (267.0   | ) |  |  | n/a     |   
|Finance charges                                                                         |  | $                                    | (10.7   | )                    |  | $    | (17.9    | ) |  |  | 67.3    | % 
|Loss on impairment of investments accounted at cost                                     |  |                                      | (22.1   | )                    |  |      | (13.1    | ) |  |  | (40.8   | %)
|Income taxes                                                                            |  |                                      | (4.4    | )                    |  |      | (41.6    | ) |  |  | 845.5   | % 
|Equity in loss of affiliate                                                             |  |                                      | (9.5    | )                    |  |      | (25.3    | ) |  |  | 166.3   | % 
|                                                                                        |  |                                      |         |                      |  |      |          |   |  |  |         |   
|Net loss from continuing operations before
minority interests and goodwill amortization |  | $                                    | (31.2   | )                    |  | $    | (364.9   | ) |  |  | 1,069.6 | % 
|Goodwill amortization                                                                   |  | $                                    | (16.1   | )                    |  | $    | (21.7    | ) |  |  | 34.8    | % 
|Minority interests                                                                      |  |                                      | (0.3    | )                    |  |      | (0.6     | ) |  |  | 100.0   | % 
|                                                                                        |  |                                      |         |                      |  |      |          |   |  |  |         |   
|Net loss from continuing operations                                                     |  | $                                    | (47.6   | )                    |  | $    | (387.2   | ) |  |  | 713.4   | % 
|Net loss of discontinued operations                                                     |  |                                      | (0.3    | )                    |  |      | (2.6     | ) |  |  | 766.7   | % 
|Gain on disposal of discontinued operations                                             |  |                                      |        |                      |  |      | 13.4     |   |  |  | n/a     |   
|                                                                                        |  |                                      |         |                      |  |      |          |   |  |  |         |   
|Net loss                                                                                |  | $                                    | (47.9   | )                    |  | $    | (376.4   | ) |  |  | 685.8   | % 
|                                                                                        |  |                                      |         |                      |  |      |          |   |  |  |         |   

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Unaudited pro forma income statements for the years ended December 31, 2001 and
2000

The following table is not intended to replace the Consolidated Financial
Statements prepared in accordance with French GAAP. The table sets forth
certain unaudited pro forma condensed combined financial information for the
years ended December 31, 2001 and 2000 as if the acquisition of Global One and
the integration of the SITA Equant Joint Venture had occurred on January 1,
2000. The Company believes that this unaudited pro forma condensed combined
financial information provides useful disclosure for comparing periods before
and after the combination.

The presentation of financial information on a pro
forma basis complies with
French practice unless otherwise stated, but does not comply with Article 11 of
Regulation S-X of the Exchange Act. The basis for the presentation of these
financial statements is set out in Note 5 of the Consolidated Financial
Statements. There can be no guarantee that Equant would have achieved results
similar to those presented in the pro forma financial information had the
business combination in fact taken place on January 1, 2000. The unaudited pro
forma financial information is not intended to be a substitute for, and should
be read in conjunction with, the Financial Statements included in Item 18,
including the notes thereto.

|                                                                                        |  |                                   |          |              |  |      |          |   |  |  |       |   
|--------------------------------------------------------------------------------------- |  | --------------------------------- | -------- | ------------ |  | ---- | -------- | - |  |  | ----- | --
|                                                                                        |  | At or for the year ended          |          |             
|                                                                                        |  | December 31,                      |          | % change    
|                                                                                        |  |                                   |          | from 2000 to
|                                                                                        |  | 2000                              |          | 2001         |  | 2001
|                                                                                        |  |                                   |          |              |  |     
|                                                                                        |  | (U.S. dollars in millions, except |          |              |  |     
|                                                                                        |  | percentages)                      |          |              |  |     
|Revenues                                                                                |  | $                                 | 2,733.8  |              |  | $    | 3,064.8  |   |  |  | 12.1  | % 
|Cost of products and services                                                           |  |                                   | (2,100.8 | )            |  |      | (2,381.2 | ) |  |  | 13.3  | % 
|Other operating income                                                                  |  |                                   |         |              |  |      | 146.4    |   |  |  | n/a   |   
|                                                                                        |  |                                   |          |              |  |      |          |   |  |  |       |   
|Gross profit                                                                            |  | $                                 | 633.0    |              |  | $    | 830.0    |   |  |  | 31.1  | % 
|Selling                                                                                 |  | $                                 | (407.8   | )            |  | $    | (409.3   | ) |  |  | 0.4   | % 
|General and Administrative                                                              |  |                                   | (404.2   | )            |  |      | (429.4   | ) |  |  | 6.2   | % 
|EBITDA (1)                                                                              |  |                                   | (179.0   | )            |  |      | (8.7     | ) |  |  | (95.1 | %)
|Depreciation and amortization, excluding goodwill                                       |  |                                   | (335.8   | )            |  |      | (452.9   | ) |  |  | 34.9  | % 
|Share plan costs (2)                                                                    |  |                                   | 24.1     |              |  |      | 7.1      |   |  |  | (70.5 | %)
|Non-recurring charges (3)                                                               |  |                                   | (18.9    | )            |  |      | (109.5   | ) |  |  | 479.4 | % 
|                                                                                        |  |                                   |          |              |  |      |          |   |  |  |       |   
|Operating loss                                                                          |  | $                                 | (509.6   | )            |  | $    | (564.0   | ) |  |  | 10.7  | % 
|Finance charges                                                                         |  | $                                 | (47.1    | )            |  | $    | (32.9    | ) |  |  | (30.1 | %)
|Loss on impairment of investments accounted at cost                                     |  |                                   | (22.1    | )            |  |      | (13.1    | ) |  |  | (40.8 | %)
|Income taxes                                                                            |  |                                   | (13.1    | )            |  |      | (57.2    | ) |  |  | 330.1 | % 
|Equity in loss of affiliate                                                             |  |                                   | (9.5     | )            |  |      | (25.3    | ) |  |  | 166.3 | % 
|                                                                                        |  |                                   |          |              |  |      |          |   |  |  |       |   
|Net loss from continuing operations before
minority interests and goodwill amortization |  | $                                 | (601.4   | )            |  | $    | (692.5   | ) |  |  | 5.1   | % 
|Goodwill amortization                                                                   |  |                                   | (16.1    | )            |  |      | (21.7    | ) |  |  | 34.8  | % 
|                                                                                        |  |                                   |          |              |  |      |          |   |  |  |       |   
|Net loss from continuing operations, before
minority interests                          |  | $                                 | (617.5   | )            |  | $    | (714.2   | ) |  |  | 15.7  | % 

48



---



##### 



Reconciliation from actual to unaudited pro forma results for the year ended December 31, 2001
(U.S. dollars in millions)

|                                                                                                  |  |           |          |            |  |                |        |                 |  |            |       |   |  |   |        |   |  |   |          |  
|------------------------------------------------------------------------------------------------- |  | --------- | -------- | ---------- |  | -------------- | ------ | --------------- |  | ---------- | ----- | - |  | - | ------ | - |  | - | -------- | -
|                                                                                                  |  |           |          |            |  |                |        |                 |  | Global One |       |   |  |   |        |   |  |  
|                                                                                                  |  | Equant as |          | Global One |  | excluded       |        | Other           |  |            |       |  
|                                                                                                  |  | reported  |          | H1 (4)     |  | businesses (5) |        | adjustments (6) |  | Pro Forma 
|Sales of services and products                                                                    |  | $         | 2,390.7  |            |  | $              | 595.4  |                 |  | $          | (95.4 | ) |  | $ | 174.1  |   |  | $ | 3,064.8  |  
|Cost of services and products sold                                                                |  |           | (1,847.0 | )          |  |                | (554.8 | )               |  |            | 183.2 |   |  |   | (162.6 | ) |  |   | (2,381.2 | )
|Other operating income                                                                            |  |           | 146.4    |            |  |                |       |                 |  |            |      |   |  |   |       |   |  |   | 146.4    |  
|                                                                                                  |  |           |          |            |  |                |        |                 |  |            |       |   |  |   |        |   |  |   |          |  
|Gross profit                                                                                      |  | $         | 690.1    |            |  | $              | 40.6   |                 |  | $          | 87.8  |   |  | $ | 11.5   |   |  | $ | 830.0    |  
|Selling                                                                                           |  |           | 255.1    |            |  |                | 152.8  |                 |  |            | (8.0  | ) |  |   | 9.4    |   |  |   | 409.3    |  
|General and Administrative                                                                        |  |           | 299.7    |            |  |                | 97.1   |                 |  |            | (9.6  | ) |  |   | 42.2   |   |  |   | 429.4    |  
|                                                                                                  |  |           |          |            |  |                |        |                 |  |            |       |   |  |   |        |   |  |   |          |  
|EBITDA                                                                                            |  | $         | 135.2    |            |  | $              | (209.3 | )               |  | $          | 105.4 |   |  | $ | (40.1  | ) |  | $ | (8.7     | )
|Depreciation and amortization,
excluding goodwill                                                 |  |           | 299.2    |            |  |                | 85.6   |                 |  |            |      |   |  |   | 68.1   |   |  |   | 452.9    |  
|Share plan costs                                                                                  |  |           | (7.1     | )          |  |                |       |                 |  |            |      |   |  |   |       |   |  |   | (7.1     | )
|Non-recurring charges                                                                             |  |           | 110.2    |            |  |                |       |                 |  |            |      |   |  |   | (0.7   | ) |  |   | 109.5    |  
|                                                                                                  |  |           |          |            |  |                |        |                 |  |            |       |   |  |   |        |   |  |   |          |  
|Operating profit/(loss)                                                                           |  | $         | (267.0   | )          |  | $              | (294.9 | )               |  | $          | 105.4 |   |  | $ | (107.5 | ) |  | $ | (564.0   | )
|Financial income/(charges)                                                                        |  |           | (17.9    | )          |  |                | (34.0  | )               |  |            |      |   |  |   | 19.0   |   |  |   | (32.9    | )
|Loss on impairment of investments
accounted at cost                                               |  |           | (13.1    | )          |  |                |       |                 |  |            |      |   |  |   |       |   |  |   | (13.1    | )
|Income taxes                                                                                      |  |           | (41.6    | )          |  |                | (2.4   | )               |  |            |      |   |  |   | (13.2  | ) |  |   | (57.2    | )
|Equity in loss of unconsolidated
affiliate                                                        |  |           | (25.3    | )          |  |                |       |                 |  |            |      |   |  |   |       |   |  |   | (25.3    | )
|                                                                                                  |  |           |          |            |  |                |        |                 |  |            |       |   |  |   |        |   |  |   |          |  
|Net profit/(loss) from continuing
operations, before minority
interests and goodwill
amortization |  | $         | (364.9   | )          |  | $              | (331.3 | )               |  | $          | 105.4 |   |  | $ | (101.7 | ) |  | $ | (692.5   | )
|Goodwill amortization                                                                             |  |           | (21.7    | )          |  |                | (2.4   | )               |  |            | 2.4   |   |  |   |        |   |  |   | (21.7    | )
|                                                                                                  |  |           |          |            |  |                |        |                 |  |            |       |   |  |   |        |   |  |   |          |  
|Net profit/(loss) from continuing
operations before minority
interests                            |  | $         | (386.6   | )          |  | $              | (333.7 | )               |  | $          | 107.8 |   |  | $ | (101.7 | ) |  | $ | (714.2   | )

49



---



##### 



Reconciliation of actual to unaudited pro forma results for the year ended December 31, 2000
(U.S. dollars in millions)

|                                                                                                  |  |           |         |              |  |                |          |                 |  |            |        |   |  |   |        |   |  |   |          |  
|------------------------------------------------------------------------------------------------- |  | --------- | ------- | ------------ |  | -------------- | -------- | --------------- |  | ---------- | ------ | - |  | - | ------ | - |  | - | -------- | -
|                                                                                                  |  |           |         |              |  |                |          |                 |  | Global One |        |   |  |   |        |   |  |  
|                                                                                                  |  | Equant as |         | Global One   |  | excluded       |          | Other           |  |            |        |  
|                                                                                                  |  | reported  |         | historic (7) |  | businesses (8) |          | adjustments (9) |  | Pro Forma 
|                                                                                                  |  |           |         |              |  |                |          |                 |  |           
|Sales of services and products                                                                    |  | $         | 1,473.4 |              |  | $              | 1,131.7  |                 |  | $          | (311.4 | ) |  | $ | 440.1  |   |  | $ | 2,733.8  |  
|Cost of services and products sold                                                                |  |           | (989.0  | )            |  |                | (1,095.9 | )               |  |            | 360.0  |   |  |   | (375.9 | ) |  |   | (2,100.8 | )
|                                                                                                  |  |           |         |              |  |                |          |                 |  |            |        |   |  |   |        |   |  |   |          |  
|Gross profit                                                                                      |  | $         | 484.4   |              |  | $              | 35.8     |                 |  | $          | 48.6   |   |  | $ | 64.2   |   |  | $ | 633.0    |  
|Selling                                                                                           |  |           | 174.9   |              |  |                | 227.9    |                 |  |            | (2.0   | ) |  |   | 7.0    |   |  |   | 407.8    |  
|General and Administrative                                                                        |  |           | 132.4   |              |  |                | 216.2    |                 |  |            | (8.2   | ) |  |   | 63.8   |   |  |   | 404.2    |  
|                                                                                                  |  |           |         |              |  |                |          |                 |  |            |        |   |  |   |        |   |  |   |          |  
|EBITDA (1)                                                                                        |  | $         | 177.1   |              |  | $              | (408.3   | )               |  | $          | 58.8   |   |  | $ | (6.6   | ) |  | $ | (179.0   | )
|Depreciation and amortization,
excluding goodwill                                                 |  |           | 166.8   |              |  |                | 169.0    |                 |  |            |       |   |  |   |       |   |  |   | 335.8    |  
|Share plan costs                                                                                  |  |           | (24.1   | )            |  |                |         |                 |  |            |       |   |  |   |       |   |  |   | (24.1    | )
|Non-recurring charges                                                                             |  |           | 18.9    |              |  |                |         |                 |  |            |       |   |  |   |       |   |  |   | 18.9     |  
|                                                                                                  |  |           |         |              |  |                |          |                 |  |            |        |   |  |   |        |   |  |   |          |  
|Operating profit/(loss)                                                                           |  | $         | 15.5    |              |  | $              | (577.3   | )               |  | $          | 58.8   |   |  | $ | (6.6   | ) |  | $ | (509.6   | )
|Financial income/(charges)                                                                        |  |           | (10.7   | )            |  |                | (36.4    | )               |  |            |       |   |  |   |       |   |  |   | (47.1    | )
|Loss on impairment of investments
accounted at cost                                               |  |           | (22.1   | )            |  |                |         |                 |  |            |       |   |  |   |       |   |  |   | (22.1    | )
|Income taxes                                                                                      |  |           | (4.4    | )            |  |                | (8.7     | )               |  |            |       |   |  |   |       |   |  |   | (13.1    | )
|Equity in loss of unconsolidated
affiliate                                                        |  |           | (9.5    | )            |  |                |         |                 |  |            |       |   |  |   |       |   |  |   | (9.5     | )
|                                                                                                  |  |           |         |              |  |                |          |                 |  |            |        |   |  |   |        |   |  |   |          |  
|Net
(loss)/profit from continuing
operations, before minority
interests and goodwill
amortization |  | $         | (31.2   | )            |  | $              | (622.4   | )               |  | $          | 58.8   |   |  | $ | (6.6   | ) |  | $ | (601.4   | )
|Goodwill amortization                                                                             |  |           | (16.1   | )            |  |                | (4.4     | )               |  |            | 4.4    |   |  |   |       |   |  |   | (16.1    | )
|                                                                                                  |  |           |         |              |  |                |          |                 |  |            |        |   |  |   |        |   |  |   |          |  
|Net profit/(loss) from continuing
operations before Minority
Interests                            |  | $         | (47.3   | )            |  | $              | (626.8   | )               |  | $          | 63.2   |   |  | $ | (6.6   | ) |  | $ | (617.5   | )



|(1) |  | EBITDA is defined
as earnings before finance charges, income taxes, share plan costs,
non-recurring charges, depreciation and amortization. EBITDA should
be considered only in conjunction with all of the information in the
Selected Financial Data as well as the Consolidated Financial
Statements. You should not consider EBITDA to be an alternative to
operating profit/loss as an indicator of our performance or as an
alternative to cash flows as a measure of our liquidity. Although
many companies calculate measures of EBITDA and include these in
their financial statements, EBITDA is not a measure of performance
calculated in accordance with U.S. GAAP and may not be presented on the face of a U.S. GAAP income statement. EBITDA is
used in the telecommunications industry as a measure of financial
performance by excluding certain variables that affect net income
(including asset bases, depreciation policies, financing activities
and tax regimes) but may not be directly related to all financial
aspects of the operations of a telecommunications company. As we
define it, EBITDA may not be comparable to other similarly titled
measures used by other companies.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Share plan costs represent our cost of providing stock to employees under
our share-based incentive compensation plans. Under French GAAP there is
no compensation cost if awards and options are satisfied through the issue
of new equity. Social security charges are payable on the fair value of
the shares granted and are recognized over the period between the granting
and vesting dates of the awards. These costs were negative in 2000 and
2001 (meaning that we reversed costs that were previously incurred) as a
result of the release of accruals for social charges which will no longer
be payable following the decline in our share price. We have to pay the
social security charges in cash to the appropriate public authorities when
the awards vest.                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   
|(3) |  | Non-recurring charges in 1999 and 2000 include the restructuring costs of
some of our operations, particularly                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

50



---



##### 



|    |  | relating to our then existing joint venture with SITA and our integration
services activities. In 2001 they mostly include the costs of integrating
the former Global One businesses.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(4) |  | Global One H1 represents the results of Global One for the period from
January 1, 2001 through June 29, 2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   
|(5) |  | Global One excluded businesses primarily represent the carrier voice
and calling card businesses of Global One which we now undertake as agents
of France Telecom.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   
|(6) |  | Other adjustments include the revenues and associated incremental costs
of the SITA/Equant network Joint Venture, as well as adjustments to the
results of Global One for the period from January 1, 2001 through June 29,
2001. The pro forma adjustments reflect the inclusion in our statement of
operations of all of the historic costs of the Network for the period from
January 1, 2001 through June 29, 2001, allocated between cost of revenue
and selling, general and administrative expenses. The pro forma revenues
reflect the assumption that we would have billed SITA for its share of
network costs. Any revenues contained in our historic accounts that had
been billed directly to SITA have been eliminated as these are now
intercompany revenues.
|   
|(7) |  | Global One Historic represents the results of Global One for the year
ended December 31, 2000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   
|(8) |  | Global One excluded businesses primarily represent the carrier voice
and calling card businesses of Global One which we now undertake as agents
of France Telecom.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   
|(9) |  | Other adjustments include the revenues and associated incremental costs
of the SITA/Equant network Joint Venture for the year ended December 31,
2000. The pro forma adjustments reflect the inclusion in our statement of
operations of all of the historic costs of the Network, allocated between
cost of revenue and selling, general and administrative expenses. The pro
forma revenues reflect the assumption that we would have billed SITA for
its share of network costs. Any revenues contained in our historic
accounts that had been billed directly to SITA have been eliminated as
these are now intercompany revenues.                                                                                                                                    

Revenues

The following tables set forth our revenues, on an actual and a pro forma
basis, broken down by line of business.

|                      |                             |   |                                                |      |           |   |         |      |      |   |         |      |   |   |         |      |  
|--------------------- | --------------------------- | - | ---------------------------------------------- | ---- | --------- | - | ------- | ---- | ---- | - | ------- | ---- | - | - | ------- | ---- | -
|                      |                             |   | Year ended December 31,                       
|                      |                             |   |                                               
|                      |                             |   | 2000                                           |      | 2001      |   | 2000    |      | 2001
|                      |                             |   |                                                |      |           |   |         |      |     
|                      |                             |   | Actual                                         |      | Pro Forma
|                      |                             |   |                                                |      |          
|                      |                             |   | (U.S. dollars in millions, except percentages)
|Network Services      |                             | $ | 717.0                                          |      |           | $ | 1,258.5 |      |      | $ | 1,334.2 |      |   | $ | 1,551.2 |     
|                      | As a percentage of revenues |   |                                                | 48.7 | %         |   |         | 52.6 | %    |   |         | 48.8 | % |   |         | 50.6 | %
|Integration Services  |                             |   | 434.7                                          |      |           |   | 447.1   |      |      |   | 516.0   |      |   |   | 498.9   |     
|                      | As a percentage of revenues |   |                                                | 29.5 | %         |   |         | 18.7 | %    |   |         | 18.9 | % |   |         | 16.3 | %
|Other Services        |                             |   | 10.3                                           |      |           |   | 142.3   |      |      |   | 132.0   |      |   |   | 284.9   |     
|                      | As a percentage of revenues |   |                                                | 0.7  | %         |   |         | 6.0  | %    |   |         | 4.8  | % |   |         | 9.3  | %
|SITA Network contract |                             |   | 311.4                                          |      |           |   | 542.8   |      |      |   | 751.6   |      |   |   | 729.8   |     
|                      | As a percentage of revenues |   |                                                | 21.1 | %         |   |         | 22.7 | %    |   |         | 27.5 | % |   |         | 23.8 | %
|                      |                             |   |                                                |      |           |   |         |      |      |   |         |      |   |   |         |     
|Total                 |                             | $ | 1,473.4                                        |      |           | $ | 2,390.7 |      |      | $ | 2,733.8 |      |   | $ | 3,064.8 |     
|                      |                             |   |                                                |      |           |   |         |      |      |   |         |      |   |   |         |     

Our actual revenues increased by 62.3% to $2,390.7 million for the year ended
December 31, 2001 compared to $1,473.4 million for the year ended December 31,
2000. This resulted principally from the acquisition of Global One in June 2001
(which added approximately $517 million to our revenues) and from significant
increases in revenues from SITA

51



---



##### 



following the termination of the SITA Equant network Joint Venture. If we had
not acquired Global One, our revenues excluding the SITA Network contract would
have increased by approximately 14%.

On a pro forma basis our revenues increased by 12.1% to $3,064.8 million from
$2,733.8 million. This reflects increased revenues from Network Services and
Other Services, partially offset by declines in Integration Services and the
SITA Network contract.

The following table shows our actual revenues broken down by geographic region.
Revenues are attributed to the region in which the related services are
invoiced.

|                               |                             |   |                                      |      |      |   |         |      |  
|------------------------------ | --------------------------- | - | ------------------------------------ | ---- | ---- | - | ------- | ---- | -
|                               |                             |   | Year ended December 31,             
|                               |                             |   |                                     
|                               |                             |   | 2000                                 |      | 2001
|                               |                             |   |                                      |      |     
|                               |                             |   | (U.S. dollars in millions, except in
|                               |                             |   | percentages)                        
|                               |                             |   |                                     
|Revenues by Region:            |                             |   |                                      |      |      |   |         |     
|Americas                       |                             | $ | 570.4                                |      |      | $ | 801.7   |     
|                               | As a percentage of revenues |   |                                      | 38.7 | %    |   |         | 33.5 | %
|Europe, Middle East and Africa |                             |   | 746.6                                |      |      |   | 1,348.6 |     
|                               | As a percentage of revenues |   |                                      | 50.7 | %    |   |         | 56.4 | %
|Asia Pacific and Japan         |                             |   | 156.4                                |      |      |   | 240.4   |     
|                               | As a percentage of revenues |   |                                      | 10.6 | %    |   |         | 10.1 | %
|                               |                             |   |                                     
|Total                          |                             | $ | 1,473.4                              |      |      | $ | 2,390.7 |     
|                               |                             |   |                                     

Europe, Middle East and Africa achieved 80.6% revenue growth, the Americas
achieved 40.6% revenue growth and Asia Pacific and Japan achieved 53.7% revenue
growth for the year ended December 31, 2001 as compared to 2000. These figures
reflect primarily the areas of concentration of Global Ones business.

Network Services

Revenues from network services grew by approximately 76% to $1,258.5 million,
as compared to $717.0 million in 2000, led by the continued demand for
advanced, high speed data network services such as frame relay, asynchronous
transfer mode (ATM) and IP services. On a pro forma basis Network Services
revenues grew by 16.3%. Approximately 95% of Network Services revenues are now
generated from high-speed services.

The following table sets forth the revenues from each of our Network Services
primary product lines. Pro forma revenue by product line is not available for
2000.

Revenues by product line:

|                                      |                                                  |   |                                                |      |           |   |         |      |      |   |         |   |   |   |         |      |  
|------------------------------------- | ------------------------------------------------ | - | ---------------------------------------------- | ---- | --------- | - | ------- | ---- | ---- | - | ------- | - | - | - | ------- | ---- | -
|                                      |                                                  |   | Year ended December 31,                       
|                                      |                                                  |   |                                               
|                                      |                                                  |   | 2000                                           |      | 2001      |   | 2000    |      | 2001
|                                      |                                                  |   |                                                |      |           |   |         |      |     
|                                      |                                                  |   | Actual                                         |      | Pro Forma
|                                      |                                                  |   |                                                |      |          
|                                      |                                                  |   | (U.S. dollars in millions, except percentages)
|Frame Relay and IP                    |                                                  | $ | 530.7                                          |      |           | $ | 947.2   |      |      |   |        |   |   | $ | 1,232.2 |     
|                                      | As a percentage of Network Services revenues     |   |                                                | 74.0 | %         |   |         | 75.3 | %    |   |         |  | % |   |         | 79.4 | %
|                                      |                                                  |   |                                                |      |           |   |         |      |      |   |         |   |   |   |         |     
|Traditional MDNS (X.25/SNA/SDLC/X.28) |                                                  |   | 186.3                                          |      |           |   | 311.3   |      |      |   |        |   |   |   | 320.0   |     
|                                      | As a percentage of Network k Services
revenues 2 |   |                                                | 26.0 | %         |   |         | 24.7 | %    |   |         |  | % |   |         | 20.6 | %
|Total                                 |                                                  | $ | 717.0                                          |      |           | $ | 1,258.5 |      |      | $ | 1,334.2 |   |   | $ | 1,551.2 |     
|                                      |                                                  |   |                                                |      |           |   |         |      |      |   |         |   |   |   |         |     

These revenue increases were principally the result of the acquisition of
Global One in June 2001, as well as increases

52



---



##### 



in volume (connections and traffic), which resulted from the growth in the
international data transmission market and from both new and increased existing
customer penetration. The pro forma revenue increase reflects the increases
in volume described above. Our network services order book exceeded $3.0
billion at December 31, 2001, and of the orders received during 2001 over 66%
(by value) were for renewals or extensions of existing contracts.

The following table sets forth our actual network services revenue by
geographic region based on the region in which the services are invoiced.

|                                    |                                              |   |                                                   |      |      |   |         |      |  
|----------------------------------- | -------------------------------------------- | - | ------------------------------------------------- | ---- | ---- | - | ------- | ---- | -
|                                    |                                              |   | Year ended December 31,                          
|                                    |                                              |   |                                                  
|                                    |                                              |   | 2000                                              |      | 2001
|                                    |                                              |   |                                                   |      |     
|                                    |                                              |   | (U.S. dollars in millions, except in percentages)
|Network Service revenues by Region: |                                              |   |                                                   |      |      |   |         |     
|Americas                            |                                              | $ | 253.0                                             |      |      | $ | 440.8   |     
|                                    | As a percentage of Network Services revenues |   |                                                   | 35.3 | %    |   |         | 35.0 | %
|Europe, Middle East and Africa      |                                              |   | 411.7                                             |      |      |   | 736.0   |     
|                                    | As a percentage of Network Services revenues |   |                                                   | 57.4 | %    |   |         | 58.5 | %
|Asia Pacific and Japan              |                                              |   | 52.3                                              |      |      |   | 81.7    |     
|                                    | As a percentage of Network Services revenues |   |                                                   | 7.3  | %    |   |         | 6.5  | %
|                                    |                                              |   |                                                  
|Total                               |                                              | $ | 717.0                                             |      |      | $ | 1,258.5 |     
|                                    |                                              |   |                                                  

The following table sets forth the number of connections provided and the
traffic, in billions of characters, generated from these connections.

|                             |  |                         |         |  |      |  |         | 
|---------------------------- |  | ----------------------- | ------- |  | ---- |  | ------- | 
|                             |  | Year ended December 31,
|                             |  |                        
|                             |  | 2000                    |         |  | 2001
|                             |  |                         |         | 
|Network Service connections: |  |                         |         |  |      |  |         | 
|Connections                  |  |                         | 182,760 |  |      |  | 188,658 | 

Connections for 2000 include connections for both Equant and SITA and include 19,480 non-customer connections.

The increase in the number of connections reflects the inclusion of
approximately 32,000 connections acquired with Global One, partially offset by
a reduction in connections following the exclusion of non-customer connections and growth in high speed
connections.

Integration Services

Revenues for 2001 grew by $12.4 million, or 2.9% to $447.1 million compared to
$434.7 million in 2000. This growth was entirely due to the acquisition of
Global One. If we had not acquired Global One our revenues would have fallen
by approximately 13%. As a result of the economic slowdown and our target
customers related reductions in capital expenditures, our revenues from
fulfillment and system sales fell from $129 million in 2000 to
$121.5 million in
2001. This had a negative effect on our installation and maintenance income.

On a pro forma basis our integration services revenues fell by 3.3% to $498.9
million in 2001 from $516.0 million in 2000. The weakening of fulfillment and
systems sales was particularly pronounced in the fourth quarter, with revenues
over 50% below the levels of the comparative period in 2000. This decline was
partially offset by a 104% increase in revenues from hosting, messaging and
applications, mainly as a result of the transfer of a hosting business from
France Telecom to Global One in January 2001. This gave rise to approximately
$55 million of additional revenue.

53



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The following table sets forth our Integration Services revenues by product
line.

|                             |                                |   |                                                |      |           |   |       |      |      |   |       |      |   |   |       |      |  
|---------------------------- | ------------------------------ | - | ---------------------------------------------- | ---- | --------- | - | ----- | ---- | ---- | - | ----- | ---- | - | - | ----- | ---- | -
|                             |                                |   | Year ended December 31                        
|                             |                                |   |                                               
|                             |                                |   | 2000                                           |      | 2001      |   | 2000  |      | 2001
|                             |                                |   |                                                |      |           |   |       |      |     
|                             |                                |   | Actual                                         |      | Pro Forma
|                             |                                |   |                                                |      |          
|                             |                                |   | (U.S. dollars in millions, except percentages)
|Revenues by product line:    |                                |   |                                                |      |           |   |       |      |      |   |       |      |   |   |       |     
|Hosting and applications     |                                | $ | 47.9                                           |      |           | $ | 91.3  |      |      | $ | 64.5  |      |   | $ | 131.5 |     
|                             | As a percentage of IS revenues |   |                                                | 11.0 | %         |   |       | 20.4 | %    |   |       | 12.5 | % |   |       | 26.4 | %
|Fulfillment and system sales |                                |   | 129.0                                          |      |           |   | 121.5 |      |      |   | 193.7 |      |   |   | 141.3 |     
|                             | As a percentage of IS revenues |   |                                                | 29.7 | %         |   |       | 27.2 | %    |   |       | 37.6 | % |   |       | 28.3 | %
|Services                     |                                |   | 257.8                                          |      |           |   | 234.3 |      |      |   | 257.8 |      |   |   | 226.1 |     
|                             | As a percentage of IS revenues |   |                                                | 59.3 | %         |   |       | 52.5 | %    |   |       | 49.9 | % |   |       | 45.3 | %
|                             |                                |   |                                                |      |           |   |       |      |      |   |       |      |   |   |       |     
|Total                        |                                | $ | 434.7                                          |      |           | $ | 447.1 |      |      | $ | 516.0 |      |   | $ | 498.9 |     
|                             |                                |   |                                                |      |           |   |       |      |      |   |       |      |   |   |       |     

Other Services

The following table sets forth our Other Services revenues by type.

|                                               |                                   |   |                                                |       |           |   |       |      |      |   |       |       |   |   |       |      |  
|---------------------------------------------- | --------------------------------- | - | ---------------------------------------------- | ----- | --------- | - | ----- | ---- | ---- | - | ----- | ----- | - | - | ----- | ---- | -
|                                               |                                   |   | Year ended December 31                        
|                                               |                                   |   |                                               
|                                               |                                   |   | 2000                                           |       | 2001      |   | 2000  |      | 2001
|                                               |                                   |   |                                                |       |           |   |       |      |     
|                                               |                                   |   | Actual                                         |       | Pro Forma
|                                               |                                   |   |                                                |       |          
|                                               |                                   |   | (U.S. dollars in millions, except percentages)
|Revenues by product line:                      |                                   |   |                                                |       |           |   |       |      |      |   |       |       |   |   |       |     
|Convergence solutions                          |                                   | $ | 10.3                                           |       |           | $ | 101.0 |      |      | $ | 132.0 |       |   | $ | 172.8 |     
|                                               | As a percentage of Other revenues |   |                                                | 100.0 | %         |   |       | 71.0 | %    |   |       | 100.0 | % |   |       | 60.7 | %
|Services provided to France Telecom affiliates |                                   |   |                                               |       |           |   | 41.3  |      |      |   |      |       |   |   | 112.1 |     
|                                               | As a percentage of Other revenues |   |                                                | 0     | %         |   |       | 29.0 | %    |   |       | 0     | % |   |       | 39.3 | %
|                                               |                                   |   |                                                |       |           |   |       |      |      |   |       |       |   |   |       |     
|Total                                          |                                   | $ | 10.3                                           |       |           | $ | 142.3 |      |      | $ | 132.0 |       |   | $ | 284.9 |     
|                                               |                                   |   |                                                |       |           |   |       |      |      |   |       |       |   |   |       |     

Revenues from Other Services rose by 1,281.6%, or $132 million, to $142.3
million in 2001 from $10.3 million in 2000. The increase reflects significant
increases in revenues from Convergence Solutions (primarily the significant
circuit switched voice activity we acquired with Global One), as well as the
inclusion of revenues from other services we now provide to France Telecom
affiliates.

Pro forma revenues from Other Services for 2001 were $284.9 million, an
increase of $152.9 million, or 115.8%, from $132.0 million in 2000. This
increase is primarily the result of the inclusion of product management
royalties from Transpac under the new contractual arrangements agreed
by Global One in
January 2001. See Item 7. Major Shareholders and Related Party Transactions 
Related Party Transactions  Relationship with France Telecom for further
information on our arrangements with Transpac. There was also an increase in
circuit switched voice revenues.

SITA Network Contract

Our revenues from SITA increased by $231.4 million or 74.3% to $542.8 million
in 2001 from $311.4 million in 2000. This increase reflects the change in our
contractual arrangements with SITA following the termination of the SITA Equant
network Joint Venture. On a pro forma basis, our revenues from SITA fell by
2.9% , or $21.8 million, from $751.6 million in 2000 to $729.8 million in 2001.
This decrease reflects price reductions guaranteed under the new contract
which took effect on July 1, 2001.

Costs of Products and Services

54



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Costs of products and services increased by 86.8% in 2001, largely as a result
of our acquisition of Global One and the termination of the SITA/Equant network
Joint Venture. On a pro forma basis costs of products and services increased
by 13.3% in 2001, largely as a result of the increased scale of the Network.

The actions we have taken to integrate Global Ones network into the network
have already yielded significant cost savings. The total charge for circuits
(access, international, national and termination) has fallen by $40 million
between the third quarter of 2001 and the fourth quarter, some 11% of the third
quarters total, while staff costs associated with the network have fallen by
$10 million, approximately 6% of the total for the third quarter, over the same
period. We expect these savings to continue in 2002.

Other Operating Income

Other operating income comprises recoveries from France Telecom in respect of
our switched voice services and the provision of services with respect to the
network. These recoveries from France Telecom are classified as Other Operating
Income rather than revenues since we do not act as principal in these
transactions.

We have agreed to transfer the operation, management and financial
responsibility for our switched voice business and switched voice platform
(most of which we acquired in the merger with Global One) to France Telecom by
the end of 2005. We and France Telecom have planning and financial
arrangements in place to ensure that the switched voice business does not
materially affect our profitability. We received $97.9 million from France
Telecom in 2001 under these arrangements. We expect to migrate gradually our
voice business to a Voice over IP platform by the end of 2005 and accordingly
these amounts should fall in the future.

We provide transmission capacity and IP services to France Telecom in countries
where France Telecom does not have a presence. Pricing for these services is
based on market price. We also supply ancillary support services to France
Telecom on a cost plus basis. These commercial relationships will continue
under varying terms so long as France Telecom continues to own at least 34% of
our outstanding shares. France Telecom paid us $48.5 million under these
arrangements in 2001.

Gross Profit

Gross profit grew by 42.5% or $205.7 million to $690.1 million in 2001 from
$484.4 million in 2000. This increase reflects our acquisition of Global One
and the termination of the SITA Equant network Joint Venture in 2001. The gross
margin fell from 32.9% in 2000 to 28.9% in 2001. The 2001 result was adversely
impacted by reductions in revenue from continuing severe price competition
in the Integration Services market, as well as the lower margin earned on the
former Global One contracts.

On a pro forma basis, gross profit grew by 31.1%, or $197 million, to $830
million in 2001 from $633.0 million in 2000. The pro forma gross margin rose
from 23.2% in 2000 to 27.1% in 2001. This improvement arises mainly from a
combination of higher Network Services revenues and an improvement in the
Network cost structure, following the reorganization commenced in the fourth
quarter of 2000 and the integration of the Global One network, offset in part
by the conditions facing our Integration Services businesses described above.

Our ability to increase margins will depend, among other things, on our ability
to successfully manage our Network costs and our ability to market and sell
global support center and professional and maintenance specialist services, and
the margins may in fact remain static or decline.

Selling costs increased by 45.9% to $255.1 million in 2001 from $174.9 million
in 2000. The rise in expenditure reflects the increased numbers of sales staff
following our acquisition of Global One. As a percentage of total revenues,
selling costs fell from 11.9% in 2000 to 10.7% in 2001.

On a pro forma basis selling costs increased by only 0.4%, or $1.5 million, to
$409.3 million from $407.8 million in 2000. We have reduced the number of
quota bearing salespersons across the two organizations from over 1,000 at
December 31, 2000 to approximately 650 at December 31, 2001, reflecting the
consolidation of the Equant and Global

55



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One sales organizations and the closure of inefficient sales offices in a
number of countries. As a percentage of pro forma revenues, selling costs fell
from 14.9% in 2000 to 13.4% in 2001.

We intend to expand our sales force, and hence we expect our selling costs
to continue to increase over the next few years, although at a slower rate than
the growth in revenues.

General and administrative expenses

Our general and administrative expenses increased by $167.3 million, or 126.4%,
in 2001, from $132.4 million in 2000 to $299.7 million in 2001. The rise in
expenditure reflects the acquisition of Global One  if we had not acquired
Global One our general and administrative expenses would have increased by
approximately $40 million. Our bad debt expense rose to $38.5 million in 2001
compared to $8.0 million in 2000, reflecting the impact of deteriorating
market conditions on the collectibility of our receivables. As a percentage of
total revenues, general and administrative costs rose from 9.0% in 2000 to
12.5% in 2001.

On a pro forma basis, general and administrative expenses increased by 6.2% or
$25.2 million to $429.4 million from $404.2 million in 2000. As a percentage
of pro forma revenues, general and administrative expenses fell from 14.8% in
2000 to 14.0% in 2001.

EBITDA

EBITDA fell by 23.6% to $135.3 million in 2001 from $177.1 million in 2000.
As a percentage of revenue, EBITDA fell from 12.0% in 2000 to 5.7% in
2001.
This decrease reflects the lower gross margins and increased general and
administrative and selling costs.

On a pro forma basis, EBITDA in 2001 was a loss of $8.7 million, compared to a
loss of $179.0 million in 2000. This improvement reflects the significant
increase in pro forma gross margin, partially offset by the small increases in
selling, general and administrative costs.

Depreciation and amortization, excluding goodwill

Depreciation and amortization increased by $132.4 million, or 79.4%, in 2001 to
$299.2 million from $166.8 million in 2000. The increase primarily reflects
the increased amount of network assets following the acquisition of Global One
 if we had not acquired Global One, depreciation and amortization would have
increased by approximately 29%. The significant and increasing levels of
capital expenditure in recent years has also caused depreciation expense to
rise. As a percentage of revenue, depreciation and amortization rose from
11.3% in 2000 to 12.5% in 2001.

On a pro forma basis, depreciation and amortization increased by $117.1 million
or 34.9% in 2001 to $452.9 million from $335.8 million in 2000. Of this
increase, approximately $68 million relates to the write off of network assets
acquired with Global One. Excluding these one-off items, the underlying
increase was 14.6%, and the pro forma depreciation and amortization charge
accounted for 12.6% of pro forma revenues.

Share plan costs

Since all our share option exercises have been satisfied with the issue of new
shares, share plan costs represent (for French GAAP purposes) the social
charges expected to be payable on exercise. As almost all of our outstanding
share options were either exercised or cancelled at the time of the France
Telecom transactions we have released the remainder of our accruals for the
future payments of social security. The significant credit in share plan costs
in 2000 reflects mostly the decrease in our share price compared with 1999. As
our share price declined, we adjusted our assumptions of the values of the
option shares on which these accruals were based.

Non-recurring charges

The following table sets forth the components of our non-recurring charges for
the periods indicated.

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|                                                                                          |  |                            |      |      |  |   |       |  
|----------------------------------------------------------------------------------------- |  | -------------------------- | ---- | ---- |  | - | ----- | -
|                                                                                          |  | Year ended December 31,   
|                                                                                          |  |                           
|                                                                                          |  | 2000                       |      | 2001
|                                                                                          |  | (U.S. dollars in millions)
|Non-recurring charges:                                                                    |  |                            |      |      |  |   |       |  
|Restructuring and integration of Equant, Global One
and SITA Equant network Joint Venture |  | $                          | 0.0  |      |  | $ | 173.4 |  
|Divisional reorganization                                                                 |  |                            | 4.9  |      |  |   | 0.4   |  
|SITA Equant network Joint Venture                                                         |  |                            | 14.0 |      |  |   | 5.1   |  
|Other                                                                                     |  |                            |     |      |  |   | 10.5  |  
|                                                                                          |  |                            |      |     
|Total                                                                                     |  | $                          | 18.9 |      |  | $ | 189.4 |  
|Reimbursement due from FT                                                                 |  |                            |     |      |  |   | (79.2 | )
|                                                                                          |  |                            |      |     
|Total                                                                                     |  | $                          | 18.9 |      |  | $ | 110.2 |  
|                                                                                          |  |                            |      |     

Non-recurring charges in 2001 amounted to $189.4 million. This comprised
$173.4 million of restructuring and integration costs following the France
Telecom transactions as well as $10.5 million of transaction-related expenses
that cannot be treated as part of the cost of acquisition.

Following the merger with Global One and the termination of the SITA/Equant
network Joint Venture, we commenced integrating the operations of the three
organizations. The major components of the restructuring and integration costs
incurred during the period since the transactions are asset write downs ($51.5
million), employee termination costs ($38.0 million), lease exit costs ($35.4
million) and integration planning and implementation costs ($26.7 million). We
established a Critical Staff Retention Program in advance of the France Telecom
transactions, and approximately $10.0 million expensed in the year under that
program is also included in restructuring charges.

We expect to incur further costs as a result of our restructuring and
integration with Global One and the SITA/Equant network Joint Venture through
June 2003, of which we expect to incur approximately $300 million in 2002. We
anticipate that our integration activities will yield enhanced synergies in
excess of $350 million on an annualized basis in 2003. These synergies are
largely comprised of headcount reductions, closure of duplicate facilities and
savings in network costs. We may not be able to achieve the benefits we
anticipate through our restructuring and integration activities to the extent
or as soon as we expect, and we may have to incur further costs in pursuit of
these benefits. For a discussion of some factors that could negatively affect
our restructuring and integration activities, see Item 3. Key Information 
Risk Factors  Failure to successfully integrate Global Ones operations with
our operations could materially and adversely affect our financial position and
results of operations.

Under the terms of the Contribution Agreement, certain of the restructuring and
integration costs are to be reimbursed by France Telecom. France Telecom has
agreed to meet $79.2 million of the costs incurred to date, and this
contribution has been netted against the expense. See Item 7. Major
Shareholders and Related Party Transactions  Related Party Transactions  Relationship with France Telecom and Item 10, Additional Information  Material Contracts for further information.

A further $0.4 million of asset write downs were recognized in the first half
of 2001 in respect of the divisional reorganization which we had commenced in
2000, as well as an additional $5.1 million of employee termination costs
arising from the restructuring of the SITA/Equant Joint Venture Entity we began
in 2000 to create a process driven, rather than regionally focused,
organization. All reserves established to cover the costs of these two
reorganizations had been utilized at December 31, 2001.

Non-recurring charges in 2000 include a $14.0 million restructuring charge as
the SITA/Equant Joint Venture Entity underwent restructuring. A further $4.9
million restructuring charge was recognized as we initiated a plan to integrate
our two larger divisions, Equant Network Services and Equant Integration
Services, into a single organization. This integration became effective on
January 1, 2001.

57



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Operating profit

We recorded an operating loss of $267.0 million in 2001 compared to an
operating profit of $15.5 million in 2000. This change reflects increases in
depreciation charges and non-recurring charges following the acquisition of
Global One, as well as the lower gross margins and increased general and
administrative and selling costs discussed above.

On a pro forma basis, our operating loss increased by $54.4 million to $564.0
million in 2001 from $509.6 million in 2000. This change reflects the
increased depreciation and non-recurring charges, partially offset by
improvements in pro forma gross margins.

Financial income / (charges)

The following table sets forth the components of our financial income/(charges) for the periods indicated.

|                                                  |  |                            |       |      |  |   |       |  
|------------------------------------------------- |  | -------------------------- | ----- | ---- |  | - | ----- | -
|                                                  |  | Year ended December 31,   
|                                                  |  |                           
|                                                  |  | 2000                       |       | 2001
|                                                  |  | (U.S. dollars in millions)
|Financial income / (charges):                     |  |                            |       |      |  |   |       |  
|Foreign exchange gain / (losses)                  |  | $                          | 2.3   |      |  | $ | (6.4  | )
|Cost of early termination of finance arrangements |  |                            | 0     |      |  |   | (2.1  | )
|Interest income                                   |  |                            | 10.0  |      |  |   | 20.9  |  
|Interest expense                                  |  |                            | (23.0 | )    |  |   | (30.3 | )
|                                                  |  |                            |       |     
|Financial income / (charges)                      |  | $                          | (10.7 | )    |  | $ | (17.9 | )
|                                                  |  |                            |       |     

In 2000, the U.S. dollar strengthened against all other major currencies.
This situation continued in 2001, with increases of 6.3% against the Euro, 3.9%
against the British Pound and 12.1% against the Yen. We incurred a foreign
exchange loss in 2001 primarily as a result of the impact of the strengthening
dollar on non-dollar-denominated loans to former Global One subsidiaries.

During the second quarter of 2001, we recognized a charge of $2.1 million ($1.4
million net of tax) as a result of early repayment fees on the outstanding
borrowings under our main credit line, which we repaid as required on
completion of the France Telecom transactions.

In 2000, interest expense exceeded interest income as we utilized cash received
in our IPO and commenced utilization of a $400 million credit facility we
established in October 1998, mainly for the purpose of capital expenditure and
our investments in Radianz and other affiliates. In 2001, interest expense
increased significantly prior to the France Telecom transactions as we drew
down the remainder of our $400 million facility and entered into additional
facilities to fund our capital expenditures. These borrowings were repaid with
the cash received from France Telecom in exchange for the issue of preference
shares and in connection with our acquisition of Global One, resulting in a
shift to interest income in the second half of the year. See Liquidity and
Capital Resources.

On a pro forma basis, financial charges fell by $14.2 million from $47.1
million in 2000 to $32.9 million in 2001.

Global One incurred $29.3 million of interest (net) in 2000, of which $28.3
million was payable to related parties. The debt to France Telecom was repaid
prior to the acquisition by us and pro forma interest expense (net) for the
year dropped to $23.2 million from $45.4 million in 2000 . Partially offsetting
these improvements was an increase in our foreign exchange losses. We incurred
a pro forma foreign exchange loss of $1.6 million in 2000 compared to $7.6
million in 2001, primarily as a result of the impact of the strengthening
dollar on non-dollar-denominated loans to former Global One subsidiaries.

Loss on impairment of investments

Loss on impairment of investments fell from $22.1 million in 2000 to $13.1
million in 2001. This represents the write-

58



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down to fair value of certain investments accounted for using the cost method,
when management believes that it is more likely than not that its initial
investment may not be fully recovered. At December 31, 2000, the loss on
impairment of investments consisted of a $17.0 million impairment provision on
STSN Inc., a company in which we own a 7.1% non-controlling interest, and the
write-off of $5.1 million representing the entire cost of our 18.0%
non-controlling interest in Tripeze.com. At December 31, 2001, an additional
$13.1 million was provided against the investment in STSN Inc. to write down
the entire remaining cost of our investment to zero.

Income taxes

Our tax charge has varied considerably from year to year as a result of the
varying levels of profitability of our operations in certain countries and the
utilization of tax losses carried forward. We receive revenues in over 50
countries and, even if an overall loss is incurred, a taxable profit is
typically made in certain countries.

Certain of our subsidiaries, in particular the former Global One companies,
have a history of significant losses, resulting in substantial tax losses being
carried forward. These are recorded on the balance sheet as deferred tax assets
net of valuation allowance, reflecting our determination that it is probable
that we will fail to realize our investment in some portion or all of these
assets.

Estimated net operating loss carry forwards at December 31, 2000 and 2001 and
their expiration dates are shown below:

|                            |  |                            |      |                    |  |            |         |  |  |               |  | 
|--------------------------- |  | -------------------------- | ---- | ------------------ |  | ---------- | ------- |  |  | ------------- |  | 
|                            |  | Net operating loss         |      | Net operating loss |  |            |         | 
|                            |  |                            |      |                    |  |            |         | 
|Country of tax jurisdiction |  | 2000                       |      | 2001               |  | Expiration
|                            |  |                            |      |                    |  |           
|                            |  | (U.S. dollars in millions) |      |                    |  |           
|The Netherlands             |  | $                          | 8.7  |                    |  | $          | 104.0   |  |  | No expiration
|United Kingdom              |  |                            | 11.1 |                    |  |            | 217.1   |  |  | No expiration
|United States               |  |                            | 3.0  |                    |  |            | 396.6   |  |  | 2007 to 2013 
|Ireland                     |  |                            |     |                    |  |            | 273.0   |  |  | No expiration
|Singapore                   |  |                            | 37.3 |                    |  |            | 68.9    |  |  | No expiration
|Other                       |  |                            | 23.0 |                    |  |            | 448.5   |  |  | Various      
|                            |  |                            |      |                    |  |            |         |  |  |               |  | 
|Total                       |  | $                          | 83.1 |                    |  | $          | 1,508.1 |  |  |               |  | 
|                            |  |                            |      |                    |  |            |         |  |  |               |  | 

The following table sets forth the calculation of our tax charge or credit for
the periods indicated.

|                               |  |                            |       |      |  |   |      | 
|------------------------------ |  | -------------------------- | ----- | ---- |  | - | ---- | 
|                               |  | Year ended December 31,   
|                               |  |                           
|                               |  | 2000                       |       | 2001
|                               |  |                            |       |     
|                               |  | (U.S. dollars in millions)
|Tax charge:                    |  |                            |       |      |  |   |      | 
|Current tax                    |  | $                          | 15.2  |      |  | $ | 12.3 | 
|Deferred tax (credit) / charge |  |                            | (10.8 | )    |  |   | 29.3 | 
|                               |  |                            |       |     
|Total provision                |  | $                          | 4.4   |      |  | $ | 41.6 | 
|                               |  |                            |       |     

At December 31, 2001 the deferred tax asset
was $434.2 million, including those related to
operating losses of approximately $374 million and to other temporary timing
differences of $60 million. However, we recorded a 100% valuation allowance
against the asset to reflect our managements estimate that it is not probable
that we will realize the asset in the near future. As a result of our decision
to integrate Equant and Global One entities on a country by country basis, the
substantially larger amounts of losses and other deferred tax assets in the
Global One entities required that the valuation allowance be increased to 100%.
While these assets have been provided for, the tax losses remain available for
use in the future.

59



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##### 



The comparable figures at December 31, 2000 were a deferred tax asset of $64.8
million with a valuation allowance of
$27.4 million.

On a pro forma basis, our tax charge increased from $13.1 million in 2000 to
$57.2 million in 2001, primarily as a result of the provision for deferred tax
assets.

Equity in loss of affiliate

Our equity in the loss of Radianz has increased by $15.8 million, or 167.6%, to
$25.3 million in 2001 from $9.5 million in 2000. This reflects a full year of
our share of the losses of Radianz compared to the six months recognized in
2000. In the 18 months since it has launched, Radianz has built a new
IP network which is now operational with points of presence in 49
cities in 37 countries, and has built two global hosting centers,
which is now operational.

Goodwill amortization

Goodwill amortization increased by $5.6 million, or 34.6%, to $21.7 million in
2001 from $16.1 million in 2000 as a result of the inclusion of a full years
amortization of our investment in Radianz.

Discontinued Operations

We disposed of Equant Application Services on October 1, 2001. The net losses
for the period to disposal amounted to $2.6 million compared to net losses of
$0.3 million for the year ended December 31, 2000. This reflects a decline in
the demand for internet-based, retail commerce applications following the end of
the dot.com boom.

We sold Equant Application Services for consideration of $15.6 million,
realizing a gain on disposal of $13.4 million.

60



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Results of Operations for the Year Ended December 31, 2000, Compared to the Year Ended December 31, 1999 based on French GAAP

The following table sets forth our statement of operations for the years ended
December 31, 1999 and 2000 and the percentage change between the two periods:

|                                                                                                   |  |                            |         |           |  |         |         |   |  |   |       |   
|-------------------------------------------------------------------------------------------------- |  | -------------------------- | ------- | --------- |  | ------- | ------- | - |  | - | ----- | --
|                                                                                                   |  | Year ended December 31,    |         | % change 
|                                                                                                   |  |                            |         | From 1999
|                                                                                                   |  | 1999                       |         | 2000      |  | to 2000
|                                                                                                   |  |                            |         |           |  |        
|                                                                                                   |  | (U.S. dollars in millions) |         |           |  |        
|Revenues                                                                                           |  | $                          | 1,031.3 |           |  | $       | 1,473.4 |   |  | $ | 42.9  | % 
|Costs of products and services                                                                     |  |                            | (628.9  | )         |  |         | (989.0  | ) |  |   | 57.3  | % 
|                                                                                                   |  |                            |         |           |  |         |         |   |  |   |       |   
|Gross profit                                                                                       |  | $                          | 402.4   |           |  | $       | 484.4   |   |  |   | 20.4  | % 
|Selling                                                                                            |  | $                          | (125.3  | )         |  | $       | (174.9  | ) |  |   | 39.6  | % 
|General and Administrative                                                                         |  |                            | (118.7  | )         |  |         | (132.4  | ) |  |   | 11.5  | % 
|EBITDA (1)                                                                                         |  |                            | 158.4   |           |  |         | 177.1   |   |  |   | 11.8  | % 
|Depreciation and amortization, excluding goodwill                                                  |  |                            | (106.0  | )         |  |         | (166.8  | ) |  |   | 57.4  | % 
|Share plan costs (2)                                                                               |  |                            | (28.2   | )         |  |         | 24.1    |   |  |   | n/a   |   
|Non-recurring charges (3)                                                                          |  |                            | (1.9    | )         |  |         | (18.9   | ) |  |   | 894.7 | % 
|                                                                                                   |  |                            |         |           |  |         |         |   |  |   |       |   
|Operating profit                                                                                   |  | $                          | 22.3    |           |  | $       | 15.5    |   |  |   | (30.5 | )%
|Finance income (charges)                                                                           |  | $                          | 14.7    |           |  | $       | (10.7   | ) |  |   | n/a   |   
|Loss in impairment of investments accounted at cost                                                |  |                            |        |           |  |         | (22.1   | ) |  |   | n/a   |   
|Income taxes                                                                                       |  |                            | (19.9   | )         |  |         | (4.4    | ) |  |   | (77.9 | )%
|Equity in loss of affiliate                                                                        |  |                            |        |           |  |         | (9.5    | ) |  |   | n/a   |   
|                                                                                                   |  |                            |         |           |  |         |         |   |  |   |       |   
|Net profit / (loss) from continuing operations
before minority interests and goodwill
amortization |  | $                          | 17.1    |           |  | $       | (31.2   | ) |  |   | n/a   |   
|Goodwill amortization                                                                              |  |                            | (4.0    | )         |  |         | (16.1   | ) |  |   | 302.5 | % 
|Minority interests                                                                                 |  |                            | (0.9    | )         |  |         | (0.3    | ) |  |   | (66.7 | )%
|                                                                                                   |  |                            |         |           |  |         |         |   |  |   |       |   
|Net profit / (loss) from continuing operations                                                     |  | $                          | 12.2    |           |  | $       | (47.6   | ) |  |   | n/a   |   
|Net loss of discontinued operations                                                                |  |                            | (0.2    | )         |  |         | (0.3    | ) |  |   | n/a   |   
|                                                                                                   |  |                            |         |           |  |         |         |   |  |   |       |   
|Net profit / (loss)                                                                                |  | $                          | 12.0    |           |  | $       | (47.9   | ) |  |   | n/a   |   
|                                                                                                   |  |                            |         |           |  |         |         |   |  |   |       |   



|(1) |  | EBITDA is defined
as earnings before finance charges, income taxes, share plan costs,
non-recurring charges, depreciation and amortization. EBITDA should
be considered only in conjunction with all of the information in the
Selected Financial Data as well as the Consolidated Financial
Statements. You should not consider EBITDA to be an alternative to
operating profit/loss as an indicator of our performance or as an
alternative to cash flows as a measure of our liquidity. Although
many companies calculate measures of EBITDA and include these in
their financial statements, EBITDA is not a measure of performance
calculated in accordance with U.S. GAAP and may not be presented on the face of a U.S. GAAP income statement. EBITDA is
used in the
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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|    |  | telecommunications industry as
a measure of financial performance by excluding certain variables
that affect net income (including asset bases, depreciation policies,
financing activities and tax regimes) but may not be directly related
to all financial aspects of the operations of a telecommunications
company. As we define it, EBITDA may not be comparable to other
similarly titled measures used by other companies.                                                                                                                                                                                                                                                                                                                                            
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Share plan costs represent our cost of providing stock to employees under
our share-based incentive compensation plans. Under French GAAP there is
no compensation cost if awards and options are satisfied through the issue
of new equity. Social security charges are payable on the fair value of
the shares granted and are recognized over the period between the granting
and vesting dates of the awards. These costs were negative in 2000 and
2001 (meaning that we reversed costs that were previously incurred) as a
result of the release of accruals for social charges which will no longer
be payable following the decline in our share price. We have to pay the
social security charges in cash to the appropriate public authorities when
the awards vest.
|   
|(3) |  | Non-recurring charges in 1999 and 2000 include the restructuring costs of
some of our operations, particularly relating to our then existing joint
venture with SITA and our integration services activities. In 2001 they
mostly include the costs of integrating the former Global One businesses.                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

Revenues

Our revenues increased 42.9% to $1,473.4 million for the year ended December
31, 2000 compared to $1,031.3 million for the year ended December 31, 1999.
This resulted principally from significant increases in revenues from SITA as
well as continuing growth in revenues from Integration Services and Network
Services.

The following table sets forth our revenues broken down by line of business and
by geographic region. Revenues are attributed to the region in which the
related services are invoiced.

|                              |                       |                             |   |                            |      |      |   |         |      |  
|----------------------------- | --------------------- | --------------------------- | - | -------------------------- | ---- | ---- | - | ------- | ---- | -
|                              |                       |                             |   | Year ended December 31,   
|                              |                       |                             |   |                           
|                              |                       |                             |   | 1999                       |      | 2000
|                              |                       |                             |   |                            |      |     
|                              |                       |                             |   | (U.S. dollars in millions,
|                              |                       |                             |   | except percentages)       
|Revenues by Line of Business: |                       |                             |   |                            |      |      |   |        
|                              | Network Services      |                             | $ | 550.8                      |      |      | $ | 717.0   |     
|                              |                       | As a percentage of revenues |   |                            | 53.4 | %    |   |         | 48.7 | %
|                              | Integration Services  |                             |   | 314.1                      |      |      |   | 434.7   |     
|                              |                       | As a percentage of revenues |   |                            | 30.4 | %    |   |         | 29.5 | %
|                              | Other Services        |                             |   | 2.8                        |      |      |   | 10.3    |     
|                              |                       | As a percentage of revenues |   |                            | 0.3  | %    |   |         | 0.7  | %
|                              | SITA Network contract |                             |   | 163.6                      |      |      |   | 311.4   |     
|                              |                       | As a percentage of revenues |   |                            | 15.9 | %    |   |         | 21.1 | %
|                              |                       |                             |   |                            |      |     
|                              | Total                 |                             | $ | 1,031.3                    |      |      | $ | 1,473.4 |     
|                              |                       |                             |   |                            |      |     

|                    |                                |                             |   |                            |      |      |   |         |      |  
|------------------- | ------------------------------ | --------------------------- | - | -------------------------- | ---- | ---- | - | ------- | ---- | -
|                    |                                |                             |   | Year ended December 31,   
|                    |                                |                             |   |                           
|                    |                                |                             |   | 1999                       |      | 2000
|                    |                                |                             |   |                            |      |     
|                    |                                |                             |   | (U.S. dollars in millions,
|                    |                                |                             |   | except percentages)       
|Revenues by Region: |                                |                             |   |                            |      |      |   |        
|                    | Americas                       |                             | $ | 342.6                      |      |      | $ | 570.4   |     
|                    |                                | As a percentage of revenues |   |                            | 33.2 | %    |   |         | 38.7 | %
|                    | Europe, Middle East and Africa |                             |   | 563.3                      |      |      |   | 746.5   |     
|                    |                                | As a percentage of revenues |   |                            | 54.6 | %    |   |         | 50.7 | %
|                    | Asia Pacific and Japan         |                             |   | 125.4                      |      |      |   | 156.4   |     
|                    |                                | As a percentage of revenues |   |                            | 12.2 | %    |   |         | 10.6 | %
|                    |                                |                             |   |                            |      |     
|                    | Total                          |                             | $ | 1,031.3                    |      |      | $ | 1,473.4 |     
|                    |                                |                             |   |                            |      |     

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Europe, Middle East and Africa achieved 32.5% revenue growth, the Americas
achieved 66.5% revenue growth and Asia Pacific and Japan achieved 24.7% revenue
growth for the year ended December 31, 2000 as compared to 1999.

Network Services

The following table sets forth the revenues from each of our Network Services
primary product lines.

|                          |                                       |                                              |   |                            |      |      |   |       |      |  
|------------------------- | ------------------------------------- | -------------------------------------------- | - | -------------------------- | ---- | ---- | - | ----- | ---- | -
|                          |                                       |                                              |   | Year ended December 31,   
|                          |                                       |                                              |   | 1999                       |      | 2000
|                          |                                       |                                              |   |                            |      |     
|                          |                                       |                                              |   | (U.S. dollars in millions,
|                          |                                       |                                              |   | except percentages)       
|Revenues by product line: |                                       |                                              |   |                            |      |      |   |      
|                          | Traditional MDNS (X.25/SNA/SDLC/X.28) |                                              | $ | 181.8                      |      |      | $ | 186.3 |     
|                          |                                       | As a percentage of Network Services revenues |   |                            | 33.0 | %    |   |       | 26.0 | %
|                          | Frame Relay and IP                    |                                              |   | 337.9                      |      |      |   | 530.7 |     
|                          |                                       | As a percentage of Network Services revenues |   |                            | 61.3 | %    |   |       | 74.0 | %
|                          | Other (1)                             |                                              |   | 31.1                       |      |      |   | 0.0   |     
|                          |                                       | As a percentage of Network Services revenues |   |                            | 5.7  | %    |   |       | 0    | %
|                          |                                       |                                              |   |                            |      |     
|                          | Total                                 |                                              | $ | 550.8                      |      |      | $ | 717.0 |     
|                          |                                       |                                              |   |                            |      |     



|(1) |  | Other relates to a sales category that has been reallocated to
various other categories since December 31, 1999.
|--- |  | ------------------------------------------------------------------------------------------------------------------

Revenues from Network Services grew by approximately 30.2% to $717.0 million,
as compared to $550.8 million in 1999, led by significant growth in our frame
relay and IP services. These revenue increases were principally the result of
increases in volume (connections and traffic), which resulted from the growth
in the international data transmission market and from both new and increased
existing customer penetration. We believe that the increased customer
penetration is largely the result of our ongoing focus on marketing and
distribution activities, in particular the increase of our sales force activity
in the United States and Europe.

The following table sets forth our Network Services by geographic region based
on the region in which the services are contracted.

|                                     |                                |                                        |   |                            |      |      |   |       |      |  
|------------------------------------ | ------------------------------ | -------------------------------------- | - | -------------------------- | ---- | ---- | - | ----- | ---- | -
|                                     |                                |                                        |   | Year ended December 31,   
|                                     |                                |                                        |   | 1999                       |      | 2000
|                                     |                                |                                        |   |                            |      |     
|                                     |                                |                                        |   | (U.S. dollars in millions,
|                                     |                                |                                        |   | except percentages)       
|Network Services revenues by region: |                                |                                        |   |                            |      |      |   |      
|                                     | Americas                       |                                        | $ | 186.2                      |      |      | $ | 264.6 |     
|                                     |                                | As a percentage of divisional revenues |   |                            | 33.8 | %    |   |       | 36.9 | %
|                                     | Europe, Middle East and Africa |                                        |   | 332.1                      |      |      |   | 399.4 |     
|                                     |                                | As a percentage of divisional revenues |   |                            | 60.3 | %    |   |       | 55.7 | %
|                                     | Asia Pacific and Japan         |                                        |   | 32.5                       |      |      |   | 52.7  |     
|                                     |                                | As a percentage of divisional revenues |   |                            | 5.9  | %    |   |       | 7.4  | %
|                                     |                                |                                        |   |                            |      |     
|                                     | Total                          |                                        | $ | 550.8                      |      |      | $ | 717.0 |     
|                                     |                                |                                        |   |                            |      |     

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The following table sets forth the number of connections provided and the
traffic, in billions of characters, generated from these connections.

|                             |                 |  |                         |         |      |  |  |         | 
|---------------------------- | --------------- |  | ----------------------- | ------- | ---- |  |  | ------- | 
|                             |                 |  | Year ended December 31,
|                             |                 |  | 1999                    |         | 2000
|                             |                 |  |                         |         |     
|Network Services connections |                 |  |                         |         |      |  |  |        
|                             | Connections (1) |  |                         | 183,543 |      |  |  | 182,760 | 

Connections for both 1999 and 2000 include
connections for both Equant and SITA and include non-customer connections of 22,607 for
1999 and 19,480 for 2000. The reduction in the number of connections reflects a 4.6% fall in SITA
connections as certain SITA customers
migrated to IP.

Integration Services.

Revenues for 2000 increased by $120.6 million, or 38.4% to $434.7 million
compared to 1999. It is not possible to identify how much of this growth was
attributable to the acquisition of TechForce in 1999, as this company was fully
integrated into ours during 2000. However, TechForces revenues from January
1, 1999 to July 31, 1999 (the acquisition date) were $51.0 million, so,
assuming that we had owned TechForce for the full year 1999, revenue growth for
Equant Integration Services/TechForce in 2000 would have been 19% compared to
1999.

The following table sets forth our Integration Services revenues by product
line.

|                                               |                              |                                                  |   |                            |      |      |   |       |      |  
|---------------------------------------------- | ---------------------------- | ------------------------------------------------ | - | -------------------------- | ---- | ---- | - | ----- | ---- | -
|                                               |                              |                                                  |   | Year ended December 31,   
|                                               |                              |                                                  |   | 1999                       |      | 2000
|                                               |                              |                                                  |   |                            |      |     
|                                               |                              |                                                  |   | (U.S. dollars in millions,
|                                               |                              |                                                  |   | except percentages)       
|Integration Services revenues by product line: |                              |                                                  |   |                            |      |      |   |      
|                                               | Hosting and applications (1) |                                                  | $ |                           |      |      | $ | 47.9  |     
|                                               |                              | As a percentage of Integration Services revenues |   |                            | %    |      |   |       | 11.0 | %
|                                               | Fulfillment                  |                                                  |   | 91.3                       |      |      |   | 129.0 |     
|                                               |                              | As a percentage of Integration Services revenues |   |                            | 29.1 | %    |   |       | 29.7 | %
|                                               | Services (1)                 |                                                  |   | 222.8                      |      |      |   | 257.8 |     
|                                               |                              | As a percentage of Integration Services revenues |   |                            | 70.9 | %    |   |       | 59.3 | %
|                                               |                              |                                                  |   |                            |      |     
|                                               | Total                        |                                                  | $ | 314.1                      |      |      | $ | 434.7 |     
|                                               |                              |                                                  |   |                            |      |     



---

|(1) |  | In 1999 Integration Services revenues were classified as either
Fulfillment or Services. It is not possible to identify how much of the
Services revenue relates to Hosting and Applications.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Other Services.

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In 1999 and 2000 revenues from Other Services comprise switched voice revenues,
which increased from $2.8 million to
$10.3 million. These revenue increases were principally the result of increases
in volume, which resulted from the growth in the international data
transmission market and from both new and increased existing customer
penetration.

SITA Network Contract.

Revenues from the SITA Joint Venture Agreements increased by $147.8 million to
$311.4 million in 2000 compared to $163.6 million in 1999. These revenues
generally reflect the portion of depreciation and notional finance charges
related to our investments in capital assets for the Network that were borne by
SITA pursuant to the Joint Venture Agreements cost sharing provisions, plus
SITAs share of the operating costs of LNOs that it transferred to us; their
net effect on profit or loss before income taxes was limited to the 1% margin
contained in the notional finance charge.

The growth in revenues generally reflects the significant growth in the network
assets base and the transfer of LNOs. SITAs transfer to us of four LNO groups
in 1999 and five LNO groups in 2000 increased the divisions costs and revenues
by $53.8 million in 1999 and $41.0 million in 2000, respectively. The
operating costs of these LNO groups were shared with SITA through the Joint
Venture Agreement.

Costs of Products and Services

Costs of products and services increased by 57% in 2000, largely as a result of
increases in Network costs. Network costs increased by $170 million, or 52%,
to $498 million in 2000 from $328 million in 1999. The increases in Network
costs reflected both the growth of our Network Services business, including an
attendant rise in connections on and traffic being carried by the Network, as
well as the growth of Equants network activity relative to SITAs. The total
cost of access circuits also increased during 2000 over their cost in 1999.

Gross Profit

Gross profit grew by 20.4% to $484.4 million in 2000 from $402.4 million in
1999. The gross profit percentage fell from 39.0% in 1999 to 32.9% in 2000.
The 2000 result was adversely impacted by increased Network activity in high
cost countries and higher than budgeted traffic relative to SITA, both factors
leading to an increase in the percentage of the Network costs that we are
responsible for. We were also adversely affected by severe price competition
in the Integration Services market.

Selling Costs

Selling costs increased by 39.6% to $174.9 million in 2000 from $125.3 million
in 1999. As a percentage of total revenues, selling costs fell from 12.2% in
1999 to 11.9% in 2000.

We continued our hiring program to build our sales and sales support staff in
2000. We added 77 employees supporting Network sales, and continued to
increase our investment in sales and marketing of Integration Services.

General and administrative expenses

Our general and administrative expenses increased by $13.7 million, or 11.5%,
in 2000, from $118.7 million in 1999 to $132.4 million in 2000. General and
administrative expenses increased at a slower rate than revenue growth, and
fell as a percentage of total revenue from 11.5% in 1999 to 9.0% in 2000. This
may not be indicative of future trends due to increased expenditures on process
and systems improvements. Our charges for bad and doubtful debts have increased
as our revenues have grown.

The increase reflects the opening of new sales offices around the world and
investments in processes and systems. The increase also reflects the full year
impact of the TechForce acquisition and professional fees incurred related to
evaluating various corporate transactions, including the France Telecom
transactions.

65



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##### 



EBITDA

EBITDA increased by 11.8% to $177.1 million in 2000 from $158.4 million in
1999. As a percentage of revenue, EBITDA fell from 15.4% in 1999 to 12.0% in
2000. This decrease reflects the lower gross margins and increased selling,
general and administrative costs.

Depreciation and amortization, excluding goodwill

Depreciation and amortization increased by $60.8 million or 57.4% in 2000 to
$166.8 million from $106.0 million in 1999. The increase reflects higher
levels of capital expenditure on network assets. As a percentage of revenue,
depreciation and amortization increased from 10.3% in 1999 to 11.3% in 2000.

Share plan costs

We incurred share plan costs of $28.2 million in 1999 and a credit of $24.1
million in 2000. Since all our share option exercises were satisfied with the
issue of new shares, share plan costs represent the social charges expected to
be payable on exercise. The credit in share plan costs in 2000 reflects mostly
the decrease in our share price compared with 1999, which has reduced our
estimate of future payments of social security.

Non-recurring charges

Non-recurring charges in 1999 include a further $1.9 million of severance costs
in respect of the restructuring of our former Equant Integration Services
division which had commenced in 1998.

Non-recurring charges in 2000 included a $14.0 million restructuring charge as
the SITA/Equant Joint Venture Entity underwent restructuring to creating a
process driven, rather than regionally focused, organization. Non-recurring
charges in 2000 included a further $4.9 million restructuring charge as we
initiated a plan to integrate our two larger divisions, Equant Network Services
and Equant Integration Services, into a single organization. This integration
became effective on January 1, 2001.

Operating profit

Operating profit fell by 30.5% or $6.8 million in 2000 to $15.5 million from
$22.3 million in 1999. This result reflected the reductions in gross margin
described above, as well as significant increases in selling expenses and
depreciation and amortization charges. As a percentage of revenues, operating
profit fell from 2.2% in 1999 to 1.1% in 2000.

Financial income / (charges)

The following table sets forth the components of our financial income /
(charges) for the periods indicated.

|                                                      |  |                            |      |      |  |   |       |  
|----------------------------------------------------- |  | -------------------------- | ---- | ---- |  | - | ----- | -
|                                                      |  | Year ended December 31,   
|                                                      |  |                           
|                                                      |  | 1999                       |      | 2000
|                                                      |  |                            |      |     
|                                                      |  | (U.S. dollars in millions)
|Financial income/(charges)                            |  |                            |      |      |  |   |       |  
|Foreign exchange gain                                 |  | $                          | 0.7  |      |  | $ | 2.3   |  
|Income from early termination of finance arrangements |  |                            | 0.8  |      |  |   |       |  
|Interest income                                       |  |                            | 17.2 |      |  |   | 10.0  |  
|Interest expense                                      |  |                            | (4.0 | )    |  |   | (23.0 | )
|                                                      |  |                            |      |     
|Financial income / (charges)                          |  | $                          | 14.7 |      |  | $ | (10.7 | )
|                                                      |  |                            |      |     

The U.S. dollar strengthened considerably in 1999 against most currencies, with
a particularly pronounced effect on the Euro to dollar exchange rate. The 13%
decline of the Euro, relative to the U.S. dollar, in 1999 had a significant

66



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##### 



downward effect on our Integration Services revenues. However, this had only a
marginal impact on operating
profit, because most of the related expenses declined in tandem with revenues.
This trend continued into 2000, when the U.S. dollar continued to strengthen
against all other major currencies.

The proceeds from our IPO in July 1998 were used in part to repay our
outstanding borrowings under our then-existing $600 million revolving credit
facility agreement. In June 1999 interest rate caps which had been used to
manage interest rate risk related to those borrowings were sold for $0.8
million, resulting in recognition of an extraordinary gain.

Following receipt of the proceeds of our IPO in July 1998, interest income
exceeded interest expense throughout 1999 after we repaid our outstanding loans
due under this credit facility and placed the balance of the proceeds on
deposit. In 2000, interest expense significantly increased as we began drawing
down under a $400 million credit facility established in October 1998, mainly
for the purpose of capital expenditure and our investments in Radianz and other
affiliates. See Liquidity and Capital Resources.

Loss on impairment of investments

Loss on impairment of investment of $22.1 million represents the write-down to
fair value of certain investments accounted for using the cost method, when our
management believes that it is more likely than not that our initial investment
may not be fully recovered. At December 31, 2000, the loss on impairment of
investments consisted of a $17.0 million impairment provision on STSN Inc., a
company in which Equant owns a 7.1% non-controlling interest, and the write-off
of $5.1 million representing the entire cost of our 18.0% non-controlling
interest in Tripeze.com.

Income taxes

Our tax charge has varied considerably from year to year as a result of the
varying levels of profitability of our operations in certain countries and the
utilization of tax losses carried forward. We receive revenues in over 50
countries and, even if an overall loss is incurred, a taxable profit is
typically made in certain countries.

Certain of our subsidiaries have a history of significant losses, resulting in
substantial tax losses being carried forward. These are recorded on the balance
sheet as deferred tax assets net of valuation allowance reflecting our
determination that it is probable that some portion or all of the assets will
not be realized.

Estimated net operating loss carry forwards at December 31, 1999 and 2000 and
their expiration dates are shown below:

|                            |  |                            |      |                    |  |            |      |  |  |               |  | 
|--------------------------- |  | -------------------------- | ---- | ------------------ |  | ---------- | ---- |  |  | ------------- |  | 
|                            |  | 1999                       |      | 2000               |  |            |      | 
|                            |  |                            |      |                    |  |            |      | 
|Country of tax jurisdiction |  | Net operating loss         |      | Net operating loss |  | Expiration
|                            |  |                            |      |                    |  |           
|                            |  | (U.S. dollars in millions) |      |                    |  |           
|The Netherlands             |  | $                          | 8.7  |                    |  | $          | 8.7  |  |  | No expiration
|United Kingdom              |  |                            | 15.5 |                    |  |            | 11.1 |  |  | No expiration
|United States               |  |                            | 12.6 |                    |  |            | 3.0  |  |  | 2007 to 2013 
|Singapore                   |  |                            | 30.1 |                    |  |            | 37.3 |  |  | No expiration
|Other                       |  |                            | 17.1 |                    |  |            | 23.0 |  |  | Various      
|                            |  |                            |      |                    |  |            |      | 
|                            |  | $                          | 84.0 |                    |  | $          | 83.1 |  |  |               |  | 
|                            |  |                            |      |                    |  |            |      | 

The following table sets forth the calculation of our tax charge or credit
for the periods indicated.

|           |  |                              |  |   |      |                            |  |      |       |   |  | 
|---------- |  | ---------------------------- |  | - | ---- | -------------------------- |  | ---- | ----- | - |  | 
|           |  |                              |  |   |      | Year ended December 31,   
|           |  |                              |  |   |      |                           
|           |  |                              |  |   |      | 1999                       |  | 2000
|           |  |                              |  |   |      |                            |  |     
|Tax charge |  |                              |  |   |      | (U.S. dollars in millions)
|           |  | Current tax                  |  | $ | 17.4 |                            |  | $    | 15.2  |  
|           |  | Deferred tax charge/(credit) |  |   | 2.5  |                            |  |      | (10.8 | )
|           |  |                              |  |   |      |                            |  |     
|           |  | Total provision              |  | $ | 19.9 |                            |  | $    | 4.4   |  
|           |  |                              |  |   |      |                            |  |     

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At December 31, 2000 the deferred tax asset was $64.8 million reflecting
operating losses, share plan and other temporary timing differences. However,
we recorded a valuation allowance of $27.4 million against the asset to reflect
our managements estimate that it is not probable that we will fail to realize
this portion of the asset. The comparable figures at December 31, 1999 were a
deferred tax asset of $63.4 million with a valuation allowance of $33.9
million. The valuation allowance at December 31, 2000 has decreased because in
certain jurisdictions we have reported taxable income.

Equity in loss of affiliate

Equity in loss of unconsolidated affiliate of $9.5 million represents our 49%
share of the losses of Radianz, accounted for by the equity method.

Goodwill amortization

Goodwill amortization increased to $16.1 million in 2000 from $4.0 million in
1999 as a result of the amortization of goodwill arising on our investment in
Radianz ($8.3 million) and the inclusion of a full years amortization of our
investment in Techforce.

Discontinued Operations

Revenues from Equant Application Services increased by 33.8% in 2000
principally as a result of the growth in sales of on-line IP applications
systems and related third-party software and equipment. A substantial portion
of this growth was attributable to sales to dot.com related companies. Equant
Application Services gross margin was 38.0% in 1999 and 34.9% in 2000
reflecting the continued development costs of IP and web based products and the
lower margins generated by the sale of third-party software and equipment.
Operating profits were adversely affected in 1999 by costs incurred to develop
new software packages for the internet e-commerce environment and in 2000 by
the deterioration in gross margin and the write-off of bad debts associated
with dot.coms of approximately $0.3 million.

Liquidity and capital resources

The following table summarizes our cash flows.

|                       |                      |  |                            |        |      |  |      |        |   |  |   |        |  
|---------------------- | -------------------- |  | -------------------------- | ------ | ---- |  | ---- | ------ | - |  | - | ------ | -
|                       |                      |  | Year ended December 31,   
|                       |                      |  |                           
|                       |                      |  | 1999                       |        | 2000 |  | 2001
|                       |                      |  |                            |        |      |  |     
|                       |                      |  | (U.S. dollars in millions)
|Cash flow by activity: |                      |  |                            |        |      |  |      |        |   |  |   |       
|                       | Operating activities |  | $                          | 96.4   |      |  | $    | 69.2   |   |  | $ | (117.4 | )
|                       | Investing activities |  |                            | (352.1 | )    |  |      | (620.4 | ) |  |   | (129.2 | )
|                       | Financing activities |  | $                          | 4.9    |      |  | $    | 400.9  |   |  | $ | 574.8  |  

Operating Activities.In 1999, we generated cash inflows from operating
activities of $96.4 million. This resulted primarily from a net profit for the
period of $12.0 million, which included the significant non-cash item of $110.0
million for depreciation and amortization. During the year we paid $10.8
million of share plan social charges in respect of the first vesting of shares
under the Employee Share Award Plan. Our working capital requirements
increased by $28.5 million in the period.

In 2000, we generated cash inflows from operating activities of $69.2 million.
This resulted primarily from a net loss for the period of $47.9 million, which
included the significant non-cash items of $182.9 million for depreciation and
amortization and $33.9 million for impairment losses and equity in loss of
affiliates. During the year we paid $16.6 million of share plan social charges
in respect of the vesting of shares under our employee share award plan. Our
working capital requirements increased by $90.0 million in the period.

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In 2001, we incurred cash outflows from operating activities of $117.4 million.
This resulted primarily from a net loss for the period of $376.4 million, which
however included the significant non-cash items of $320.9 million for
depreciation and amortization, $41.3 million in respect of the write off of
deferred tax assets and $38.4 million for impairment losses and equity in loss
of affiliates. During the year we paid $6.9 million of share plan social
charges in respect of the accelerated vesting of shares under our employee
share award plan, and $1.9 million on the buy back of options. Our working
capital requirements increased by $141.1 million in the period.

Investing Activities.Net cash used in investing activities consists of cash
used for the purchase of property and equipment, intangible assets and
acquisitions, less the proceeds from sales of assets. The level of net cash
used in investing activities in 1999 and 2000 reflected our ongoing investment
in the Network, as described in  Capital Expenditures, as well as
investments in unconsolidated affiliates in 2000, mostly relating to our
contribution to Radianz.

In 1999, we invested $71.7 million, net of cash acquired, in the acquisition of
TechForce and $1.0 million in the acquisition of the remaining 51 percent of
the outstanding shares of Equant Integration Services Co Limited, formerly ITS
Korea Co Limited, at its net book value.

In 2000, we purchased property and equipment with a value of $306.8 million and
intangible assets of $45.3 million. We also invested net cash of $269.2
million. This consisted of $225 million, exclusive of transaction costs of
$4.0 million, for the 49% interest in Radianz, our joint venture with Reuters.
The remainder consisted of the acquisition of non-controlling interests of
18.0% in Tripeze.com Inc., 7.1% in STSN Inc. and 5.5% in iPass Inc., for cash
considerations of $5.1 million, $30.1 million and $5.1 million, respectively.
We funded these investments from our cash resources and a portion of our $400
million facility.

In 2001, we purchased property and equipment with a value of $285.2 million and
intangible assets of $127.0 million. These purchases were funded by our debt
facilities and the cash received from France Telecom for the issuance of
preference shares. The acquisition of Global One increased our cash balances
by $295.3 million, before transaction costs of $29.4 million.

Financing Activities.Net cash provided by financing activities in 1999
reflects local borrowings to fund working capital requirements in currencies
other than U.S. dollars. Net cash provided by financing activities in 2000
reflects drawings under our $400 million revolving credit facility established
in October 1998. Net cash provided by financing activities in 2001 represents
the cash received from France Telecom for the issuance of preference shares,
net of long and short-term debt repayment.

On October 23, 1998, we entered into a new credit facility agreement with a
syndicate of 15 banks, providing for a 5-year $400 million unsecured revolving
credit facility. The agreement contained certain covenants, including a
negative pledge, a restriction on the disposal of assets, certain restrictions
on other borrowings and maintenance of certain financial ratios. At December
31, 2000, we were in compliance with those covenants. Interest accrued at a
margin over LIBOR set by reference to our debt to earnings ratio. The debt to
earnings ratio at December 31, 2000 implied a margin of 37.5 basis points above
LIBOR. In the course of 2000 the facility was fully drawn down.

On January 9, 2001, we entered into a $300 million unsecured revolving credit
facility pursuant to a facility agreement among Equant N.V., certain of our
subsidiaries and Citibank/Schroder Salomon Smith Barney, Dresdner Kleinwort
Wasserstein and the Royal Bank of Scotland Plc. The revolving credit facility
had a final maturity on January 8, 2002, and we had the option to convert
amounts outstanding at maturity into term loans for an additional period of 180
days. With the exception of the margin, which was 75.0 basis points above
LIBOR until June 30, 2001, all other terms and conditions were substantially
the same as those of the $400 million facility described above. See also
Certain Financing Arrangements below.

Both of these facilities were repaid in June 2001 with the proceeds received
from France Telecom from the issuance of preference share capital.

We and our subsidiaries have a number of available unsecured lines of credit
and other borrowing arrangements. At December 31, 2001, the unutilized portion
of these totaled approximately $29.5 million.

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We have signed a $250 million revolving
credit facility agreement and a $50 million treasury management
agreement with France Telecom. The
terms of these agreements, as France Telecom has offered them to us, are set
out below.

Under the revolving credit facility, France Telecom has made available to us a
maximum of $250 million. Drawdowns are available in a variety of currencies
during the period May 2, 2002 until September 30, 2003. Interest is charged
at 120 basis points above the inter bank offering rate of the relevant currency on the amount
drawn down under the facility. The facility has a final maturity on September
30, 2007.

Under the treasury management agreement, France Telecom has made available to
us a maximum of $50 million. Interest is charged at
40 basis points above the overnight USD LIBOR on the net balance outstanding under the agreement.
The terms of the agreement are subject to renewal on December 31 each year.

We believe that a combination of our existing cash resources, the credit
facility and the treasury management agreement from France Telecom is
sufficient to meet our planned working capital needs beyond the end of 2002. See
Item 3. Key Information  Risk Factors  We will require additional funding
from France Telecom or external sources.

Capital expenditures.The telecommunications industry is generally
characterized as highly capital intensive, although data networks are
significantly less capital intensive than voice networks.

The following table sets forth our capital expenditures in 1999, 2000 and 2001,
by category:

|                                        |  |                            |       |      |  |      |       |  |  |   |       | 
|--------------------------------------- |  | -------------------------- | ----- | ---- |  | ---- | ----- |  |  | - | ----- | 
|                                        |  | Year ended December 31,   
|                                        |  |                           
|                                        |  | 1999                       |       | 2000 |  | 2001
|                                        |  |                            |       |      |  |     
|                                        |  | (U.S. dollars in millions)
|Capital expenditure by category:        |  |                            |       |      |  |      |       |  |  |   |       | 
|Network and customer premises equipment |  | $                          | 240.4 |      |  | $    | 299.0 |  |  | $ | 334.1 | 
|Computer hardware and software          |  |                            | 22.2  |      |  |      | 21.7  |  |  |   | 54.2  | 
|Other                                   |  |                            | 17.9  |      |  |      | 31.4  |  |  |   | 23.9  | 
|                                        |  |                            |       |      |  |      |       |  |  |   |       | 
|Total                                   |  | $                          | 280.5 |      |  | $    | 352.1 |  |  | $ | 412.2 | 
|                                        |  |                            |       |      |  |      |       |  |  |   |       | 

Our capital expenditures totaled $412.2 million in 2001, primarily relating to
the expansion of the network, the improvement of customer service and the
further development of products and services including $75.5 million spent on
increasing our transmission capacity in the form of IRUs. On a pro
forma basis our capital expenditure totaled approximately $519
million, of which $419 million was in respect of network and customer
premises equipment. We expect to continue
to benefit from lower costs of capital items, including purchased transmission
capacity, and from improved network capital efficiency. Our capital
expenditures increased by approximately $60 million, or 17%, from 2000 to 2001.
This increase is primarily due to a $54.3 million increase in IRU purchases. We
funded these purchases from our debt facilities in 2000 and from our debt
facilities and the cash received from France Telecom in 2001. See Certain
Financing Arrangements below.

Approximately 75% of our capital expenditures in 2001 were in common network
equipment (both switching and transmission) and customer premises equipment, as
compared to 86% in 1999 and 85% in 2000. We plan to incur capital expenditure
of approximately $500 million in 2002, to be funded from our existing cash
resources and the external borrowing facilities agreed with France Telecom. We intend to make
capital expenditures in countries with high production revenue and in response
to customer requirements for increased capacity and greater capillarity. We
invest in the purchase of transmission capacity between major countries to
reduce the costs of transmission. We have also invested and we intend to
continue to make significant investments in our computer, management
information, customer service and billing systems. We also invest in equipment
for customers of our network service.

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The following summarizes our contractual cash obligations and commercial
commitments at December 31, 2001, and the effect such obligations are expected
to have on liquidity and cash flow in future periods.

|                                                  |  |                            |       |                  |  |           |      |           |  |               |      |  |  |   |      |  |  |   |       | 
|------------------------------------------------- |  | -------------------------- | ----- | ---------------- |  | --------- | ---- | --------- |  | ------------- | ---- |  |  | - | ---- |  |  | - | ----- | 
|                                                  |  | Payments due by period    
|                                                  |  |                           
|                                                  |  | Total                      |       | Less than 1 year |  | 2-3 years |      | 4-5 years |  | After 5 years
|                                                  |  |                           
|                                                  |  | (U.S. dollars in millions)
|Long-term debt,
including current
obligations (a) |  | $                          | 14.3  |                  |  | $         | 9.8  |           |  | $             | 4.5  |  |  | $ | 0.0  |  |  | $ | 0.0   | 
|Operating leases (b)                              |  |                            | 277.2 |                  |  |           | 53.7 |           |  |               | 73.2 |  |  |   | 28.6 |  |  |   | 121.7 | 
|                                                  |  |                           
|Total Contractual
cash obligations                |  | $                          | 291.5 |                  |  | $         | 63.5 |           |  | $             | 77.7 |  |  | $ | 28.6 |  |  | $ | 121.7 | 

(a)  Long-term debt includes bank overdrafts, term borrowings and capital
leases. The total minimum amount payable under capital leases of $5.1 million
includes $1.5 million of future finance charges.

(b)  The amounts stated in respect of operating leases include obligations
on leases where we are currently negotiating with lessors to terminate leases
and for which provisions have been recognized as part of our restructuring and
integration activities. Certain of these amounts are recoverable from France
Telecom.

|                                    |  |                       |       |                  |  |                            |      |           |  |               |      |  |  |   |      |  |  |   |      | 
|----------------------------------- |  | --------------------- | ----- | ---------------- |  | -------------------------- | ---- | --------- |  | ------------- | ---- |  |  | - | ---- |  |  | - | ---- | 
|                                    |  | Commitments by period
|                                    |  |                      
|                                    |  | Total                 |       | Less than 1 year |  | 2-3 years                  |      | 4-5 years |  | After 5 years
|                                    |  |                      
|                                    |  |                       |       |                  |  | (U.S. dollars in millions) |      |           |  |              
|                                    |  |                      
|Guarantees (a)                      |  | $                     | 4.3   |                  |  | $                          | 4.3  |           |  | $             |     |  |  | $ |     |  |  | $ |     | 
|Unconditional
supply obligations(b) |  |                       | 106.2 |                  |  |                            | 12.5 |           |  |               | 25.0 |  |  |   | 25.0 |  |  |   | 43.7 | 
|                                    |  |                      
|Total Commercial Commitments        |  | $                     | 110.5 |                  |  | $                          | 16.8 |           |  | $             | 25.0 |  |  | $ | 25.0 |  |  | $ | 43.7 | 
|                                    |  |                      

(a)  We have contingent liabilities, including guarantees provided to
non-consolidated entities, totaling $4.3 million at December 31, 2001.

(b)  We have agreed to provide $125 million of services to Radianz over a
period of 10 years from July 1, 2000. Approximately $18.8 million of services
were provided in the period from July 1, 2000 through December 31, 2001.

Impact of Changes in Exchange Rates

Our results of operations and financial condition can be significantly affected
by changes in exchange rates between the U.S. dollar and other currencies,
particularly the Euro, British pound, Japanese yen, Singapore dollars and Hong
Kong dollars.

We calculate prices for our network services activities in U.S. dollars, and
subsidiaries accounting for approximately 98% of our revenues from these
activities use U.S. dollars as their functional currency. We may translate
prices for these products and services at the time of sale or billing into
other currencies using an exchange rate current at that time. We accordingly
bear exchange rate risk during the lives of those contracts, as their prices
with prices are translated into other currencies at the time of sale. In other
lines of business, we price and record revenues predominantly in local
currencies.

Our network services costs are largely
denominated in U.S. dollars and Euros. We bear an exchange
rate risk in respect of contracts that are not U.S. dollar-denominated. We
incur most of our non-network services costs in the currency in which we
provide the services. We often match prices to the corresponding costs, but we
incur some equipment-related costs in U.S. dollars. To the extent that the
local currency used

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by a subsidiary fluctuates against the U.S. dollar, the payables in respect of
such equipment purchases may increase or decrease significantly and lead to
foreign exchange losses or gains.

Although the numerous currencies in which we operate have not moved uniformly,
the U.S. dollar strengthened considerably in 1999 against most currencies, with
a particularly pronounced effect on the Euro to dollar exchange rate. The 13%
decline of the Euro relative to the U.S. dollar in 1999 had a significant
downward effect on our Integration Services revenues. However, this had only a
marginal impact on operating profit, because most of the related expenses
declined in tandem with revenues. On a consolidated basis our net foreign
exchange gain for 1999 amounted to $0.7 million. In 2000, the U.S. dollar
continued to strengthen against all other major currencies, and our
consolidated net foreign exchange gain amounted to $2.3 million. The U.S.
dollar appreciated still further in 2001, gaining 6.3% against the Euro, 3.9%
against the British Pound and 12.1% against the Yen. Our consolidated net
foreign exchange loss for 2001 amounted to $6.4 million.

We prepare our Consolidated Financial Statements in U.S. dollars. However, as
described above, a sizeable portion of our revenues were earned in currencies
other than the U.S. dollar. In addition, a substantial portion of our assets
are non-dollar denominated, because we generally carry local Network assets in
the currency of the countries in which they are located. Any appreciation of
the dollar against the currencies in which these items are denominated has the
effect of reducing their dollar values in our Consolidated Financial
Statements. For consolidation purposes, we translate into U.S. dollars, using
the period-end exchange rate, the assets, shareholders equity and liabilities
of those of our subsidiaries for which the dollar is not the functional
currency. We translate income and expenses at the average exchange rate for the
period. We record adjustments resulting from the translation directly in
shareholders equity, and show them as cumulative foreign currency translation
adjustments in our consolidated balance sheet. The balance sheet impact of
such translation adjustments has been, and may be expected to continue to be,
material from period to period. These adjustments resulted in decreases in
shareholders equity of $33.0 million, $25.2 million and $42.4 million in 1999,
2000 and 2001 respectively. The decrease in shareholders equity in these years
resulted primarily from the translation of local Network assets, held in the
currency of the countries in which they are located, into U.S. dollars.

Certain Financing Arrangements

The following is a summary of the financing arrangements we had in place during
the years ending December 31, 1999, 2000 and 2001. All of these
facilities were
cancelled, and the amounts drawn down repaid, upon the closing of the France
Telecom Transactions in June 2001.

On October 23, 1998, we entered into a revolving credit facility pursuant to a
Facility Agreement among us, certain of our subsidiaries and a syndicate of
banks named therein. Dresdner Kleinwort Benson and Paribas acted as joint
arrangers for the banks, with HSBC Investment Bank plc acting as agent.

The Facility Agreement provided a $400 million unsecured revolving credit
facility. The revolving credit facility had a final maturity on October 23,
2003. We and certain of our subsidiaries were able to borrow funds under the
Facility Agreement. We also (with certain subsidiaries) guaranteed all amounts
borrowed under the facility.

We were unable to borrow any amounts under the facility if it would have
resulted in our net debt exceeding a multiple of earnings before interest,
taxes, depreciation and amortization, non-recurring charges and extraordinary
items and non-cash costs in respect of the employee share award plans. That
multiple was 3.5 until December 31, 2001, and 3.0 thereafter.

Any loan under the facility had one interest period, of one, two, three, six or
(under some circumstances) twelve months, at our option. Each loan matured at
the end of its interest period. We were able to re-borrow any amounts repaid.

The interest rate to be paid with respect to each loan for its applicable
interest period was the sum of (i) the margin prevailing on the first day of
the applicable interest period , (ii) LIBOR and (iii) in the case of a loan in
pounds sterling only, mandatory liquid asset costs imputed to the banks by the
requirements of the Bank of England. The margin in respect of all interest
periods was between 0.3 percent and 0.6 percent per annum, and was set by
reference to our debt to earnings ratio. Based on the debt to earnings ratio
at December 31, 2000, the margin on amounts re-borrowed was 37.5 basis points.

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On January 9, 2001, we entered into a $300 million unsecured revolving credit
facility pursuant to a facility agreement among Equant N.V., certain of our
subsidiaries and Citibank/Schroder Salomon Smith Barney, Dresdner Kleinwort
Wasserstein and the Royal Bank of Scotland Plc who acted as agents. The
revolving credit facility had a final maturity on January 8, 2002, and we had
the option to convert amounts outstanding at maturity into term loans for an
additional period of 180 days. With the exception of the margin, which was
75.0 basis points above LIBOR until June 30, 2001 and 90.0 basis points above
LIBOR thereafter until final maturity, all other terms and conditions were
substantially the same as those of the $400 million facility described above.

Research and Development

We do not perform basic research. We engage in a measure of technical research,
focused principally on monitoring emergent technologies and the manner in which
they can be adapted for commercial use.

Recent Accounting Pronouncements

In June 2001, the Financial Accounting Standards
Board issued SFAS No. 141, Business Combinations, and No. 142,
Goodwill and Other Intangible Assets.

SFAS 141 requires that the purchase method of
accounting be used for all business combinations initiated after June
30, 2001. No significant acquisitions have occurred since June 30, 2001.

SFAS 141 also includes guidance on the initial
recognition and measurement of goodwill and other intangible assets
acquired in a business combination completed after June 30, 2001.
SFAS 142 prohibits the amortization of goodwill and intangible assets
with indefinite useful lives. Instead, SFAS 142 requires that these
assets be reviewed for impairment at least annually. Additionally,
SFAS 142 requires that goodwill included in the carrying value of
equity method investments no longer be amortized. Intangible assets
with finite lives will continue to be amortized over their estimated
useful life and reviewed for impairment in accordance with SFAS 121.

We will apply Statement 142 beginning January 1,
2002. SFAS 142 prohibits the amortization of goodwill and intangible
assets with indefinite useful lives beginning January 1, 2002.
Additionally, SFAS 142 requires that goodwill included in the
carrying value of equity method investments no longer be amortized.
Application of these nonamortization provisions is expected to
result in an increase in operating income of $169.5 million ($0.60 per
share) in 2002 including the effect of the non-amortization of
trademarks which have been determined as having undefinite lives.
Changes in the useful lives of intangible assets with finite lives as
well as reclassifications from or to goodwill at the date of adoption
to or from identifiable intangibles as required by SFAS 141 are not
expected to result in a material change in net income.

SFAS 142 requires that goodwill of consolidated
entities and intangible assets with indefinite useful lives be tested
for impairment at least annually using the prescribed two-step
process. The first step is a screen for potential impairment, while
the second step measures the amount of impairment, if any. We have
performed the first of the required impairment tests of goodwill and
indefinite lived intangible assets as of January 1, 2002. Based on
steps we have taken to prepare for the adoption of Statement 142, no
significant impairment will be recorded at January 1, 2002 as a
cumulative effect of change in
accounting principle.

We are a single reporting unit and therefore we will
estimate fair value using the quoted market prices adjusted for an
appropriate "control premium". We may be obliged to recognize
significant impairment charges in connection with SFAS 142 due to
considerable volatility in our share price.

In June 2001, the Financial Accounting Standards
Board issued SFAS No. 143, Accounting for Asset Retirement
Obligations. SFAS 143 requires the fair value of a liability for an
asset retirement obligation be recognized in the period in which it
is incurred if a reasonable estimate of fair value can be made. The
associated asset retirement costs are capitalized as part of the
carrying amount of the long-lived asset. An entity shall measure
changes in the liability for an asset retirement obligation due to
passage of time by applying an interest method of allocation to the
amount of the liability at the beginning of the period. That amount
shall be recognized as an increase in the carrying amount of the
liability and as an expense classified as an operating item in the
statement of income. SFAS 143 is effective for fiscal years beginning
after June 15, 2002. We are currently reviewing the provisions of
this statement and its potential impact on our results of operations
and our financial position.

In August 2001, the Financial Accounting Standards
Board issued SFAS No. 144, Accounting for the Impairment or Disposal
of Long-Lived Assets. This Statement addresses the financial
accounting and reporting for the impairment or disposal of
long-lived assets and supersedes SFAS 121, and the accounting and
reporting provisions of APB Opinion No. 30, Reporting the Results of
Operations-Reporting the Effects of Disposal of a Segment of a
Business, and Extraordinary, Unusual and Infrequently Occurring Events
and Transactions, for the disposal of a segment of a business (as
previously defined in that Opinion). The provisions of this Statement
are effective for financial statements issued for fiscal years
beginning after December 15, 2001. We do not anticipate that adoption
of SFAS 144 will have a material impact on our results of operations
or our financial position.

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Operating and Financial Review under U.S. GAAP

The following section is a discussion of our results of operations under U.S.
GAAP for the year ended December 31, 2001 compared to the results of Global One
for the year ended December 31, 2000. The following discussion should be read
in conjunction with the financial information included in Note 29 to the
Consolidated Financial Statements.

Overview

Like Equant, Global One offered a single source for the provision of seamless
data, voice and IP telecommunications services for businesses, carriers and
consumers around the world. Seamless service combines one-stop shopping or
single contract customer service with uniform quality end-to-end technical and
commercial service. Global One focused primarily on multinational businesses
and their suppliers, distributors and customers. Global One provided data,
voice and/or IP services in more than 120 countries and territories worldwide,
including some of the most important telecommunications markets worldwide.

On June 29, 2001 the France Telecom Transactions were completed and the
composition of Global One changed. These transactions had a significant effect
on the operations of both Global One and Equant and are described in Item 4. 
Information on the Company  History and development of the company  Our
history.

The most significant change that occurred on June 29, 2001 was the acquisition
of Equant. Following the acquisition, Global Ones consolidated balance sheet
reflected goodwill and other intangible assets of approximately $10.4 billion.
This resulted from (i) the push down of goodwill which arose upon France
Telecoms acquisition, in April 2000, of the interests in Global One held by
Sprint and Deutsche Telekom, and (ii) the goodwill and other intangible assets
arising on the reverse acquisition of Equant. Management has assessed the
carrying value of goodwill and other intangible assets based upon certain
assumptions it made in developing projections of future cash flows. These
projections reflect the financial markets view of the telecommunications
industry and business conditions in general, and suggest that we will not
recover the carrying value of our goodwill. Accordingly we have recorded an
impairment loss of $7.5 billion to reflect the reduction in anticipated
future cash flows.

Global Ones relationship with France Telecom altered following completion of
the France Telecom Transactions. These changes comprise (i) entering into new
agreement with France Telecom which change the basis upon which we perform
certain services for France Telecom; (ii) the termination of certain agreements
with affiliates of France Telecom that had previously been combined into Global
One; and (iii) the retention by France Telecom of certain
non-operating entities.

From June 30, 2001 we have acted as France Telecoms agent on a limited risk
basis for its pre-paid and post-paid calling cards in various countries, and
are also the distributor for France Telecoms carrier business outside France.
In light of this limited risk to the Company of providing these services, the
Company earns a fee of 0.5 percent. The amounts invoiced are passed through to
France Telecom less the Companys fees  they are not shown as revenues. In
2000 Global One generated revenues of $311.4 million and
incurred a direct loss of
$63.2 million from these excluded businesses.

The series of agreements among Global Ones local sales and service units, or
LSSUs, Global Products and Services, or GPS, a division of France
Telecom, and France Telecoms long distance
division, or FTLD, which had been implemented in the second half
of 2000 were
replaced by new agreements which are described in Item 7.  Major Shareholders
and Related Party Transactions  Related Party Transactions  Our relationship
with France Telecom. The agreements between the LSSUs, FTLD and GPS required
FTLD to sell switched voice minutes, bandwidth and IP connectivity to GPS,
combining FTLDs resources with the resources owned by the LSSUs for which FTLD
were invoiced by the LSSUs at cost plus a margin. Under these agreements, all
costs invoiced by FTLD, as well as the central function costs, including global
products, global sales, finance and corporate services, were accounted for
within GPS. The LSSUs then purchased their manufactured global products and
services from GPS at wholesale market prices. All of these activities are now
carried out within Equant since June 30, 2001.

In addition, a number of non-operating entities that had previously been combined
into Global One were retained by France Telecom, resulting in repayments of
investors capital being recorded in the first half of 2001.

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Following completion of the transactions in June 2001, we began to integrate
the businesses of Equant, Global One and the SITA/Equant network Joint Venture.
Under the terms of the Contribution Agreement between France Telecom and
Equant, we are sharing certain restructuring and integration costs for a period
of two years following June 29, 2001. France Telecom has agreed to reimburse us
for half the costs of employment and termination of the first 2,500 employees
of the new entity (including employees to be transferred from SITA to us
pursuant to the SITA/Equant network Joint Venture) that we identify as not
necessary for our long-term operation. For a period of two years following
June 29, 2001, the Contribution Agreement obligates France Telecom to
participate in the non-personnel related integration and restructuring costs we
expect to incur with respect to the integration of Equant, Global One and the
SITA network and the realization of related synergies. France Telecom is to
bear, or reimburse us for, 50% of the first $240 million of these costs and
100% of the next $90 million of these costs. We incurred $173.4 million of
such costs in 2001, of which France Telecom is due to bear $79.2 million.

Results of Operations for the Year Ended December 31, 2001, Compared to the Year Ended December 31, 2000 based on U.S. GAAP

The following table sets forth our
statement of operations on a U.S. GAAP basis
for the years ended
December 31, 2000 and 2001 and the percentage change between the
two periods. Certain items which had previously been classified as
non-operating by Global One are now included within operating expenses
and the 2000 comparatives have been reclassified accordingly.

|                                                     |                                    |   |                            |        |           |   |          |          |   |  |       |         |  
|---------------------------------------------------- | ---------------------------------- | - | -------------------------- | ------ | --------- | - | -------- | -------- | - |  | ----- | ------- | -
|                                                     |                                    |   | Year ended December 31,    |        | % change 
|                                                     |                                    |   |                            |        | From
2000
|                                                     |                                    |   | 2000                       |        | 2001      |   | to 2001 
|                                                     |                                    |   |                            |        |           |   |         
|                                                     |                                    |   | (U.S. dollars in millions) |        |           |   |         
|Revenues                                             |                                    | $ | 1,131.7                    |        |           | $ | 2,102.5  |          |   |  | 85.8  | %      
|Cost of products and services                        |                                    |   | (1,250.1                   | )      |           |   | (1,909.7 | )        |   |  | 52.8  | %      
|                                                     |                                    |   |                            |        |           |   |          |          |   |  |       |        
|Gross profit                                         |                                    | $ | (118.4                     | )      |           | $ | 192.8    |          |   |  | n/a   |        
|Selling, general and administrative expenses         |                                    | $ | (466.0                     | )      |           | $ | (707.8   | )        |   |  | 51.9  | %      
|Non-recurring charges                                |                                    |   |                           |        |           |   | (170.8   | )        |   |  | n/a   |        
|Amortization of goodwill and other intangible assets |                                    |   | (216.4                     | )      |           |   | (488.7   | )        |   |  | 125.8 | %      
|Loss on impairment of goodwill                       |                                    |   |                           |        |           |   | (7,478.7 | )        |   |  | n/a   |        
|                                                     |                                    |   |                            |        |           |   |          |          |   |  |       |        
|                                                     | Total operating costs and expenses |   | $                          | (682.4 | )         |   | $        | (8,846.0 | ) |  |       | 1,196.3 | %
|                                                     |                                    |   |                            |        |           |   |          |          |   |  |       |        
|Operating loss                                       |                                    | $ | (800.8                     | )      |           | $ | (8,653.2 | )        |   |  | 980.6 | %      
|Equity in loss of affiliate                          |                                    |   |                           |        |           |   | (25.8    | )        |   |  | n/a   |        
|Interest expense (net)                               |                                    | $ | (29.3                      | )      |           | $ | (7.1     | )        |   |  | (75.8 | )%     
|Loss on impairment of investments accounted at cost  |                                    |   |                           |        |           |   | (13.1    | )        |   |  | n/a   |        
|                                                     |                                    |   |                            |        |           |   |          |          |   |  |       |        
|                                                     | Total non-operating expenses       |   | $                          | (29.3  | )         |   | $        | 46.0     |   |  |       | 57.0    | %
|Loss from continuing operations before taxes         |                                    | $ | (830.1                     | )      |           | $ | (8,699.2 | )        |   |  | 948.0 | %      
|Income taxes                                         |                                    |   | (8.9                       | )      |           |   | (27.6    | )        |   |  | 210.1 | %      
|Net loss from continuing operations                  |                                    |   | (839.0                     | )      |           |   | (8,726.8 | )        |   |  | 940.1 | %      
|Discontinued operations                              |                                    |   |                           |        |           |   | 14.5     |          |   |  | n/a   |        
|                                                     |                                    |   |                            |        |           |   |          |          |   |  |       |        
|Net loss                                             |                                    | $ | (839.0                     | )      |           | $ | (8,712.3 | )        |   |  | 938.4 | %      
|                                                     |                                    |   |                            |        |           |   |          |          |   |  |       |        

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Revenues

Revenues increased $970.8 million or 86% to $2,102.5 million for the year ended
December 31, 2001 compared to $1,131.7 million for the year ended December 31,
2000. The acquisition of Equant increased revenues by approximately $1,003
million or 88% while the change in status of the excluded businesses reduced
revenues by approximately $51 million or 5%.

Total revenues can be broken down as follows:

Revenues by Region

|                               |                             |   |                                               |      |      |   |         |      |  
|------------------------------ | --------------------------- | - | --------------------------------------------- | ---- | ---- | - | ------- | ---- | -
|                               |                             |   | Year ended December 31,                      
|                               |                             |   |                                              
|                               |                             |   | 2000                                          |      | 2001
|                               |                             |   |                                               |      |     
|                               |                             |   | (U.S. dollars in millions,except percentages)
|Americas                       |                             | $ | 315.4                                         |      |      |   | 556.2   |     
|                               | As a percentage of revenues |   |                                               | 27.9 | %    |   |         | 26.5 | %
|Europe, Middle East and Africa |                             |   | 711.6                                         |      |      |   | 1,433.2 |     
|                               | As a percentage of revenues |   |                                               | 62.8 | %    |   |         | 68.1 | %
|Asia Pacific and Japan         |                             |   | 104.7                                         |      |      |   | 113.1   |     
|                               | As a percentage of revenues |   |                                               | 9.3  | %    |   |         | 5.4  | %
|                               |                             |   |                                               |      |     
|Total                          |                             | $ | 1,131.7                                       |      |      | $ | 2,102.5 |     
|                               |                             |   |                                               |      |     

The change in the percentage of revenues generated from individual regions
reflects the fact that Equant bills a significant proportion of its revenues
from Ireland.

It is not possible to compare revenues by Line of Business, as the basis of
presentation adopted since June 30, 2001 is not consistent with that employed
by Global One in 2000 and the data required to present Global One's
2000 revenues on the current basis cannot be obtained.

Cost of products and services

Costs of products and services consists of all costs incurred to provide
services rendered to customers, including access, transmission and termination.
It also includes the costs of network depreciation and maintenance and costs of
goods and services purchased for resale.

Costs of products and services for the year ended December 31, 2001 increased
by $659.6 million or 53% to $1,909.7 million (90.8% of revenues) compared to
$1,250.1 million (110.5% of revenues) for the year ended December 31, 2000. The
increase in costs of products and services in 2001 is primarily attributable to
the acquisition of Equant  if Global One had not purchased Equant costs of products
and services would in fact have fallen by approximately 13%. The improvement in
the gross profit percentage (moving from a gross loss to a gross profit)
reflects the higher margin business model employed by Equant and increased
operating efficiencies, partially offset by additional depreciation charges to
write off network assets.

Selling, general and administrative expenses

Selling, general and administrative expenses for the year ended December 31,
2001 increased by $241.8 million or 52% to $707.8 million
compared to $466.0
million for the year ended December 31, 2000. Approximately $180

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million of this increase was attributable to the acquisition of Equant,which
increased the scale of the companys activities significantly. Depreciation and bad debt expenses rose during the year, reflecting an
increased asset base and the impact of deteriorating market conditions on the
collectibility of receivables.

Non-recurring charges

Non-recurring charges comprise the cost of restructuring and integrating Global
One, Equant and the SITA/Equant network Joint Venture in the second half of
2001. The major components of the restructuring and integration costs incurred
during the period since July 1, 2001 are asset write downs ($51.5 million),
employee termination costs ($38.0 million), lease exit costs ($35.4 million)
and integration planning and implementation costs ($26.7 million). Equant had
established a Critical Staff Retention Program in advance of the acquisition,
and approximately $10.0 million expensed in the period under that program is
also included in restructuring charges.

We expect to incur further costs as a result of our restructuring and
integration activities through June 2003, of which we expect to incur
approximately $300 million in 2002. We anticipate that our integration
activities will yield enhanced synergies in excess of $350 million on an
annualized basis in 2003. These synergies are largely comprised of headcount
reductions, closure of duplicate facilities and savings in network costs. We
may not be able to achieve the benefits we anticipate through our restructuring
and integration activities to the extent or as soon as we expect, and we may
have to incur further costs in pursuit of these benefits. For a discussion of
some factors that could negatively affect our restructuring and integration
activities, see Item 3. Key Information  Risk Factors  Failure to
successfully integrate Global Ones operations with our operations could
materially and adversely affect our financial position and results of
operations.

Under the terms of the Contribution Agreement, certain of the restructuring and
integration costs are to be reimbursed by France Telecom. France Telecom has
agreed to meet $79.2 million of the costs incurred to date, and this
contribution has been treated as a capital contribution. See Item 7. Major
Shareholders and Related Party Transactions  Related Party Transactions 
Relationship with France Telecom and Item 10. Additional Information 
Material Contracts for further information.

Amortization of Goodwill and Other Intangible Assets

Amortization of goodwill and other intangible assets, which includes customer
relationships, workforce and trade marks, increased 126% to $488.7 million for
the year ended December 31, 2001 compared to $216.4 million for the year ended
December 31, 2000. The increase was primarily due to the amortization of
goodwill and other intangible asset balances arising on the acquisition of
Equant. This transaction resulted in the recognition of $6,502.5 million in
goodwill, which is amortized over 20 years, and $208.6 million of other
intangible assets, which are amortized over periods ranging from four to twenty
years. In addition, we incurred a full years amortization on the goodwill
assigned to Global One as a result of the buyout of Deutsche Telekoms and
Sprints interests in Global One by France Telecom during the first quarter of
2000. This transaction originally resulted in the recognition of $3,859.0
million in goodwill, which is amortized over 20 years, and $303.0 million of
other intangible assets, which are amortized over periods ranging from three to
twenty years. As a result of the deterioration in the telecommunications
market we have also recognized an impairment charge on goodwill during the
year. See Loss on impairment of goodwill for more details.

Loss on impairment of goodwill

Long-lived assets, including goodwill, are subject
to an impairment review when events or circumstances occur indicating
that impairment might exist. Such events or circumstances include
significant falls, other than temporary, in the market price of our
ordinary shares. The need for recording an impairment is determined
by reference to the sum of undiscounted cash flows based on economic
assumptions and forecasted operating activities approved by our
management. When a write-down is deemed necessary, it is calculated
by reference to the difference between the carrying value and the fair value. The
determination of the fair value is based on valuations which differ
depending on the method used. Significant management judgment is
involved in the valuation process. Valuation methods we use include
discounted cash flows using appropriate rates and considering other
opportunities related to the acquisition such as synergies resulting
from the integration as well as the strategic value of the acquired
company to us, or by reference to quoted market prices.
We recorded an impairment charge
of $7,478.7 million in 2001 as a result of the significant
deterioration of the telecommunications market. This charge was based
on the difference between net book value of long-lived assets and
fair value. The fair value of long-lived assets at December 31,
2001 was determined by reference to the market price of our ordinary
shares as at that date, adjusted for an appropriate control premium,
working capital and long-term liabilities.

Depreciation

In addition to the amortization of goodwill and other intangible assets, we
recognized a $351.1 million depreciation charge in 2001 compared to
$154.7 million in 2000, with the increase of $196.4 million due primarily to the
acquisition of Equant, as well as increased depreciation on certain Network
assets. If Global One had not acquired Equant, our depreciation charge would have
increased by approximately $84 million as a result of the continued high levels
of capital expenditure on network assets.

The depreciation charge is reflected in the financial statements based on the
nature of costs and related assets as follows:

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|                                             |  |                            |       |      |  |   |       | 
|-------------------------------------------- |  | -------------------------- | ----- | ---- |  | - | ----- | 
|                                             |  | Year ended December 31,   
|                                             |  |                           
|                                             |  | 2000                       |       | 2001
|                                             |  |                            |       |     
|                                             |  | (U.S. dollars in millions)
|Cost of revenue                              |  | $                          | 138.5 |      |  | $ | 310.5 | 
|Selling, general and administrative expenses |  |                            | 16.2  |      |  |   | 40.6  | 
|                                             |  |                            |       |     
|Total                                        |  | $                          | 154.7 |      |  | $ | 351.1 | 
|                                             |  |                            |       |     

Equity in loss of affiliate

Equity in the loss of affiliate reflects recognition of our share of the loss
of Radianz for the period since the acquisition of Equant.

Interest Expense (net)

Interest expense fell 76% to $7.1 million for the year ended December 31, 2001,
compared to $29.3 million for the year ended December 31, 2000. The decrease in
interest expense was primarily due to the repayment of borrowings from France
Telecom in March 31, 2001 as part of the reorganization of Global One prior to
the acquisition of Equant. We were cash positive throughout the second half of
2001, generating interest income (including amounts due from France Telecom) of
$6.8 million.

Loss on impairment of investments

Loss on impairment of investments was $13.1 million in 2001. This represents
the write-down to fair value of certain investments accounted for using the
cost method, when management believes that it is more likely than not that its
initial investment may not be fully recovered. The charge in 2001 comprised a
$13.1 million impairment provision on STSN Inc., a company in which we own a
7.1% non-controlling interest.

Total Non-Operating Expenses

Total non-operating expenses consist of interest expense (net), equity in loss
of affiliate and loss on impairment of investments. Total
non-operating expenses increased by $16.7 million or 57% to $46.0 million for the year ended
December 31, 2001 compared to $29.3 million for the year ended December 31,
2000. This increase in non-operating expenses was primarily due to an increase
in the equity in loss of affiliate and losses on impairment of goodwill and investments
accounted at cost, partially offset by a decrease in net interest expense incurred on borrowings.

Loss on continuing operations before taxes

Loss on continuing operations before taxes increased 948% to $8,699.2 million
for the year ended December 31, 2001 compared to $830.1 million for the year
ended December 31, 2000. This increase primarily resulted from the
impairment of goodwill.

Income Taxes

Income taxes increased 210% in 2001 compared to 2000 primarily as a result of
the acquisition of Equant.

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The following section is a discussion of the historical operations of Global
One for the years ended December 31, 2000 and 1999. The following discussion
should be read in conjunction with the Combined Financial Statements of Global
One for the year ended December 31, 2000 including the notes
thereto on pages F-79 to F-99.

Overview

Global One offered a single source for the provision of seamless data, voice
and IP telecommunications services for businesses, carriers and consumers
around the world. Seamless service combines one-stop shopping or single
contract customer service with uniform quality end-to-end technical and
commercial service. Global One focused primarily on multinational businesses
and their suppliers, distributors and customers. Global One provided data,
voice and/or IP services in more than 120 countries and territories worldwide,
including some of the most important telecommunications markets worldwide.
Global One had revenues of $1,131.7 million in 2000, an increase of 7% compared
to revenues of $1,057.0 million in 1999. Global One recorded a loss of $839
million in 2000, a decrease of 7% compared to the loss of $904 million in 1999.

The improvements in Global Ones results in 2000 compared to 1999 were due to
an increase in its customer base and the implementation of a series of
agreements among Global Ones local sales and service units, or LSSUs, Global
Products and Services, or GPS, and France Telecoms long distance division, or
FTLD, and between Global One and Transpac. The agreements between the LSSUs,
FTLD and GPS implemented in the second half of 2000 required FTLD to sell
switched voice minutes, bandwidth and IP connectivity to GPS, combining FTLDs
resources with the resources owned by the LSSUs for which FTLD were invoiced by
the LSSUs at cost plus a margin. Under these agreements, all costs invoiced by
FTLD, as well as the central function costs, including global products, global
sales, finance and corporate services, were accounted for within GPS. The LSSUs
then purchased their manufactured global products and services from GPS at
wholesale market prices. As a result of these agreements, FTLD bore the cost
of France Telecoms network and charged GPS for the bandwidth/actual usage of
the network by Global One, which in turn reduced Global Ones cost of revenue
and liquidity. Consequently, GPS was considered an entity of Global One in
Global Ones historical combined financial statements. In July 2000, Global One
also granted Transpac a franchise for Global One products in France, which
consists of the right to become part of the Global One organization for the
distribution and the support of Global One products.

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Results of Operations for the Year Ended December 31, 2000, Compared to the Year Ended December 31, 1999

The following table sets forth Global Ones statement of operations for the
years ended December 31, 1999 and 2000 and the percentage change between the
two periods:

|                                                     |                                    |   |                            |        |              |   |          |        |   |  |       |       |   
|---------------------------------------------------- | ---------------------------------- | - | -------------------------- | ------ | ------------ | - | -------- | ------ | - |  | ----- | ----- | --
|                                                     |                                    |   | Year ended December 31,    |        | % change    
|                                                     |                                    |   |                            |        | From 1999 to
|                                                     |                                    |   | 1999                       |        | 2000         |   | 2000    
|                                                     |                                    |   |                            |        |              |   |         
|                                                     |                                    |   | (U.S. dollars in millions) |        |              |   |         
|Telecommunications service revenue                   |                                    | $ | 1,057.0                    |        |              | $ | 1,131.7  |        |   |  | 7.1   | %    
|Cost revenue                                         |                                    |   | (1,347.4                   | )      |              |   | (1,250.1 | )      |   |  | (7.2  | )%   
|                                                     |                                    |   |                            |        |              |   |          |        |   |  |       |      
|Gross margin                                         |                                    | $ | (290.4                     | )      |              | $ | (118.4   | )      |   |  | (59.2 | )%   
|Sales and marketing expenses                         |                                    |   | (237.6                     | )      |              |   | (256.7   | )      |   |  | 8.1   | %    
|General and administrative expenses                  |                                    |   | (189.7                     | )      |              |   | (202.2   | )      |   |  | 6.6   | %    
|Amortization of goodwill and other intangible assets |                                    |   | (114.9                     | )      |              |   | (216.4   | )      |   |  | 88.4  | %    
|                                                     |                                    |   |                            |        |              |   |          |        |   |  |       |      
|                                                     | Total operating costs and expenses |   | $                          | (542.2 | )            |   | $        | (675.3 | ) |  |       | 24.6  | % 
|                                                     |                                    |   |                            |        |              |   |          |        |   |  |       |      
|Operating loss                                       |                                    | $ | (832.6                     | )      |              | $ | (793.7   | )      |   |  | (4.7  | )%   
|Interest expense                                     |                                    |   | (24.5                      | )      |              |   | (36.3    | )      |   |  | 48.3  | %    
|Interest income                                      |                                    |   | 5.9                        |        |              |   | 7.0      |        |   |  | 18.8  | %    
|Foreign currency transaction losses                  |                                    |   | (40.8                      | )      |              |   | (3.9     | )      |   |  | (90.3 | )%   
|Other expense, net                                   |                                    |   | (4.1                       | )      |              |   | (3.1     | )      |   |  | (25.7 | )%   
|                                                     |                                    |   |                            |        |              |   |          |        |   |  |       |      
|                                                     | Total non-operating expenses       |   | $                          | (63.6  | )            |   | $        | (36.4  | ) |  |       | (42.8 | )%
|Loss before provision for income taxes               |                                    |   | (896.2                     | )      |              |   | (830.1   | )      |   |  | (7.4  | )%   
|Provision for income taxes                           |                                    |   | (8.2                       | )      |              |   | (8.9     | )      |   |  | 9.2   | %    
|Net loss                                             |                                    | $ | (904.3                     | )      |              | $ | (839.0   | )      |   |  | (7.2  | )%   
|                                                     |                                    |   |                            |        |              |   |          |        |   |  |       |      

Telecommunications Service Revenue

Telecommunications service revenue increased 7% to $1,131.7 million for the
year ended December 31, 2000 compared to $1,057.0 million for the year ended
December 31, 1999, primarily due to an increase in Global Ones data and IP
customer base. Global Ones telecommunications service revenue can be broken
down both by product line and regionally as follows:

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Telecommunications Service Revenue by Product

|                         |                             |   |                            |      |      |   |         |      |  
|------------------------ | --------------------------- | - | -------------------------- | ---- | ---- | - | ------- | ---- | -
|                         |                             |   | Year ended December 31,   
|                         |                             |   |                           
|                         |                             |   | 1999                       |      | 2000
|                         |                             |   |                            |      |     
|                         |                             |   | (U.S. dollars in millions,
|                         |                             |   | except percentages)       
|Data and IP services (1) |                             | $ | 640.8                      |      |      | $ | 711.5   |     
|                         | As a percentage of revenues |   |                            | 60.6 | %    |   |         | 62.9 | %
|Business Voice Services  |                             |   | 156.4                      |      |      |   | 149.5   |     
|                         | As a percentage of revenues |   |                            | 14.8 | %    |   |         | 13.2 | %
|Carrier Voice Services   |                             |   | 185.2                      |      |      |   | 190.7   |     
|                         | As a percentage of revenues |   |                            | 17.5 | %    |   |         | 16.9 | %
|Calling Card Services    |                             |   | 69.5                       |      |      |   | 66.4    |     
|                         | As a percentage of revenues |   |                            | 6.6  | %    |   |         | 5.9  | %
|Other (2)                |                             |   | 5.1                        |      |      |   | 13.6    |     
|                         | As a percentage of revenues |   |                            | 0.5  | %    |   |         | 1.1  | %
|                         |                             |   |                            |      |     
|Total                    |                             | $ | 1,057.0                    |      |      | $ | 1,131.7 |     
|                         |                             |   |                            |      |     



(1) Includes the data network, the IP network, satellites and systems and carrier
bandwidth.(2) Includes Global One Hosting services.

For the impact of the business lines that were not contributed to us in
connection with the transactions on the above table, please see the pro forma
information included within Note 5 to the Consolidated Financial Statements.

Telecommunications Service Revenue by Region

|               |                             |   |                            |      |      |   |         |      |  
|-------------- | --------------------------- | - | -------------------------- | ---- | ---- | - | ------- | ---- | -
|               |                             |   | Year ended December 31,   
|               |                             |   |                           
|               |                             |   | 1999                       |      | 2000
|               |                             |   |                            |      |     
|               |                             |   | (U.S. dollars in millions,
|               |                             |   | except percentages)       
|Asia Pacific   |                             | $ | 68.7                       |      |      | $ | 104.7   |     
|               | As a percentage of revenues |   |                            | 6.5  | %    |   |         | 9.2  | %
|North America  |                             |   | 168.3                      |      |      |   | 245.6   |     
|               | As a percentage of revenues |   |                            | 15.9 | %    |   |         | 21.7 | %
|Latin America  |                             |   | 44.9                       |      |      |   | 69.8    |     
|               | As a percentage of revenues |   |                            | 4.2  | %    |   |         | 6.2  | %
|REEMEA(1)      |                             |   | 137.1                      |      |      |   | 164.9   |     
|               | As a percentage of revenues |   |                            | 13.0 | %    |   |         | 14.6 | %
|Western Europe |                             |   | 638.0                      |      |      |   | 546.7   |     
|               | As a percentage of revenues |   |                            | 60.4 | %    |   |         | 48.3 | %
|               |                             |   |                            |      |     
|Total          |                             | $ | 1,057.0                    |      |      | $ | 1,131.7 |     
|               |                             |   |                            |      |     



(1) Russia, Eastern Europe, the Middle East and Africa

In 2000, telecommunications service revenue generated in the Asia Pacific
region increased primarily due to a new $29.7 million contract with an
Australian carrier. See Sales and Marketing Expenses. The
telecommunications service revenue in the United States increased primarily due
to the reassignment in July 2000 of the sales contracts with Sprint, which were
originally entered into by a Global One entity in Ireland; prior to July 2000,
revenue from these contracts was included in Western Europe revenue.

81



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Cost of Revenue

Cost of revenue consists of all costs incurred to provide services rendered to
customers, including access, transmission and termination. It also includes the
costs of network depreciation and maintenance and costs of goods and services
purchased for resale.

Cost of revenue for the year ended December 31, 2000 decreased 7% to $1,250.1
million (110.5% of revenues) compared to $1,347.4 million (127.5% of revenues)
for the year ended December 31, 1999. The decrease in cost of revenue in 2000
is primarily attributable to the series of agreements entered into during July
2000 between Global Ones LSSUs, FTLD and GPS and between Global One and
Transpac which are discussed above under the caption
Overview. The net
effect of these agreements in 2000 was a $98.0 million reduction in cost of
revenue. Additionally, the 1999 results reflect a fixed asset impairment charge
of $66.7 million recorded to write-down certain network fixed assets to their
net realizable value. These decreases in cost of revenue were partially offset
by a $23.9 million increase in depreciation expense. See
Depreciation.

Sales and Marketing Expenses

Sales and marketing expenses consist of costs incurred by the sales and
marketing force to promote and sell Global One products and services and to
monitor and collect accounts receivable. Sales and marketing expenses for the
year ended December 31, 2000 increased 8% to $256.7 million compared to $237.6
million for the year ended December 31, 1999. The increase in sales and
marketing expenses was substantially attributable to an increase in the
allowance for doubtful accounts, due in part to a provision of approximately
$24 million in respect of amounts due from an Australian carrier.

At the time services were provided to this customer Global One obtained
collateral and guarantees from the customers parent company. Payments of over
$5 million were received during the year 2000. However, as of December 31,
2000, management made a full provision for the remaining amounts due in view of
the customers subsequent financial situation.

General and Administrative Expenses

General and administrative expenses are those expenses incurred by the central
and local
management functions of Global One which monitor Global Ones performance.
These costs include the cost of administrative assets and facilities. General
and administrative expenses for the year ended December 31, 2000, increased 7%
to $202.2 million compared to $189.7 million for the year ended December 31,
1999. The increase was primarily due to an increase in employee compensation
rates and related costs.

Amortization of Goodwill and Other Intangible Assets

Amortization of goodwill and other intangible assets, which includes customer
relationships, workforce and trade marks, increased 88% to $216.4 million for
the year ended December 31, 2000 compared to $114.9 million for the year ended
December 31, 1999. The increase was primarily due to the amortization of
goodwill and other intangible asset balances assigned to Global One as a result
of the buyout of Deutsche Telekoms and Sprints interests in Global One by
France Telecom during the first quarter of 2000. This transaction resulted in
the recognition of $3,859.0 million in goodwill, which is amortized over 20
years, and $303.0 million of other intangible assets, which are amortized over
periods ranging from three to twenty years.

Depreciation

In addition to the amortization of goodwill and other intangible assets, Global
One recognized a $154.7 million depreciation charge in 2000 compared to $128.5
million in 1999, with the increase due primarily to continuing net investments
in Global Ones network. This depreciation charge related to the network and
administrative assets owned by Global One, which are depreciated over periods
ranging from two to 25 years.

The depreciation charge was recognized by Global One and is reflected in its
financial statements based on the
82

nature of costs and related assets as follows:

|                                    |  |                            |       |      |  |   |       | 
|----------------------------------- |  | -------------------------- | ----- | ---- |  | - | ----- | 
|                                    |  | Year ended December 31,   
|                                    |  |                           
|                                    |  | 1999                       |       | 2000
|                                    |  |                            |       |     
|                                    |  | (U.S. dollars in millions)
|Cost of revenue                     |  | $                          | 114.6 |      |  | $ | 138.5 | 
|Sales and marketing expenses        |  |                            | 5.6   |      |  |   | 6.7   | 
|General and administrative expenses |  |                            | 8.3   |      |  |   | 9.5   | 
|                                    |  |                            |       |     
|Total                               |  | $                          | 128.5 |      |  | $ | 154.7 | 
|                                    |  |                            |       |     

Interest Expense

Interest expense increased 48% to $36.3 million for the year ended December 31,
2000, compared to $24.5 million for the year ended December 31, 1999. The
increase in interest expense was primarily due to higher average borrowings
through August 31, 2000 from France Telecom and, through March 31, 2000, from
Global Ones former affiliates, Deutsche Telekom and Sprint. Interest expense
from borrowings from financial institutions did not materially change between
2000 and 1999, amounting to approximately $8.0 million per year.

Foreign Currency Transaction Losses

Foreign currency transaction losses decreased 90% to $3.9 million for the year
ended December 31, 2000 compared to $40.8 million for the year ended December
31, 1999. In 1999, Global One had subsidiaries that used U.S. dollars as their
functional currency but which had net euro asset balances. Therefore, in 1999
Global One recognized substantial foreign currency transaction losses due to
the significant weakening of the euro against the U.S. dollar. Most of those
Global One entities maintaining a net euro asset balance changed their
borrowing currency from the U.S. dollar to the euro in 2000, which had the
effect of reducing Global Ones foreign currency transaction losses.
Additionally, foreign currency transaction gains were recorded in the fourth
quarter of 2000 on net euro receivable balances derived from transactions with
France Telecom due to the strengthening of the euro against the U.S. dollar.

Total Non-Operating Expenses

Total non-operating expenses consist of interest income, interest expense,
foreign currency transaction losses, and other expense, net. Total
non-operating expenses decreased 43% to $36.4 million for the year ended
December 31, 2000 compared to $63.6 million for the year ended December 31,
1999. This decrease in non-operating expenses was primarily due to the change
in foreign currency transaction losses, partially offset by an increase in net
interest expense incurred on the borrowings obtained from France Telecom.

Loss before Provision for Income Taxes

Loss before provision for income taxes decreased 7% to $830.1 million for the
year ended December 31, 2000 compared to $896.2 million for the year ended
December 31, 1999. This decrease primarily resulted from a net improvement in
Global Ones operating margin in 2000 (70% of revenues) over 1999 (79% of
revenues) and also from the decline in total non-operating expenses in 2000.

Provision for Income Taxes

Provision for income taxes consists of all payments made and provisions
accounted for to record income tax on Global Ones revenues over the years
ended December 31, 2000 and 1999. Provision for income taxes were stable in
2000 compared to 1999.

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Item 6. Directors, Senior Management and Employees

Supervisory Board

As a Dutch company, our day to day management is entrusted to the Management
Board under the supervision of the Supervisory Board. The Supervisory Board
oversees and advises the Management Board. The Supervisory Board is responsible
for establishing and supervising the policies pursued by the Management Board
and the general course of our affairs and our business. In addition, certain
actions by the Management Board require the prior approval of the Supervisory
Board, and the Supervisory Board may by resolution specify additional actions
that require such approval. See Management Board. In fulfilling their
duties, supervisory directors must serve our business interests.

The Supervisory Board currently consists of nine supervisory directors, all of
whom are appointed and removed by our shareholders at a General Meeting of
shareholders. Our Articles of Association require the retirement of supervisory
directors at the age of 68, although their terms are otherwise unlimited,
except if the General Meeting appointing the director(s) specifies otherwise.
Our Articles of Association provide that the General Meeting of shareholders
must elect five directors nominated by France Telecom, as long as it holds at
least 34% of our outstanding shares, one director nominated by SITA, one
director nominated by the SITA Foundation and two independent directors
nominated by the Nominating Committee. As of December 30, 2002, the SITA
Foundation will lose the right to nominate a director; there will instead be
three Independent Directors after that time. The supervisory directors do not
have service contracts with us and no termination benefits are payable at the
end of their mandates.

Our Articles of Association provide that the General Meeting of shareholders
will elect supervisory directors from lists of nominees France Telecom, SITA,
the SITA Foundation and the Nominating Committee present. The lists are
binding as long as, with respect to any particular seat, the list consists of
two or more candidates, although the general meeting of shareholders can
deprive the lists of their binding nature by two thirds vote representing more
than half of our issued capital. The supervisory director nominated by SITA
will cease to be a supervisory director when that right ceases to exist
contractually between us and SITA S.C. As of December 30, 2002, the
Supervisory Director appointed by the SITA Foundation shall be replaced by an
Independent Director nominated by the Nominating Committee.

The supervisory directors appoint a chairman of the Supervisory Board from
among their rank. The Supervisory Board meets no less frequently than once each
calendar quarter, and must meet upon request by its chairman or by two or more
of its other supervisory directors. Resolutions of the Supervisory Board
require the approval of an absolute majority of votes cast.

The general meeting of shareholders may suspend or dismiss supervisory
directors. The general meeting of shareholders establishes the compensation of
supervisory directors upon the recommendation of the compensation committee of
the Supervisory Board.

France Telecom, as majority shareholder, or any other holder of a significant
percentage of our shares, may be able to exercise more influence at a
shareholders meeting than would be apparent from the size of its holding to
the detriment of our public shareholders. This is because the holders of most
of our publicly-owned shares hold their shares in book-entry form, and many of
these holders do not give voting instructions to their depositary institutions.
These institutions generally do not vote shares without instructions. It may
be difficult for shareholders holding shares in book-entry form to deliver
voting instructions to us. Our Articles of Association contain no requirement
that a specified percentage of our shares must be represented at shareholders
meetings for the shareholders present at the meeting to adopt resolutions.
Therefore, a significant shareholder, such as France Telecom, may have a
decisive influence on the outcome of shareholder votes, even if the shareholder
holds less than a majority of our shares at the time.

Our current supervisory directors are:

Michel Bon*Born 1943. Chief Executive Officer, France Telecom. He is also
Chairman of the Boards of France Telecom and Orange S.A., and serves as a
director for several other French companies, including Bull S.A., Air Liquide

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S.A. and Lafarge S.A. He is a France Telecom nominee to the Supervisory Board,
with an indefinite term.

Jacques Champeaux*Born 1948. Executive Vice President in charge of the Large
Business Division, France Telecom. He serves as a director for various France
Telecom subsidiaries. He is a France Telecom nominee to the Supervisory Board,
with an indefinite term.

Jean-Yves Gouiffes*Born 1948. Executive Vice President in charge of the
Network Division of France Telecom. He also serves as a director for various
France Telecom subsidiaries and joint ventures. He is a France Telecom nominee
to the Supervisory Board, with an indefinite term.

Bernard Izerable*Born 1956. Senior Vice President International, France
Telecom. He also serves as a director for various France Telecom subsidiaries
and joint ventures. He is a France Telecom nominee to the Supervisory Board,
with an indefinite term.

Riccardo Lippi*Born 1938. Chairman of the Board of Trustees, the SITA
Foundation. He is also Chairman of the Supervisory Board of SITA INC, and was
Chairman of the Board of Directors of SITA SC from 1996 to 2000. He is the
SITA Foundations nominee to the Supervisory Board, with a term that will end
in December 2002.

Roberto Quarta.Born 1949. A Principal in Clayton, Dubilier & Rice, a
private equity firm, and Chairman, BBA Group Plc. He is also a member of the Board of Directors, CD&R Acquisition plc.  He was formerly Group Chief
Executive of BBA Group Plc and a non-executive director of Powergen plc.
He was elected as an independent member of the Supervisory Board on
May 23, 2002 for an indefinite term.

Jean-Louis Vinciguerra*Born 1944. Chief Financial Officer and Executive Vice
President in charge of the Resources Division, France Telecom. He also serves
as a director for various France Telecom subsidiaries. He is a France Telecom
nominee to the Supervisory Board, with an indefinite term.

John Watson*Born 1944. Director General, SITA SC and Managing Director of
SITA INC. He is also a director of various SITA subsidiaries. He is SITAs
nominee to the Supervisory Board, with an indefinite term.

Irving Yoskowitz.*Born 1945. Lawyer, Crowell & Moring, and Senior Partner,
Global Technology Partners, LLC. He also serves as a director for BBA Group
plc. Elected as a non-affiliated director of the Supervisory Board in 1998, he
is an independent member of the supervisory Board, with an indefinite term.

*The biographical information presented for each of our current supervisory
directors is as of December 31, 2001.

Anne Bingaman was an independent member of the Supervisory Board until her
resignation, which became effective on May 23, 2002. She was born in 1943 and
is Chief Executive Officer, Valor Telecom LLC. She is also Chairman of the
Board of Valor Telecom LLC, and serves as a director for McLeod USA and on the
Board of Advisors for Net 2000 and BIA Investment Fund.

Nominating Committee

The current members of our Nominating Committee are
Didier Delepine, Irving Yoskowitz, Jacques Champeaux, and Roberto
Quarta. In accordance with our Articles of Association, our Nominating Committee is a
committee of the Supervisory Board with four members, three of whom must be
supervisory directors and one of whom is the Chairman of the Management
Board. Two of the delegates from the Supervisory Board must be independent
directors. Resolutions of the Nominating Committee, including all nominations,
are adopted by the majority of its delegates.

For each vacancy of an independent director to be filled, the Nominating
Committee must nominate to the general meeting of shareholders at least two
candidates to fill the vacancy if the list of candidates is to be binding on
the General Meeting of the shareholders.

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Audit Committee

The current members of our Audit Committee are Roberto
Quarta, Riccardo Lippi and Jean-Louis Vinciguerra, who serves as the Chairman.
Until May 23, 2002, Anne Bingaman was also a member of the Committee. The
Audit Committee is an elected committee of our Supervisory Board, and has three
members, each of whom is financially literate, with the Chairman being a
financial professional, who also serves as France Telecoms Chief Financial
Officer. Duties comprise assisting the Supervisory Board in its review of and
decision-making process with respect to financial matters, recommending the
appointment and dismissal of our independent auditors and meeting periodically
with them.

The Audit Committee also reviews the nature and scope of our annual audit, the
results of the annual audit, letters from the auditors to our management and
responses to such letters, our interim and annual financial statements, changes
in our accounting policies and practices, our internal audit function and its
evaluations and recommendations.

Our Supervisory Board employs a guidance tool, known as the Terms of Reference
to outline its expectations and the general duties of our Audit Committee. The
Terms of Reference delineate the general duties of the Audit Committee in
assisting the Supervisory Board in fulfilling its oversight responsibilities
and specifically assigns duties with regards to the external auditor and our
finance, internal audit and risk management functions. The Terms of Reference
in place prior to the merger was approved by the Supervisory Board in July 1999.
Postmerger, the Supervisory Board and the current Audit Committee is
contemplating amendments to the Terms of Reference. This amendment is
necessary because the current version extends the authority of the Audit
Committee to the now dissolved SITA/Equant joint venture. The current Terms of
Reference require the Audit Committee to carry out the following duties by
function:

Finance Function



| |  | review the annual report, the annual financial statements, the quarterly or other interim financial information
that we plan to release to the public, and quarterly financial information to be provided to
shareholders for agreement, before submission to the Supervisory
Board, focusing particularly on (a) any changes in
accounting policies and practices; (b) any proposals for changes to our basis for the valuation of assets and
liabilities for the determination of results; and (c) possible significant adjustments resulting from the audit;
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | ensure compliance with current accounting standards; current stock exchange and other regulatory requirements; and
validate the going concern assumption made by management;                                                                                                                                                                                                                                                                                                                                                                                 
| 
| |  | evaluate the suitability and
effectiveness of the internal control environment; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| 
| |  | review the adequacy of our accounting and financial human resources and the adequacy of our succession planning
process.                                                                                                                                                                                                                                                                                                                                                                                                                                       

Internal Audit Function



| |  | review and evaluate the Internal Audit function including independence of its reporting obligations, the proposed
audit plan for the year and the co-ordination of such plan with the external auditors;
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | review the adequacy the
Internal Audit Departments charter, budget and staffing; and                                                                                                                   
| 
| |  | review and concur in the appointment, replacement, reassignment or dismissal of the Head of Internal Audit.                                                                                             

The revised but not yet effective Terms of Reference contain no material
changes. Virtually, all amendments, are non-material terminology changes. The
Terms of Reference under consideration add only two new requirements:



| |  | review annually our risk
assessment and risk management process; and
|- |  | --------------------------------------------------------------------

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| |  | review the results of the
Internal Audit Departments work at least twice annually.
|- |  | -----------------------------------------------------------------------------------

Compensation Committee

The current members of the Compensation Committee are Irving Yoskowitz, who
serves as chairman, Jacques Champeaux and Jean-Yves Gouiffes.

The Compensation Committee is appointed by the Supervisory Board. It makes
recommendations to the Board with regard to salary, bonus and other terms and
conditions of employment of the Managing Directors and compensation of
Supervisory Board Directors. The Supervisory Board also appoints the Chairman
of the Compensation Committee, who must be an Independent Director.

Management Board

Our day to day management is entrusted to the Management Board under the
supervision of the Supervisory Board. Under the Articles of Association, the
Management Board must obtain prior approval from the Supervisory Board for:



| |  |  | the issuance, repurchase or redemption of any shares or other
equity securities (including securities convertible into or
exchangeable or exercisable for our shares or other equity securities)
that we or a subsidiary issue or that a general or limited partnership
in which we or subsidiary who is a partner issues;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | the making of any application for a registration with a view to a
listing or quotation, or withdrawal of a listing or quotation, on any
stock exchange, of any of our securities;                                                                                                                                         
|
| |  |  | the entering into or termination of any alliance or long-term
agreement for cooperation by us or any of our affiliates, with any
third party, or the entering into or termination of any material joint
venture, partnership or other similar arrangement;                                                                
|
| |  |  | our acquisition or that by a subsidiary of a material participation in another legal entity;                                                                                                                                                                                                                              
|
| |  |  | the amendment of our Articles of Association;                                                                                                                                                                                                                                                                             
|
| |  |  | a merger, legal split, consolidation or dissolution;                                                                                                                                                                                                                                                                      
|
| |  |  | the filing of any petition for bankruptcy or for a suspension of
payment or other protection pursuant to any applicable law for the
protection of creditors;                                                                                                                                                              
|
| |  |  | the adoption of or significant change in, any business plan or budget of ours, or investment levels in us;                                                                                                                                                                                                                
|
| |  |  | the reduction of our issued capital;                                                                                                                                                                                                                                                                                      
|
| |  |  | the sale of any portion of the shares we hold in any significant subsidiary;                                                                                                                                                                                                                                              
|
| |  |  | the accrual of any material debt which exceeds 5% of our
consolidated assets (other than the extension, refinancing or
replacement of existing debt);                                                                                                                                                                     
|
| |  |  | capital expenditures in any financial year in excess of the capital
expenditures approved in our approved annual consolidated budget;                                                                                                                                                                                     
|
| |  |  | the declaration of any dividends or other distributions on capital
stock, other than to any of our wholly-owned subsidiaries; and                                                                                                                                                                                         

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| |  |  | the approval of the results of any audit.
| | - |  | -----------------------------------------

The Supervisory Board may, by majority vote, adopt resolutions requiring its
approval for other specified actions by the Management Board.

Under our Articles of Association, the Management Board shall consist of
between three and seven managing directors as resolved by a general meeting of
shareholders, and shall include a Chairman, as Chief Executive Officer, also
appointed at the general meeting of the shareholders. The Chairman is charged
with the general management and administration of our day to day affairs and
the oversight and supervision of the affairs of our subsidiaries. The general
meeting of shareholders appoints the managing directors for an indefinite
period from a binding list of nominees proposed by the Supervisory Board.
France Telecom has a right to nominate one seat on the Management Board, so
long as it holds at least 34% of the outstanding shares of the Company. The
general meeting of shareholders can deprive the Supervisory Boards list of its
binding nature by two-thirds vote representing more than half of our issued
capital. Resolutions of the Management Board require the approval of a majority
of the managing directors, provided that at least two votes, including that of
the Chairman, are cast in favor of resolutions to be validly adopted.

The general meeting of shareholders may suspend or remove one or more managing
directors, either at the proposal of the Supervisory Board or its own accord.
The Supervisory Board may suspend managing directors, but if a general meeting
of shareholders does not dismiss the suspended managing director within three
months of such suspension, or if the general meeting of shareholders resolves
to lift the suspension, the suspension will end. The general meeting of
shareholders determines the compensation and other terms and conditions of
employment of the managing directors, based upon the recommendation of the
Supervisory Board.

The current managing directors are:

Didier Delepine.Born 1947. Mr. Delepine was appointed President and Chief
Executive Officer in January 1998. Prior to that date, Mr. Delepine also served
as the president and chief executive officer of Equant Network Services,
positions he held from 1995 to July 1999. Prior to joining Equant, he held a
number of senior positions at SITA, including that of senior vice president,
during which time he managed the worldwide development of the Network and
handled business development and production of information processing services.

John Allkins.Born 1949. Mr. Allkins
joined us in September 1995 as Chief
Financial Officer. Prior to that, he worked at British Telecom as finance
director for its Worldwide Networks division from 1991 to 1995 and as finance
director of BT International from 1988 to 1991. He has also held senior
financial management positions at the United Kingdom telecommunications arm of
ITT, including chief financial officer of its submarine cables business.

Daniel Caclin.Born 1953. Mr. Caclin
joined us in 2001 as Chief Operating
Officer. He previously was Chief Executive Officer of Global One. He has been
Executive Vice President for France Telecoms Data Business and Chief Executive
Officer of Transpac. Previously, he held various positions of responsibility
at France Telecom, primarily in areas of corporate business and finance

Compensation

The aggregate compensation paid in 2001 to our managing directors as a group
was approximately $3,108,490. (This figure includes contingent or deferred
compensation accrued in 2000 but excludes non-cash compensation of $7.2
million, which represents share plan compensation costs in respect of options
granted and shares awarded). In 2000, we did not grant any options or
restricted shares to the managing directors. In 2001, we granted 100,000
options and 25,000 restricted shares in aggregate to a new member of senior
management. In addition we granted a total of 65,654 options (at an average
exercise price of $26.98) and 348 restricted shares to other employees.

The aggregate compensation paid in 2001 to our supervisory directors as a group
was approximately $0.6 million. (This includes non-cash compensation of $0.2
million representing share plan compensation costs associated with options
granted). We granted options covering 12,488 shares (at a weighted average
exercise price of $28.03) to our former supervisory directors for services
rendered. These former supervisory directors had previously received
the standard compensation package for supervisory board directors,
which consists of a $25,000 annual taxable retainer and a taxable
attendance fee of $2,000 per meeting plus expenses. Where
intercontinental travel is required to attend a meeting, an
additional meeting fee is provided. This compensation package was
approved by the shareholders.

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Our current supervisory directors received in 2001, options covering 31,248 (at
a weighted average price of $14.40). For more detail on the options granted to
our managing directors and supervisory directors, see   Share Ownership

The managing directors were also covered in 2001 under group life and medical
insurance programs that we provided. The aggregate amount included within
compensation paid that we set aside to provide pension, retirement or similar
benefits was approximately $0.5 million in 2001. The managing directors are
entitled to a maximum severance package of two years earnings
as compensation, immediate vesting of all options and two years of
healthcare and group-term life insurance benefits upon
termination of employment at our request. The cash compensation is
due and payable within 30 days of the termination.

We adopted a plan in November 2000 in anticipation of our acquisition by
France Telecom to provide both Equant and Global One with a mechanism to
encourage key employees, including our managing directors, to stay on and to
ensure these same employees with a minimum level of severance benefits in the
event of their termination unassociated with the France Telecom, Global One and
SITA transactions and subsequent integration activities. The key features of
the plan are as follows:



| |  | A retention provision  Effective from November 19, 2000, participants
are eligible to receive a periodic cash retention payment made in six
month increments based upon the achievement of predetermined time-based
corporate milestones for the first eighteen months of the activities
relating to the merger and integration with three potential payments.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | A severance provision  In the event a participants employment
terminates under certain circumstances, a designated period of salary
payments, including bonus potential, would be paid.                                                                                                                                                                      

There were originally 119 participants in this
plan. The retention payments through December 31, 2001 were approximately $15.1 million, none of which was
to then current managing directors. Daniel Caclin received $50,910 prior to
becoming a Management Board member.

Employee Incentive Plans

Since 1995, we have had an employee share award plan for the benefit of
eligible employees of Equant, SITA and the Joint Venture Entity. Under the
terms of this plan, November 1998 was the cut-off date for determining
general eligibility for awards. We made awards to our current managing directors of an
aggregate of approximately 543,272 shares under this plan. In 2001, this Plan
was split into separate plans and SITA and Equant established individual trusts
for the assets previously in the combined trust. In addition, an aggregate of
58,910 share awards from the SITA/Equant Share Award Plan were granted. Of
these 45,000 were to members of senior management.

In June 2001, the company conducted a tender offer. Employees were given
materials which enabled them to determine whether they wished to tender
options, an exercise price at or above $88 for a payment of $2 per option
tendered. 1,743 employees tendered 946,906 options for an aggregate payment of
approximately $1.9 million. In conjunction with France Telecoms acquisition
of a majority of our shares, all options and restricted share awards granted on
or prior to November 19, 2000 vested.

We adopted a share option plan in 1998 for our employees, including our
executives and senior management. The Option Plan provides that we may grant
options and awards of shares covering up to a total of 3% of our shares
outstanding, or 9,000,000 shares. As of December 31, 2001, there were
approximately 3.2 million options and restricted shares outstanding. We made
the first of these grants effective July 21, 1998 to all eligible employees at
an exercise price of $27.00. Since then, we have granted further options on
several occasions to our managing directors and other executive officers,
supervising directors and other employees. The exercise prices for our grants
of options under the Option Plan through September 15, 1999 were no less than
the average price of our shares on the New York Stock Exchange over the five
trading days preceding the grant date, in accordance with the original
definition of exercise price. We have amended the terms of the Option Plan,
as implemented in various countries, to provide that the exercise price for
subsequent grants can be no less than the average price of our shares on the
New York Stock Exchange or Euronext Paris on the date the Management Board
selects. However, with respect to newly hired employees, including employees of
LNOs that SITA may transfer to us or of any businesses we might acquire, we
generally periodically set an exercise price for options we will grant during a
certain period, or exceptionally, we may specify an exercise price for options
granted in the hiring agreement for a newly hired employee. This may lead us to
recognize additional compensation costs relating to these grants depending on
our share price at the time of grant. In some countries we have adopted a
phantom plan

89



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based on our share price, rather than an actual share option plan. The phantom
plan is designed to approximate for our employees the incentives of owning
share options without involving the actual transfer of options or shares. No
further benefits were established under the phantom plan following completion
of the France Telecom transactions. We have the right to issue and sell shares
to meet the costs of the phantom plans. We may award additional options under
our share option plans in the future.

Employees

We had 11,258 employees (full-time and full-time equivalents) at December 31,
2001. In addition, through the arrangements relating to the Joint Venture
Agreement, we benefit from the services of 2,456 SITA employees that support
the Network. We have experienced an increase in staff turnover as we have
grown and are taking actions to minimize this. We currently have
10,832 employees as of May 31, 2002.

The following table shows, at the dates indicated, our employees by
function.

|                           |  |                         |       |      |  |      |       |  |  |  |        | 
|-------------------------- |  | ----------------------- | ----- | ---- |  | ---- | ----- |  |  |  | ------ | 
|                           |  | 1999                    |       | 2000 |  | 2001
|                           |  |                         |       |      |  |     
|                           |  | Year ended December 31,
|                           |  |                        
|Direct                     |  |                         | 1,917 |      |  |      | 2,808 |  |  |  | 7,159  | 
|Selling                    |  |                         | 751   |      |  |      | 847   |  |  |  | 1,905  | 
|General and administrative |  |                         | 708   |      |  |      | 745   |  |  |  | 2,194  | 
|                           |  |                         |       |      |  |      |       |  |  |  |        | 
|Total                      |  |                         | 3,376 |      |  |      | 4,400 |  |  |  | 11,258 | 
|                           |  |                         |       |      |  |      |       |  |  |  |        | 

In addition to the full-time employees referred to above, we had 1,312
contractors and temporary staff as of December 31, 2001.

Share ownership

None of our supervisory directors or managing directors beneficially owns, on
an individual basis, shares representing 1% or more of our issued and
outstanding share capital. As of May 21, 2002, our managing and supervisory
directors held the following stock options:

|                 |  |                  |         |                |  |   |        |  |  | 
|---------------- |  | ---------------- | ------- | -------------- |  | - | ------ |  |  | 
|Expiry Date      |  | Number of Shares |         | Exercise Price
|                 |  |                  |         |               
|July 21, 2008    |  |                  | 138,704 |                |  | $ | 27     | 
|October 15, 2008 |  |                  | 1,346   |                |  | $ | 37.14  | 
|March 25, 2009   |  |                  | 110,000 |                |  | $ | 82.06  | 
|May 1, 2009      |  |                  | 555     |                |  | $ | 89.95  | 
|May 25, 2009     |  |                  | 563     |                |  | $ | 88.71  | 
|May 25, 2010     |  |                  | 1,358   |                |  | $ | 36.83  | 
|May 10, 2011     |  |                  | 3,568   |                |  | $ | 28.03  | 
|July 20, 2011    |  |                  | 27,776  |                |  | $ | 14.40  | 
|March 27, 2012   |  |                  | 400,000 |                |  |   | 13.12 | 

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Item 7. Major Shareholders and Related Party Transactions

MAJOR SHAREHOLDERS

As of December 31, 2001, we had 282,704,149 ordinary shares outstanding and
10,000,000 convertible preference shares outstanding. During the year, we
issued 10,000,000 convertible preference shares and 81,145,594 ordinary shares,
80,617,348 in respect of the acquisition of Global One, 1,226 in respect of
share options that were exercised and 528,246 in respect of restricted share
awards that vested. To our knowledge as of June 24, 2002, France Telecom
owned approximately 52.55% of our ordinary shares, and public shareholders held
47.45% of our ordinary shares (including 0.11% of our voting shares held by
Supervisory Directors and Managing Directors as a group). The following table shows information as of June 24,
2002 on the ownership of our shares.

|                              |  |                                                         |  |              |             |            |  |            |       |  
|----------------------------- |  | ------------------------------------------------------- |  | ------------ | ----------- | ---------- |  | ---------- | ----- | -
|                              |  |                                                         |  |              |             |            |  | Percent of
|Title of Class                |  | Identity of Person or Group                             |  | Number Owned |             | Class/Vote
|                              |  |                                                         |  |              |             |           
|Convertible
Preference Shares |  | France Telecom                                          |  |              | 10,000,000  |            |  |            | 100   |  
|Ordinary Shares               |  | France Telecom                                          |  |              | 148,567,348 |            |  |            | 52.55 | %
|Ordinary Shares               |  | Supervisory Directors
and Managing
Directors as a Group |  |              | 304,317     |            |  |            | 0.11  | %



---

As of December 31, 2001, 55.4% of the voting share capital of France Telecom
S.A. was controlled by the Government of the Republic of France.

As of December 31, 2001, we had 91 U.S. shareholders of record. Approximately
1.7% of our ordinary shares were held by U.S. shareholders of record as of that
date. This percentage is based on information from our share register and may
not represent the actual number of shares beneficially held by U.S. persons.

Significant changes in share ownership

Immediately following our initial public offering in July 1998, the SITA
Foundation owned approximately 59.6% of our issued ordinary shares. The SITA
Foundation sold ordinary shares in public offerings in February 1999 and
December 1999. Immediately following the December 1999 offering, the SITA
Foundation owned approximately 34% of our issued ordinary shares.

On November 19, 2000, we entered into a Contribution Agreement with France
Telecom and Atlas as part of a wider set of separate but interrelated
transactions. On completion of these transactions on June 29, 2001, France
Telecom acquired a controlling interest in us. Upon execution of numerous
contracts among France Telecom, SITA SC, and SITA INC. and us:



| |  | We acquired 100% of Global One in exchange for 80,617,348 newly issued Equant shares; and                                                                                                                                                                  
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | France Telecom, through Atlas, subscribed for 10 million newly issued Equant convertible
preference shares for $1 billion in cash and acquired the SITA Foundations 67,950,000 shares in Equant in exchange for
30,886,364 existing France Telecom shares.

Each convertible preference share has the same voting rights as one ordinary
share and automatically converts into one new ordinary share on
June 29, 2006. See Item 10. Additional
Information  Material
Contracts  Description of Contribution Agreement.

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Under Annex 6 of the Contribution Agreement, France Telecom and any of its
affiliates are prohibited from purchasing any more of our shares in the next
five years, if such a purchase would result in beneficial ownership of 70% or
more of our shares. France Telecom is generally prohibited from selling more
than an aggregate 3% of the shares it currently owns June 29, 2002 or more than
an aggregate of 25% of our shares between June 29, 2002 and June 29, 2005.

RELATED PARTY TRANSACTIONS

On June 29, 2001, as part of the France Telecom Transactions, we agreed to a
framework for a series of new arrangements which replaced the existing
SITA-Equant joint venture agreement. The new arrangements with SITA
were originally signed on June 29, 2001, and finalized pursuant
to respective Errata Amendments on November 30, 2001 and, as described below, address all major aspects of our
relationship with SITA. We have also entered into a series of agreements
detailing the contractual basis for France Telecoms supply of a variety of
services to us and for our purchase of transmission capacity from France
Telecom. These arrangements will continue with France Telecom for so long as
France Telecom maintains at least 34% of ownership of our outstanding shares.
Most of the activities governed by the contracts with France Telecom, its
affiliates and SITA are largely administrative and not individually material.

Our Relationship with SITA

On June 29, 2001, we terminated the Joint Venture Agreement with SITA and
replaced it with (i) the Strategic Relationship Umbrella Agreement, (ii) the
Network Services Agreement and (iii) the Transition and Management Agreement.
See Item 10. Additional Information  Material Contracts for summaries of the
Strategic Umbrella Agreement, Network Services Agreement and Transition and
Management Agreement. We have also entered into an account management
agreement with SITA. English law governs all of these agreements. Under the
new arrangement with SITA, we control and manage the Network and provide on a
preferred basis our portfolio of products and services to SITA, who delivers
those services globally to airlines, airports, companies in the aerospace
industry, companies in the airline computerized reservation systems, travel
agents and companies whose principal business is the distribution of air
travel, aviation organizations, the airfreight business and certain other
customers

Our Relationship with France Telecom

Commercial Relationships between Us and France Telecom with Respect To End User
Customers

On June 29, 2001, we entered into numerous agreements with France Telecoms
subsidiary, Transpac. The Umbrella, Affiliation and Reseller Agreements
summarized below together govern the commercial relationship between Transpac
and us in France. These agreements establish the terms and conditions that
govern the joint business planning and monitoring process between Transpac and
us (with the exception of voice and calling card services). We have also
entered into agreements with Transpac on particular hosting, sales, service and
trademark licensing arrangements consistent with the Umbrella, Affiliation and
Reseller Agreements.

The Transpac Umbrella Agreement

The Transpac Umbrella Agreement establishes the overall scope of our
relationship with Transpac and covers the supply of all data products.
Transpac cannot sell to SITA and Radianz within their respective markets, but
Transpac has exclusive rights either to resell our services in France or to act
as an agent for the provision of existing products to our existing customers in
France. Transpac cannot sell outside France except under the Global Account
Management program. Each year Transpac must commit to aggregate revenue
commitments in the form of minimum revenue guarantees. Such commitments are a
key condition to our grant of various marketing and resale rights within France
to Transpac.

We have agreed with France Telecom and Transpac to establish a steering
committee that is in charge of the

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execution of the various agreements contemplated in the Transpac Umbrella
Agreement and to resolve any disputes.

We are entitled to terminate any of the agreements contemplated by the Transpac
Umbrella Agreement if France Telecoms interest in our voting shares falls
below 34%.

The Affiliation Agreement

We entered into the Affiliation Agreement with Transpac to provide Transpac
with the exclusive right of resale of certain of our products within France and
to appoint Transpac as our exclusive supplier of certain corporate products
within France.

The Reseller Agreement

We entered into the Reseller Agreement with Transpac to provide Transpac with
the exclusive right of resale of some of our products within France as detailed
in the Agreement. Transpac may only sell our products to customers other than
our existing customers in France, and any Transpac sales to our existing
customers in France require our prior, written consent. Although Transpac has
reserved the right to establish retail prices at which it may market and sell
our products in France, it may not alter the global pricing structure for our
products. The Reseller Agreement will expire when all of our products have
been converged with products offered by the former Global One.

The Contribution Agreement governs the supply of services outside of France. We
have signed a Memorandum of Understanding with France Telecom Long Distance
confirming our intention to enter into a cross distribution agreement for the
resale of carrier services and global products. We are currently negotiating
these agreements.

Commercial Relationships Between Us and France Telecom With Respect to the
Network

France Telecom supplies transmission capacity and IP services to us consistent
with our obligations to purchase from them under certain circumstances. The
purchase obligations are subject to France Telecoms competitiveness with
respect to financial, and quality of service criteria. The purchase
obligation applies only to certain countries and the pricing is established
using a benchmarking process. We also provide transmission capacity and IP
services to France Telecom in countries in which it does not have a presence.
In addition, we may also supply ancillary support services such as
installation, trouble shooting, help desk, field operations, maintenance,
equipment and circuit procurement, among other services. These services are
provided on a cost basis. For further details on pricing see Item 10.
Material Contracts. We provide human resources support in the form of
dedicated staff made available to France Telecom to support their activities
outside of France. These services are provided on a cost-plus basis. These
commercial relationships will continue under varying terms so long as
FranceTelecom continues to own at least 34% of our outstanding shares.

Pre-Paid and Post-paid Calling Cards Business; Supply of Carrier Services to
Carriers Business

Outside France, we act as France Telecoms distributor for its pre-paid and
post-paid calling cards businesses and its telecommunications services for
carriers business pursuant to distribution agreements originally entered into
between France Telecom and Global One. We have agreed with France Telecom to
terminate these agreements by the end of 2002. With respect to the pre-paid
and post-paid calling cards businesses, we anticipate that any future support
will comprise largely human resources services or operational support, but not
distribution. With respect to the carrier business, France Telecom intends to
establish companies in various countries and operate these businesses out of
these companies as much as possible. France Telecom can require us to continue
to act as its distributor in certain countries for a minimum of one year,
however, in such an event, and we shall enter into new distribution agreements
on arms length commercial terms with France Telecom.

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Voice Services

As prescribed by the Contribution Agreement, we have signed a Memorandum of
Understanding with France Telecom agreeing to transfer the operation,
management and financial responsibility for the switched voice business, and
the switched voice platform both of which we acquired in the merger with Global
One over to France Telecom by the end of 2005. We are currently negotiating
definitive agreements consistent with the form of agreements annexed to the
Voice Memorandum of Understanding.

We will gradually shift our voice customers to a voice-over-IP platform as we
develop the technical solution to do so. The migration should be complete by
the end of 2005. In the interim, under the Agreement for the Supply of
switched voice services, France Telecom provides a global commercial voice
service to us for resale to our multinational customers. Consideration for
such services is determined through the development of a joint business plan
that results in France Telecoms absorbing the cost of the switched voice.

Item 8. Financial Information

CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION

For our Consolidated Statements and Other Financial Information, see Item 18.
Financial Statements.

Legal Proceedings

From time to time we have been, and we expect to continue to be, subject to
legal proceedings and claims in the ordinary course of our business. We are not
currently aware of any legal proceedings or claims that we believe will have,
individually or in the aggregate, a material adverse effect on our business,
financial position or results of operations.

Dividend Policy

We have not, to date, paid any dividends on our shares. We expect that we will
retain all available funds for use in the operation and expansion of our
business, and we do not anticipate paying cash dividends in the foreseeable
future.

If we declare dividends in the future, we may do so either in Euros or U.S.
dollars. In the event that we declare dividends in Euros, the amount of U.S.
dollars realized by shareholders will vary with the rate of exchange between
U.S. dollars and Euros, as the case may be. See Description of
SharesDividends.

SIGNIFICANT CHANGES

There are no material developments to report since
December 31, 2001.

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Item 9. The Offer and Listing

COMMON SHARE PRICE RANGE

Our ordinary shares have been listed on the New York Stock Exchange under the
symbol ENT and on the Paris Stock Exchange (Euronext Paris) under the
symbol EQU (Euroclear France code: 12701) since our initial public offering
in July 1998. The following table sets forth the high and low closing prices of
the ordinary shares as recorded on the New York Stock Exchange Composite Tape
and the high and low closing price in Euros for our shares for the quarters and
months indicated.

|                                  |  |                         |         |                 |  |      |         |     |  |   |        |  |  |   |       | 
|--------------------------------- |  | ----------------------- | ------- | --------------- |  | ---- | ------- | --- |  | - | ------ |  |  | - | ----- | 
|                                  |  | High                    |         | Low             |  | High |         | Low
|                                  |  |                         |         |                 |  |      |         |    
|                                  |  | New
York Stock Exchange |         | Bourse de Paris
|                                  |  | Price per Share         |         | Price per Share
|                                  |  |                         |         |                
|                                  |  | (in dollars)            |         | (in Euros)(1)  
|                                 
|1998 (beginning July 21, 1998)    |  | $                       | 6715/16 |                 |  | $    | 333/4   |     |  |  | 59.29  |  |  |  | 28.05 | 
|1999                              |  | $                       | 112     |                 |  | $    | 691/2   |     |  |  | 115.50 |  |  |  | 60.00 | 
|First Quarter 2000                |  | $                       | 1269/16 |                 |  | $    | 815/8   |     |  |  | 128.90 |  |  |  | 86.70 | 
|Second Quarter 2000               |  | $                       | 87      |                 |  | $    | 36      |     |  |  | 90.60  |  |  |  | 38.50 | 
|Third Quarter 2000                |  | $                       | 463/16  |                 |  | $    | 3411/16 |     |  |  | 52.20  |  |  |  | 37.75 | 
|Fourth Quarter 2000               |  | $                       | 37      |                 |  | $    | 2313/16 |     |  |  | 41.50  |  |  |  | 27.40 | 
|First Quarter 2001                |  | $                       | 31.88   |                 |  | $    | 21.13   |     |  |  | 33.98  |  |  |  | 23.31 | 
|Second Quarter 2001               |  | $                       | 30.00   |                 |  | $    | 22.90   |     |  |  | 34.10  |  |  |  | 21.24 | 
|Third Quarter 2001                |  | $                       | 26.80   |                 |  | $    | 7.95    |     |  |  | 21.25  |  |  |  | 8.25  | 
|October 2001                      |  | $                       | 11.45   |                 |  | $    | 7.86    |     |  |  | 12.95  |  |  |  | 8.46  | 
|November 2001                     |  | $                       | 13.40   |                 |  | $    | 10.26   |     |  |  | 15.48  |  |  |  | 11.16 | 
|December 2001                     |  | $                       | 13.90   |                 |  | $    | 11.25   |     |  |  | 15.48  |  |  |  | 12.79 | 
|January 2002                      |  | $                       | 12.90   |                 |  | $    | 11.20   |     |  |  | 14.47  |  |  |  | 13.00 | 
|February 2002                     |  | $                       | 11.16   |                 |  | $    | 8.02    |     |  |  | 13.44  |  |  |  | 9.13  | 
|March 2002                        |  | $                       | 11.35   |                 |  | $    | 8.81    |     |  |  | 13.12  |  |  |  | 10.27 | 
|April 2002                        |  | $                       | 11.23   |                 |  | $    | 9.05    |     |  |  | 12.93  |  |  |  | 10.05 | 
|May 2002                          |  | $                       | 9.02    |                 |  | $    | 6.80    |     |  |  | 10.05  |  |  |  | 7.28  | 
|June 2002 (through June 24, 2002) |  | $                       | 6.79    |                 |  | $    | 4.41    |     |  |  | 7.30   |  |  |  | 4.50  | 



|(1) |  | Our ordinary shares were quoted on Euronext Paris in French Francs prior
to January 1, 1999, when the Euro became a lawful currency in the Republic
of France. Share prices appearing in this table for periods before that
date have been translated at a rate of 1 = FF6.55957.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

MARKET INFORMATION

General

Our ordinary shares are listed on the New York Stock Exchange and the Euronext
Paris.

Euronext Paris

Euronext Paris is a self-regulatory organization that oversees the operation of
regulated markets, including the admission of financial instruments. It is
responsible for supervising the trading of listed securities on French stock
exchanges and publishing a daily official price list that includes price
information concerning listed securities. Euronext Paris has introduced
continuous trading during trading hours by computer for most listed securities.

Securities approved for listing by Euronext Paris are traded on one of three markets. The
securities of most large companies are listed on the Premier Marché, and
the Second Marchéis available for small-and medium-sized companies. Securities
may also be traded on the Nouveau Marché, a regulated electronic market
designed primarily for small capitalization and start-up companies.
ThePremier
Marché, the Second Marchéand the Nouveau Marchéare operated and managed by Euronext Paris.
Our ordinary
shares are traded on thePremier Marché.

Official trading of listed securities on the Premier Marché of  Euronext Paris is transacted through
investment service providers that are members of Euronext Paris and takes place
continuously on each business day from 9:00 a.m. through 5:25 p.m. (Paris time), with a
pre-opening session from 7:15 a.m. through 9:00 a.m. and a post closing session from 5:25 p.m. to 5:30 p.m. (during which transactions
are recorded but not executed until the next opening auction at
9:00 a.m. or closing auction at 5:30 p.m.) Any trade effected after the close of a stock
exchange session is recorded on the next Euronext Paris trading day, at the
closing price for the relevant security at the end of the previous days
session.

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Euronext Paris places securities listed on the Premier Marché in one of two categories, depending
on their trading volumes. Our shares trade in the Continu category, which includes the most actively
traded securities. Euronext Paris automatically restricts trading in a security listed in the Premier Marché
in the Continu category upon entry in the central order book of an order likely to result in a trade
being executed at a price exceeding the specific price limits defined by its regulations. In particular, trading is
automatically restricted in a security whose quoted price varies by more than 10.0% from the last price determined in an auction
or by more than 2.0% from the last traded price. If the order that has caused the restriction is not confirmed within
the following minute, the trading of this security resumes. If the order is confirmed, an auction is organized
after a call phase of four minutes, during which orders are entered in the central order book but not executed.



Euronext Paris may also suspend trading of a security
listed on the Premier Marchéin certain other limited circumstances, including,
for example, the occurrence of unusual trading activity in the security.

Trades of securities listed on the Premier Marchéof Euronext Paris are
generally settled in cash (marché au comptant). However, allowance is made for
investors wishing to settle later, since intermediaries offer a Deferred
Settlement Service (Service á Règlement Différé or SRD) for a selection of
stock. Our ordinary shares are eligible for Deferred Settlement orders. In
this system, the transfer of ownership to or from the investor takes place on
the date of settlement, which is the last business day of the month. The
deferred settlement account closes five business days before the end of the
calendar month. When a stock goes ex-dividend between
the day of the trade and settlement day, buyers are not entitled to the related
tax credit since they only acquire ownership at the end of the month.
Individual investors may, provided their intermediaries agree, roll their
positions over from one month to the next on the basis of a referencing price
published by Euronext Paris each month. In the event of a public tender offer,
it will not be possible to place deferred settlement orders for the stock
concerned as long as the offer remains open. A fee is charged for the deferred
settlement orders: as with all other fees, intermediaries set the applicable
rate freely, without the intervention of market authorities. Finally,
intermediaries are entitled to refuse deferred settlement orders, whether to
buy or to sell.

Item 10  Additional Information

MEMORANDUM AND ARTICLES OF ASSOCIATION

We were incorporated under the laws of The Netherlands as a public limited
liability company (naamloze vennootschap) by deed dated March 3, 1995, as
amended and restated effective the closing date of our initial public offering
on July 23, 1998. The Articles of Association were further amended and restated
on June 29, 2001. We have our corporate seat in Amsterdam, The Netherlands,
with our principal executive offices at Gatwickstraat 21-23, 1043 GL
Amsterdam-Sloterdijk. We are registered under no. 33267383 with the trade
register at the Chamber of Commerce in Amsterdam, The Netherlands. Certain
provisions of our Articles of Association and certain provisions of Dutch law
are summarized below. The following summary does not purport to be complete and
is qualified in its entirety by reference to the Articles of Association and
such law.

Objects

Our objects are set forth in article 3 of the Articles of Association and
entail:

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| | (a) |  | to hold, co-ordinate and manage various interests in the capital
stock of various companies worldwide engaged in the business of selling
various telecommunications services, developing and selling various
computer software products, providing various telecommunications
equipment, maintenance and other related services, and to coordinate
and supervise their world-wide management;                                                                                                                                                                                                                       
| | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (b) |  | to undertake all financial operations and in particular to
acquire, dispose of, or exchange shares and other securities in any
commercial, industrial or financial company, to hold all or part of the
capital stock or to own a controlling interest in various companies and
whenever necessary to supervise their management, to borrow and lend
money and to guarantee or grant security in relation to the obligation
of others, to make deposits and establish and carry out all forms of
banking relationships; and to enter into and perform all ancillary
agreements and arrangements for any such purpose;
|
| | (c) |  | to establish commercial direction and policy for the various
companies described in subclauses (a) and (b), to provide all forms of
management services and to appoint their management; and                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| | (d) |  | to undertake any action or operation in direct or indirect
relation with our objects.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

Certain powers of Directors

If a managing director, acting in his personal capacity, enters into an
agreement with us or conducts any litigation against us, we may be represented
in that matter either by our Management Board or the other managing directors,
or by a supervisory director to be designated by the Supervisory Board, all the
foregoing unless the general meeting of shareholders designate a person for
that purpose of the law provides for the designation in a different manner.
Such person can also be the managing director with whom there is the conflict
of interest. If a managing director has a conflict of interest with us other
than as referred to in the second preceding sentence, he shall, like the
Management Board or the other managing directors, have the power to represent
us, with due observance of the provisions of our Articles of Association.

Among other restrictions, our Management Board may not undertake or propose or
take resolutions, without a resolution or approval by the Supervisory Board
with respect to the entering into:



| | (i)  |  | any loan agreement,                                                                                                                                                                                                                   
| | ---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (ii) |  | incurrence of indebtedness for borrowed money or the
guarantee or granting of any other form of security for the
indebtedness of others, if the relevant transaction is  material
within the meaning of the Articles of Association;

provided that no such resolution or approval shall be necessary for the
entering into of any loan agreement, incurrence of indebtedness for borrowed
money or the guarantee of or granting any other form of security for the
indebtedness issued to others in exchange for, or the proceeds of which are
used to extend, refinance, renew, replace or refund, any such loan agreement,
indebtedness, guarantee or security in existence on June 29, 2001 and provided,
further, that any such refinancing, renewal, replacement or refund shall not
increase the principal amount of the related indebtedness.

Retirement: members of the Supervisory Board

No supervisory director may be 68 years of age or older and each supervisory
director must resign from office no later than on the day on which the annual
general meeting shareholders is held in the financial year in which he becomes
68 years of age.

Dividends

We will add the profits made in any financial year to the reserves, unless the
general meeting of shareholders determines otherwise in accordance with the
Articles of Association. Out of our
share premium reserve and other reserves available for shareholder
distributions under Dutch law, the general meeting of

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shareholders may declare distributions, upon the proposal of the Management
Board and the approval of the Supervisory Board. We may not pay dividends if
the payment would reduce shareholders equity below the paid-up portion of the
share capital, plus the reserves statutorily required to be maintained. With
the approval of the general meeting of shareholders, upon the proposal of the
Management Board and subject to the approval of the Supervisory Board, we may
pay out interim dividends, subject to certain provisions of Dutch law. We may
resolve to pay a dividend in whole or in part in the form of shares or other
assets. Dividends which have not been claimed five years and two days after
becoming payable shall be forfeited to our benefit.

We have not, to date, paid dividends in respect of our shares. At present, we
expect that we will retain all available funds for use in the operation and
expansion of the business, and we do not currently anticipate paying cash
dividends in the foreseeable future. In the event that dividends are declared,
however, we expect that we would pay such dividends either in Euros or U.S.
dollars, although we may declare dividends in other currencies. In the event
that we declare dividends in Euros, the amount of U.S. dollars realized by
shareholders will vary with the rate of exchange between U.S. dollars and
Euros. We will pay cash dividends to holders of our shares of Dutch Registry to
the Dutch Transfer Agent and Registrar who will, if necessary, convert such
dividends into Euros, at the rate of exchange on the date such dividends are
paid, for disbursement to such holders. We will pay cash dividends to holders
of our shares of New York Registry to the New York Transfer Agent and
Registrar, who will, if necessary, convert such dividends into U.S. dollars at
the rate of exchange on the date such dividends are paid, for disbursement to
such holders. We will pay dividends on our shares held in registered form to
the person in whose name those shares are registered as of the relevant record
date. Accordingly, so long as a holder elects to hold his or her shares in
book-entry form through the Depository Trust Company (DTC) or Euroclear
France S.A. (Euroclear France), such holder will receive any dividends
through DTC or Euroclear France, and must rely on the procedures of those
organizations to receive such dividends or to enforce any other rights that he
or she may have as a shareholder.

Shareholder Meetings and Voting Rights

Each shareholder has the right to attend general meetings of shareholders,
either in person or represented by a person holding a written proxy, to address
shareholder meetings, and to exercise voting rights, subject to the provisions
of the Articles of Association. Our annual general meeting of shareholders will
be held within six months after the close of each financial year, in Amsterdam,
Rotterdam, The Hague or in the municipality of Haarlemmermeer (Schiphol
Airport), The Netherlands. We will hold extraordinary general meetings of
shareholders as often as the Supervisory Board or the Management Board deems
necessary, or upon the written request of France Telecom or one or more
shareholders representing not less than 10% of our shares to the Management
Board specifying in detail the matters to be addressed at the meeting.

We will give notice of each meeting of shareholders by mail to registered
holders of our shares and other persons who by law are entitled to attend
meetings, at the address of each shareholder or other person as set forth in
the shareholder register. Alternatively, we may publish notice thereof in a
daily distributed newspaper in The Netherlands and in an internationally
distributed financial daily periodical of international repute and in such
other manner as may be required to comply with the rules of any securities
exchange on which our shares are listed or any automated quotation system on
which our shares are quoted, not later than four weeks prior to the meeting. We
are exempt from the proxy rules under the Exchange Act. Euroclear France will
provide notice of general meetings of shareholders to, and compile voting
instructions from, holders of our shares held directly or indirectly through
Euroclear France. The New York Agent will provide notice of general meetings of
shareholders to, and compile voting instructions from, holders of our shares
held directly or indirectly through DTC. Voting instructions compiled by
Euroclear France will be remitted to the Dutch Transfer Agent and Registrar (as
defined herein). The New York Agent and the Dutch Transfer Agent and Registrar
will vote our shares held by them according to such instructions. In order for
holders of our shares held directly or indirectly through Euroclear France to
attend general meetings of shareholders in person, such holders must withdraw
their shares from Euroclear France and have such shares registered directly in
their name or in the name of their nominee. In order for holders of our shares
held directly or indirectly through DTC to attend general meetings of
shareholders in person, such holders need not withdraw such shares from DTC but
must follow rules and procedures established by the New York Agent. Holders of
our shares in bearer form must deposit those shares as specified in the
published notice. It may be difficult for shareholders holding shares in
book-entry form to deliver voting instructions to us.

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Each share is entitled to one vote. Unless otherwise required by the Articles
of Association or Dutch law, resolutions of general meetings of shareholders
require the approval of an absolute majority of the votes cast.

Adoption of Annual Accounts and Discharge of Management Liability

The Management Board must prepare our annual accounts within five months after
the end of each fiscal year (unless the general meeting of shareholders has
extended this period by a maximum of six additional months by reason of special
circumstances). Within six months after the end of such financial year (or
within such additional time), the Management Board shall present the annual
accounts to the general meeting of shareholders, together with the advice it
has received thereon from the Supervisory Board and accompanied by the annual
report.

At the General Meeting of Shareholders at which it is resolved to adopt the
financial statements, it shall be separately proposed to release the Managing
Directors and the Supervisory Directors from liability for the performance of
their respective duties, insofar as the performance of such duties is reflected
in the financial statements and/or the annual report. The scope of a release
from liability is subject to limitations by law.

Article 20 of the Articles of the Company contains provisions with regard to
the indemnification by the Company of current and former members of the
Supervisory Board and Management Board and other persons. Pursuant to these
provisions, the Company shall indemnify the foregoing persons against certain
expenses and other costs. Any indemnification by the Company shall (unless
otherwise ordered by a court) only be made upon a determination by the Company
that indemnification of the relevant person is proper in the circumstances
because he had met the applicable standard of conduct.

Liquidation Rights

In the event of our dissolution and winding up, the assets remaining after
payment of all liabilities shall be distributed among the shareholders in
accordance with the Articles of Association.

Issue of Shares; Preemptive Rights

Unless limited or excluded by the general meeting of shareholders or the
Management Board as described below, each holder of shares has a pro rata
preemptive right to subscribe for any newly issued shares in Equant, unless
payment must be made other than in cash.

The general meeting of shareholders has the power to issue shares and to
determine the terms and conditions of share issuances. The general meeting of
shareholders may also authorize the Management Board, for a period of no more
than five years, to issue shares and to determine the terms and conditions of
share issuances. Any such authorization shall specify the number of shares that
may be issued. Any issuance of shares by the Management Board is subject to the
approval of the Supervisory Board. As long as this power is vested in the
Management Board, the general meeting of shareholders shall neither have the power
to issue shares nor the power to determine the price, conditions or
times of the
issuance.

The general meeting of shareholders also has the power to limit or exclude
preemptive rights in connection with new issuances of shares, and may authorize
the Management Board, for a period of no more than five years, to limit or
exclude preemptive rights (if the Management Board has been simultaneously
designated as having the authority to issue shares). The Management Board has
been delegated the power to issue shares, and to grant share options and rights
to acquire shares, and to restrict or exclude preemptive rights, in each case
subject to the approval of the Supervisory Board, until July 31, 2003.

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Acquisition of Shares

We may acquire shares in our own share capital, subject to certain provisions
of Dutch law and of our Articles of Association, if (i) the general meeting of
shareholders has given the Management Board authorization to do so (which
authorization shall be valid for no more than 18 months, and shall specify the
number of shares that may be acquired and the permitted price range); (ii) our
shareholder capital, reduced by the acquisition price, is not less than the sum
of the paid and called-up share capital and the reserves to be maintained
pursuant to Dutch law or the Articles of Association; and (iii) the par value
of the shares that we and our subsidiaries already hold does not exceed
one-tenth of our issued share capital. Shares that we hold may not be voted and
may not participate in any distribution of profits or distribution of surplus
assets after liquidation.

Cancellation of Shares

By resolution of the general meeting of shareholders, we may cancel shares that
we hold, provided that the cancellation may not cause the paid up portion of
the share capital to be reduced to less than one-fifth of the authorized
capital, and subject to certain statutory provisions.

Amendment of the Articles of Association

The general meeting of shareholders may resolve to amend the Articles of
Association at the proposal of, or with the prior approval of, the Supervisory
Board.

Disclosure of Holdings

Under the Act of Disclosure of Holdings in Listed Companies 1996 (Wet melding
zeggenschap in ter beurze genoteerde vennootschappen 1996, the Disclosure of
Holdings Act 1996), any person who, directly or indirectly, acquires or
disposes of an interest in the capital or the voting rights of a public limited
liability company incorporated under Dutch law with an official listing on a
stock exchange within the European Economic Area must give a written notice of
such acquisition or disposal to that company and the Dutch Authority for the
Financial Markets (Autoriteit Financiele Makten), if as a result of such
acquisition or disposal the percentage of capital interest or voting rights
held by such person falls within another percentage range as compared to the
percentage range held by such person prior to such acquisition or disposal. The
percentage ranges referred to in the Disclosure of Holdings Act 1996 are 0-5,
5-10, 10-25, 25-50, 50-66 2/3 and over 66 2/3.

Non-compliance with the obligations of the Disclosure of Holdings Act 1996
constitutes an economic offense, and may result in criminal sanctions. In
addition, a civil court can issue orders against any person who does not notify
or incorrectly notifies in accordance with the Disclosure of Holdings Act 1996,
including suspension of voting rights in respect of such persons shares.

The insider trading rules under the 1995 Act on the Supervision of the
Securities Trade (Wet toezicht effectenverkeer 1995) create an additional
notification duty for shareholders holding, directly or indirectly, a capital
interest of more than 25% in a listed company. Such shareholders must notify
the Dutch Authority for the Financial Markets of any and all transactions from
or within the Netherlands that they carry out, directly or indirectly, in our
securities. If a more than 25% shareholder is a legal entity and not an
individual, the obligation is extended to the managing and supervisory board
members of the legal entity.

The Dutch Authority for the Financial Markets can also impose administrative
penalties (bestuurlijke boetes en dwangsommen) in the event of a violation of
the Disclosure of Holdings Act and of the insider trading rules. Violation of
insider trading rules can also lead to criminal sanctions.

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Limitations on Right to Hold or Vote Shares

There are currently no limitations imposed by Dutch law or by our Articles of
Association on the right of non-resident holders to hold or vote our shares.

MATERIAL CONTRACTS

Description of the Contribution Agreement

The Contribution.On November 19, 2000, we, France Telecom and Atlas entered
into the Contribution Agreement, pursuant to which Atlas contributed to us 100%
of the share capital of Global One, which was required to have net cash of not
less than $300 million. In return, we effected a capital increase and issued
to Atlas 80,617,348 new Equant ordinary shares. Prior to or as soon as
practicable following the closing, France Telecom was required to transfer out
of Global One certain existing businesses of Global One. As a result of these
transactions, we became the owner of Global Ones corporate data services
business. France Telecom has also undertaken to share with us certain
restructuring costs resulting from our combination with Global One. We
describe these costs in Item 5. Operating and Financial Review and Prospects 
Overview Factors Affecting our Business. In addition, Atlas subscribed for
10,000,000 new Equant convertible preference shares for $1 billion. Each Equant
convertible preference share has the same voting rights as one ordinary share
and are mandatorily and automatically convertible into one Equant ordinary
share on the fifth anniversary of the closing of the transactions. Should any
dividends be declared on our ordinary shares, holders of our convertible
preference shares will receive a preferential dividend of 0.045 new Equant
preference shares for each Equant preference share, as well as the dividend per
share paid on our ordinary shares.

Other Business Arrangements. Under the terms of the Contribution Agreement, we
and France Telecom have agreed to manage customer relationships as an
integrated group. Generally, we have account responsibility for multinational
corporations and other corporate customers outside France. France Telecom
generally has account responsibility for customers in France, and any
international data network services it provides to these customers are sourced
exclusively from us. In addition, we have entered into a cash pooling
arrangement with France Telecom pursuant to which we lend to France Telecom our
excess cash position. The specific terms of these business arrangements are
still being negotiated under the framework provided in the Contribution
Agreement.

Corporate Governance. Under the terms of the Contribution Agreement, for so
long as France Telecom and its affiliates in the aggregate beneficially own at
least 34% of our outstanding share capital, our Supervisory Board will consist
of, and be maintained at, nine members. For the first 18 months after closing,
five of these members will be nominated by France Telecom, one will be
nominated by the Foundation, one will be nominated by the board of SITA as
representative of the air transport community and two will be independent.
After 18 months, the Foundation will lose its right to nominate a Supervisory
Board member, and three members will be independent. Approval of the
independent directors is required in order to permit us to enter into any
material contract, agreement or transaction with France Telecom or any of its
affiliates other than in the ordinary course of business and on an arms length
basis. Approval of the independent directors is also required for the
Supervisory Board to approve certain amendments to our Articles of Association,
as well as for us to pay dividends.

Standstill; Transfer Restrictions. Under the Contribution Agreement, France
Telecom is generally prohibited from: (i) taking any action for five years from
the closing date that would result in its beneficially owning more than 70% of
our outstanding stock; (ii) selling or otherwise disposing of more than an
aggregate of 3% of the Equant shares during the first year after the closing
date or more than an aggregate of 25% of the shares during the three subsequent
years unless our independent directors approve, or shareholders can, or if the
transaction would combine us with another company and France Telecom would hold
at least 34% of the voting rights in the new entity; or (iii) for four years
after closing, knowingly causing or permitting any transaction or series of
related transactions that would involve the acquisition or accumulation of a
controlling interest in us by any party other than France Telecom, unless all
shareholders are accorded the same treatment as France Telecom.

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Indemnification.From and after the closing, and subject to certain
limitations, we, France Telecom and Atlas have agreed to indemnify and hold
harmless each other party to the Contribution Agreement for certain losses or
other claims arising from or in connection with any breach of warranty,
representation or other covenant or obligation under the Contribution Agreement
or for any untrue statement of material fact or omission to state a material
fact with respect to information provided by or concerning such party in
certain documents in connection with the transactions. Liability (for
indemnification or otherwise) with respect to a breach of any representation or
warranty is subject if true for each party to a minimum per-claim amount of $1
million and a deductible of $115 million. The aggregate liability of France
Telecom and Atlas for indemnification is capped at $1.5 billion, while our
liability for indemnification is capped at $3 billion. We have the option to
pay any net amounts we may owe France Telecom in respect of our indemnification
obligation in cash or, in certain circumstances, in new Equant ordinary shares.

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Description Of The Strategic Relationship Umbrella Agreement (Umbrella
Agreement)

On June 29, 2001, we signed the Umbrella Agreement with France Telecom, SITA
and SITA INC. to create a new strategic relationship among the parties with
respect to the network previously operated for both our and SITAs benefit. The
objective of the Umbrella Agreement is to ensure that SITA continues to enjoy access to the Network and support services on a preferred basis so that it can continue
exclusively to deliver its services to the Air Transport Community. Under the
Umbrella Agreement, SITA has become our sole distributor to the air transport
community.

We have established, as required by the Umbrella
Agreement, a SITA Relationship Team to address all of SITAs business needs. Moreover, so long as SITA uses us
as its exclusive supplier of network services, SITA can appoint one
representative to our Supervisory Board. The Umbrella Agreement became
effective on July 1, 2001 and will stay in effect so long as the Network
Services and the Transition and Management Agreements are in effect.

To manage this new relationship, the Umbrella Agreement creates a joint
executive committee, comprised of three persons appointed by SITA and three
persons appointed by us, with the following specialized sub-committees:
Product Council, Network Planning Committee and Network Operations Performance
Committee. Our head of network operations must be a member of the Executive
Committee. The executive committee has overall authority to implement and
maintain the Umbrella, the Network Services and the Transition and Management
Agreements, including a significant role in the resolution of all disputes.

If the Executive committee is unable to resolve a particular dispute, it is
referred first to our CEO and to the SITA Director General, then to a Board
Committee consisting of the Supervisory Board Chairmen of both Equant and SITA
with a third independent member appointed by the Chairmen. A failure to
resolve the dispute at the Board Committee level results in a referral to
formal binding ICC arbitration in London.

Under the terms of the
Umbrella Agreement, in the event of
a change of control of one of the parties resulting in that partys being
controlled by a competitor of the other party, the other party will have the
right to terminate the new agreement if the change of control jeopardizes its
legitimate business interests. In addition, in the event that France Telecom
knowingly sells 5% or more of our ordinary shares to a competitor of SITA, we
and France Telecom have agreed to cause that competitor to be bound by any
non-solicitation provisions contained in the agreement in respect of the sale
to the air transport community of our network services.

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Network Services Agreement

General Principles

On June 29, 2001 we entered into a ten year Services Agreement governed by
English law, with SITA, and SITA Inc. requiring us to provide to SITA all
network services necessary for SITAs use or for resale to the air transport
community.

Services

We have agreed to provide products and services to SITA consisting of or, to a
partial extent, comprising telecommunications carriage, as well as certain
support services and such other products or services as we and SITA may agree
to from time to time, and we have agreed to provide SITA the same generic
products and services that we offer to our other customers. All
products and services will be branded as SITA products when resold by
SITA.

Changes in the Scope of the Services

We have agreed with SITA to establish a product council to make recommendations
regarding the development of new generic products and services and new SITA
specific products and services.

Upon our acceptance of a product council recommendation, we have agreed to fund
the full cost of the development of any new generic product or service. In the
event we reject the product councils recommendation, SITA may require us to
develop the product or service, but such product or service will be designated
as SITA specific, and the costs for the development of such products and
services shall be borne by SITA.

Should we decide to market a SITA-specific product or service to a customer
other than SITA, we must pay SITA a negotiable fee. We may, in our sole
discretion, market a SITA-specific product or service as a standard product or
service across our customer base, but we must refund to SITA the entire cost of
development (or a portion thereof depending on the timing of our decision to
market the product or service).

Network, Network Planning and Network Expansion

We have agreed to ensure and provide continuity of network services in all
countries and locations where SITA provided network services to
customers on July 1, 2001. We may not make any proposed change or take any action which is
likely to negatively affect the functionality of the network services.

We are responsible for funding the acquisition of all network assets used in
the operation and delivery of generic products and services, and we have agreed
to fund and maintain, at our own cost, these generic network assets necessary
to support the Network. Furthermore, we have agreed to fund and implement
certain expansions and modifications of the Network. SITA bears no
responsibility for funding expansions or modifications to the Network, for the
acquisition of any network assets or for the maintenance or routine development
of the Network.

We have agreed to fund modifications or expansions to the Network recommended
by the network planning committee. We may, however, under certain
circumstances, refuse to fund such an action.

If we fail to fund an action like this such that our failure constitutes a
breach of the Services Agreement, SITA may take such steps as are reasonably
necessary to provide the affected services to the Air Transport Community. If we consent
or

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if our failure to fund an action like this constitutes a material breach of the
Services Agreement as determined by the Executive Committee, SITA retains the
option, which we call step-in rights, to recover operational control of
sufficient network resources to provide its services to the Airport Transport
Community. These rights terminate once we fulfill our funding obligation.

Service Procedures

SITA and we have agreed that our chief executive officer and the Director
General of SITA SC will meet annually to review the overall operation of the
Services Agreement.

Certain agreements existing between Global One and customers in the Air
Transport Community prior to the merger between us and Global One have now been
transferred to or assumed by us. With respect to some of these agreements,
including those agreements with annual revenues exceeding U.S. $ 100,000, we
have agreed to cooperate fully with SITA to either assign, novate or otherwise
transfer them at the earliest practical date. Confidentiality arrangements
prevented the disclosure of some of these agreements to SITA, and we
approached those customers to obtain their consent.

Exclusivity and Non-Solicitation

For five years starting July 1, 2001 (the Effective Period), we will be the
exclusive supplier of network services to SITA, and, subject to certain limited
exceptions, SITA may not purchase network services from any of our competitors
without our prior written consent.

Our exclusivity arrangements with SITA under the Services Agreement do not
preclude SITA Inc. or certain of its affiliates from conducting their normal
business activities or engaging in any other activity that may result in the
use of network services obtained from some provider other than us.

During the Effective Period, we may not sell our network services to the air
transport community; but these non-solicitation obligations will terminate if
SITA ceases selling network services to the air transport community.

During the Effective Period, SITA may not sell network services to customers
outside the air transport community.

The exclusivity and non-solicitation obligations apply only to the provision of
network services and do not restrict SITA or us from providing other services
in any market sector or country.

In the event of a material breach of the exclusivity or non-solicitation
obligations, the non-breaching party is entitled to terminate those obligations
by providing written notice and is entitled to monetary damages.

Service Levels

We have agreed to provide the network services in accordance with certain
service levels and performance targets established in the Services Agreement.

Pricing

Individual services provided under the Services Agreement are classified as
priced services, exception priced services, standard cost services and pass
through services; a further categorization defines services as cost-base or
non-cost base services or as a SITA-specific product/service or a generic
product/service.

We have agreed to provide the various network services at diverse price levels,
depending upon the classification of the service provided. The cost sharing
mechanism implemented and performed by us and SITA under the terms of the
previously existing Joint Venture Agreement has now been replaced by the
pricing procedures and classifications listed in the Services Agreement and the
Price Books annexed to that agreement.

We and SITA have agreed that the forecast provided by either SITA SC or SITA
Inc. of its total expected revenues

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shall be based, in part, on the accuracy and sufficiency of the historical data
provided by us to SITA SC and SITA Inc, and that SITA shall retain the right to
initiate dispute resolution proceedings to determine the accuracy and
sufficiency of the historical data we have provided.

If we fail to meet the requirements for the integration and migration of SITAs
outsourcing arrangements, or we fail to meet the committed delivery date for
the provision of customer orders by more than sixty days, or if we fail to
perform satisfactorily and such failure results in the termination of a
contractual arrangement between SITA and one of its customers, such failure
shall be defined as an event of significant non-performance. In addition, the
implementation by SITA of any right under the Service Agreement to purchase
network services classified as a cost base service from a provider other than
us also constitutes an event of significant non-performance.

Benchmarking

We and SITA have agreed to certain arrangements to compare the prices of the
network services provided by us with the prices set out in comparable third
party customer contracts and, if necessary and subject to certain limitations,
to adjust the prices established in the Services Agreement accordingly.

SITA and we have agreed to certain arrangements to conduct a comparison of the
relative weighted average net prices in various regions indexed to various
volume levels for distributors providing services and products similar to those
provided by SITA.

SITA and we have also agreed to certain arrangements to compare the prices of
the network services provided by us to SITA with the prices provided by us to
other sales channels. If the comparison fails to satisfy
certain most favored nation standards, then we shall be required to develop a
most favored nation price book to satisfy those standards, to provide SITA
with a refund based upon the differential and to develop a price book to
satisfy those standards in the future.

Minimum Revenue Commitment

For the two years of the Services Agreement, we and SITA have agreed certain minimum revenues commitments to be paid by SITA
on a quarterly basis to be included in the adjusted cost base service
charges and we have committed to reduce our unit costs to SITA by a
certain fixed percentage. The minimum revenue commitment is calculated with reference to the
cost base established prior to the effective date of the Services Agreement,
with the deductions from the minimum revenue commitment provided for in the
Services Agreement. In the third year of the
Services Agreement and thereafter, further reductions in unit costs will be linked to
the volume of services SITA purchases, and we have agreed not to increase
prices to SITA unless market prices increase.

Recognizable Costs

We have the right to require SITA to pay certain costs and expenses (to the
extent greater than U.S. $100,000) associated with certain network activity
forecasts provided to us by SITA, if that the value of actual network activity
negatively deviates by a minimum of 10% from the forecasted network activity
within a given financial quarter and our other sales channels would be unable
to accommodate or utilize the activity resulting in the deviation. These costs
shall be invoiced at the end of each month for any given contract year.

Indemnification and Limitation of Liability

We and SITA have agreed to indemnify and hold harmless each other for any claim
asserting that any wilful
or deliberate breach of the Services Agreement or any claim brought by a third
party arising from the marketing or provision of the network services under the
Services Agreement.

No claim under the Services Agreement shall exceed the total service charges
payable by SITA pursuant to the Services Agreement in respect of the 12 months
immediately preceding the date on which the last claim arises; provided,
however, that neither we nor SITA exclude or limit liability for the following:
(i) death or personal injury caused by our or SITAs negligence; (ii) real
property claims caused by our or SITAs negligence; (iii) any claim for

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which either we or SITA have been indemnified under the Services Agreement;
(iv) either our or SITAs failure to claim any invoiced amount validly owing to
either us or SITA, respectively, for performance under the Services Agreement;
(v) fraudulent misrepresentation; (vi) any breach of obligations implied by
Section 12 of the Sale of Goods Act 1979 or Section 20 of the Supply of Goods
and Services Act 1982; (vii) any claim relating to the infringement of
intellectual property rights; (viii) any claim relating to the breach of either
our or SITAs confidentiality obligations as detailed in the
Services
Agreement; (ix) to the extent a limitation is not permitted by
law; or (x) wilful or deliberate serious and significant breach of the Services Agreement.

Term and Termination

The Services Agreements term is ten years from Agreement July 1. Both we and
SITA may terminate the Services Agreement for cause in the event the other
party materially breaches the agreement and fails to remedy its breach. In
addition, we may terminate this agreement if SITA fails to pay properly
invoiced and undisputed amounts owed under the Services Agreement that exceed
the total service charges payable by the defaulting SITA party for the three
most recent billing periods preceding our notice to terminate.

Both SITA and we may terminate the Services Agreement in the event of
insolvency or bankruptcy of the other party or if a change of control, as
defined in the Umbrella Agreement, occurs.

In the event of a delay in the provision of services due to force majeure, SITA
may elect to terminate the provision of those services delayed by the force
majeure or source substitute services to mitigate the delay.

We have agreed to use commercially reasonable efforts to facilitate the orderly
and efficient transfer to and assumption of the network services by a
substitute supplier (for a period not to exceed six months) in the event of
expiration or termination of the Services Agreement, to reimburse SITA for any
service charges paid in advance, to provide SITA the option to purchase at net
book value any equipment owned by us and used exclusively by us for the purpose
of providing the network services to SITA and to use commercially reasonable
efforts to procure the assignment or novation of equipment leases and
maintenance and support agreements used exclusively by us for the purpose of
providing the network services to SITA.

Transition and Management Agreement

General Principles

Under the new arrangements with SITA, we now own where permitted, operate and
manage the Network. In certain countries, SITA continues to operate the
network locally in order to ensure the orderly and seamless operation of the
global network, although we are responsible to SITA for the costs of operating
in those countries. On June 29, 2001, we entered into the Transition Agreement
with SITA governing these arrangements. We will assume ownership of the
network in those countries where we do not yet have ownership as soon as
commercially possible. The Transition Agreement is governed by English law.

Transfer of Network Resources

To the extent legally possible within each country and as soon as possible
after July 1, 2001, SITA shall transfer to us the complete network in the
following countries: Australia, Canada, France, Singapore, Switzerland, the
United Kingdom and the United States. The transfer of the complete network in
all other countries shall occur as soon as possible after July 1, 2001 to the
extent legally possible. SITA may either transfer to us all of the capital
stock owned by SITA in the relevant company holding the Network or may use
other means, as we and SITA may agree, to transfer the Network.

The transfer of a given network includes the transfer of relevant employees and
assets. To the extent commercially and legally possible, SITA will transfer
staff to us in accordance with existing contractual and statutory terms of
employment, although we have reserved the right to determine subsequent terms
and conditions of employment. To the extent SITA has purchased certain network
assets with its own funds, we shall reimburse SITA the net book

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value of those assets at the time of transfer. To the extent SITA has purchased
or refinanced certain other assets with funds borrowed from us, the transfer of
the relevant asset shall reduce the principal due on the loan in the amount of
the net book value of the asset at the time of the transfer.

In cases in which the advance transfer of certain aspects of the Network would,
without any detriment to SITA, improve our status in respect of any relevant
regulatory requirements or would be commercially beneficial to us, the
Transition Agreement permits the partial, advance transfer of network
resources, assets and staff.

Prior to the transfer of a network, we must meet all requisite legal and
regulatory conditions, and we must establish the capability to operate the
Network.

Access to the Global Network

To enable SITA to continue to provide services to the air transport community,
we have entered into a network access arrangement detailing SITAs rights of
access to our global network. We have agreed to provide SITA with policies,
procedures and instructions relating to its access to and use of our global
Network, and we have agreed to indemnify and hold SITA harmless for certain
losses incurred in respect of actions performed under this arrangement or in compliance with the policies and procedures provided by us.

Regulatory Principles

The parties to the Transition and Management Agreement have agreed to cooperate in respect of
regulatory issues in order to ensure the efficient transfer of the global
Network and the continued compliance with regulatory requirements after the
transfer of the global Network. SITA has agreed to use commercially reasonable
efforts to maintain any necessary licenses prior to the transfer of a Network
and to assist us in acquiring any relevant regulatory approvals to operate the
global Network.

IT Transition

The new arrangements require the separation of our and SITAs IT
infrastructures and systems; in certain respects, however, the compatibility of
those systems and their ability to interface with each other must remain
intact. We have established with SITA a joint IT taskforce to ensure the
efficient and harmonious transition of information technology and have agreed
to complete the transition by April 1, 2003.

We have agreed to continue to provide SITA with the same IT support services as
contemplated under the preexisting Joint Venture Agreement until the completion
of the IT transition; such services include infrastructure, application and
operations services. SITA has agreed to provide us with the same IT support
services it provided prior to the effective date of the new arrangements,
including server hosting, mainframe application hosting and user services. In
addition, the IT transition contemplates that certain IT agreements with third
parties benefit both SITA and us.

Purchasing and Procurement Transition

We have agreed to provide SITA with policies, procedures
and instructions relating to the purchase and procurement necessary to support in-country
network operations. Equant will bear the cost of providing purchasing
and procurement support to SITA, and will reimburse SITAs costs of
supporting ICNO purchasing and procurement.

We have agreed to use commercially reasonable efforts to allow SITA to purchase
network equipment and related products and services from our top five suppliers
on the same terms at which we purchase such products and services from our top
five suppliers. SITA will indemnify and hold us harmless from any losses
incurred by us due to SITAs dealings with our top five suppliers.

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Premises and General Services

The parties have agreed to cooperate with respect to the use of premises
currently occupied by in-country network operations by developing a plan to
serve as a framework for formalizing site-specific arrangements between the
parties.

The parties have agreed to divide general management activity in respect of the
facilities and premises and other ancillary supporting services (called general
services).

SITA In-Country Network Operations Costs

We have agreed to reimburse SITA for all of the costs it incurs in the course
of performing the in-country network operations (which we called the SITA ICNO
costs). SITA will provide us, on a monthly basis, with a statement of the
costs, incorporating various costs relating to the Network and its assets,
staff and equipment, as well as costs associated with the use of premises and
other costs relating to the in-country network operations. We may question
SITAs statement of the costs and may, in good faith, dispute any amount by
providing written explanation of the dispute to SITA.
Costs relating to the in-country operations incurred prior to July 1, 2001, the
effective date of the Transition Agreement, were accounted for under separate
accounts and were shared by us and SITA in accordance with the cost sharing
ratios applicable under the preexisting Joint Venture Agreement; provided,
however, that any such costs not identified until after the date fourteen (14)
days prior to SITAs cut off date for the acceptance of audit adjustments for
calendar year 2001 will be deemed to be SITA ICNO costs.

Reimbursement of Restructuring Costs and Material Financial Detriment Costs

Restructuring Costs.Subject to certain limitations, we have agreed to
reimburse SITA for costs and expenses it incurs in connection with the transfer
or partial transfer of a Network, costs and expenses incurred by SITA in
connection with the IT Transition and costs relating to the transactions
necessary to complete the transfer of a These costs do not include the costs
relating to the reasonable tax, legal and other agreed fees of external
advisors incurred by SITA or us to complete the network transfer.

Material Financial Detriment Costs.Subject to certain limitations, we have
agreed to reimburse SITA for losses incurred within five years of and due to
the transfer of a Network. Such reimbursement, however, is due for a given
five year period after the transfer of a Network only at such time as, with
respect to the first 12 months after the transfer, 10% of the budgeted costs
being transferred have been reached or, with respect to each of the subsequent
four twelve -month periods, 10% of the budgeted costs being transferred have
been. With respect to the transfers of Networks which do not exceed the
applicable threshold, such transfers are aggregated, and we have agreed to
reimburse SITA for costs it incurs in excess of 5% of the budgeted costs being
transferred.

SITA has agreed to submit eligible restructuring costs and material financial
detriment costs on a monthly basis, and we have a right to audit relevant SITA
records to verify any restructuring costs and material financial detriment
costs

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submitted for reimbursement.

Indemnification

We and SITA have agreed to indemnify and hold harmless each other for certain
losses and claims arising from wilful or deliberate serious and significant
breach of the Transition Agreement and for any losses and claims arising out of
or in connection with the services we and SITA, respectively, provide to each
other.

No claim under the Transition Agreement shall exceed $250,000,000; provided,
however, that neither we nor SITA exclude or limit liability for the following:
(i) death or personal injury caused by our or SITAs negligence; (ii) real
property claims caused by our or SITAs negligence; (iii) any claim for which
either we or SITA have been indemnified under the Transition Agreement; (iv)
either our or SITAs failure to claim any invoiced amount validly owing to
either us or SITA, respectively, for performance under the Transition
Agreement; (v) fraudulent misrepresentation; (vi) any breach of obligations
implied by Section 12 of the Sale of Goods Act 1979 or Section 20 of the Supply
of Goods and Services Act 1982; (vii) any claim relating to the infringement of
intellectual property rights; (viii) any claim relating to the breach of either
our or SITAs confidentiality obligations as detailed in the Transition
Agreement; (ix) to the extent a limitation is not permitted by law; or (x)
wilful or deliberate serious and significant breach of the Transition
Agreement.

Limitation of Liability

Our maximum liability for restructuring cost
reimbursements and material financial detriment costs under the
Transition and Management Agreement may not exceed, in the aggregate,
$500,000,000.

Damages for other claims under the Transition and
Management Agreement shall not exceed, in the aggregate,
$250,000,000; provided, however, that neither we nor SITA exclude or
limit liability for the following: (i) death or personal injury
caused by our or SITAs negligence; (ii) real property
claims caused by our or SITAs negligence; (iii) any claim
for which either we or SITA have been indemnified under the
Transition and Management Agreement; (iv) either our or
SITAs failure to claim any invoiced amount validly owing to
either us or SITA, respectively, for performance under the Transition
and Management Agreement; (v) fraudulent misrepresentation;
(vi) any breach of obligations implied by Section 12 of the
Sale of Goods Act 1979 or Section 20 of the Supply of Goods and
Services Act 1982; (vii) any claim relating to the infringement
of intellectual property rights; (viii) any claim relating to
the breach of either our or SITAs confidentiality obligations
as detailed in the Transition and Management Agreement; (ix) to
the extent a limitation is not permitted by law; or (x) willful
or deliberate serious and significant breach of the Transition and
Management Agreement.

Dispute Resolution

For a description of the dispute resolution procedures, see the section on the
Strategic Relationship Umbrella Agreement in Item 7  Major Shareholders and
Related Party Transactions  Our Relationship with France Telecom.

Term and Termination

The Transition and Management Agreement has a term of ten years beginning on
July 1, 2001. Neither SITA nor we has any right to terminate the Transition
Agreement. The Transition Agreement will terminate solely at the expiration of
its term unless SITA and we agree otherwise.

EXCHANGE CONTROLS

There are currently no limitations imposed by Dutch law or by our Articles of
Association on the right of non-resident holders to hold or vote our ordinary
shares. Additionally, there are currently no Dutch laws, decrees or
regulations that restrict the export or import of capital, including, but not
limited to, Dutch foreign exchange controls, or that affect the remittance of
dividends, interest or other payments, to non-resident holders of the ordinary
shares, except as otherwise set forth in Taxation.

TAXATION

Netherlands Taxation

This summary does not purport to be a comprehensive description of all
Netherlands tax consequences of an investment in our shares. Each investor
should consult a professional tax advisor with respect to the tax consequences
of an investment in our shares. The discussion of certain Netherlands taxes
set forth below is included for general information only and does not address
every potential tax consequence of an investment in our shares under the laws
of The Netherlands. The following summary of Netherlands tax considerations is
limited to the tax implications for an individual or corporate owner of our
shares who, directly or indirectly, owns less than 10% of the voting power our
company (a holder of shares).

The following summary is based on the tax legislation, published case law and
other regulations as applicable on

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December 31, 2001, without prejudice to any
amendments that may be enacted after that date and implemented with or
without retroactive effect. The following summary does not address any tax
consequences for a holder of shares that could arise as a result of the
entering into force of any such proposed legislation.

Withholding Tax

Dividends we distribute generally are subject to a Netherlands withholding tax
imposed at a rate of 25%. The expression dividends we distributed as used
herein includes, but is not limited to:



| | (i)   |  | distributions in cash or in kind, deemed and constructive
distributions and repayments of paid-in capital not recognised as
capital for Netherlands dividend withholding tax purposes;                                                                                                                                                                                                                           
| | ----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (ii)  |  | Liquidation proceeds, proceeds of redemption of our shares
or, as a rule, consideration for our repurchase of our shares in
excess of the average paid-in capital recognized as capital for
Netherlands dividend withholding tax purposes;                                                                                                                                                                       
|
| | (iii) |  | The par value of shares issued to a holder of shares or an
increase of the par value of our shares, as the case may be, to the
extent that it does not appear that a contribution, recognised for
Netherlands dividend withholding tax purposes, has been made or will
be made; and                                                                                                                              
|
| | (iv)  |  | Partial repayment of paid-in capital, recognised for
Netherlands dividend withholding tax purposes, if and to the extent
that there are net profits (zuivere winst), unless the general
meeting of shareholders has resolved in advance to make such
repayment and provided that the par value of the shares concerned
has been reduced by an equal amount by way of an amendment of the
Articles of Association.

Legislation is in force, but not effective, pursuant to which a credit for
Dutch dividend withholding tax will for Dutch domestic tax purposes only be
available to the beneficial owner (uiteindelijk gerechtigde) of dividends we
have distributed. A new legislative proposal that deals with the beneficial
ownership of dividends passed the Second Chamber of Parliament on November 15,
2001. The intention is that this new legislation will take effect retroactively
to April 27, 2001. The legislation that is in force, but not effective, will
then be abrogated. The Dutch tax authorities have taken the position that the
beneficial ownership test can also be applied to deny relief from Dutch
dividend withholding tax under double tax treaties and the Tax Arrangement for
the Kingdom.



| |  |  | If a Non-Resident holder of shares is resident in The Netherlands
Antilles or Aruba or in a member state of the European Union or in a
country that has concluded a double tax treaty with The Netherlands, we
are not required to withhold Dutch dividend withholding tax from a
dividend we distributed to such holder of shares to the extent that the
temporary special distribution tax applies to the distribution. We are
subject to a temporary special distribution tax at a rate of 20% to the
extent that dividends we distributed during the period from January 1,
2001 up to and including December 31, 2005 are classified as
excessive. For purposes of this distribution tax, dividends
considered to be excessive to the extent that, during a particular
calendar year, the total thereof exceeds the highest of the following
three amounts:4% of our market capitalization at the beginning of the
relevant calendar year;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | twice the amount of the average annual dividends (exclusive of
extraordinary distributions) distributed in the three calendar years
immediately preceding January 1, 2001; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| |  |  | our consolidated commercial results for the preceding book year,
subject to certain adjustments.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

The special distribution tax will not be due if and to the extent the aggregate
of dividends we during the period from January 1, 2001 up to and including
December 31, 2005 exceeds the fair market value of the assets at the end of the
fiscal year ending on December 31, 2000, net of liabilities and provisions and
reduced by the paid-in capital. The special distribution tax will be reduced in
proportion to the percentage of the shares that were held, at the time of the
excessive distribution, during an uninterrupted period of three years, by
individuals or entities (other than investment institutions
(beleggingsinstellingen)as defined in the Dutch Corporate Income Tax Act 1969)
holding at least 5% of the nominal paid-in capital, provided such shareholders
are resident in The Netherlands, The Netherlands Antilles or Aruba, or in

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a
member state of the EuropeanUnion, or in a country that has concluded a double
tax treaty with The Netherlands. In that
connection, shares that were held on September 14, 1999 are deemed to have been
held on that date during an uninterrupted period of three years. The special
distribution tax is not a withholding tax; it is imposed directly on us.
Therefore, if it is reduced because certain shareholders own at least 5% of the
nominal paid-in capital, we will receive the benefit of the reduction and it
will inure indirectly not only to the shareholders whose shareholdings caused
the reduction to apply.

If a holder of shares is resident in a country other than The Netherlands and
if a double taxation treaty is in effect between The Netherlands and such
country, such holder of shares may, depending on the terms of such double
taxation treaty, be eligible for a full or partial exemption from, or refund
of, Netherlands dividend withholding tax.

Under the treaty in effect between The Netherlands and the United States (the
U.S./NL Income Tax Treaty), dividends we have paid to a resident of the United
States (other than an exempt organization or exempt pension organisation) are
generally eligible for a reduction of the 25% Netherlands withholding tax to
15%, unless the shares held by such resident are attributable to an enterprise
or part of an enterprise that is, in whole or in part, caried on through a
permanent establishment or a permanent representative in The Netherlands. The
U.S./NL Income Tax Treaty provides for a complete exemption for dividends
received by exempt pension trusts and exempt organisations as defined therein.
Except in the case of exempt organizations, the reduced dividend withholding
rate can be applied at source upon payment of the dividends, provided the
proper forms have been filed in advance of the payment. A holder of shares
other than an individual will not be eligible for the benefits of the U.S./NL
Income Tax Treaty if such holder of shares does not satisfy one or more of the
tests set forth in the limitations on benefits provision of Article 26 of the
U.S./NL Income Tax treaty.

A holder of shares (other than an exempt organization) generally may claim the
benefits of a reduced withholding tax rate or an exemption from withholding tax
pursuant to the U.S./NL Income Tax Treaty by submitting a duly signed Form IB 92
USA, which form includes a bankers affidavit stating that the shares are in
the banks custody in the name of the applicant, or that the shares have been
exhibited to the bank as being the property of the applicant. If the Form IB 92
USA is submitted prior to the dividend payment date, we can apply the reduced
withholding tax rate to the dividend payment. A holder of shares unable to
claim withholding tax relief in this manner can obtain a refund of excess tax
withheld by filing a Form IB 92 USA and describing the circumstances that
prevented claiming withholding tax relief at source.

Qualifying U.S. exempt organizations must seek a full refund of the tax
withheld by using the Form IB 95 USA, which form also includes a bankers
affidavit.

Taxes on Income and Capital Gains

A holder of shares will not be subject to any Netherlands taxes on income or
capital gains in respect of dividends we distributed or in respect of any gain
realized on the disposal of shares (other than the withholding tax described
above), provided that:



| | (i)   |  | such holder is neither resident nor deemed to be resident
in the Netherlands and has not elected to be treated as a resident
of the Netherlands for Dutch income tax purposes;                                                            
| | ----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (ii)  |  | such holder does not have an enterprise or an interest in
an enterprise that is carried on through a permanent establishment
or a permanent representative in The Netherlands and to which
enterprise the shares are attributable;        
|
| | (iii) |  | such holder does not have a substantial interest or a
deemed substantial interest in us or, in the event that such holder
does have or is deemed to have such interest, it forms part of the
assets of an enterprise; and                 
|
| | (iv)  |  | such holder is not entitled to a share in the profits of an
enterprise that is effectively managed in the Netherlands other than
by way of securities or through an employment contract, the shares
being attributable to such enterprise.

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| | (v) |  | such holder is an individual and the benefits derived from
the shares are taxable as a benefit from miscellaneous activities
(resultaat uit overige werkzaamheden).
| | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------

The shares will generally form part of a substantial interest if the holder of
such shares, alone or together with his spouse, certain other relatives
(including foster children) and/or certain persons sharing his or her
household, does hold, whether directly or indirectly, ownership of, or have
certain rights over: (a) at least five percent of the issued share capital of
any class of our shares; (b) option rights to acquire our shares representing
at least five percent of the issued share capital of any class of our shares;
or (c) profit participating certificates entitling the holder to at least five
percent of our annual profit, or entitling the holder to at least five percent
of the liquidation proceeds upon liquidation of our company. A deemed
substantial interest is present if part of a substantial interest has been
disposed of, or is deemed to have been disposed of, on a non-recognition basis.

Gift, Estate and Inheritance Taxes

No gift, estate or inheritance taxes will arise in The Netherlands with respect
to an acquisition of shares by way of a gift by, or on the death of, a holder
of shares who is neither resident nor deemed to be resident in The Netherlands,
and has not elected to be treated as a resident of the Netherlands for gift,
estate and inheritance tax purposes, unless:



| | (i)  |  | such holder at the time of the gift has or at
the time of his death had an enterprise or an interest in an
enterprise that is or was, in whole or in part, carried on
through a permanent establishment or a permanent
representative in The Netherlands and to which enterprise the
shares are or were attributable; or
| | ---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (ii) |  | in the case of a gift of shares by an individual
who at the time of the gift was neither resident nor deemed to
be resident in The Netherlands, such individual dies within
180 days after the date of the gift, while being resident or
deemed to be resident in The Netherlands.                                      

For purposes of Netherlands gift, estate and inheritance tax, an individual who
holds the Netherlands nationality is deemed to be resident in The Netherlands
if he or she has been resident in the Netherlands at any time during the ten
years preceding the date of the gift or death.

For purposes of Netherlands gift tax, an individual not holding the Netherlands
nationality is deemed to be resident in The Netherlands if he or she has been
resident in The Netherlands at any time during the twelve months preceding the
date of the gift. Applicable tax treaties may override this deemed residence.

Other Taxes and Duties

No Netherlands registration tax, transfer tax, stamp duty or any other similar
documentary tax or duty other than court fees will be payable in The
Netherlands in respect of or in connection with the subscription, issue,
placement, allotment or delivery of the shares.

United States Taxation

The following is a summary of certain U.S. federal income tax considerations
relevant to the purchase, ownership and disposition of the shares by a holder
that is a citizen or resident of the United States or a U.S. domestic
corporation or that otherwise will be subject to U.S. federal income tax on a
net income basis in respect of the shares (a U.S. holder). The summary does
not purport to be a comprehensive description of all of the tax considerations
that may be relevant to a decision to purchase the shares. In particular, this
summary deals only with U.S. holders that will hold the shares as capital
assets, and does not address the tax treatment of U.S. holders that may be
subject to special tax rules, such as banks, tax-exempt entities, insurance
companies, securities dealers, investors liable for alternative minimum tax,
persons that hold the shares as part of a synthetic security or conversion
transaction or as part of an integrated investment (including a straddle)
comprised of shares and one or more other positions, persons whose functional
currency is not the U.S. dollar, and holders of five percent or more of our
voting shares. The summary is based on the U.S.-NL Treaty

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and the tax laws of the United States and The Netherlands in effect on the date
hereof, which are subject to change. Prospective purchasers should consult
their own advisors as to the tax consequences of the purchase, ownership and
disposition of the shares in light of their own particular circumstances,
including the effect of any state, local or foreign laws.

Taxation of Dividends

Distributions paid out of the Companys current or accumulated earnings and
profits (as determined under U.S. federal income tax principles) in respect of
the shares (including the amounts withheld in respect of Dutch withholding tax)
generally will be subject to U.S. federal income taxation as foreign source
dividend income, and will not be eligible for the dividends received deduction
generally allowed to U.S. corporations.

Subject to generally applicable limitations and the discussion below, Dutch
withholding tax imposed on dividends at the treaty rate will be treated as a
foreign income tax eligible for credit against a U.S. holders U.S. federal
income tax liability (or, at a U.S. holders election, may be deducted in
computing taxable income). Foreign tax credits will not be allowed for
withholding taxes imposed in respect of certain short-term or hedged positions
in securities or in respect of arrangements in which a U.S. holders expected
economic profit, after non-U.S. taxes, is insubstantial. Holders should consult
their own advisors concerning the implications of these rules in light of their
particular circumstances.

We may fund dividend distributions on the shares with dividends received from
its subsidiaries organized outside The Netherlands. Under special Netherlands
tax rules applicable to international holding company structures, we will be
entitled in certain circumstances to reduce the amount of taxes that it
otherwise would be obliged to pay to the Dutch tax authorities by an amount
equal to 3 percent of the lesser of the dividends that it receives from its
foreign subsidiaries and the net dividends that it pays to its shareholders.
There is no authority directly addressing the implications of these special tax
rules for the taxation of dividends paid to U.S. holders. It is possible that
the foreign tax credits otherwise allowable for U.S. tax purposes in respect of
Dutch withholding taxes on dividend income would be reduced by the proportion
of the Dutch tax saving realized by us that is measured by reference to those
dividends. We will advise U.S. holders if we claim the benefit of this
reduction in respect of dividends on the shares.

Taxation of Capital Gains

Gains or losses realized by a U.S. holder on the sale or other disposition of
the shares generally will be treated for U.S. federal income tax purposes as
capital gains or losses, and generally will be long-term gains or losses if the
shares have been held for more than one year. Long-term capital gain recognized
by an individual holder generally is subject to taxation at a maximum rate of
20 percent. Gain or loss, if any, realized by a U.S. holder on the sale or
other disposition of shares generally will be treated as U.S. source income for
U.S. foreign tax credit purposes.

Non-U.S. Holders

A holder of shares that is, with respect to the United States, a foreign
corporation or a nonresident alien individual (a Non-U.S. holder) generally
will not be subject to U.S. federal income or withholding tax on dividends
received on the shares unless the dividend income is effectively connected with
the holders conduct of a trade or business in the United States. A Non-U.S.
holder of Shares will not be subject to U.S. federal income tax or withholding
tax in respect of gain realized on the sale or other disposition of the shares,
unless (i) the gain is effectively connected with the holders conduct of a
trade or business in the United States or (ii) in the case of gain realized by
an individual Non-U.S. holder, the Non-U.S. holder is present in the United
States for 183 days or more in the taxable year of the sale and certain other
conditions are met.

U.S. Backup Withholding

A U.S. holder may be subject to backup withholding at the rate of 31% with
respect to payments of dividends or proceeds from a sale of the shares, unless
the holder (i) is a corporation or other exempt recipient, and demonstrates
this fact when so required, or (ii) provides a correct taxpayer identification
number, certifies that it is not subject to backup withholding, and otherwise
complies with applicable requirements of the backup withholding rules. While

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Non-U.S. holders generally are exempt from backup withholding, a Non-U.S.
holder may, in certain circumstances, be required to comply with certain
information and identification procedures in order to prove this exemption.

DOCUMENTS ON DISPLAY

For documents on display, see Item 19. Exhibits.

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Item 11. Quantitative and Qualitative Disclosures About Market Risk

We have used derivative financial instruments to reduce exposure to market
risks resulting from fluctuations in interest rates and foreign currency
exchange, however we are currently not party to any interest rate derivatives.
These hedging instruments are classified in a manner consistent with the item
being hedged, meaning that the associated asset and liability items are
recorded at their hedged values rather than the spot value. As a matter of
policy, we do not enter into financial instruments for trading or speculative
purposes.

Credit risks

Our primary credit risk is the risk that our customers will not pay for the
services we have provided. We have procedures in place designed to minimize
the credit risk of new customers. To date, we have not experienced a
significant level of
bad debt.

We are also exposed to credit risk from the use of derivative financial
instruments should a counterparty default. To minimize credit risk associated
with derivative instruments, we only enter into transactions with high quality
counterparties such as financial institutions that satisfy our established
credit approval criteria.

Foreign exchange risks

We have a policy on currency exposure to protect us against volatility and
adverse movements in exchange rates. In line with this policy, all material
transactional exposures which can be estimated with reasonable certainty are
hedged by executing a transaction in the external market or through the use of
pre-existing natural hedges. We primarily use forward exchange contracts with a
term of less than 3 months. Our functional currency is the U.S. dollar.

At December 31, 2001, we had foreign exchange contracts outstanding in various
currencies related to both commercial and financial transactions denominated in
currencies other than U.S. dollars. Our primary net foreign currency exposures
at December 31, 2001 included British pounds, Euros and Korean Won. Management
does not foresee or expect any significant changes in foreign currency exposure
in the near future, although, as we describe above in Item 5. Operating and
Financial Review and Prospects  Impact of Changes in Exchange Rates, our
results of operations and financial condition can be significantly affected by
changes in exchange rates.

As of December 31, 2001, we had a net unrealized gain of $1.1 million on
outstanding contracts marked to market on that date.
Unrealized gains/losses in foreign currency exchange contracts are defined as
the difference between the contract rate at the inception date of the foreign
currency exchange contract and the current market exchange rates. Consistent
with the nature of the economic hedge of such foreign currency exchange
contracts, decreases or increases of the underlying instrument or transaction
being hedged would offset the corresponding unrealized gains or losses on the
hedging instrument. In addition, our global operations include activities in a
number of countries with hyperinflationary economies. Operations in these
countries are not significant and do not have a material effect on our
financial statements when taken as a whole.

We do not anticipate any material adverse effect on our consolidated financial
position, results of operations or cash flows resulting from the use of
derivative financial instruments. We cannot guarantee, however, that our
hedging strategies will be effective or that translation losses can be
minimized or forecast accurately. See Forward-Looking Statements.

The following table provides information about our foreign exchange forward
contracts at December 31, 2001. The table presents the value of the contracts
in U.S. dollars at the contract exchange rate as of the contract maturity date.
The fair value of foreign exchange forward contracts is calculated with market
standard financial software.

116



---



##### 



|                 |  |         |             |             |  |                  |  |       |               |  |  |                 |            |         |  |            |              |  |  |   |             |  
|---------------- |  | ------- | ----------- | ----------- |  | ---------------- |  | ----- | ------------- |  |  | --------------- | ---------- | ------- |  | ---------- | ------------ |  |  | - | ----------- | -
|                 |  |         |             |             |  |                  |  |       |               |  |  | Contract Rate   |            |         |  |            |              |  |  |  
|                 |  |         |             |             |  |                  |  |       |               |  |  | (units of local |            |         |  |            |              |  |  |  
|                 |  |         |             |             |  |                  |  |       |               |  |  | currency        |            | Forward |  | Settlement
|Buying           |  | Selling |             | per dollar) |  | Position         |  | Value
|                 |  |         |             |             |  |                  |  |      
|U.S. dollar      |  | $       | 267,369     |             |  | Brazilian Real   |  |       | 660,000       |  |  |                 | 2.4685     |         |  | $          | 267,369      |  |  | $ | 283,871     |  
|U.S. dollar      |  | $       | 2,590,000   |             |  | Argentinian Peso |  |       | 2,766,120     |  |  |                 | 1.0680     |         |  |            | 2,590,000    |  |  |   | 2,766,120   |  
|U.S. dollar      |  | $       | 4,000,000   |             |  | Korean Won       |  |       | 5,315,000,000 |  |  |                 | 1,028.7500 |         |  |            | 4,000,000    |  |  |   | 4,039,368   |  
|U.S. dollar      |  | $       | 9,346,842   |             |  | British pound    |  | £     | 6,588,750     |  |  |                 | 0.7049     |         |  |            | 9,346,842    |  |  |   | 9,576,463   |  
|U.S. dollar      |  | $       | 135,999,888 |             |  | Euro             |  |      | 151,901,060   |  |  |                 | 1.1169     |         |  |            | 135,999,888  |  |  |   | 135,163,345 |  
|Euro             |  |        | 6,421,755   |             |  | U.S. dollar      |  | $     | 5,747,327     |  |  |                 | 1.1173     |         |  |            | (5,747,327)  |  |  |   | (5,778,343  | )
|British Pound    |  | £       | 20,960,000  |             |  | U.S. dollar      |  | $     | 29,758,170    |  |  |                 | 0.7043     |         |  |            | (29,758,170) |  |  |   | (29,051,887 | )
|Singapore dollar |  | S$      | 200,242     |             |  | U.S. dollar      |  | $     | 108,239       |  |  |                 | 1.8500     |         |  |            | (108,239)    |  |  |   | (107,968    | )

All these contracts expire in 2002.

For further information concerning the potential effects of changes in exchange
rates, see Item 5. Operating and Financial Review and ProspectsFinancial
OverviewImpact of Changes in Exchange Rates.

Interest rate risks

In prior years we have used interest rate caps to manage interest rate risk
related to certain borrowings. We had no significant interest rate hedging
instruments in effect as of December 31, 2001, as all borrowings outstanding at
this date were short-term in nature. The fair value of short-term debt is
considered insensitive to interest rate variation, due to its short duration.

The table below provides information about our risk exposure associated with
our outstanding debt obligations at December 31, 2001. The fair values included
in the table have been based on quoted market values at December 31, 2001. The
table presents principal cash flows and related interest rates.

|                               |  |                                                |      |                  |  |   |     | 
|------------------------------ |  | ---------------------------------------------- | ---- | ---------------- |  | - | --- | 
|                               |  | At December 31, 2001                          
|                               |  |                                               
|                               |  | Carrying Value                                 |      | Settlement Value
|                               |  |                                                |      |                 
|                               |  | (U.S. dollars in millions, except percentages)
|Debt  short term              |  |                                                |      |                  |  |   |     | 
|Variable rate (Japanese Yen)   |  | $                                              | 6.2  |                  |  | $ | 6.2 | 
|Average interest rate          |  |                                                | 0.48 | %                |  |   |     | 
|Variable rate (Brazilian real) |  | $                                              | 0.8  |                  |  | $ | 0.8 | 
|Average interest rate          |  |                                                | 28.7 | %                |  |   |     | 
|Variable rate (Other)          |  | $                                              | 2.0  |                  |  | $ | 2.0 | 
|Average interest rate          |  |                                                | 0    | %                |  |   |     | 
|Variable rate (U.S. dollar)    |  | $                                              | 0.2  |                  |  | $ | 0.2 | 
|Average interest rate          |  |                                                | 7.50 | %                |  |   |     | 

Item 12. Description of Securities Other than Equity Securities

This item is not applicable.

117



---



##### 



PART II

Item 13. Defaults, Dividend Arrearages and Delinquencies

This item is not applicable.

Item 14. Material Modifications to the Rights of Security Holders and Use of
Proceeds

This item is not applicable.

Item 15.[Reserved]

Item 16.[Reserved]

PART III

Item 17. Financial Statements

The registrant has responded to Item 18 in lieu of responding to this Item.

Item 18. Financial Statements

The financial statements listed in the accompanying Index to Financial
Statements and Financial Statement Schedule are filed as part of this annual
report.

Item 19. Exhibits

The exhibits listed in the accompanying index are filed or incorporated by
reference as part of this annual report.

118



---



##### 



119



---



##### 



INDEX TO FINANCIAL STATEMENTS

Equant N.V.

|                                                 |  |  |      | 
|------------------------------------------------ |  |  | ---- | 
|Reports
of the Independent Auditors              |  |  | F-2  | 
|Consolidated Statements of

Operations           |  |  | F-4  | 
|Consolidated Balance

Sheets                     |  |  | F-5  | 
|Consolidated Statements on Cash

Flows           |  |  | F-7  | 
|Consolidated Statements of

Shareholders Equity |  |  | F-9  | 
|Notes to the Consolidated

Financial Statements  |  |  | F-10 | 

Global One

|                                                    |  |  |      | 
|--------------------------------------------------- |  |  | ---- | 
|Reports
of the Independent

Auditors                |  |  | F-77 | 
|Combined Statements of

Operations                  |  |  | F-79 | 
|Combined Balance

Sheets                            |  |  | F-80 | 
|Combined Statements of Cash

Flows                  |  |  | F-81 | 
|Combined Statements of Change

in Investors Equity |  |  | F-82 | 
|Notes
to the Combined Financial

Statements         |  |  | F-83 | 

F-1



---



##### 



Report of the Independent Auditors

To the Supervisory Board and Shareholders of Equant N.V.

We have audited the accompanying consolidated balance sheet of Equant
N.V. and subsidiaries (the Company) as of December 31, 2001, and the
related consolidated statements of operations, shareholders equity,
and cash flows for the year then ended. These financial statements are
the responsibility of the Companys management. Our responsibility is
to express an opinion on these financial statements based on our
audit.

We conducted our audit in accordance with auditing standards
generally accepted in the United States. Those standards require that
we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position
of Equant N.V. and subsidiaries at December 31, 2001, and consolidated
results of their operations and their cash flows for the year then
ended in conformity with accounting principles generally accepted in
France.

Accounting principles generally accepted in France vary in certain
significant respects from accounting principles generally accepted in
the United States. The application of the latter would have affected
shareholders equity as of December 31, 2001 and net income for the
year then ended to the extent summarised in Note 30 to the
consolidated financial statements.

|                       |  |                       
|---------------------- |  | ----------------------
|Ernst & Young LLP      |  | PricewaterhouseCoopers
|London, United Kingdom |  | London, United Kingdom
|                       |  |                       

March 27, 2002

F-2



---



##### 



Report of the Independent
Auditors

To the Supervisory Board and Shareholders of Equant N.V.

We have audited the accompanying consolidated balance sheets of Equant N.V. and its subsidiaries
(the Company) at December 31, 2000 and 1999, and the related consolidated statements of operations, shareholders
equity and cash flows for each of the two years in the period ended December
31, 2000. These financial statements are the responsibility of the Companys
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

We conducted our audit in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Equant N.V. and
its subsidiaries at December 31, 2000 and 1999, and the consolidated results of
their operations and their cash flows for each of the two years in the period
ended December 31, 2000 in conformity with accounting principles generally
accepted in France.



|                                         |                                              
|---------------------------------------- | ---------------------------------------------
|Ernst & Young LLP
London, United Kingdom | PricewaterhouseCoopers
London, United Kingdom

March 27, 2002

F-3



---



##### 



Equant N.V.

Consolidated Statements of Operations
(US dollars in millions, except per share data, unless otherwise stated)

|                                                                                                  |  |  |     |      |  |      |             |       |   |  |     |       |      |   |             |   |  |   |         |      |  |  |             |  
|------------------------------------------------------------------------------------------------- |  |  | --- | ---- |  | ---- | ----------- | ----- | - |  | --- | ----- | ---- | - | ----------- | - |  | - | ------- | ---- |  |  | ----------- | -
|Years ended December 31                                                                           |  |  |     |      |  | 1999 |             |       |   |  |     |       | 2000 |   |             |   |  |   |         | 2001
|                                                                                                  |  |  |     |      | 
|Sales of services and products                                                                    |  |  |     |      |  | $    | 1,031.3     |       |   |  |     |       |      | $ | 1,473.4     |   |  | $ | 2,390.7 |     
|Cost of services and products sold                                                                |  |  |     |      |  |      | (628.9      | )     |   |  |     |       |      |   | (989.0      | ) |  |   |         |      |  |  | (1,847.0    | )
|Other operating income                                                                            |  |  |     |      |  |      |            |       |   |  |     |       |      |   |            |   |  |   |         |      |  |  | 146.4       |  
|                                                                                                  |  |  |     |      | 
|Gross profit                                                                                      |  |  |     |      |  |      | 402.4       |       |   |  |     |       |      |   | 484.4       |   |  |   |         |      |  |  | 690.1       |  
|Selling                                                                                           |  |  |     |      |  |      | 125.3       |       |   |  |     |       |      |   | 174.9       |   |  |   |         |      |  |  | 255.1       |  
|General and administrative                                                                        |  |  |     |      |  |      | 118.7       |       |   |  |     |       |      |   | 132.4       |   |  |   |         |      |  |  | 299.7       |  
|                                                                                                  |  |  |     |      | 
|EBITDA(1)                                                                                         |  |  |     |      |  |      | 158.4       |       |   |  |     |       |      |   | 177.1       |   |  |   |         |      |  |  | 135.3       |  
|Depreciation and amortization, excluding goodwill                                                 |  |  |     |      |  |      | 106.0       |       |   |  |     |       |      |   | 166.8       |   |  |   |         |      |  |  | 299.2       |  
|Share plan costs                                                                                  |  |  |     |      |  |      | 28.2        |       |   |  |     |       |      |   | (24.1       | ) |  |   |         |      |  |  | (7.1        | )
|Non-recurring charges                                                                             |  |  |     |      |  |      | 1.9         |       |   |  |     |       |      |   | 18.9        |   |  |   |         |      |  |  | 110.2       |  
|                                                                                                  |  |  |     |      | 
|Operating profit/(loss)                                                                           |  |  |     |      |  |      | 22.3        |       |   |  |     |       |      |   | 15.5        |   |  |   |         |      |  |  | (267.0      | )
|Financial income/(charges)                                                                        |  |  |     |      |  |      | 14.7        |       |   |  |     |       |      |   | (10.7       | ) |  |   |         |      |  |  | (17.9       | )
|Loss on impairment of investments accounted for at cost                                           |  |  |     |      |  |      |            |       |   |  |     |       |      |   | (22.1       | ) |  |   |         |      |  |  | (13.1       | )
|Income taxes                                                                                      |  |  |     |      |  |      | (19.9       | )     |   |  |     |       |      |   | (4.4        | ) |  |   |         |      |  |  | (41.6       | )
|Equity in loss of affiliate                                                                       |  |  |     |      |  |      |            |       |   |  |     |       |      |   | (9.5        | ) |  |   |         |      |  |  | (25.3       | )
|                                                                                                  |  |  |     |      | 
|Net profit/(loss) from continuing operations, before minority interests
and goodwill amortization |  |  |     |      |  |      | 17.1        |       |   |  |     |       |      |   | (31.2       | ) |  |   |         |      |  |  | (364.9      | )
|Goodwill amortization                                                                             |  |  |     |      |  |      | (4.0        | )     |   |  |     |       |      |   | (16.1       | ) |  |   |         |      |  |  | (21.7       | )
|Minority interests                                                                                |  |  |     |      |  |      | (0.9        | )     |   |  |     |       |      |   | (0.3        | ) |  |   |         |      |  |  | (0.6        | )
|                                                                                                  |  |  |     |      | 
|Net profit/(loss) from continuing operations                                                      |  |  |     |      |  |      | 12.2        |       |   |  |     |       |      |   | (47.6       | ) |  |   |         |      |  |  | (387.2      | )
|Net loss of discontinued operations                                                               |  |  |     |      |  |      | (0.2        | )     |   |  |     |       |      |   | (0.3        | ) |  |   |         |      |  |  | (2.6        | )
|Gain on disposal of discontinued operations                                                       |  |  |     |      |  |      |            |       |   |  |     |       |      |   |            |   |  |   |         |      |  |  | 13.4        |  
|                                                                                                  |  |  |     |      | 
|Net profit/(loss)                                                                                 |  |  |     |      |  | $    | 12.0        |       |   |  |     |       |      | $ | (47.9       | ) |  | $ | (376.4  | )   
|                                                                                                  |  |  |     |      | 
|PER SHARE DATA  BASIC AND DILUTED
Net profit/(loss) from continuing operations                   |  |  | US$ | 0.06 |  |      | US$         | (0.24 | ) |  | US$ | (1.56 | )   
|Discontinued operations                                                                           |  |  |     |      |  |      |            |       |   |  |     |       |      |   |            |   |  |   |         |      |  |  | 0.04        |  
|                                                                                                  |  |  |     |      | 
|Net profit/(loss) per share                                                                       |  |  | US$ | 0.06 |  |      | US$         | (0.24 | ) |  | US$ | (1.52 | )   
|                                                                                                  |  |  |     |      | 
|Basic weighted average number of shares                                                           |  |  |     |      |  |      | 201,477,046 |       |   |  |     |       |      |   | 201,503,333 |   |  |   |         |      |  |  | 247,985,649 |  
|Diluted weighted average number of shares, where the impact is not antidilutive                   |  |  |     |      |  |      | 203,467,643 |       |   |  |     |       |      |   |             |   |  |   |         |      |  |  |             |  
|                                                                                                  |  |  |     |      | 



|(1) |  | EBITDA: operating profit/(loss) before Share plan costs, Non-recurring
charges and Depreciation and Amortization.
|--- |  | -----------------------------------------------------------------------------------------------------------------

The accompanying notes are an integral part of the consolidated financial statements

F-4



---



##### 



Equant N.V.

Consolidated Balance Sheets
(US dollars in millions, unless otherwise stated)

|                   |                                                                    |  |  |  |  |      |         |         |  |  |  |  |      |   |         |         | 
|------------------ | ------------------------------------------------------------------ |  |  |  |  | ---- | ------- | ------- |  |  |  |  | ---- | - | ------- | ------- | 
|ASSETS             |                                                                    |  |  |  |  |      |         |         |  |  |  |  |      |   |         |        
|At December 31     |                                                                    |  |  |  |  | 2000 |         |         |  |  |  |  | 2001 |  
|                   |                                                                    |  | 
|Current assets     |                                                                    |  |  |  |  |      |         |         |  |  |  |  |      |   |         |        
|                   | Cash and cash equivalents                                          |  |  |  |  |      | $       | 53.5    |  |  |  |  |      |   | $       | 385.8   | 
|                   | Accounts receivable from SITA, Radianz and France Telecom          |  |  |  |  |      |         | 100.0   |  |  |  |  |      |   |         | 688.4   | 
|                   | Accounts receivable, other                                         |  |  |  |  |      |         | 259.9   |  |  |  |  |      |   |         | 578.9   | 
|                   | Lease receivables                                                  |  |  |  |  |      |         | 14.7    |  |  |  |  |      |   |         | 14.1    | 
|                   | Inventories                                                        |  |  |  |  |      |         | 29.2    |  |  |  |  |      |   |         | 26.6    | 
|                   | Deferred income taxes                                              |  |  |  |  |      |         | 9.2     |  |  |  |  |      |   |         | -       | 
|                   | Sales and other taxes recoverable                                  |  |  |  |  |      |         | 69.7    |  |  |  |  |      |   |         | 90.4    | 
|                   | Other current assets and prepaid costs                             |  |  |  |  |      |         | 64.5    |  |  |  |  |      |   |         | 163.5   | 
|                   |                                                                    |  | 
|                   | Total current assets                                               |  |  |  |  |      |         | 600.7   |  |  |  |  |      |   |         | 1,947.7 | 
|                   |                                                                    |  | 
|Non-current assets |                                                                    |  |  |  |  |      |         |         |  |  |  |  |      |   |         |        
|                   | Goodwill (net of amortization of $23.6 and $47.6 in 2000 and 2001) |  |  |  |  |      |         | 199.2   |  |  |  |  |      |   |         | 177.5   | 
|                   | Other intangible assets, net                                       |  |  |  |  |      |         | 81.1    |  |  |  |  |      |   |         | 301.2   | 
|                   | Property and equipment, net                                        |  |  |  |  |      |         | 569.6   |  |  |  |  |      |   |         | 1,077.4 | 
|                   | Investments accounted for under the equity method                  |  |  |  |  |      |         | 151.1   |  |  |  |  |      |   |         | 133.6   | 
|                   | Investments at cost                                                |  |  |  |  |      |         | 18.2    |  |  |  |  |      |   |         | 6.2     | 
|                   | Long-term receivables                                              |  |  |  |  |      |         | 6.7     |  |  |  |  |      |   |         | 32.9    | 
|                   | Long-term lease receivables                                        |  |  |  |  |      |         | 35.7    |  |  |  |  |      |   |         | 25.6    | 
|                   | Deferred income taxes                                              |  |  |  |  |      |         | 28.2    |  |  |  |  |      |   |         | -       | 
|                   | Other non-current assets                                           |  |  |  |  |      |         | 16.4    |  |  |  |  |      |   |         | 17.0    | 
|                   |                                                                    |  | 
|                   | Total non-current assets                                           |  |  |  |  |      |         | 1,106.2 |  |  |  |  |      |   |         | 1,771.4 | 
|                   |                                                                    |  | 
|Total assets       |                                                                    |  |  |  |  | $    | 1,706.9 |         |  |  |  |  |      | $ | 3,719.1 |        
|                   |                                                                    |  | 

The accompanying notes are an integral part of the consolidated financial statements

F-5



---



##### 



Equant N.V.

Consolidated Balance Sheets continued
(US dollars in millions, unless otherwise stated)

|                                           |                                                            |  |  |  |  |      |         |        |   |  |  |  |      |   |         |         |  
|------------------------------------------ | ---------------------------------------------------------- |  |  |  |  | ---- | ------- | ------ | - |  |  |  | ---- | - | ------- | ------- | -
|LIABILITIES AND SHAREHOLDERS' EQUITY       |                                                            |  |  |  |  |      |         |        |   |  |  |  |      |   |         |        
|At December 31                             |                                                            |  |  |  |  | 2000 |         |        |   |  |  |  | 2001
|                                           |                                                            |  | 
|Current liabilities                        |                                                            |  |  |  |  |      |         |        |   |  |  |  |      |   |         |        
|                                           | Bank loans                                                 |  |  |  |  |      | $       | 2.7    |   |  |  |  |      |   | $       | 1.6     |  
|                                           | Current portion of long-term debt                          |  |  |  |  |      |         | 29.2   |   |  |  |  |      |   |         | 7.2     |  
|                                           | Trade accounts payable to SITA, Radianz and France Telecom |  |  |  |  |      |         | 44.2   |   |  |  |  |      |   |         | 451.4   |  
|                                           | Trade accounts payable, other                              |  |  |  |  |      |         | 97.8   |   |  |  |  |      |   |         | 127.8   |  
|                                           | Accrued liabilities                                        |  |  |  |  |      |         | 155.0  |   |  |  |  |      |   |         | 349.2   |  
|                                           | Deferred income                                            |  |  |  |  |      |         | 27.0   |   |  |  |  |      |   |         | 75.6    |  
|                                           | Employee liabilities                                       |  |  |  |  |      |         | 16.2   |   |  |  |  |      |   |         | 80.7    |  
|                                           | Deferred income taxes                                      |  |  |  |  |      |         | 0.4    |   |  |  |  |      |   |         | -       |  
|                                           | Taxation liabilities                                       |  |  |  |  |      |         | 41.3   |   |  |  |  |      |   |         | 91.2    |  
|                                           | Other current liabilities                                  |  |  |  |  |      |         | 32.1   |   |  |  |  |      |   |         | 121.1   |  
|                                           |                                                            |  | 
|                                           | Total current liabilities                                  |  |  |  |  |      |         | 445.9  |   |  |  |  |      |   |         | 1,305.8 |  
|                                           |                                                            |  | 
|Non-current liabilities                    |                                                            |  |  |  |  |      |         |        |   |  |  |  |      |   |         |        
|                                           | Provisions for liabilities and charges                     |  |  |  |  |      |         | 19.6   |   |  |  |  |      |   |         | 29.6    |  
|                                           | Long-term debt, less current portion                       |  |  |  |  |      |         | 404.5  |   |  |  |  |      |   |         | 4.0     |  
|                                           | Deferred income taxes                                      |  |  |  |  |      |         | 3.3    |   |  |  |  |      |   |         | -       |  
|                                           | Other non-current liabilities                              |  |  |  |  |      |         | 91.6   |   |  |  |  |      |   |         | 101.8   |  
|                                           |                                                            |  | 
|                                           | Total non-current liabilities                              |  |  |  |  |      |         | 519.0  |   |  |  |  |      |   |         | 135.4   |  
|                                           |                                                            |  | 
|Minority interests                         |                                                            |  |  |  |  |      | 0.4     |        |   |  |  |  |      |   | 0.4     |        
|Shareholders equity                       |                                                            |  |  |  |  |      |         |        |   |  |  |  |      |   |         |        
|                                           | Ordinary shares                                            |  |  |  |  |      |         | 2.4    |   |  |  |  |      |   |         | 3.2     |  
|                                           | Convertible preference shares                              |  |  |  |  |      |         |       |   |  |  |  |      |   |         | 0.1     |  
|                                           | Additional paid-in capital                                 |  |  |  |  |      |         | 958.6  |   |  |  |  |      |   |         | 2,912.4 |  
|                                           | Accumulated deficit                                        |  |  |  |  |      |         | (103.9 | ) |  |  |  |      |   |         | (148.2  | )
|                                           | Net loss for the year                                      |  |  |  |  |      |         | (47.9  | ) |  |  |  |      |   |         | (376.4  | )
|                                           | Statutory reserves                                         |  |  |  |  |      |         | 0.9    |   |  |  |  |      |   |         | 0.8     |  
|                                           | Cumulative foreign currency translation adjustment         |  |  |  |  |      |         | (68.5  | ) |  |  |  |      |   |         | (114.4  | )
|                                           |                                                            |  | 
|                                           | Total shareholders equity                                 |  |  |  |  |      |         | 741.6  |   |  |  |  |      |   |         | 2,277.5 |  
|                                           |                                                            |  | 
|Total liabilities and shareholders equity |                                                            |  |  |  |  | $    | 1,706.9 |        |   |  |  |  |      | $ | 3,719.1 |        
|                                           |                                                            |  | 

The accompanying notes are an integral part of the consolidated financial statements

F-6



---



##### 



Equant N.V.

Consolidated Statements of Cash Flows
(US dollars in millions, unless otherwise stated)

|                                                                              |                                                                  |  |  |  |  |      |       |       |      |   |       |       |   |  |  |      |  |   |        |        |  
|----------------------------------------------------------------------------- | ---------------------------------------------------------------- |  |  |  |  | ---- | ----- | ----- | ---- | - | ----- | ----- | - |  |  | ---- |  | - | ------ | ------ | -
|Years ended December 31                                                       |                                                                  |  |  |  |  | 1999 |       |       | 2000 |   |       |       |   |  |  | 2001
|                                                                              |                                                                  |  |  |  | 
|Operating activities                                                          |                                                                  |  |  |  |  |      |       |       |      |   |       |       |   |  |  |      |  |   |        |       
|                                                                              | Net profit/(loss)                                                |  |  |  |  |      | $     | 12.0  |      |   | $     | (47.9 | ) |  |  |      |  |   | $      | (376.4 | )
|Adjustments to reconcile net profit/(loss) to funds generated
from operations |                                                                  |  |  |  |  |      |       |       |      |   |       |       |   |  |  |      |  |   |        |       
|                                                                              | Minority interests                                               |  |  |  |  |      |       | 0.9   |      |   |       | 0.3   |   |  |  |      |  |   |        | 0.6    |  
|                                                                              | Loss on sale of equipment                                        |  |  |  |  |      |       | 0.3   |      |   |       | 0.4   |   |  |  |      |  |   |        | 14.2   |  
|                                                                              | Depreciation and amortization                                    |  |  |  |  |      |       | 110.0 |      |   |       | 182.9 |   |  |  |      |  |   |        | 320.9  |  
|                                                                              | Non-cash compensation expense                                    |  |  |  |  |      |       |      |      |   |       |      |   |  |  |      |  |   |        | (7.1   | )
|                                                                              | Non-cash restructuring expense                                   |  |  |  |  |      |       |      |      |   |       | 2.6   |   |  |  |      |  |   |        | 3.1    |  
|                                                                              | Gain on disposal of discontinued operations                      |  |  |  |  |      |       |      |      |   |       |      |   |  |  |      |  |   |        | (13.4  | )
|                                                                              | Non-operating finance charges                                    |  |  |  |  |      |       | (0.8  | )    |   |       |      |   |  |  |      |  |   |        | 2.1    |  
|                                                                              | Impairment provision                                             |  |  |  |  |      |       |      |      |   |       | 22.1  |   |  |  |      |  |   |        | 13.1   |  
|                                                                              | Equity in loss of affiliate                                      |  |  |  |  |      |       |      |      |   |       | 9.5   |   |  |  |      |  |   |        | 25.3   |  
|                                                                              | Deferred income taxes                                            |  |  |  |  |      |       | 2.5   |      |   |       | (10.7 | ) |  |  |      |  |   |        | 41.3   |  
|                                                                              |                                                                  |  |  |  | 
|Funds generated from operations                                               |                                                                  |  |  |  |  |      | 124.9 |       |      |   | 159.2 |       |   |  |  |      |  |   | 23.7   |       
|                                                                              |                                                                  |  |  |  | 
|Changes in operating assets and liabilities                                   |                                                                  |  |  |  |  |      |       |       |      |   |       |       |   |  |  |      |  |   |        |       
|                                                                              | Change in trading balances with SITA, Radianz and France Telecom |  |  |  |  |      |       | (20.8 | )    |   |       | (43.8 | ) |  |  |      |  |   |        | (68.2  | )
|                                                                              | Accounts and lease receivables                                   |  |  |  |  |      |       | (35.3 | )    |   |       | (72.3 | ) |  |  |      |  |   |        | (42.1  | )
|                                                                              | Inventories                                                      |  |  |  |  |      |       | (2.8  | )    |   |       | (10.4 | ) |  |  |      |  |   |        | 13.8   |  
|                                                                              | Deferred income taxes                                            |  |  |  |  |      |       | 3.1   |      |   |       | 9.2   |   |  |  |      |  |   |        | (2.1   | )
|                                                                              | Sales and other taxes recoverable                                |  |  |  |  |      |       | (3.4  | )    |   |       | (30.2 | ) |  |  |      |  |   |        | 38.2   |  
|                                                                              | Other assets and prepaid costs                                   |  |  |  |  |      |       | (1.4  | )    |   |       | (40.6 | ) |  |  |      |  |   |        | (44.5  | )
|                                                                              | Long-term accounts and lease receivables                         |  |  |  |  |      |       | (17.9 | )    |   |       | (13.3 | ) |  |  |      |  |   |        | 9.8    |  
|                                                                              | Accounts payable and accrued liabilities                         |  |  |  |  |      |       | 22.3  |      |   |       | 111.9 |   |  |  |      |  |   |        | 4.0    |  
|                                                                              | Deferred income                                                  |  |  |  |  |      |       | (4.7  | )    |   |       | 17.0  |   |  |  |      |  |   |        | 37.8   |  
|                                                                              | Employee liabilities                                             |  |  |  |  |      |       | (1.6  | )    |   |       | 1.9   |   |  |  |      |  |   |        | (10.2  | )
|                                                                              | Taxation liabilities                                             |  |  |  |  |      |       | 4.0   |      |   |       | 11.5  |   |  |  |      |  |   |        | (40.2  | )
|                                                                              | Other current and non-current liabilities                        |  |  |  |  |      |       | 30.0  |      |   |       | (30.9 | ) |  |  |      |  |   |        | (37.4  | )
|                                                                              |                                                                  |  |  |  | 
|Total changes in operating assets and liabilities                             |                                                                  |  |  |  |  |      | (28.5 | )     |      |   | (90.0 | )     |   |  |  |      |  |   | (141.1 | )     
|                                                                              |                                                                  |  |  |  | 
|Net cash provided by/(used in) operating activities                           |                                                                  |  |  |  |  | $    | 96.4  |       |      | $ | 69.2  |       |   |  |  |      |  | $ | (117.4 | )     
|                                                                              |                                                                  |  |  |  | 

The accompanying notes are an integral part of the consolidated financial statements

F-7



---



##### 



Equant N.V.

Consolidated Statements of Cash Flows continued
(US dollars in millions, unless otherwise stated)

|                                                                 |                                                                                                     |  |  |  |  |      |        |        |      |   |        |        |   |  |  |      |  |   |        |         |  
|---------------------------------------------------------------- | --------------------------------------------------------------------------------------------------- |  |  |  |  | ---- | ------ | ------ | ---- | - | ------ | ------ | - |  |  | ---- |  | - | ------ | ------- | -
|Years ended December 31                                          |                                                                                                     |  |  |  |  | 1999 |        |        | 2000 |   |        |        |   |  |  | 2001
|                                                                 |                                                                                                     |  |  |  | 
|Investing activities                                             |                                                                                                     |  |  |  |  |      |        |        |      |   |        |        |   |  |  |      |  |   |        |        
|                                                                 | Purchase of property and equipment                                                                  |  |  |  |  |      | $      | (226.8 | )    |   | $      | (306.8 | ) |  |  |      |  |   | $      | (285.2  | )
|                                                                 | Proceeds from disposal of equipment                                                                 |  |  |  |  |      |        | 1.2    |      |   |        | 0.9    |   |  |  |      |  |   |        | 6.1     |  
|                                                                 | Purchase of intangible assets                                                                       |  |  |  |  |      |        | (53.7  | )    |   |        | (45.3  | ) |  |  |      |  |   |        | (127.0  | )
|                                                                 | Proceeds from disposal of intangible assets                                                         |  |  |  |  |      |        |       |      |   |        |       |   |  |  |      |  |   |        | 7.4     |  
|                                                                 | Net cash effect of acquisitions (including cash in acquired companies
in 1999 $nil, in 2001 $295.3) |  |  |  |  |      |        | (72.7  | )    |   |        |       |   |  |  |      |  |   |        | 265.9   |  
|                                                                 | Proceeds from disposal of discontinued operations                                                   |  |  |  |  |      |        |       |      |   |        |       |   |  |  |      |  |   |        | 3.6     |  
|                                                                 | Net cash invested in investments accounted for under the equity method                              |  |  |  |  |      |        |       |      |   |        | (229.0 | ) |  |  |      |  |   |        | -       |  
|                                                                 | Net cash invested in investments accounted at cost                                                  |  |  |  |  |      |        |       |      |   |        | (40.2  | ) |  |  |      |  |   |        | -       |  
|                                                                 |                                                                                                     |  |  |  | 
|Net cash used in investing activities                            |                                                                                                     |  |  |  |  |      | (352.0 | )      |      |   | (620.4 | )      |   |  |  |      |  |   | (129.2 | )      
|                                                                 |                                                                                                     |  |  |  | 
|Financing activities                                             |                                                                                                     |  |  |  |  |      |        |        |      |   |        |        |   |  |  |      |  |   |        |        
|                                                                 | Proceeds from issuance of shares                                                                    |  |  |  |  |      |        |       |      |   |        | 1.4    |   |  |  |      |  |   |        | 1,000.0 |  
|                                                                 | Cost of issuance of shares                                                                          |  |  |  |  |      |        | (0.7   | )    |   |        |       |   |  |  |      |  |   |        | -       |  
|                                                                 | Increase in bank overdrafts                                                                         |  |  |  |  |      |        |       |      |   |        | 2.5    |   |  |  |      |  |   |        | -       |  
|                                                                 | Increase in short-term borrowings                                                                   |  |  |  |  |      |        |       |      |   |        | 18.7   |   |  |  |      |  |   |        | -       |  
|                                                                 | Net repayment of short-term borrowings and bank overdrafts                                          |  |  |  |  |      |        | (6.4   | )    |   |        | (3.4   | ) |  |  |      |  |   |        | (24.7   | )
|                                                                 | Proceeds from sale of interest rate caps                                                            |  |  |  |  |      |        | 0.8    |      |   |        |       |   |  |  |      |  |   |        | -       |  
|                                                                 | Proceeds from long-term borrowing                                                                   |  |  |  |  |      |        | 59.6   |      |   |        | 400.0  |   |  |  |      |  |   |        | 202.0   |  
|                                                                 | Repayment of long-term borrowing                                                                    |  |  |  |  |      |        | (48.0  | )    |   |        | (17.8  | ) |  |  |      |  |   |        | (602.5  | )
|                                                                 | Dividends paid by subsidiaries to minority shareholders                                             |  |  |  |  |      |        | (0.4   | )    |   |        | (0.5   | ) |  |  |      |  |   |        | -       |  
|                                                                 |                                                                                                     |  |  |  | 
|Net cash provided by financing activities                        |                                                                                                     |  |  |  |  |      | 4.9    |        |      |   | 400.9  |        |   |  |  |      |  |   | 574.8  |        
|                                                                 |                                                                                                     |  |  |  | 
|Effect of changes in exchange rates on cash and cash equivalents |                                                                                                     |  |  |  |  |      | 4.7    |        |      |   | (2.1   | )      |   |  |  |      |  |   | 4.1    |        
|                                                                 |                                                                                                     |  |  |  | 
|(Decrease)/increase in cash and cash equivalents                 |                                                                                                     |  |  |  |  |      | (246.0 | )      |      |   | (152.4 | )      |   |  |  |      |  |   | 332.3  |        
|Cash and cash equivalents at beginning of the year               |                                                                                                     |  |  |  |  |      | 451.9  |        |      |   | 205.9  |        |   |  |  |      |  |   | 53.5   |        
|                                                                 |                                                                                                     |  |  |  | 
|Cash and cash equivalents at end of the year                     |                                                                                                     |  |  |  |  | $    | 205.9  |        |      | $ | 53.5   |        |   |  |  |      |  | $ | 385.8  |        
|                                                                 |                                                                                                     |  |  |  | 

The table below provides supplemental cash flow information:

|                                   |  |      |      |      |  |   |       |  |  |      |  |  |  |   |         | 
|---------------------------------- |  | ---- | ---- | ---- |  | - | ----- |  |  | ---- |  |  |  | - | ------- | 
|Years ended December 31            |  | 1999 |      | 2000 |  |   |       |  |  | 2001
|                                   |  |      |      |      | 
|Supplemental cash flow information |  |      |      |      |  |   |       |  |  |      |  |  |  |   |         | 
|Income taxes paid                  |  | $    | 8.6  |      |  | $ | 9.3   |  |  |      |  |  |  | $ | 6.8     | 
|Interest paid                      |  |      | 3.8  |      |  |   | 19.1  |  |  |      |  |  |  |   | 30.4    | 
|Cash acquisitions                  |  |      | 74.5 |      |  |   | 269.2 |  |  |      |  |  |  |   | -       | 
|Non-cash investing activities      |  | $    |     |      |  | $ | 90.0  |  |  |      |  |  |  | $ | 1,484.5 | 
|                                   |  |      |      |      | 

The accompanying notes are an integral part of the consolidated financial statements

F-8



---



##### 



Equant N.V.

Consolidated Statements of Shareholders Equity
(US dollars in millions, unless otherwise stated)

|                                        |  |           |             |            |  |          |     |             |  |            |         |           |  |             |        |               |  |        |        |          |  |       |      |         |  |            |        |   |  |   |         |  
|--------------------------------------- |  | --------- | ----------- | ---------- |  | -------- | --- | ----------- |  | ---------- | ------- | --------- |  | ----------- | ------ | ------------- |  | ------ | ------ | -------- |  | ----- | ---- | ------- |  | ---------- | ------ | - |  | - | ------- | -
|                                        |  |           |             |            |  |          |     |             |  |            |         |           |  |             |        |               |  |        |        |          |  |       |      |         |  | Cumulative |        |   |  |  
|                                        |  |           |             |            |  | Ordinary |     |             |  |            |         |           |  |             |        |               |  |        |        |          |  |       |      | foreign |  |            |        |  
|                                        |  |           |             |            |  | and      |     | Additional  |  |            |         |           |  | Net profit/ |        |               |  |        |        | currency |  | Total
|                                        |  | Number of |             | preference |  | paid-in  |     | Accumulated |  | (loss) for |         | Statutory |  | translation |        | shareholders'
|                                        |  |           | shares      |            |  | shares   |     | capital     |  | deficit    |         | year      |  | reserves    |        | adjustment    |  | equity
|                                        |  |           |             |            |  |          |     |             |  |            |         |           |  |             |        |               |  |       
|Balance at January 1, 1999              |  |           | 201,477,046 |            |  | $        | 2.4 |             |  | $          | 958.0   |           |  | $           | (81.3  | )             |  | $      | (34.7  | )        |  | $     | 1.1  |         |  | $          | (10.3  | ) |  | $ | 835.2   |  
|Transfer of prior year result           |  |           |             |            |  |          |     |             |  |            |         |           |  |             | (34.7  | )             |  |        | 34.7   |          |  |       |      |         |  |            |        |   |  |   |         |  
|Net income for the year 1999            |  |           |             |            |  |          |     |             |  |            |         |           |  |             |        |               |  |        | 12.0   |          |  |       |      |         |  |            |        |   |  |   | 12.0    |  
|Cost of issue of stock                  |  |           |             |            |  |          |     |             |  |            | (0.8    | )         |  |             |        |               |  |        |        |          |  |       |      |         |  |            |        |   |  |   | (0.8    | )
|Unrealized translation
adjustments      |  |           |             |            |  |          |     |             |  |            |         |           |  |             |        |               |  |        |        |          |  |       |      |         |  |            | (33.0  | ) |  |   | (33.0   | )
|Transfers                               |  |           |             |            |  |          |     |             |  |            |         |           |  |             | (0.1   | )             |  |        |        |          |  |       | 0.1  |         |  |            |        |   |  |   |        |  
|                                        |  |           |             |            |  |          |     |             |  |            |         |           |  |             |       
|Balance at December 31, 1999            |  |           | 201,477,046 |            |  | $        | 2.4 |             |  | $          | 957.2   |           |  | $           | (116.1 | )             |  | $      | 12.0   |          |  | $     | 1.2  |         |  | $          | (43.3  | ) |  | $ | 813.4   |  
|                                        |  |           |             |            |  |          |     |             |  |            |         |           |  |             |       
|Transfer of prior year result           |  |           |             |            |  |          |     |             |  |            |         |           |  |             | 12.0   |               |  |        | (12.0  | )        |  |       |      |         |  |            |        |   |  |   |         |  
|Net loss for the year 2000              |  |           |             |            |  |          |     |             |  |            |         |           |  |             |        |               |  |        | (47.9  | )        |  |       |      |         |  |            |        |   |  |   | (47.9   | )
|Issuance of stock options               |  |           | 81,509      |            |  |          |     |             |  |            | 1.4     |           |  |             |        |               |  |        |        |          |  |       |      |         |  |            |        |   |  |   | 1.4     |  
|Unrealized translation
adjustments      |  |           |             |            |  |          |     |             |  |            |         |           |  |             |        |               |  |        |        |          |  |       | (0.1 | )       |  |            | (25.2  | ) |  |   | (25.3   | )
|Transfers                               |  |           |             |            |  |          |     |             |  |            |         |           |  |             | 0.2    |               |  |        |        |          |  |       | (0.2 | )       |  |            |        |   |  |   |        |  
|                                        |  |           |             |            |  |          |     |             |  |            |         |           |  |             |       
|Balance at December 31, 2000            |  |           | 201,558,555 |            |  | $        | 2.4 |             |  | $          | 958.6   |           |  | $           | (103.9 | )             |  | $      | (47.9  | )        |  | $     | 0.9  |         |  | $          | (68.5  | ) |  | $ | 741.6   |  
|                                        |  |           |             |            |  |          |     |             |  |            |         |           |  |             |       
|Transfer of prior year result           |  |           |             |            |  |          |     |             |  |            |         |           |  |             | (47.9  | )             |  |        | 47.9   |          |  |       |      |         |  |            |        |   |  |   |         |  
|Net loss for the year 2001              |  |           |             |            |  |          |     |             |  |            |         |           |  |             |        |               |  |        | (376.4 | )        |  |       |      |         |  |            |        |   |  |   | (376.4  | )
|Issuance of common shares               |  |           | 80,617,348  |            |  |          | 0.8 |             |  |            | 1,454.3 |           |  |             |        |               |  |        |        |          |  |       |      |         |  |            |        |   |  |   | 1,455.1 |  
|Issuance of preference shares           |  |           | 10,000,000  |            |  |          | 0.1 |             |  |            | 999.9   |           |  |             |        |               |  |        |        |          |  |       |      |         |  |            |        |   |  |   | 1,000.0 |  
|Issuance of stock options               |  |           | 528,246     |            |  |          |     |             |  |            |        |           |  |             |        |               |  |        |        |          |  |       |      |         |  |            |        |   |  |   | -       |  
|Difference on acquisition
of Global One |  |           |             |            |  |          |     |             |  |            | (500.4  | )         |  |             |        |               |  |        |        |          |  |       |      |         |  |            |        |   |  |   | (500.4  | )
|Unrealized translation
adjustments      |  |           |             |            |  |          |     |             |  |            |         |           |  |             |        |               |  |        |        |          |  |       |      |         |  |            | (42.4  | ) |  |   | (42.4   | )
|Transfers                               |  |           |             |            |  |          |     |             |  |            |         |           |  |             | 3.6    |               |  |        |        |          |  |       | (0.1 | )       |  |            | (3.5   | ) |  |   | -       |  
|                                        |  |           |             |            |  |          |     |             |  |            |         |           |  |             |       
|Balance at December 31, 2001            |  |           | 292,704,149 |            |  | $        | 3.3 |             |  | $          | 2,912.4 |           |  | $           | (148.2 | )             |  | $      | (376.4 | )        |  | $     | 0.8  |         |  | $          | (114.4 | ) |  | $ | 2,277.5 |  
|                                        |  |           |             |            |  |          |     |             |  |            |         |           |  |             |       

The accompanying notes are an integral part of the consolidated financial
statements

F-9



---



##### 



Equant N.V.

Notes to the Consolidated Financial Statements
(US dollars in millions, unless otherwise stated)

1. Organization and Description of Business

Equant N.V. (the Company or Equant) has its statutory seat in Amsterdam,
The Netherlands, and is one of the worlds leading providers of seamless
international data network services to multinational businesses. As a single
source for global communications, the Companys network may be connected
directly to the desktop, or it may be accessed remotely from portable
computers or other network access interfaces. In addition, the Company
provides ancillary services to complement data and voice networks, including
project management and technology consulting as well as managed services
including security, groupware and hosting.

Initial public offering and secondary offerings

In July 1998, Equant sold 30,048,486 ordinary shares through a public equity
offering on the New York Stock Exchange in the United States and on the
Bourse de Paris in France.

On February 17, 1999, the Company completed a secondary public equity
offering of 48,300,000 ordinary shares on behalf of Stichting The SITA
Foundation (the Foundation), certain investment funds which Morgan
Stanley Dean Witter Capital Partners managed (the MSDWCP Funds) and
Company employees. The Foundation consists of the members of Societe
International de Telecommunications Aeronautiques S.C. (SITA S.C. or
SITA) that had a shareholding in Equant and is separately constituted and
managed from SITA.

On December 3, 1999, the Company sold 46 million ordinary shares to the
public on behalf of the Foundation and the MSDWCP Funds.

As a result of these offerings, public ownership of the Company increased to
62.1% at December 31, 1999.

All shares held by the Foundation until December 2, 1999, formed a class of
Shares (the Class A shares) separate from the issued shares held by other
shareholders, as a result of certain additional rights (the Foundation
Rights) granted. The formation of the Class A shares and the accompanying
Foundation Rights terminated on that date. As a result all issued ordinary
shares are of a single class.

France Telecom Transactions

In November 2000, the Foundation, then the largest shareholder of the
Company, announced that its Board had entered into a share purchase
agreement (the Share Purchase Agreement) with France Telecom S.A. (France
Telecom) to sell its entire shareholding of approximately 68 million
ordinary shares in Equant. France Telecom would also acquire 10 million new
Equant convertible preference shares for $1 billion in cash. Additionally,
France Telecom would issue to the Companys public shareholders one
Contingent Value Right (CVR) in respect of each Equant ordinary share held
by the Companys shareholders. A CVR entitles shareholders, except France
Telecom and the Foundation, up to 15 in cash per CVR held immediately
following the third anniversary of the closing of these transactions,
depending upon market conditions of Equant ordinary shares at such time.
Concurrent with this announcement, and subject to completion of the Share
Purchase Agreement, the Company announced that its Board had approved a
Contribution Agreement (the Contribution Agreement) with France Telecom
and Atlas Telecommunications S.A. (Atlas)  a wholly-owned subsidiary of
France Telecom and holding company for both Global One Communications
Holdings B.V. and Global One Communications World Holdings B.V.
(collectively referred to as Global One). Pursuant to the Contribution
Agreement, Equant would acquire 100% of the share capital of Global One from
Atlas in exchange for 80,617,348 newly issued Equant ordinary shares. In
addition, the Company also announced that it had entered into an agreement
with France Telecom and SITA to replace the Companys joint venture with
SITA with a new agreement whereby, among other things, the Company would
assume full control of the network of SITA Equant S.C. (the SITA Equant
network Joint Venture).

F-10



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##### 



Equant N.V.

Notes to the Consolidated Financial Statementscontinued
(US dollars in millions, unless otherwise stated)

1. Organization and Description of Businesscontinued

France Telecom Transactionscontinued

Under the Contribution Agreement, the Calling Card and Voice Carrier
Services businesses of Global One are to be transferred out of Global One to
France Telecom within 12 months of completion of the transactions described
above. The Calling Card and Voice Carrier Services businesses are
collectively referred to as Excluded Businesses (see also Calling cards
and voice carrier services in Note 23).

The above transactions, collectively referred to as France Telecom
Transactions, were completed under the conditions specified above on June
29, 2001. As a result, the Company merged the operations of Equant, Global
One and the SITA Equant network Joint Venture, and France Telecom became the
majority shareholder of the combined Company with an approximate ownership
of 54.3%. As a result of the France Telecom Transactions, Equant is
consolidated in the Financial Statements of France Telecom. These Financial
Statements can be obtained from France Telecom, 6 Place dAlleray, 75505
Paris Cedex, France.

2. Future Financing Requirements

The Company has budgeted significant future funding requirements. Operating
results before non-recurring charges were profits of $24.2 in 1999 and $34.4
in 2000, and losses of $156.8 in 2001. Net cash flows from operating
activities were inflows of $96.4 in 1999 and $69.2 in 2000, and a net cash
outflow of $117.4 in 2001. Additionally, Global One, whose accounts were
prepared under generally accepted accounting principles in the United States
of America, reported operating losses of $793.7 in 1999 and $832.6 in 2000,
and net cash outflows from operating activities of $553.3 in 1999 and $556.1
in 2000.

Equant incurs substantial capital expenditures. Investment in network
equipment and other assets amounted to $280.5 in 1999, $352.1 in 2000 and
$412.2 in 2001. The Company expects substantial capital investment to
continue for the foreseeable future.

At December 31, 2001, Equant had $385.8 of cash and cash equivalents,
including amounts deposited with France Telecom of $237.5. In addition,
under the terms of the Contribution Agreement between France Telecom and the
Company, France Telecom committed to meet 50% of the costs of integrating
Equant, Global One and the SITA Equant network Joint Venture, subject to
certain limits (see Note 6).

France Telecom has offered to make available to the Company a $250 revolving
credit facility agreement and a $50 treasury management agreement. The terms
of these agreements, as currently offered, are set out below. The Company
has until June 1, 2002 to decide whether to accept these agreements.

Under the revolving credit facility, France Telecom will make available to
the Company a maximum of $250. Drawdowns will be available in a variety of
currencies during the period June 3, 2002 until September 30, 2003. Interest
will be charged at 120 basis points above the inter bank offering rate on
the amount drawn down under the facility. The facility will have a final
maturity on September 30, 2007.

Under the treasury management agreement, France Telecom will make available
to the Company a maximum of $50 in a variety of currencies. Interest will be
charged at LIBOR plus 40 basis points on the net balance outstanding under
the agreement. The terms of the agreement will be subject to renewal on
December 31 each year.

Management considers that its existing cash resources and the commitments
from France Telecom are sufficient to fund its operations for at least 12
months from the date of these Financial Statements and have therefore
prepared the Financial Statements on a going concern basis.

F-11



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##### 



Equant N.V.

Notes to the Consolidated Financial Statementscontinued
(US dollars in millions, unless otherwise stated)

3. Significant Accounting Policies

Basis of preparation

The Company has adopted generally accepted accounting principles in France
(French GAAP) to present financial information in a manner consistent with
France Telecom, the Companys majority shareholder. The Financial Statements
of the Company have been prepared in accordance with French GAAP and Rule
99-02 of the Comite de la Reglementation Comptable (CRC).

Presentation of the Consolidated Financial Statements

Assets and liabilities are classified based on liquidity or maturity dates,
with short-term balances (due within one year) shown separately from
long-term balances. Unless indicated otherwise, assets and liabilities are
stated at face value.

The Consolidated Statement of Operations includes additional disclosure of
Share plan costs and Non-recurring charges as separate line items.
The results arising from discontinued operations are separately disclosed
after results from continuing operations. These additional line items are
defined in the accounting policies for Stock based compensation,
Non-recurring charges and Discontinued operations respectively.

The principal accounting policies, which have been presented consistently in
all periods presented in these Financial Statements, are stated below:

Use of estimates in the preparation of financial statements

The preparation of financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
balance sheet date and the reported amounts of revenues and expenses in the
reporting period. Actual results could differ from those estimates.

Translation of foreign currencies

All assets and liabilities of foreign subsidiaries are translated into US
dollars at the exchange rates in effect at the balance sheet date. Income
and expense items of foreign subsidiaries are translated at the average
exchange rates for the period. Net exchange gains or losses resulting from
such translation are included in Cumulative foreign currency translation
adjustment within Shareholders equity.

Gains and losses from foreign currency transactions are included in
Financial income/(charges), in the Consolidated Statement of Operations in
the period during which they arise.

Exchange gains and losses on foreign currency investments and loans of a
long-term nature are reported as Cumulative foreign currency translation
adjustments in Shareholders equity.

The Company maintains its financial records in US dollars. All amounts
stated in these Consolidated Financial Statements are in millions of US
dollars unless otherwise stated, or prefixed US$ in which case the amounts
stated are single units. Approximately 67% of the Companys revenues were
accounted for in US dollars in 2001.

Consolidation principles

Companies which are fully owned, or which the Company controls, are fully
consolidated. Investments in businesses over which Equant N.V. does not have
control, but has the ability to exercise significant influence over
operating and financial policies, are accounted for using the equity method.
All significant inter-company accounts and transactions have been
eliminated.

F-12



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##### 



Equant N.V.

Notes to the Consolidated Financial Statementscontinued
(US dollars in millions, unless otherwise stated)

3. Significant Accounting Policiescontinued

Purchase accounting

Earnings for acquired companies are included for the period subsequent to
the acquisition date.

The acquisition of Global One has been accounted for under the purchase
method of accounting under paragraph 215 of CRC Rule 99-02. Under this
method, the historical carrying value of the acquired business is carried
over in the acquirers financial statements because Equant acquired over 90%
of the shares of Global One in a single transaction, settled through a share
issue by the Company. In acquisitions where the requirements of paragraph
215 of CRC Rule 99-02 are not fulfilled, the excess of the cost over the
fair value of the net assets acquired is recorded as Goodwill.

Revenue recognition

Sale of services

Revenues for sale of data transmission, voice and value added services,
collectively referred to as Services, including sales of equipment under
operating type leases, are recognized when services are rendered. Revenues
are billed in accordance with the customers contracts, and accordingly may
represent both a period fee and usage component. Payments received from
customers before the relevant criteria for revenue recognition are satisfied
are included in deferred revenue in the Consolidated Balance Sheet. For
other product sales and services, revenues are recognized when products are
delivered or services are rendered to customers and all significant
obligations have been satisfied. Certain maintenance services are billed in
advance in accordance with contractual arrangements and related revenues are
initially deferred and recognized as services are provided. Certain costs
incurred on behalf of and recovered from France Telecom are excluded from
Revenues and included in Other operating income.

Sales-type leases

Revenues from sale of technical equipment to customers that meet the
criteria of sales-type lease accounting are recognized in the period that
the rights and obligations of ownership transfer to the purchaser.

Other operating income

As a consequence of expansion and realignment of the business of the
enlarged Company, during the year, certain services have been provided to
affiliates of France Telecom (the Affiliates) in respect of switched voice
and network IP services totaling $146.4 (1999 and 2000: $nil). These
services are provided by Equant in those locations in which it has
infrastructure that is utilized by, and recharged to, the Affiliates in
accordance with contractual agreements. This reimbursement of network costs
is recorded as Other operating income.

Equant also utilizes the equivalent network capacity of the Affiliates in
certain countries providing service to its customers and recognizes these
network costs as a Cost of services and products sold. The related billing
to customers is recorded as revenue.

F-13



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##### 



Equant N.V.

Notes to the Consolidated Financial Statementscontinued
(US dollars in millions, unless otherwise stated)

3. Significant Accounting Policiescontinued

Stock based compensation

Share plan costs relate to the income or expense arising from the
repurchase of shares on the open market, the issue of shares held in
treasury, and social charges payable by the Company on share option and
share award plans.

Share option and share award plans are excluded from the balance sheet until
such time the grant or award is vested. If the Company issues new shares to
satisfy the exercise, then the difference between the par value and the
exercise price is recorded as an addition to Additional paid-in capital, a
component of Shareholders equity, with no impact to the Consolidated
Statement of Operations. If the Company repurchases shares on the open
market or issues shares held in treasury, then the difference between the
repurchase price of the shares and the exercise price is recorded as a
charge in the Consolidated Statement of Operations, within Share plan
costs.

Social charges payable by the Company on the fair value of shares granted
are accrued over the period between the dates of granting and vesting, based
on the expected exercise rates, and charged to Share plan costs.

Non-recurring charges

Non-recurring charges relate to the costs of restructuring the Companys
operations.

Non-recurring charges are shown as a separate line in the Consolidated
Statement of Operations and include amounts arising from significant
reorganizations of the Company. Amounts recoverable from France Telecom in
respect of the restructuring and integration of Equant, Global One and the
SITA Equant network Joint Venture in accordance with the Contribution
Agreement (see Note 6) are shown as a reduction to non-recurring charges.

Income taxes

Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized reflecting the
differences between the financial statement carrying amounts of existing
assets and liabilities and their respective tax bases and operating loss and
tax credit carry forwards. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in future years
in which those temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities of a change in
tax rates is recognized in income in the period enacted. Deferred tax assets
are recognized to the extent that their recovery is considered probable.

Research and development costs

The Company does not engage in basic research. The Company engages in a
measure of technical research focused principally on monitoring emergent
technologies and the manner in which they can be adapted for commercial use.
The research and development activities are focused on new applications and
product development using industry-wide protocols and are expensed as
incurred.

Advertising

Advertising costs are expensed as incurred. Advertising costs incurred in
the years ended December 31, 1999, 2000 and 2001 were $4.8, $4.5 and $4.6
respectively. In 2001, the Company also incurred $6.7 of cost related to
branding the new organization. These costs are included within
Restructuring and integration of Equant, Global One and SITA Equant network
Joint Venture, a component of Non-recurring charges.

F-14



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##### 



Equant N.V.

Notes to the Consolidated Financial Statementscontinued
(US dollars in millions, unless otherwise stated)

3. Significant Accounting Policiescontinued

Discontinued operations

Results of discontinued operations are aggregated into a single line and the
results for all periods presented in the Consolidated Statements of
Operations are restated. The results of discontinued operations are stated
net of income taxes.

Cash and cash equivalents

Cash and cash equivalents are defined as highly liquid investments with
original maturity of 90 days or less.

Accounts receivable

Accounts receivable are reduced to net realizable value by an allowance for
doubtful accounts.

Inventories

Inventories are stated at the lower of cost (determined principally on the
first-in, first-out basis) or market value. Provisions for potentially
obsolete or slow-moving inventory are determined through managements
analysis of inventory levels and future sales or usage forecasts.
Maintenance spare parts and components are amortized on a straight-line
basis over three years, and the related expense is included within Cost of
services and products sold, in the Consolidated Statement of Operations.

Intangible assets

Intangible assets are stated at historical cost less amortization calculated
on a straight-line basis over the expected useful lives of the relevant
assets. Intangible assets include goodwill, indefeasible rights of use
(IRU), software applications and other items.

Goodwill

The excess of the cost over the fair value of the net assets of purchased
businesses, including unconsolidated affiliates, is recorded as goodwill and
is amortized on a straight-line basis over periods of 20 years or less. The
amortization period is determined by taking into account the specific nature
of each acquisition and has ranged from 5 to 20 years on historic
acquisitions.

Goodwill is subject to an impairment review when events or circumstances
occur indicating that an impairment might exist. Such events or
circumstances include significant adverse changes, other than temporary, in
the assumptions or expectations considered at the time of the acquisition.
The need to recognize an impairment is assessed with reference to
undiscounted cash flows arising from the economic and operating assumptions
used by the management of the Company. Impairment, where necessary, is
recorded as the difference between book value and fair value. Fair value is
determined based on future cash flows discounted at appropriate rates,
taking into account benefits expected at acquisition, such as synergies
expected to result from the integration of the business with the Companys
operations and the strategic position of the business for the Company.

IRU

An IRU is a right to use a specified amount of capacity on fiber optic
cables and related equipment for a specified time period. The rights that
the Company acquires from the IRU cannot be revoked or voided. IRUs are
capitalized as intangible assets and are amortized over the shorter of 10
years and the contract term.

F-15



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##### 



Equant N.V.

Notes to the Consolidated Financial Statementscontinued
(US dollars in millions, unless otherwise stated)

3. Significant Accounting Policiescontinued

Intangible assetscontinued

Software



Equant develops internal-use software. Equant defines internal-use software
as software acquired or internally developed or modified solely to meet the
internal needs of Equant. Internal and external costs incurred during the
preliminary project stage are expensed as incurred. Capitalization of such
costs begins upon completion of the preliminary project stage and upon
managements authorization and commitment to fund the software project, and
capitalization ceases at the point at which the computer software project is
substantially complete and ready for its intended use. Internal and external
costs for data conversion, training and maintenance are expensed as
incurred, and overhead costs are not capitalized. Software applications are
amortized over three to five years.

Property and equipment

Property and equipment are stated at historical cost less depreciation
calculated on a straight-line basis over the expected useful lives of the
relevant assets. Major renewals and improvements are capitalized while
maintenance and repairs are expensed when incurred.

Depreciation is calculated with reference to expected useful lives, which are generally as follows:

|                                               |  |                |  | 
|---------------------------------------------- |  | -------------- |  | 
|Owned buildings                                |  | 10 to 40 years
|Leasehold improvements                         |  | 10 to 40 years
|Network assets                                 |  | 3 to 10 years 
|Tools, test and demonstration equipment        |  | 3 to 5 years  
|Computer equipment                             |  | 3 to 5 years  
|Office equipment, furniture and motor vehicles |  | 3 to 10 years 

Assets acquired under capital lease arrangements are depreciated in
accordance with the expected useful lives detailed above or the lease terms
if shorter. In addition, network assets acquired under the interim funding
arrangements with SITA S.C. are capitalized and depreciated (see Note 14).

Impairment of long-lived assets (other than goodwill)

Property and equipment and intangible assets (excluding goodwill) are
written down when, as a result of events or changes in circumstances, their
recoverable value appears to be permanently less than their carrying value.
For assets to be held and used, impairment is principally determined for
each group of assets by comparing their carrying value with the undiscounted
cash flows they are expected to generate based upon managements
expectations of future economic and operating conditions. Network assets are
reviewed on a collective basis. At the time such evaluations indicate that
future cash flows are insufficient to recover the carrying value of such
assets, the assets are adjusted to their fair value.

Should the above comparison indicate that an asset is permanently impaired,
the write-down recognized is equivalent to the difference between carrying
value and fair value. Fair value is determined on the basis of discounted
cash flows or by reference to replacement cost for used equipment, cost of
alternative technologies or recent transactions for similar businesses, or
market prices.

Assets to be disposed of are written down to their fair value, less costs of
disposal, when such value is lower than their carrying value.

F-16



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##### 



Equant N.V.

Notes to the Consolidated Financial Statementscontinued
(US dollars in millions, unless otherwise stated)

3. Significant Accounting Policiescontinued

Other investments

Other investments consist of Investments accounted for under the equity
method and Investments at cost. Under the equity method, the investment
is initially recorded at Equants share of the net assets of the affiliate
and is increased or decreased by Equants proportionate share of the
entitys respective profits or losses. Dividends received from these
investees reduce the carrying value of the investments. The difference
between the cost of the investment and Equants share of net assets at the
date of acquisition is recorded as Goodwill.

Investments that are less than 20% owned, or where Equant does not have
significant influence, are stated at cost. Provisions for impairment in
value are recognized where management has estimated that net realizable
values are lower than cost.

Statutory reserves

In certain countries in which the Company operates, local regulations
require a proportion of the net earnings to be classified as statutory
reserves. Where this is applicable, retained earnings have been set aside at
the stipulated rate. These reserves are for the most part not available for
distribution, except on closure of operations. Statutory reserves are
reviewed annually in conjunction with the preparation of the Annual Reports
of relevant subsidiary companies, and are separately disclosed in the
Consolidated Statement of Shareholders Equity.

Provisions for liabilities and charges

The Company has implemented CRC Rule 2000-06 on provisions and reserves with
effect from January 1, 2000, whereby a provision is recorded when the
Company is committed to a course of action, and it is more likely than not
that a future liability will result. The implementation did not result in
any significant impact on the financial results of the Company.

Employee retirement benefit plans

The Company operates a mixture of defined benefit and defined contribution
pension plans. Such benefit plans vary according to the customary benefit
plans prevailing in the country concerned. In some countries the amount of
provision is determined in accordance with the obligations under statutory
post-employment benefit schemes. The contribution to the defined
contribution schemes, and the net periodic cost under the defined benefit
schemes as actuarially determined, are charged to the Consolidated Statement
of Operations.

The liability for end-of-service indemnities is accrued in accordance with
labor legislation in each country where such benefits are required.

Equipment on operating leases

Equant purchases equipment that is subsequently leased to customers under
operating leases. Income from operating leases is recognized over the term
of the lease. Depreciation takes into account the estimated residual values
of the leased equipment, which are calculated at the lease inception date.
Each of the assets is depreciated on a straight-line basis over a period
consistent with the term of the lease.

F-17



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##### 



Equant N.V.

Notes to the Consolidated Financial Statementscontinued
(US dollars in millions, unless otherwise stated)

3. Significant Accounting Policiescontinued

Financial instruments

The Company uses derivative financial instruments for the purpose of hedging
currency risks, which exist as part of ongoing business operations.
As a policy, the Company does not engage in speculative or leveraged
transactions, nor does the Company hold or issue financial instruments for
trading purposes.

Forward exchange contracts are generally used to hedge exposure to currency
fluctuations on certain short-term transactions denominated in a currency
other than the Companys functional currency. Gains and losses on these
contracts generally offset the foreign exchange gains and losses on the
underlying hedged transactions recorded in the Consolidated Balance Sheet
and are included in the basis of the asset or liability and recorded in the
Consolidated Statement of Operations when the underlying transaction is
settled. The discount or premium on these contracts is recorded in the
Consolidated Balance Sheet and amortized through the Consolidated Statement
of Operations over the life of the contract or immediately if the underlying
hedged instrument is settled. Losses not expected to be recovered upon
completion of the hedged transaction are expensed.

4. Basic and Diluted Net Profit/(Loss) per Share

The basic and diluted net profit/(loss) per share is calculated by dividing
net profit/(loss) by the combined weighted average number of shares
outstanding during the year.

The 10 million convertible preference shares issued as part of the France
Telecom Transactions are included in the calculation of the weighted average
number of ordinary shares outstanding as their conversion into ordinary
shares is unconditional and will occur automatically on June 29, 2006.

The impact of unexercised stock options on weighted average number of
ordinary shares outstanding amounted to 3,640,270 and 3,944,786 for the
years ended December 31, 2000 and 2001 respectively. These amounts were not
included in the diluted earnings per share calculation in 2000 and 2001 as
they would have been antidilutive.

5. Acquisition and Disposal of Businesses and Investments

Acquisition of Global One

On June 29, 2001, the Company completed the acquisition of 100% of the share
capital of Global One in exchange for 80,617,348 new ordinary shares of the
Company, as referred to in Note 1. The transfer of the Global One business
from France Telecom to the Company in exchange for newly issued shares of
the Company has been accounted for under the purchase method of accounting
under paragraph 215 of CRC Rule 99-02. The excess of the cost of acquisition
over the net book value of Global One assets acquired was taken to
Additional Paid-in Capital.

F-18



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##### 



Equant N.V.

Notes to the Consolidated Financial Statementscontinued
(US dollars in millions, unless otherwise stated)

5. Acquisition and Disposal of Businesses and Investmentscontinued

Acquisition of Global Onecontinued

The total cost of acquisition for Global One paid by the Company was as follows:

|                                                       |  |  |  |  |  |   |         |  | 
|------------------------------------------------------ |  |  |  |  |  | - | ------- |  | 
|Issue of 80,617,348 new ordinary shares in the Company |  |  |  |  |  | $ | 1,455.1 | 
|Transaction costs, net of tax                          |  |  |  |  |  |   | 29.4    | 
|                                                       |  |  |  |  |  |   |         | 
|Total cost of acquisition                              |  |  |  |  |  | $ | 1,484.5 | 
|                                                       |  |  |  |  |  |   |         | 

The cost of acquisition has been allocated to the following identifiable assets and liabilities:

|                                                                     |                                                        |   |       |        |   |   |         |  | 
|-------------------------------------------------------------------- | ------------------------------------------------------ | - | ----- | ------ | - | - | ------- |  | 
|Total cost of acquisition                                            |                                                        |   |       |        |   | $ | 1,484.5 | 
|Identifiable assets and liabilities acquired (unaudited)             |                                                        |   |       |        |   |   |         | 
|                                                                     | Cash and cash equivalents                              | $ | 295.3 |        |   |   |         | 
|                                                                     | Accounts receivable (net of provisions of $97.7)       |   |       | 541.0  |   |   |         |  | 
|                                                                     | Intangible assets (net of amortization of $36.0)       |   |       | 158.0  |   |   |         |  | 
|                                                                     | Property and equipment (net of depreciation of $385.6) |   |       | 553.2  |   |   |         |  | 
|                                                                     | Accounts payable                                       |   |       | (207.6 | ) |   |         |  | 
|                                                                     | Accrued liabilities                                    |   |       | (176.3 | ) |   |         |  | 
|                                                                     | Overdraft and short-term debt                          |   |       | (1.7   | ) |   |         |  | 
|                                                                     | Non-current liabilities                                |   |       | (20.4  | ) |   |         |  | 
|                                                                     | Other assets and liabilities                           |   |       | (157.4 | ) |   |         |  | 
|                                                                     |                                                        |   |       |        |   |   | 984.1   | 
|                                                                     |                                                        |   |       |        |   |   |         | 
|Excess of cost of acquisition over net book value of assets acquired |                                                        |   |       |        |   | $ | 500.4   | 
|                                                                     |                                                        |   |       |        |   |   |         | 

The unaudited pro forma condensed consolidated statements of operations
present the effect of the acquisition of Global One and other effects
of the France Telecom Transactions as if they had occurred on January 1,
2000. The unaudited pro forma condensed consolidated statements of
operations are based on the historical financial statements of Equant and
Global One and are prepared in accordance with French GAAP. The unaudited
pro forma financial information does not purport to represent the results of
operations that actually would have resulted had the France Telecom
Transactions occurred on the date indicated. It should not be taken as
indicative of the future results of the operations of the combined entities.

The pro forma results for 2000 and 2001 include 12 months each of Equant and
Global One. The 2000 and 2001 pro formas also assume that the
new SITA contractual arrangements were in place for the whole of 2000 and
2001. Certain contractual arrangements with Global One for product
development and the transfer of a hosting business from France Telecom took
place on January 1, 2001 and consequently have not been included
in the 2000 pro formas. The income and expenses derived from Excluded
Businesses have been removed from the pro forma consolidated statements of
operations.

F-19



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##### 



Equant N.V.

Notes to the Consolidated Financial Statementscontinued
(US dollars in millions, unless otherwise stated)

5. Acquisition and Disposal of Businesses and Investments continued

Acquisition of Global Onecontinued

The unaudited pro forma condensed consolidated statements of operations were as follows:

|                                                                                         |  |     |       |   |  |           |         |   |       |   |  |           |  |  |         |  
|---------------------------------------------------------------------------------------- |  | --- | ----- | - |  | --------- | ------- | - | ----- | - |  | --------- |  |  | ------- | -
|                                                                                         |  |     |       |   |  | 2000      |         |   |       |   |  | 2001     
|Years ended December 31                                                                  |  |     |       |   |  | unaudited |         |   |       |   |  | unaudited
|                                                                                         |  |     |       |   |  |           |         |   |       |   |  |           |  |  |        
|Sales of services and products                                                           |  |     |       |   |  | $         | 2,733.8 |   |       |   |  | $         |  |  | 3,064.8 |  
|                                                                                         |  |     |       |   |  |           |         |   |       |   |  |           |  |  |        
|Gross profit                                                                             |  |     |       |   |  |           | 633.0   |   |       |   |  |           |  |  | 830.0   |  
|                                                                                         |  |     |       |   |  |           |         |   |       |   |  |           |  |  |        
|EBITDA                                                                                   |  |     |       |   |  |           | (179.0  | ) |       |   |  |           |  |  | (8.7    | )
|                                                                                         |  |     |       |   |  |           |         |   |       |   |  |           |  |  |        
|Operating loss                                                                           |  |     |       |   |  |           | (509.6  | ) |       |   |  |           |  |  | (564.0  | )
|Financial charges                                                                        |  |     |       |   |  |           | (47.1   | ) |       |   |  |           |  |  | (32.9   | )
|Loss on impairment of investments accounted at cost                                      |  |     |       |   |  |           | (22.1   | ) |       |   |  |           |  |  | (13.1   | )
|Income taxes                                                                             |  |     |       |   |  |           | (13.1   | ) |       |   |  |           |  |  | (57.2   | )
|Equity in loss of affiliate                                                              |  |     |       |   |  |           | (9.5    | ) |       |   |  |           |  |  | (25.3   | )
|                                                                                         |  |     |       |   |  |           |         |   |       |   |  |           |  |  |        
|Net loss from continuing operations, before minority interests and goodwill amortization |  |     |       |   |  |           | (601.4  | ) |       |   |  |           |  |  | (692.5  | )
|Goodwill amortization                                                                    |  |     |       |   |  |           | (16.1   | ) |       |   |  |           |  |  | (21.7   | )
|                                                                                         |  |     |       |   |  |           |         |   |       |   |  |           |  |  |        
|Net loss from continuing operations, before minority interests                           |  |     |       |   |  | $         | (617.5  | ) |       |   |  | $         |  |  | (714.2  | )
|                                                                                         |  |     |       |   |  |           |         |   |       |   |  |           |  |  |        
|Earnings per share, basic and diluted                                                    |  | US$ | (2.11 | ) |  | US$       |         |   | (2.44 | )

Disposal of Equant Application Services (EAS) division

On October 1, 2001, the Company disposed of the EAS division for cash and
loan notes totaling $15.6, of which $3.6 had been received before year-end,
recognizing a gain of $13.4 (after taxes of $0.3). The net losses of EAS for
the years ended December 31, 1999 and 2000 and the nine months ended
September 30, 2001 were as follows:

|                               |  |      |      |      |  |   |      |   |  |      |  |  |  |  |      |  
|------------------------------ |  | ---- | ---- | ---- |  | - | ---- | - |  | ---- |  |  |  |  | ---- | -
|Years ended December 31        |  | 1999 |      | 2000 |  |   |      |   |  | 2001
|                               |  |      |      |      |  |   |      |   |  |      |  |  | 
|Sales of services and products |  | $    | 19.1 |      |  | $ | 25.5 |   |  | $    |  |  |  |  | 14.2 |  
|                               |  |      |      |      |  |   |      |   |  |      |  |  | 
|Gross profit                   |  |      | 7.7  |      |  |   | 9.4  |   |  |      |  |  |  |  | 4.1  |  
|                               |  |      |      |      |  |   |      |   |  |      |  |  | 
|Operating loss                 |  |      | (0.2 | )    |  |   | (0.6 | ) |  |      |  |  |  |  | (3.7 | )
|Financial charges              |  |      |     |      |  |   | (0.1 | ) |  |      |  |  |  |  | (0.3 | )
|Income tax benefit             |  |      |     |      |  |   | 0.4  |   |  |      |  |  |  |  | 1.4  |  
|                               |  |      |      |      |  |   |      |   |  |      |  |  | 
|Net loss                       |  | $    | (0.2 | )    |  | $ | (0.3 | ) |  | $    |  |  |  |  | (2.6 | )
|                               |  |      |      |      |  |   |      |   |  |      |  |  | 

No material assets or liabilities were transferred as a result of the
disposal of EAS.

F-20



---



##### 



Equant N.V.

Notes to the Consolidated Financial Statementscontinued
(US dollars in millions, unless otherwise stated)

5. Acquisition and Disposal of Businesses and Investmentscontinued

Local Network Operations transfers

As referred to in Note 23, Related party transactions and cost sharing
agreement, in certain countries, Local Network Operations groups (LNO
groups) are transferred by SITA to the Company upon fulfillment of certain
conditions. During 2001, SITA transferred to the Company the LNO groups for
Puerto Rico, Singapore, Hungary, Portugal, US Virgin Islands, Guam,
Luxembourg, Spain and Japan. These transfers included a total of 237
employees.

During 2000, SITA transferred to the Company the LNO groups for Germany,
Norway, Iceland, the United Kingdom and The Netherlands. These transfers
included a total of 394 employees.

During 1999, the first year of such transactions, SITA transferred to the
Company the LNO groups for the United States, Hong Kong and Canada. These
transfers included a total of 405 employees.

Pursuant to the transfers of the LNO groups, the assets and liabilities
associated with each LNO group were purchased at net book value for cash by
the Company.

Investment in Radianz

On February 3, 2000, the Company announced its participation in a joint
venture with Reuters Group PLC (Reuters) forming Radianz Limited
(Radianz), a company offering a secure Internet Protocol network to the
financial services industry. Radianz is owned 49% by the Company and 51% by
Reuters and started operations on July 1, 2000. The excess of consideration
over the Companys share of the fair value of the net assets of Radianz at
formation of approximately $160.5 was included in Goodwill in the
accompanying Consolidated Balance Sheets and is being amortized over a
period of ten years (see Note 15 Other investments).

Acquisition of investments in iPass, STSN and Tripeze

During 2000, the Company acquired non-controlling interests of 18.0% in
Tripeze.com, Inc. (Tripeze), 7.1% in STSN, Inc. (STSN) and 5.5% in
iPass, Inc. (iPass), for cash considerations of $5.1, $30.1 and $5.1
respectively. These investments are accounted for at cost, net of provisions
for impairments in value (see Note 15, Other investments).

Acquisition of TechForce, Inc

On August 17, 1999, the Company acquired TechForce, Inc. for an aggregate
purchase price of $73.4. The acquisition was accounted for as a purchase and
the excess of the purchase price over the estimated fair value of the net
assets acquired was recorded as goodwill and amortized over eight years. As
of December 31, 2001, the goodwill balance is $35.3 net of accumulated
amortization of $15.2.

Acquisition of ITS Korea Co. Limited

In 1999, the Company acquired the remaining 51% of the outstanding shares of
Equant Integration Services Co. Limited, formerly ITS Korea Co. Limited for
an aggregate purchase price of $1.0. This acquisition was accounted for as a
purchase and did not result in any goodwill being recorded by the Company.

F-21



---



##### 



Equant N.V.

Notes to the Consolidated Financial Statementscontinued
(US dollars in millions, unless otherwise stated)

6. Non-recurring Charges

Non-recurring charges comprise:

|                                                                                          |  |   |      |  |  |   |      |  |  |   |       |  
|----------------------------------------------------------------------------------------- |  | - | ---- |  |  | - | ---- |  |  | - | ----- | -
|Years ended December 31                                                                   |  |   | 1999 |  |  |   | 2000 |  |  |   | 2001  |  
|                                                                                          |  |   |      |  |  |   |      |  |  |   |       |  
|Restructuring and integration of Equant,
Global One and SITA Equant network Joint Venture |  | $ |     |  |  | $ |     |  |  | $ | 173.4 |  
|SITA Equant network Joint Venture restructuring                                           |  |   |     |  |  |   | 14.0 |  |  |   | 5.1   |  
|Divisional reorganization                                                                 |  |   |     |  |  |   | 4.9  |  |  |   | 0.4   |  
|EIS division restructuring                                                                |  |   | 1.9  |  |  |   |     |  |  |   | -     |  
|Other                                                                                     |  |   |     |  |  |   |     |  |  |   | 10.5  |  
|                                                                                          |  |   |      |  |  |   |      |  |  |   |       |  
|Total restructuring and integration costs                                                 |  |   | 1.9  |  |  |   | 18.9 |  |  |   | 189.4 |  
|Reimbursement due from France Telecom                                                     |  |   |     |  |  |   |     |  |  |   | (79.2 | )
|                                                                                          |  |   |      |  |  |   |      |  |  |   |       |  
|Non-recurring charges                                                                     |  | $ | 1.9  |  |  | $ | 18.9 |  |  | $ | 110.2 |  
|                                                                                          |  |   |      |  |  |   |      |  |  |   |       |  

Restructuring and integration of Equant, Global One and SITA Equant network Joint Venture

Following the France Telecom Transactions, the Company commenced integrating
the operations of Equant, Global One and the SITA businesses acquired. The
nature of restructuring and integration costs incurred during the period as
a result of these transactions comprise:

|                              |  |              |   |           |  |          |       |          |  |      |       |   |  |              |       |            |  |   |      | 
|----------------------------- |  | ------------ | - | --------- |  | -------- | ----- | -------- |  | ---- | ----- | - |  | ------------ | ----- | ---------- |  | - | ---- | 
|                              |  | Balance at   |   |           |  |          |       |          |  |      |       |   |  |              |       | Balance at
|                              |  | December 31, |   |           |  |          |       | Reserves |  |      |       |   |  | December 31,
|                              |  | 2000         |   | Additions |  | utilized |       | Other    |  | 2001
|                              |  |              |   |           |  |          |       |          |  |     
|Employee termination          |  | $            |  |           |  | $        | 32.3  |          |  | $    | (23.9 | ) |  | $            |      |            |  | $ | 8.4  | 
|Write-down of assets          |  |              |  |           |  |          | 51.5  |          |  |      |      |   |  |              | (51.5 | )          |  |   | -    | 
|Excess employment costs       |  |              |  |           |  |          | 5.7   |          |  |      | (5.7  | ) |  |              |      |            |  |   | -    | 
|Integration teams             |  |              |  |           |  |          | 13.0  |          |  |      | (13.0 | ) |  |              |      |            |  |   | -    | 
|Branding                      |  |              |  |           |  |          | 6.7   |          |  |      | (6.7  | ) |  |              |      |            |  |   | -    | 
|Lease exit costs              |  |              |  |           |  |          | 35.4  |          |  |      | (10.0 | ) |  |              |      |            |  |   | 25.4 | 
|Critical staff retention plan |  |              |  |           |  |          | 15.1  |          |  |      | (15.1 | ) |  |              |      |            |  |   | -    | 
|Legal, consulting and other   |  |              |  |           |  |          | 13.7  |          |  |      | (13.7 | ) |  |              |      |            |  |   | -    | 
|                              |  |              |   |           |  |          |       |          |  |      |       |   |  |              |       |            |  |   |      | 
|                              |  | $            |  |           |  | $        | 173.4 |          |  | $    | (88.1 | ) |  | $            | (51.5 | )          |  | $ | 33.8 | 
|                              |  |              |   |           |  |          |       |          |  |      |       |   |  |              |       |            |  |   |      | 

$22.6 of the balance at December 31, 2001 is included in Provisions for
liabilities and charges. The remainder is included in Accrued liabilities.

Under the terms of the Contribution Agreement between France Telecom and the
Company, the two companies agreed to share certain restructuring and
integration costs, as set out below:

F-22



---



##### 



Equant N.V.

Notes to the Consolidated Financial Statementscontinued
(US dollars in millions, unless otherwise stated)

6. Non-recurring Chargescontinued

Restructuring and integration of Equant, Global One and SITA Equant network Joint Venturecontinued

Personnel restructuring costs

For a period of two years following June 29, 2001, France Telecom shall
reimburse Equant for half the financial costs of employment and termination
of the Excess Equant Employees, being the first 2,500 employees of Equant
(including employees to be transferred from SITA to Equant pursuant to the
SITA Equant network Joint Venture) or Global One that Equant management
identifies as not necessary for the long-term operation of Equant.

Non-personnel integration and restructuring costs

For a period of two years following June 29, 2001, Equant will also incur
non-personnel related integration and restructuring costs (the Integration
Costs) with respect to the integration of Equant, Global One, and the SITA
Equant network Joint Venture. France Telecom shall bear or reimburse Equant
for a portion of the Integration Costs, as follows:



|i)  |  | with respect to the first $240 of Integration Costs, each of France
Telecom and Equant shall pay half on an equal basis; and,
|--- |  | -----------------------------------------------------------------------------------------------------------------------------
|   
|ii) |  | France Telecom shall bear the next $90 of Integration Costs.                                                                 

Accrued cost recovery from France Telecom totaled $79.2 for restructuring
and integration costs incurred by Equant in the year ended December 31,
2001, of which $67.2 had not been received before year-end and is included
in Other current assets and prepaid costs in the Consolidated Balance
Sheet.

The Company expects to incur substantial future costs to restructure and
integrate Equant, Global One and the SITA Equant network Joint Venture.
Recovery from France Telecom of part of these costs will be available until
June 2003.

SITA Equant network Joint Venture restructuring

During the third and fourth quarters of 2000, Equant and SITA initiated the
restructuring of the SITA Equant network Joint Venture. The purpose of this
restructuring was to create a process driven organization, better aligned to
customer requirements. In the fourth quarter of 2000, this led to plans to
rationalize certain global operations such as Help Desks and Network Control
Centers. The rationalization began in the fourth quarter of 2000 and
continued during 2001.

As described in Note 1, one of the agreements within the France Telecom
Transactions resulted in Equant assuming full control of the SITA Equant
network Joint Venture. As the benefits of this restructuring were expected
to accrue principally to Equants future operating results, Equant agreed to
absorb 100% of the charges recorded before June 29, 2001. Costs of
restructuring and integrating the SITA Equant network Joint Venture after
June 29, 2001 are included under Restructuring and integration of Equant,
Global One and SITA Equant network Joint Venture. As a result, the Company
recorded within non-recurring charges, a restructuring charge of $14.0 in
2000 primarily for severance costs and other costs related to headcount
reduction and consolidation of operations.

F-23



---



##### 



Equant N.V.

Notes to the Consolidated Financial Statementscontinued
(US dollars in millions, unless otherwise stated)

6. Non-recurring Chargescontinued

SITA Equant network Joint Venture restructuringcontinued

The following table sets forth the movement in the SITA Equant network Joint
Venture restructuring activities for the year ended December 31, 2001:

|                     |  |              |     |           |  |          |     |          |  |      |       |   |  |              |   |            |  |   |   | 
|-------------------- |  | ------------ | --- | --------- |  | -------- | --- | -------- |  | ---- | ----- | - |  | ------------ | - | ---------- |  | - | - | 
|                     |  | Balance at   |     |           |  |          |     |          |  |      |       |   |  |              |   | Balance at
|                     |  | December 31, |     |           |  |          |     | Reserves |  |      |       |   |  | December 31,
|                     |  | 2000         |     | Additions |  | utilized |     | Other    |  | 2001
|                     |  |              |     |           |  |          |     |          |  |     
|Employee termination |  | $            | 5.3 |           |  | $        | 5.1 |          |  | $    | (10.4 | ) |  | $            |  |            |  | $ |  | 
|                     |  |              |     |           |  |          |     |          |  |      |       |   |  |              |   |            |  |   |   | 

The restructuring charge incurred in the year ended December 31, 2000 of
$14.0 included $11.5 of employee termination costs to eliminate 266
positions and $2.5 of other costs, mostly office consolidation and
outplacement costs.

Termination costs include severance costs and contractual benefits in
accordance with an approved plan. At December 31, 2000, all 266 employees
had been notified and 120 positions included in the plan had been
eliminated.

Divisional reorganization

During the fourth quarter of 2000, the Company initiated a plan to integrate
two of its divisions  Equant Network Services and Equant Integration
Services  into a single organization. This integration became effective on
January 1, 2001. As a result of this reorganization, the Company recorded
a restructuring charge of $4.9, primarily for severance costs and other
costs related to headcount reduction, and for share plan costs associated
with these employees included in the restructuring plan.

The following table sets forth the movement in Divisional reorganization
restructuring activities for the year ended December 31, 2001:

|                     |  |              |     |           |  |          |     |          |  |      |      |   |  |              |   |            |  |   |   | 
|-------------------- |  | ------------ | --- | --------- |  | -------- | --- | -------- |  | ---- | ---- | - |  | ------------ | - | ---------- |  | - | - | 
|                     |  | Balance at   |     |           |  |          |     |          |  |      |      |   |  |              |   | Balance at
|                     |  | December 31, |     |           |  |          |     | Reserves |  |      |      |   |  | December 31,
|                     |  | 2000         |     | Additions |  | utilized |     | Other    |  | 2001
|                     |  |              |     |           |  |          |     |          |  |     
|Employee termination |  | $            | 2.1 |           |  | $        |    |          |  | $    | (2.1 | ) |  | $            |  |            |  | $ |  | 
|Write-down of assets |  |              |    |           |  |          | 0.4 |          |  |      | (0.4 | ) |  |              |  |            |  |   |  | 
|Other costs          |  |              | 0.2 |           |  |          |    |          |  |      | (0.2 | ) |  |              |  |            |  |   |  | 
|                     |  |              |     |           |  |          |     |          |  |      |      |   |  |              |   |            |  |   |   | 
|                     |  | $            | 2.3 |           |  | $        | 0.4 |          |  | $    | (2.7 | ) |  | $            |  |            |  | $ |  | 
|                     |  |              |     |           |  |          |     |          |  |      |      |   |  |              |   |            |  |   |   | 

The restructuring charge incurred in the year ended December 31, 2000 of
$4.9 included $4.2 of termination costs to eliminate 48 positions, $0.4 of
software costs written-down and $0.3 of other costs, mostly composed of
property lease exit costs.

Termination costs included severance and contractual benefits determined in
accordance with an approved plan and also included costs for outplacement
services, medical and supplemental vacation. At December 31, 2001 all
identified positions included in the plan had been eliminated.

F-24



---



##### 



Equant N.V.

Notes to the Consolidated Financial Statementscontinued
(US dollars in millions, unless otherwise stated)

6. Non-recurring Chargescontinued

Equant Integration Services (EIS) division restructuring

In the year ended December 31, 1998, the EIS division reviewed its service
and product offerings and its selling and administrative processes in an
effort to strengthen its competitive position and to better align its
operations in the Europe, Middle East and Africa region in response to
market conditions. As a result, the Company recorded a restructuring charge
of $6.2 primarily for severance and other costs related to headcount
reductions ($4.3 and $1.9 of this charge was recorded in 1998 and 1999
respectively).

Of the total restructuring provision of $6.2 relating to the EIS division
restructuring activities, $2.5 was utilized in 1999, $1.4 was utilized in
2000 and $0.1 was utilized in 2001. No provision remains at December 31,
2001.

Other non-recurring charges

Other non-recurring charges in 2001 include costs incurred on advisory fees
arising from transactions that were abandoned during the year. There were no
provisions at December 31, 2001 in respect of these charges.

7. Financial Income/(Charges)

Financial income/(charges) consists of the following:

|                                                                   |  |      |      |      |  |      |       |   |  |   |       |  
|------------------------------------------------------------------ |  | ---- | ---- | ---- |  | ---- | ----- | - |  | - | ----- | -
|Years ended December 31                                            |  | 1999 |      | 2000 |  | 2001
|                                                                   |  |      |      |      |  |      |       |   |  |   |       |  
|Foreign exchange gain/(loss)                                       |  | $    | 0.7  |      |  | $    | 2.3   |   |  | $ | (6.4  | )
|Income from/(costs of) early termination of financing arrangements |  |      | 0.8  |      |  |      |      |   |  |   | (2.1  | )
|Interest income                                                    |  |      | 17.2 |      |  |      | 10.0  |   |  |   | 20.9  |  
|Interest expense                                                   |  |      | (4.0 | )    |  |      | (23.0 | ) |  |   | (30.3 | )
|                                                                   |  |      |      |      |  |      |       |   |  |   |       |  
|                                                                   |  | $    | 14.7 |      |  | $    | (10.7 | ) |  | $ | (17.9 | )
|                                                                   |  |      |      |      |  |      |       |   |  |   |       |  

During the year ended December 31, 1999, the Company recognized income of
$0.8 ($0.5 net of tax) from the sale of interest rate caps related to a $600
facility which had been repaid in 1998 with a portion of the proceeds
received from the IPO. During the year ended December 31, 2001, the Company
recognized a charge of $2.1 ($1.4 net of tax) as a result of early repayment
fees and expensing of previously deferred arrangement fees on the
outstanding borrowings under the Companys main credit line, which was
mandatory on completion of the France Telecom Transactions.

F-25



---



##### 



Equant N.V.

Notes to the Consolidated Financial Statementscontinued
(US dollars in millions, unless otherwise stated)

8. Income Taxes

The tax provision/(benefit) consists of the following:

|                        |                 |   |      |      |   |   |      |       |   |   |      |       |  
|----------------------- | --------------- | - | ---- | ---- | - | - | ---- | ----- | - | - | ---- | ----- | -
|Years ended December 31 |                 |   | 1999 |      |   |   | 2000 |       |   |   | 2001 |      
|                        |                 |   |      |      |   |   |      |       |   |   |      |      
|Current income taxes    |                 |   |      |      |   |   |      |       |   |   |      |      
|                        | The Netherlands |   | $    | 5.6  |   |   | $    | 16.1  |   |   | $    | (11.4 | )
|                        | Other           |   |      | 11.8 |   |   |      | (0.9  | ) |   |      | 23.7  |  
|                        |                 |   |      |      |   |   |      |       |   |   |      |      
|                        | Total current   |   |      | 17.4 |   |   |      | 15.2  |   |   |      | 12.3  |  
|Deferred income taxes   |                 |   |      |      |   |   |      |       |   |   |      |      
|                        | The Netherlands |   |      | 7.0  |   |   |      | (7.7  | ) |   |      | 6.2   |  
|                        | Other           |   |      | (4.5 | ) |   |      | (3.1  | ) |   |      | 23.1  |  
|                        |                 |   |      |      |   |   |      |       |   |   |      |      
|                        | Total deferred  |   |      | 2.5  |   |   |      | (10.8 | ) |   |      | 29.3  |  
|                        |                 |   |      |      |   |   |      |       |   |   |      |      
|Total tax charge        |                 | $ | 19.9 |      |   | $ | 4.4  |       |   | $ | 41.6 |      
|                        |                 |   |      |      |   |   |      |       |   |   |      |      

The source of net profit/(loss) from continuing operations before minority interests and taxes for the years ended December 31, 1999, 2000 and 2001 is as follows:

|                                                                                        |  |   |      |  |  |   |       |   |  |   |        |  
|--------------------------------------------------------------------------------------- |  | - | ---- |  |  | - | ----- | - |  | - | ------ | -
|Years ended December 31                                                                 |  |   | 1999 |  |  |   | 2000  |   |  |   | 2001   |  
|                                                                                        |  |   |      |  |  |   |       |   |  |   |        |  
|The Netherlands                                                                         |  | $ | 18.6 |  |  | $ | (7.3  | ) |  | $ | (54.4  | )
|Other countries                                                                         |  |   | 14.4 |  |  |   | (35.6 | ) |  |   | (290.6 | )
|                                                                                        |  |   |      |  |  |   |       |   |  |   |        |  
|Net profit/(loss) from continuing operations
before minority interests and income taxes |  | $ | 33.0 |  |  | $ | (42.9 | ) |  | $ | (345.0 | )
|                                                                                        |  |   |      |  |  |   |       |   |  |   |        |  

F-26



---



##### 



Equant N.V.

Notes to the Consolidated Financial Statementscontinued
(US dollars in millions, unless otherwise stated)

8. Income Taxescontinued

The tax charge for the year has been reconciled to the standard tax rate
applicable in The Netherlands for corporate income. A reconciliation of
Equants statutory and effective income tax rate for the years ended
December 31, 1999, 2000 and 2001 is as follows:

|                                                    |  |      |      |      |  |      |       |   |  |  |       |  
|--------------------------------------------------- |  | ---- | ---- | ---- |  | ---- | ----- | - |  |  | ----- | -
|Years ended December 31                             |  | 1999 |      | 2000 |  | 2001
|                                                    |  | %    |      | %    |  | %   
|                                                    |  |      |      |      |  |      |       |   |  |  |       |  
|Statutory rate applicable in The Netherlands        |  |      | 35.0 |      |  |      | 35.0  |   |  |  | 35.0  |  
|Change in valuation allowance                       |  |      | (1.2 | )    |  |      | 5.4   |   |  |  | (27.1 | )
|Jurisdictional differences in tax rates             |  |      | (4.8 | )    |  |      | (16.2 | ) |  |  | (15.6 | )
|Valuation adjustment on integration                 |  |      |     |      |  |      |      |   |  |  | (12.0 | )
|Equity in loss of affiliate                         |  |      |     |      |  |      | (7.7  | ) |  |  | (4.6  | )
|Loss on impairment of investments accounted at cost |  |      |     |      |  |      | (17.9 | ) |  |  | (1.3  | )
|Goodwill write off and amortization                 |  |      | 4.3  |      |  |      | (13.1 | ) |  |  | (0.8  | )
|Tax deductible transaction-related expenses         |  |      |     |      |  |      |      |   |  |  | 0.5   |  
|Share plan costs                                    |  |      | 14.3 |      |  |      | 11.4  |   |  |  | 2.9   |  
|Operational expenses disallowed for tax purposes    |  |      | 12.7 |      |  |      | (7.2  | ) |  |  | 2.9   |  
|Restructuring costs                                 |  |      |     |      |  |      |      |   |  |  | 8.0   |  
|                                                    |  |      |      |      |  |      |       |   |  |  |       |  
|Effective tax rate                                  |  |      | 60.3 |      |  |      | (10.3 | ) |  |  | (12.1 | )
|                                                    |  |      |      |      |  |      |       |   |  |  |       |  

The deferred tax assets and liabilities by nature of temporary difference are analyzed as follows:

|                       |                                       |      |      |       |   |   |   |        |  
|---------------------- | ------------------------------------- | ---- | ---- | ----- | - | - | - | ------ | -
|At December 31         |                                       | 2000 |      | 2001 
|                       |                                       |      |      |       |   |   |   |       
|Deferred tax assets    |                                       |      |      |       |   |   |   |       
|                       | Operating losses carried forward      |      | $    | 29.9  |   |   | $ | 374.1  |  
|                       | Share plan costs                      |      |      | 4.9   |   |   |   | -      |  
|                       | Other temporary differences           |      |      | 30.0  |   |   |   | 60.1   |  
|                       |                                       |      |      |       |   |   |   |       
|                       | Total deferred tax asset              |      |      | 64.8  |   |   |   | 434.2  |  
|                       | Less: valuation allowances            |      |      | (27.4 | ) |   |   | (434.2 | )
|                       |                                       |      |      |       |   |   |   |       
|                       | Total deferred tax asset, net         |      |      | 37.4  |   |   |   | -      |  
|Deferred tax liability |                                       |      |      |       |   |   | - |       
|                       | Temporary differences on fixed assets |      | (0.2 | )     |   |   | - |       
|                       | Other temporary differences           |      |      | (3.5  | ) |   |   | -      |  
|                       |                                       |      |      |       |   |   |   |       
|                       | Total deferred tax liability          |      |      | (3.7  | ) |   |   | -      |  
|                       |                                       |      |      |       |   |   |   |       
|Net deferred tax asset |                                       | $    | 33.7 |       |   | $ | - |       
|                       |                                       |      |      |       |   |   |   |       

F-27



---



##### 



Equant N.V.

Notes to the Consolidated Financial Statementscontinued
(US dollars in millions, unless otherwise stated)

8. Income Taxescontinued

Deferred tax assets before valuation allowances at December 31, 2001,
relating to Global One entities acquired as a result of the France Telecom
Transactions amounted to $298.6 and $58.7 arising from Operating losses
carried forward and Other temporary differences, respectively.

Valuation allowances at December 31, 2000 were made on the basis that the
tax benefit of losses and other deferred tax assets in certain subsidiaries
were unlikely to be realized in the immediate future. At the date of the
merger all Global One companies had 100% valuation allowances against
deferred tax assets.

Following completion of the France Telecom Transactions, and as a result of
the Companys decision to integrate Equant and Global One entities on
a country by country basis, the substantially larger amounts of deferred tax
assets in the Global One entities required that the valuation allowances
against deferred tax assets in Equant entities be increased to 100%. As a
result, $41.3 of deferred tax balances as at June 30, 2001 were provided
against.

The net deferred tax assets are reflected in the accompanying Consolidated Balance Sheets as follows:

|                                   |  |      |      |      |  |   |   | 
|---------------------------------- |  | ---- | ---- | ---- |  | - | - | 
|At December 31                     |  | 2000 |      | 2001
|                                   |  |      |      |     
|Current deferred tax asset         |  | $    | 9.2  |      |  | $ | - | 
|Non-current deferred tax asset     |  |      | 28.2 |      |  |   | - | 
|Current deferred tax liability     |  |      | (0.4 | )    |  |   | - | 
|Non-current deferred tax liability |  |      | (3.3 | )    |  |   |   | 
|                                   |  |      |      |      |  |   |  
|Net deferred tax asset             |  | $    | 33.7 |      |  | $ | - | 
|                                   |  |      |      |      |  |   |  

Estimated net operating losses carried forward at December 31, 2000 and 2001 and their expiration dates are as follows:

|                            |  |                     |  |                                     |      |      |      |   |       |   |         | 
|--------------------------- |  | ------------------- |  | ----------------------------------- | ---- | ---- | ---- | - | ----- | - | ------- | 
|                            |  | Expiration dates at |  | Net operating losses at December 31
|Country of tax jurisdiction |  | December 31, 2001   |  | 2000                                |      | 2001
|                            |  |                     |  |                                     |      |     
|The Netherlands             |  | No expiration       |  | $                                   | 8.7  |      |      | $ | 104.0 |  
|United Kingdom              |  | No expiration       |  |                                     | 11.1 |      |      |   | 217.1 |  
|United States               |  | 2007 to 2014        |  |                                     | 3.0  |      |      |   | 396.6 |  
|Eire                        |  | No expiration       |  |                                     |     |      |      |   | 273.0 |  
|Other                       |  | Various             |  |                                     | 60.3 |      |      |   | 517.4 |  
|                            |  |                     |  |                                     |      |      |      |   |       |   |         | 
|                            |  |                     |  |                                     |      | $    | 83.1 |   |       | $ | 1,508.1 | 
|                            |  |                     |  |                                     |      |      |      |   |       |   |         | 

Certain jurisdictions apply laws or procedures which attempt to restrict or
eliminate the carry-forward of tax losses on amalgamations or where there is
a change of ownership in conjunction with a change in business operations.
Certain of the country amalgamations could give rise to such restrictions or
eliminations. The figures stated above are without regard to such possible
restrictions or eliminations on the basis that they will be resisted.

F-28



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##### 



Equant N.V.

Notes to the Consolidated Financial Statementscontinued
(US dollars in millions, unless otherwise stated)

8. Income Taxescontinued

Equant is acting in a large number of countries, governed by changing tax
regulations on both national and international levels, giving rise to
potential tax exposures against which provisions have been made.

At December 31, 2001, no deferred income taxes have been provided on
undistributed earnings of foreign subsidiaries as they are not expected to
be remitted in the foreseeable future.

9. Personnel Costs and Staff Numbers

Set out below is an analysis of personnel costs:

|                                |  |      |       |      |  |      |       |  |  |   |       | 
|------------------------------- |  | ---- | ----- | ---- |  | ---- | ----- |  |  | - | ----- | 
|                                |  |      |       |      |  |      |       |  |  |   |       | 
|Years ended December 31         |  | 1999 |       | 2000 |  | 2001
|                                |  |      |       |      |  |     
|Salaries and wages              |  | $    | 213.3 |      |  | $    | 317.2 |  |  | $ | 556.5 | 
|Social security contributions   |  |      | 18.9  |      |  |      | 33.9  |  |  |   | 79.9  | 
|Pension costs                   |  |      | 7.5   |      |  |      | 13.1  |  |  |   | 21.1  | 
|                                |  |      |       |      |  |      |       |  |  |   |       | 
|                                |  |      | 239.7 |      |  |      | 364.2 |  |  |   | 657.5 | 
|Seconded in and temporary staff |  |      | 17.5  |      |  |      | 19.1  |  |  |   | 67.3  | 
|                                |  |      |       |      |  |      |       |  |  |   |       | 
|                                |  | $    | 257.2 |      |  | $    | 383.3 |  |  | $ | 724.8 | 
|                                |  |      |       |      |  |      |       |  |  |   |       | 

Set out below is an analysis of staff numbers by function:

|                           |  |      |       |      |  |      |       |  |  |  |        | 
|-------------------------- |  | ---- | ----- | ---- |  | ---- | ----- |  |  |  | ------ | 
|                           |  | 1999 |       | 2000 |  | 2001
|                           |  |      |       |      |  |     
|Direct                     |  |      | 1,917 |      |  |      | 2,808 |  |  |  | 7,159  | 
|Selling                    |  |      | 751   |      |  |      | 847   |  |  |  | 1,905  | 
|General and administrative |  |      | 708   |      |  |      | 745   |  |  |  | 2,194  | 
|                           |  |      |       |      |  |      |       |  |  |  |        | 
|                           |  |      | 3,376 |      |  |      | 4,400 |  |  |  | 11,258 | 
|                           |  |      |       |      |  |      |       |  |  |  |        | 

As a result of the acquisition of Global One, 6,255 employees joined the
Company on June 29, 2001. Additionally, at December 31, 1999, 2000 and 2001
the Company had the benefit of the services of 3,900, 3,280 and 2,456 SITA
employees to support the network. The number of staff for 2001 is as at
December 31, 2001. The number of staff for 1999 and 2000 are monthly
averages.

F-29



---



##### 



Equant N.V.

Notes to the Consolidated Financial Statementscontinued
(US dollars in millions, unless otherwise stated)

10. Accounts Receivable

A summary of accounts receivable is as follows:

|                                                          |                                       |      |       |       |   |   |         |         |  
|--------------------------------------------------------- | ------------------------------------- | ---- | ----- | ----- | - | - | ------- | ------- | -
|                                                          |                                       |      |       |       |   |   |         |        
|At December 31                                            |                                       | 2000 |       | 2001 
|                                                          |                                       |      |       |      
|Accounts receivable from SITA, Radianz and France Telecom |                                       | $    | 100.0 |       |   | $ | 688.4   |        
|Accounts receivable, other                                |                                       |      | 259.9 |       |   |   | 578.9   |        
|                                                          |                                       |      |       |       |   |   |         |        
|                                                          |                                       | $    | 359.9 |       |   | $ | 1,267.3 |        
|                                                          |                                       |      |       |       |   |   |         |        
|                                                         
|At December 31                                            |                                       |      | 2000  |       |   |   | 2001    |        
|                                                          |                                       |      |       |      
|Accounts receivable                                       |                                       | $    | 295.7 |       |   | $ | 1,220.8 |        
|Unbilled receivables                                      |                                       |      | 81.6  |       |   |   | 227.2   |        
|                                                          |                                       |      |       |       |   |   |         |        
|                                                          | Total receivables                     |      |       | 377.3 |   |   |         | 1,448.0 |  
|                                                          | Less: allowance for doubtful accounts |      |       | (17.4 | ) |   |         | (180.7  | )
|                                                          |                                       |      |       |       |   |   |         |        
|Accounts receivable, net                                  |                                       | $    | 359.9 |       |   | $ | 1,267.3 |        
|                                                          |                                       |      |       |       |   |   |         |        

The majority of unbilled receivables represents revenues earned in the year,
not yet invoiced. Such amounts are generally billed in the next month.

The charge for doubtful accounts is reported within General and
administrative expenses in the Consolidated Statement of Operations and
totaled $9.3, $8.0 and $38.5 for the years ended December 31, 1999, 2000 and
2001 respectively. Accounts receivable are reported net of accrued credit
notes to be issued to customers.

Accounts receivable from SITA, Radianz and France Telecom are further
described in Note 23 Related party transactions and cost sharing
agreement.

11. Lease Receivables

Lease receivables consists of the following:

|                                |                       |      |      |       |   |   |      |       |  
|------------------------------- | --------------------- | ---- | ---- | ----- | - | - | ---- | ----- | -
|At December 31                  |                       | 2000 |      | 2001 
|                                |                       |      |      |       |   |   |      |      
|Gross finance lease receivables |                       | $    | 53.4 |       |   | $ | 41.9 |      
|Unearned income                 |                       |      | (3.0 | )     |   |   | (2.2 | )    
|                                |                       |      |      |       |   |   |      |      
|                                | Net lease receivables |      |      | 50.4  |   |   |      | 39.7  |  
|                                | Less: current portion |      |      | (14.7 | ) |   |      | (14.1 | )
|                                |                       |      |      |       |   |   |      |      
|Long-term lease receivables     |                       | $    | 35.7 |       |   | $ | 25.6 |      
|                                |                       |      |      |       |   |   |      |      

F-30



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##### 



Equant N.V.

Notes to the Consolidated Financial Statements continued
(US dollars in millions, unless otherwise stated)

11. Lease Receivablescontinued

Maturities of lease payments due to Equant for equipment on rentals under
non-cancelable finance leases at December 31, 2001 are as follows:

|                             |                                |   |      |      |  
|---------------------------- | ------------------------------ | - | ---- | ---- | -
|2002                         |                                | $ | 14.5 |     
|2003                         |                                |   | 15.8 |     
|2004                         |                                |   | 7.8  |     
|2005                         |                                |   | 2.8  |     
|2006                         |                                |   | 1.0  |     
|                             |                                |   |      |     
|                             | Total lease receivables, gross |   |      | 41.9 |  
|                             | Less: Unearned finance charges |   |      | (2.2 | )
|                             |                                |   |      |     
|Total lease receivables, net |                                | $ | 39.7 |     
|                             |                                |   |      |     

Gross finance lease receivables represent sales-type and direct financing
leases. These receivables have remaining lease terms ranging from one to
five years.

12. Inventories

Inventories consist of the following:

|                                           |                                                  |   |      |      |   |   |      |      |  
|------------------------------------------ | ------------------------------------------------ | - | ---- | ---- | - | - | ---- | ---- | -
|At December 31                             |                                                  |   | 2000 |      |   |   | 2001 |     
|                                           |                                                  |   |      |      |   |   |      |     
|Finished goods for resale                  |                                                  | $ | 15.1 |      |   | $ | 12.9 |     
|Maintenance and spare parts and components |                                                  |   | 15.0 |      |   |   | 14.6 |     
|                                           |                                                  |   |      |      |   |   |      |     
|                                           | Cost of inventories                              |   |      | 30.1 |   |   |      | 27.5 |  
|                                           | Provision for obsolete and slow-moving inventory |   |      | (0.9 | ) |   |      | (0.9 | )
|                                           |                                                  |   |      |      |   |   |      |     
|Total inventories, net                     |                                                  | $ | 29.2 |      |   | $ | 26.6 |     
|                                           |                                                  |   |      |      |   |   |      |     

Finished goods for resale consist of computer products. Maintenance and
spare parts and components are reported net of accumulated amortization of
$21.6 and $28.4 at December 31, 2000 and 2001 respectively.

F-31



---



##### 



Equant N.V.

Notes to the Consolidated Financial Statements continued
(US dollars in millions, unless otherwise stated)

13. Intangible Assets

Intangible assets, stated at cost less accumulated amortization, consist of the following:

|                        |  |          |       |      |  |              |       |             |  |          |        |      |  |   |       | 
|----------------------- |  | -------- | ----- | ---- |  | ------------ | ----- | ----------- |  | -------- | ------ | ---- |  | - | ----- | 
|At December 31          |  | 2000     |       |      |  |              |       |             |  |          |        | 2001
|                        |  | Net book |       |      |  |              |       | Accumulated |  | Net book
|                        |  | value    |       | Cost |  | amortization |       | value      
|                        |  |          |       |      |  |              |       |            
|Goodwill                |  | $        | 199.2 |      |  | $            | 225.1 |             |  | $        | (47.6  | )    |  | $ | 177.5 | 
|IRUs                    |  |          | 62.7  |      |  |              | 232.3 |             |  |          | (35.1  | )    |  |   | 197.2 | 
|Software applications   |  |          | 18.4  |      |  |              | 224.6 |             |  |          | (123.3 | )    |  |   | 101.3 | 
|Other                   |  |          |      |      |  |              | 2.9   |             |  |          | (0.2   | )    |  |   | 2.7   | 
|                        |  |          |       |      |  |              |       |             |  |          |        |      |  |   |       | 
|Total intangible assets |  | $        | 280.3 |      |  | $            | 684.9 |             |  | $        | (206.2 | )    |  | $ | 478.7 | 
|                        |  |          |       |      |  |              |       |             |  |          |        |      |  |   |       | 

Changes in the net book value of intangible assets are as follows:

|                                   |  |      |       |   |  |   |  |      |  |  |       |  
|---------------------------------- |  | ---- | ----- | - |  | - |  | ---- |  |  | ----- | -
|Years ended December 31            |  | 2000 |       |   |  |   |  | 2001
|                                   |  |      |       |   |  |   |  |     
|Balance at beginning of the year   |  | $    | 114.2 |   |  | $ |  |      |  |  | 280.3 |  
|Additions to IRUs                  |  |      | 21.2  |   |  |   |  |      |  |  | 75.5  |  
|Additions to Software applications |  |      | 24.1  |   |  |   |  |      |  |  | 61.6  |  
|Effect of acquisitions             |  |      | 159.3 |   |  |   |  |      |  |  | 158.0 |  
|Retirement of assets               |  |      | (6.3  | ) |  |   |  |      |  |  | (7.4  | )
|Amortization expense               |  |      | (31.8 | ) |  |   |  |      |  |  | (88.1 | )
|Translation adjustment             |  |      | (0.4  | ) |  |   |  |      |  |  | (1.2  | )
|                                   |  |      |       |   |  |   |  |      |  | 
|Balance at end of the year         |  | $    | 280.3 |   |  | $ |  |      |  |  | 478.7 |  
|                                   |  |      |       |   |  |   |  |      |  | 

The effect of acquisitions in the year ended December 31, 2000 related to
Radianz, and in 2001 to Global One. At the date of acquisition of Global
One, Global One had $79.0 capitalized in IRUs and $79.0 capitalized in
Software applications.

The total amortization expense for the years ended December 31, 1999, 2000
and 2001 amounted to $13.8, $31.8 and $88.1 respectively.

F-32



---



##### 



Equant N.V.

Notes to the Consolidated Financial Statements continued
(US dollars in millions, unless otherwise stated)

14. Property and Equipment

Property and equipment, stated at cost less accumulated depreciation, consists of the following:

|                                               |  |          |       |      |  |              |         |             |  |          |          |      |  |   |         | 
|---------------------------------------------- |  | -------- | ----- | ---- |  | ------------ | ------- | ----------- |  | -------- | -------- | ---- |  | - | ------- | 
|At December 31                                 |  | 2000     |       |      |  |              |         |             |  |          |          | 2001
|                                               |  | Net book |       |      |  |              |         | Accumulated |  | Net book
|                                               |  | value    |       | Cost |  | depreciation |         | value      
|                                               |  |          |       |      |  |              |         |            
|Owned land and buildings                       |  | $        | 2.2   |      |  | $            | 1.7     |             |  | $        | (0.7     | )    |  | $ | 1.0     | 
|Leasehold improvements                         |  |          | 40.4  |      |  |              | 168.1   |             |  |          | (73.3    | )    |  |   | 94.8    | 
|Network assets                                 |  |          | 396.6 |      |  |              | 1,481.9 |             |  |          | (744.7   | )    |  |   | 737.2   | 
|Tools, test and demonstration equipment        |  |          | 3.7   |      |  |              | 17.1    |             |  |          | (16.7    | )    |  |   | 0.4     | 
|Computer equipment                             |  |          | 34.7  |      |  |              | 223.7   |             |  |          | (132.4   | )    |  |   | 91.3    | 
|Office equipment, furniture and motor vehicles |  |          | 20.9  |      |  |              | 108.7   |             |  |          | (43.8    | )    |  |   | 64.9    | 
|Assets in course of construction               |  |          | 71.1  |      |  |              | 87.8    |             |  |          |         |      |  |   | 87.8    | 
|                                               |  |          |       |      |  |              |         |             |  |          |          |      |  |   |         | 
|Total property and equipment                   |  | $        | 569.6 |      |  | $            | 2,089.0 |             |  | $        | (1,011.6 | )    |  | $ | 1,077.4 | 
|                                               |  |          |       |      |  |              |         |             |  |          |          |      |  |   |         | 

Changes in the net book value of property and equipment are as follows:

|                                    |  |      |        |      |  |   |         |  
|----------------------------------- |  | ---- | ------ | ---- |  | - | ------- | -
|Years ended December 31             |  | 2000 |        | 2001
|                                    |  |      |        |     
|Balance at beginning of the year    |  | $    | 422.5  |      |  | $ | 569.6   |  
|Additions of property and equipment |  |      | 306.9  |      |  |   | 285.2   |  
|Acquisition of Global One           |  |      |       |      |  |   | 553.2   |  
|Retirement of assets                |  |      | (0.9   | )    |  |   | (71.3   | )
|Depreciation expense                |  |      | (151.1 | )    |  |   | (232.8  | )
|Reclassifications                   |  |      | 2.8    |      |  |   | -       |  
|Translation adjustment              |  |      | (10.6  | )    |  |   | (26.5   | )
|                                    |  |      |        |      |  |   |         |  
|Balance at end of the year          |  | $    | 569.6  |      |  | $ | 1,077.4 |  
|                                    |  |      |        |      |  |   |         |  

At the date of acquisition of Global One, Global One had $487.9 invested in
Network assets, $52.5 in Computer equipment, and $12.8 in other assets.

The total depreciation expense for the years ended December 31, 1999, 2000
and 2001 amounted to $100.8, $151.1 and $232.8 respectively. The net book
value of assets held under capital leases amounted to $16.1 at December 31,
2001, net of accumulated depreciation of $14.6. The Company has some capital
leases on all classes of Property and equipment except Owned land and
buildings and Assets in the course of construction.

F-33



---



##### 



Equant N.V.

Notes to the Consolidated Financial Statements continued
(US dollars in millions, unless otherwise stated)

14. Property and Equipmentcontinued

The Network assets balance includes equipment purchased by the Company which
is subsequently leased to customers under operating leases. Income from
operating leases is recognized over the term of the lease. Although
realization is not assured, management believes that it is more
likely than not that the estimated residual values will be realized. Each of
these assets is depreciated on a straight-line basis over a period of time
consistent with the economic life of the asset (see Note 11, Lease
receivables). At December 31, 2000 and 2001, equipment under operating
leases
to customers amounted to $0.8 and $1.2 respectively, net of accumulated
depreciation of $11.1 and $10.7 respectively. Depreciation expense on
equipment under operating leases to customers totaled $1.3, $1.1 and $0.6
for the years ended December 31, 1999, 2000 and 2001 respectively.
Expenditures for maintenance and repairs are the responsibility of the
lessee.

Under the terms of Equants relationship with SITA for the management of the
network, both under the former SITA Equant network Joint Venture agreement
and the current Network Services Agreement, Equant is required to fund all
capital expenditures on the network, except for those assets that are to be
used solely for SITAs customers. Although Equant is responsible for
management of the entire network and approves all network capital spending,
it does not legally own SITAs Local Network Operators (LNOs), where some
of these assets are deployed. Therefore, Equant has applied the concept of
substance over form for these assets, in order to reflect properly the
economic reality of the transactions. Under such accounting, Equant accounts
for these expenditures as equipment purchases. If this treatment had not
been adopted, $125.9 of the Companys network assets at net book value as at
December 31, 2001 would have been classified as loans to SITA (gross book
value $243.0). There would be no change in the Consolidated Statement of
Operations nor the Consolidated Statement of Cash Flows as the Company is
charged for the related depreciation expense by the SITA LNOs, the liability
for which is offset by reduction to the SITA loan.

15. Other Investments

Other investments, net of provisions for impairment, consist of the following:

|                                                  |  |      |       |      |  |   |       | 
|------------------------------------------------- |  | ---- | ----- | ---- |  | - | ----- | 
|                                                  |  |      |       |     
|At December 31                                    |  | 2000 |       | 2001
|                                                  |  |      |       |     
|Investments accounted for under the equity method |  | $    | 151.1 |      |  | $ | 133.6 | 
|Investments at cost                               |  |      | 18.2  |      |  |   | 6.2   | 
|                                                  |  |      |       |      |  |   |       | 
|Total investments                                 |  | $    | 169.3 |      |  | $ | 139.8 | 
|                                                  |  |      |       |      |  |   |       | 

Investments accounted for under the equity method

Investments accounted for under the equity method represents Equants
non-controlling equity interest of 49% in Radianz. In 2000, Equant entered
into a joint venture with Reuters to provide a secure Internet Protocol
(IP) network to the financial services industry. A new entity (Radianz)
was created into which Equant contributed $225 in cash, a number of
employees, and customer contracts, which, in 1999, generated approximately
$25
of revenues to the Company. Equant also agreed to provide $125 in services
to Radianz over 10 years and agreed not to pursue new customers in the
financial services industry for the provision of extranet network services.
Reuters contributed to Radianz network assets and employees responsible for
the operations and maintenance of the Reuters internal network. Reuters
purchases network services from Radianz.

Radianz has been accounted for under the equity accounting method as
management considers the Companys ability to invoke joint control is not
currently achieved because Reuters remains both the dominant supplier and
customer of Radianz, and accordingly is in a position to affect
significantly the operations of Radianz without the prior approval of
Equant.

F-34



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##### 



Notes to the Consolidated Financial Statementscontinued
(US dollars in millions, unless otherwise stated)

15. Other Investments continued

Investments accounted for under the equity methodcontinued

At December 31, 2000 and 2001 the carrying value of Intangible assets
includes goodwill of $152.1 and $138.4 respectively, representing the excess
of the purchase price over Equants share of the contributed capital of
Radianz net of amortization (see Notes 5 and 13).

Radianz prepares its financial statements under generally accepted
accounting principles in the United States. The 2001 financial statements of
Radianz have not yet been audited. The 2000 financial statements of Radianz
were audited by independent accountants and differed from those initially
presented in the 2000 financial statements of Equant which were based on
estimates. The difference between the estimated 2000 share of net loss and
the actual share of net loss based on the audited financial statements was
recognized by the Company in the year ended December 31, 2001.

Included in the Accumulated deficit of the Company at December 31, 2000 and
2001 were retained deficits of $20.0 and $65.3 respectively relating to
Radianz.

The summarized Balance Sheet and Statement of Operations of Radianz as of
and for the years ended December 31, 2000 and 2001 are set out below.

|                                    |  |                   |        |         |  |           |        |   |  |   |        |  
|----------------------------------- |  | ----------------- | ------ | ------- |  | --------- | ------ | - |  | - | ------ | -
|                                    |  | 2000, as          |        | 2000    |  | 2001     
|At December 31                      |  | previously stated |        | audited |  | unaudited
|                                    |  |                   |        |         |  |          
|Current assets                      |  | $                 | 350.2  |         |  | $         | 343.2  |   |  | $ | 328.2  |  
|Non-current assets                  |  |                   | 100.1  |         |  |           | 107.0  |   |  |   | 148.7  |  
|Current liabilities                 |  |                   | (137.2 | )       |  |           | (140.6 | ) |  |   | (202.3 | )
|Non-current liabilities             |  |                   | (0.2   | )       |  |           | (6.0   | ) |  |   | (17.4  | )
|                                    |  |                   |        |         |  |           |        |   |  |   |        |  
|Net assets and Shareholders equity |  | $                 | 312.9  |         |  | $         | 303.6  |   |  | $ | 257.2  |  
|                                    |  |                   |        |         |  |           |        |   |  |   |        |  

|                        |  |                   |       |         |  |           |       |   |  |   |       |  
|----------------------- |  | ----------------- | ----- | ------- |  | --------- | ----- | - |  | - | ----- | -
|                        |  | 2000, as          |       | 2000    |  | 2001     
|Years ended December 31 |  | previously stated |       | audited |  | unaudited
|                        |  |                   |       |         |  |          
|Net revenues$           |  |                   | 187.0 |         |  | $         | 192.5 |   |  | $ | 433.9 |  
|Operating loss          |  |                   | (25.7 | )       |  |           | (33.3 | ) |  |   | (71.4 | )
|Net loss                |  | $                 | (25.1 | )       |  | $         | (26.8 | ) |  | $ | (65.1 | )
|                        |  |                   |       |         |  |           |       |   |  |   |       |  

The Companys share of the losses of Radianz accounted for under the equity
method was $9.5 for the six months ended December 31, 2000, and $25.3 for
the 12 months ended December 31, 2001. The Company has made adjustments to
the Radianz financial information to align their basis of preparation to the
Companys French GAAP accounting policies, and to eliminate the Companys
deferred service obligations that Radianz recognizes as an expense.

F-35



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##### 



Equant N.V.

Notes to the Consolidated Financial Statements continued
(US dollars in millions, unless otherwise stated)

15. Other Investmentscontinued

Investments at cost

In 2000, the Company invested $30.1 for a non-controlling interest of 7.1%
in STSN, $5.1 for a 5.5% non-controlling interest in iPass and $5.1 for a
non-controlling interest of 18.0% in Tripeze. Management believes that it is
more likely than not that its initial investments may not be fully
recovered. These investments have been written-down to what management
believes to be realizable value. In the year ended December 31, 2000, this
resulted in an impairment loss of $17.0 related to STSN and $5.1 related to
Tripeze. The Companys share of iPass at December 31, 2001, had been diluted
to 1.8% as a result of equity issues in which the Company did not
participate. A further amount of $13.1 was provided against the remaining
carrying value of STSN in the year ended December 31, 2001. The write-downs
are included in the Consolidated Statement of Operations as Loss on
impairment of investments accounted for at cost.

Investments accounted for at cost are classified as available-for-sale, but
were neither purchased nor held primarily for trading. Equant does not
control and cannot exercise significant influence on these companies. No
dividends were received from these investments in 2000 or 2001.

16. Debt and Borrowing Arrangements

Debt and borrowing arrangements consist of the following:

|                     |  |          |      |           |  |          |       |  |  |   |       | 
|-------------------- |  | -------- | ---- | --------- |  | -------- | ----- |  |  | - | ----- | 
|                     |  | Current  |      | Long-term |  | Total   
|At December 31, 2000 |  | maturity |      | maturity  |  | maturity
|                     |  |          |      |           |  |         
|Bank overdrafts      |  | $        | 2.7  |           |  | $        |      |  |  | $ | 2.7   | 
|Term borrowings      |  |          | 26.0 |           |  |          | 400.2 |  |  |   | 426.2 | 
|Capital leases       |  |          | 3.2  |           |  |          | 4.3   |  |  |   | 7.5   | 
|                     |  |          |      |           |  |          |       |  |  |   |       | 
|Debt and borrowings  |  | $        | 31.9 |           |  | $        | 404.5 |  |  | $ | 436.4 | 
|                     |  |          |      |           |  |          |       |  |  |   |       | 

|                     |  |          |     |           |  |          |     |  |  |   |      | 
|-------------------- |  | -------- | --- | --------- |  | -------- | --- |  |  | - | ---- | 
|                     |  | Current  |     | Long-term |  | Total   
|At December 31, 2001 |  | maturity |     | maturity  |  | maturity
|                     |  |          |     |           |  |         
|Bank overdrafts      |  | $        | 1.6 |           |  | $        |    |  |  | $ | 1.6  | 
|Term borrowings      |  |          | 6.6 |           |  |          | 1.0 |  |  |   | 7.6  | 
|Capital leases       |  |          | 0.6 |           |  |          | 3.0 |  |  |   | 3.6  | 
|                     |  |          |     |           |  |          |     |  |  |   |      | 
|Debt and borrowings  |  | $        | 8.8 |           |  | $        | 4.0 |  |  | $ | 12.8 | 
|                     |  |          |     |           |  |          |     |  |  |   |      | 

The aggregate maturities of current and long-term borrowings other than capital leases at December 31, 2001 are as follows:

|     |  |   |     | 
|---- |  | - | --- | 
|2002 |  | $ | 8.2 | 
|2003 |  |   | 1.0 | 
|     |  |   |     | 
|     |  | $ | 9.2 | 
|     |  |   |     | 

F-36



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##### 



Equant N.V.

Notes to the Consolidated Financial Statements continued
(US dollars in millions, unless otherwise stated)

16. Debt and Borrowing Arrangementscontinued

The denominations of borrowings by currency at December 31, 2001 are as follows:

|                 |  |           |         |          |  |      |      |          |  |                 |       |   |  |   |     | 
|---------------- |  | --------- | ------- | -------- |  | ---- | ---- | -------- |  | --------------- | ----- | - |  | - | --- | 
|                 |  | Amount    |         |          |  |      |      | Interest |  | At December 31,
|Currency         |  | loaned(1) |         | Maturity |  | rate |      | 2001    
|                 |  |           |         |          |  |      |      |         
|Brazilian real   |  |           | 1,887   |          |  |      | 2002 |          |  |                 | 28.70 | % |  | $ | 0.8 | 
|Japanese yen     |  |           | 800,000 |          |  |      | 2002 |          |  |                 | 0.48  | % |  |   | 6.2 | 
|US dollar        |  |           | 214     |          |  |      | 2003 |          |  |                 | 7.50  | % |  |   | 0.2 | 
|Other currencies |  |           |         |          |  |      |      |          |  |                 |       |   |  |   | 2.0 | 
|                 |  |           |         |          |  |      |      |          |  |                 |       |   |  |   |     | 
|                 |  |           |         |          |  |      |      |          |  |                 |       |   |  | $ | 9.2 | 
|                 |  |           |         |          |  |      |      |          |  |                 |       |   |  |   |     | 



---

|(1) |  | Amount loaned stated in thousands of local
      currency.
|--- |  | ----------------------------------------------------------

Short-term borrowings

The carrying value of short-term bank overdrafts, mainly denominated in
Japanese yen at December 31, 2001 (US dollars, New Zealand dollars and
Brazilian reals at December 31, 2000) approximated fair value. The weighted
average interest rate charged on short-term loans and the overdrafts for
2000 and 2001 was 18.5% and 3.8% respectively.

Long-term borrowings

On October 23, 1998, the Company entered into a revolving credit facility
pursuant to a facility agreement among Equant, certain of its subsidiaries
and a syndicate of 15 banks named therein. The facility agreement provided a
$400 unsecured revolving credit facility. The facility agreement had a final
maturity on October 23, 2003. The Company and certain of its subsidiaries
were able to borrow funds under the facility agreement. The Company (with
certain subsidiaries) guaranteed all amounts borrowed under the facility.
The Company had drawn down the full amount under the facility agreement as
of December 31, 2000. The interest rate at December 31, 2000 was 37.5 basis
points above LIBOR. The facility agreement was fully repaid and terminated
as a result of the France Telecom Transactions.

On January 9, 2001, the Company entered into a $300 unsecured revolving
credit facility pursuant to a facility agreement among Equant, certain of
its subsidiaries and three banks. The revolving credit facility had a final
maturity on January 8, 2002 with an option to convert borrowings or amounts
outstanding at maturity into term loans for an additional period of 180
days. With the exception of the margin, which was 75 basis points over LIBOR
until June 30, 2001 and 90 basis points over LIBOR thereafter until final
maturity, all other terms and conditions were substantially the same as
those of the $400 revolving credit facility dated October 23, 1998. At June
29, 2001, the Company had drawn down $202.5 of this facility agreement.
The facility agreement was fully repaid and terminated as a result of the
France Telecom Transactions.

Equants subsidiary in France had entered into a $20 multi-currency
revolving credit and bank guarantee facility available until December 31,
2001. The interest rate applicable to amounts drawn down under the facility
is at a variable margin over the applicable inter bank rate. As at December
31, 2000, $17.2 of the facility  mainly denominated in pounds sterling and
Euros  was drawn down. The entire amount was repaid in 2001 and the
facility was canceled.

Equants subsidiary in Japan has a facility totaling 1 billion Japanese yen
($8.7) of which 0.8 billion Japanese yen ($6.2) was utilized at December 31,
2001.

F-37



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##### 



Equant N.V.

Notes to the Consolidated Financial Statements continued
(US dollars in millions, unless otherwise stated)

16. Debt and Borrowing Arrangementscontinued

Long-term borrowingscontinued

Equants subsidiary in Singapore has various revolving credit and import
finance facilities. Amounts outstanding under these facilities at December
31, 2000 amounted to $2.9, all of which was repayable within 12 months and
the unused portion of the facilities amounted to $4.0. Under the main
facility, interest is charged at a margin over the Singapore dollar prime
lending rate. At December 31, 2001, the facility was unused and fully
available.

In addition, the Company has on-demand bank lines of credit and borrowings
that are unsecured. The total unutilized element of these facilities
available at December 31, 2001 amounted to $23.0.

Capital leases

The Company leases certain items of Property and equipment under long-term
capital leases. At December 31, 2000 and 2001, the present value
of minimum lease payments was $7.5 and $3.6 respectively. Future minimum
lease payments for assets held under capital lease arrangements
at December 31, 2001 are as follows:

|                                                                              |                                    |   |      |      |  
|----------------------------------------------------------------------------- | ---------------------------------- | - | ---- | ---- | -
|2002                                                                          |                                    | $ | 1.6  |     
|2003                                                                          |                                    |   | 1.6  |     
|2004                                                                          |                                    |   | 1.2  |     
|2005                                                                          |                                    |   | 0.7  |     
|                                                                              |                                    |   |      |     
|                                                                              | Total minimum lease payments       |   |      | 5.1  |  
|                                                                              | Less: amount representing interest |   |      | (1.5 | )
|                                                                              |                                    |   |      |     
|Present value of minimum lease payments                                       |                                    |   | 3.6  |     
|Less: capital lease obligations included in current portion of long-term debt |                                    |   | (0.6 | )   
|                                                                              |                                    |   |      |     
|Long-term capital lease obligations                                           |                                    | $ | 3.0  |     
|                                                                              |                                    |   |      |     

17. Provisions for Liabilities and Charges

Provisions for liabilities and charges consist of the following:

|                                  |  |      |      |      |  |   |      | 
|--------------------------------- |  | ---- | ---- | ---- |  | - | ---- | 
|At December 31                    |  | 2000 |      | 2001
|                                  |  |      |      |     
|Pension and retirement provisions |  | $    | 4.0  |      |  | $ | 6.9  | 
|Restructuring and integration     |  |      |     |      |  |   | 22.6 | 
|Share plan                        |  |      | 15.6 |      |  |   | 0.1  | 
|                                  |  |      |      |      |  |   |      | 
|                                  |  | $    | 19.6 |      |  | $ | 29.6 | 
|                                  |  |      |      |      |  |   |      | 

Movements in these provisions are disclosed in Notes 20, 6 and 21
respectively. The Company expects to utilize the majority of the provisions
related to Restructuring and integration before December 31, 2002.
Provisions related to Pension and retirement provisions are released over
the expected service lives of employees, which are greater than 12 months.

F-38



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##### 



Equant N.V.

Notes to the Consolidated Financial Statements continued
(US dollars in millions, unless otherwise stated)

18. Other Non-current Liabilities

Other non-current liabilities consist of the following:

|                                         |  |      |      |      |  |   |       | 
|---------------------------------------- |  | ---- | ---- | ---- |  | - | ----- | 
|At December 31                           |  | 2000 |      | 2001
|                                         |  |      |      |     
|Future services to Radianz (see Note 15) |  | $    | 74.8 |      |  | $ | 59.7  | 
|Long-term deferred revenues              |  |      | 16.2 |      |  |   | 15.7  | 
|Other non-current liabilities            |  |      | 0.6  |      |  |   | 26.4  | 
|                                         |  |      |      |      |  |   |       | 
|                                         |  | $    | 91.6 |      |  | $ | 101.8 | 
|                                         |  |      |      |      |  |   |       | 

19. Financial Instruments

Derivative financial instrument risk

The Company uses derivative financial instruments to reduce exposures to
market risks resulting from fluctuations in interest rates and foreign
exchange. The Company does not enter into financial instruments for trading
or speculative purposes.

The Company has a policy of only entering into contracts with financial
institutions that have at least an A (or equivalent) credit rating. The
Company does not have significant exposure to any one financial institution.
Management believes that risk of loss is remote and in any event would be
immaterial.

Interest rate risk management

In September 1998, the Company sold its interest rate caps on its $600
facility and in October 1998 entered into a new $400 credit facility. With
the termination of the $600 facility, the unamortized cost of the caps was
written down to zero. At December 31, 2000, the Company had fully drawn down
the $400 credit facility and had no interest rate derivative instruments
outstanding. At December 31, 2001, the $400 credit facility had been repaid
and cancelled and no interest rate derivative instruments were outstanding.

Exchange risk management

The Company enters into forward exchange contracts maturing within one year
to hedge certain costs and revenues that are denominated in foreign
currencies. These hedging instruments are classified in a consistent manner
with the item being hedged. The portion arising from the retranslation
of long-term inter-company funding balances is recorded within Cumulative
foreign currency translation adjustment and amounted to decreases of $1.5,
$6.7 and $9.5 in Shareholders equity for the years ended December 31, 1999,
2000 and 2001. Foreign exchange gains and losses actually recorded in the
Consolidated Statement of Operations for the years ended December 31, 1999,
2000 and 2001 were net gains of $0.7 and $2.3 and a net loss of $6.4
respectively. The Company had forward exchange contracts outstanding at
December 31, 2000 and 2001 in various currencies, principally against US
dollars. Unrealized gains and losses, based on dealer-quoted prices, from
marking these contracts to market are as follows:

|                                                |  |          |       |       |  |            |     |  |  |   |     | 
|----------------------------------------------- |  | -------- | ----- | ----- |  | ---------- | --- |  |  | - | --- | 
|                                                |  |          |       |       |  | Unrealized
|                                                |  | Notional |       |      
|                                                |  | amounts  |       | Gains |  | Losses    
|                                                |  |          |       |       |  |           
|Forward exchange contracts at December 31, 2000 |  | $        | 26.6  |       |  | $          |    |  |  | $ | 0.2 | 
|Forward exchange contracts at December 31, 2001 |  | $        | 187.8 |       |  | $          | 1.6 |  |  | $ | 0.5 | 
|                                                |  |          |       |       |  |            |     |  |  |   |     | 

F-39



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##### 



Equant N.V.

Notes to the Consolidated Financial Statements continued
(US dollars in millions, unless otherwise stated)

19. Financial Instrumentscontinued

Fair value of financial instruments

The carrying amount of cash and cash equivalents approximates fair value due
to the short-term maturities of these instruments. The fair value of foreign
currency contracts (used for hedging purposes) was estimated based on quoted
market prices at year-end. The fair value of long-term debt, including
current portion, is estimated based on the current rates offered to the
Company for debt of the same maturities.

The estimated fair values of the Companys financial instruments at December 31, 2000 and 2001 are as follows:

|                              |  |          |       |       |  |          |       |       |  |   |      |  |  |   |      | 
|----------------------------- |  | -------- | ----- | ----- |  | -------- | ----- | ----- |  | - | ---- |  |  | - | ---- | 
|At December 31                |  | 2000     |       | 2001 
|                              |  |          |       |      
|                              |  | Carrying |       | Fair  |  | Carrying |       | Fair 
|                              |  | amount   |       | value |  | amount   |       | value
|                              |  |          |       |       |  |          |       |      
|Non-derivatives               |  |          |       |       |  |          |       |       |  |   |      |  |  |   |      | 
|Long-term lease receivables   |  | $        | 35.7  |       |  | $        | 35.7  |       |  | $ | 25.6 |  |  | $ | 25.6 | 
|Radianz commitments           |  |          | 87.3  |       |  |          | 87.3  |       |  |   | 72.2 |  |  |   | 72.2 | 
|Long-term debt and borrowings |  |          | 404.5 |       |  |          | 404.5 |       |  |   | 4.0  |  |  |   | 4.0  | 
|Derivatives                   |  |          |       |       |  |          |       |       |  |   |      |  |  |   |      | 
|Forward exchange contracts    |  | $        |      |       |  | $        | (0.2  | )     |  | $ |     |  |  | $ | 1.1  | 
|                              |  |          |       |       |  |          |       |       |  |   |      |  |  |   |      | 

Accounts receivable, accounts payable and accrued expenses are reflected in
the financial statements at cost which approximates fair value due to the
short-term maturity of these instruments.

Concentration of credit risk

The Company invests its excess cash in deposits with France Telecom under a
centralized cash management program and with major banks throughout the
world. The Company has a policy of making investments with banks that have
at least an A (or equivalent) credit rating. These deposits generally
mature within three months and, to date, the Company has not incurred any
related losses. Cash deposits held with France Telecom are further described
in Related party transactions and cost sharing agreement, Note 23.

Concentrations of credit risk with respect to trade receivables are limited
due to the large number of independent customers comprising the Companys
customer base. Accounts receivable due from related parties are further
described in Note 23. Ongoing credit evaluations of customers financial
condition are performed and, generally, no collateral is required. The
Company maintains reserves for potential credit losses and such losses, in
the aggregate, have not exceeded managements expectations.

F-40



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##### 



Equant N.V.

Notes to the Consolidated Financial Statements continued
(US dollars in millions, unless otherwise stated)

20. Employee Benefits

Pension plans

The Company sponsors various retirement and pension plans including defined
benefit and defined contribution schemes that cover the majority of
world-wide employees.

Defined contribution plans

Defined contribution plans cover the majority of Company employees where
defined benefit plans are not in operation. In addition, employees in
the United States are eligible to participate in a voluntary 401(k) savings
plan. The Company matches a percentage of each employees contributions.
In certain territories the Company contributes a fixed percentage of each
employees salary based on local requirements in that country. Total Company
contributions charged to income for defined contribution plans were $4.9,
$7.4 and $9.8 for the years ended December 31, 1999, 2000
and 2001 respectively.

Defined benefit plans

Plan benefits are primarily based on the employees compensation during the
last three to five years before retirement and the number of years
of service. The two largest defined benefit arrangements at December 31,
1999 and 2000 were in Japan and the United Kingdom. Global One was acquired
on June 29, 2001 and had significant defined benefit plans in the United
States, the United Kingdom and France. The cost to the Company
of the defined benefit plans for the years ended December 31, 1999, 2000 and 2001 can be analyzed as follows:

|                                             |  |      |      |      |  |      |      |   |  |   |      |  
|-------------------------------------------- |  | ---- | ---- | ---- |  | ---- | ---- | - |  | - | ---- | -
|Years ended December 31                      |  | 1999 |      | 2000 |  | 2001
|                                             |  |      |      |      |  |     
|Service cost for benefits earned during year |  | $    | 2.9  |      |  | $    | 4.3  |   |  | $ | 8.1  |  
|Interest cost on projected benefits          |  |      | 1.0  |      |  |      | 1.3  |   |  |   | 4.1  |  
|Expected
          return on plan assets     |  |      | (1.4 | )    |  |      | (2.0 | ) |  |   | (3.7 | )
|Net amortization and deferral                |  |      | (0.1 | )    |  |      |     |   |  |   |     |  
|                                             |  |      |      |      |  |      |      |   |  |   |      |  
|Net
          periodic pension costs         |  | $    | 2.4  |      |  | $    | 3.6  |   |  | $ | 8.5  |  
|                                             |  |      |      |      |  |      |      |   |  |   |      |  

The following assumptions were utilized in determining the funded status of the Companys defined benefit pension plans:

|                                               |  |      |      |      |  |      |      |  |  |  |      | 
|---------------------------------------------- |  | ---- | ---- | ---- |  | ---- | ---- |  |  |  | ---- | 
|Years ended December 31                        |  | 1999 |      | 2000 |  | 2001
|                                               |  | %    |      | %    |  | %   
|                                               |  |      |      |      |  |     
|Weighted average discount rate                 |  |      | 5.60 |      |  |      | 5.88 |  |  |  | 5.70 | 
|Weighted average rate of compensation increase |  |      | 3.87 |      |  |      | 4.69 |  |  |  | 3.30 | 
|Expected
          long-term rate of return    |  |      | 8.53 |      |  |      | 7.78 |  |  |  | 8.20 | 
|                                               |  |      |      |      |  |      |      |  |  |  |      | 

The changes in the actuarial assumptions reflect movements in interest
rates, salary increases, and expected rates of return in the respective
local countries where the benefit plans reside. These assumptions are used
in the actuarial calculation of the benefit obligation and fair value of
plan assets for the following year.

F-41



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##### 



Equant N.V.

Notes to the Consolidated Financial Statements continued
(US dollars in millions, unless otherwise stated)

20. Employee Benefitscontinued

Pension planscontinued

Defined benefit planscontinued

The status of the Companys post-retirement benefit plans, both funded and
unfunded, at December 31, 2000 and 2001 is reported in the tables below.

|                                                             |  |      |      |      |  |   |      |  
|------------------------------------------------------------ |  | ---- | ---- | ---- |  | - | ---- | -
|Years ended December 31                                      |  | 2000 |      | 2001
|                                                             |  |      |      |     
|Benefit obligation at beginning of year                      |  | $    | 23.4 |      |  | $ | 34.9 |  
|Service cost                                                 |  |      | 4.3  |      |  |   | 8.1  |  
|Interest
          cost                                      |  |      | 1.3  |      |  |   | 4.1  |  
|Employees contributions                                     |  |      | 1.5  |      |  |   | 2.4  |  
|Acquisition                                                  |  |      | 6.3  |      |  |   | 43.1 |  
|Actuarial gain/(loss)                                        |  |      | 1.9  |      |  |   | (6.0 | )
|Benefits
          paid                                      |  |      | (0.8 | )    |  |   | (3.0 | )
|Currency translation adjustment                              |  |      | (2.0 | )    |  |   | (1.9 | )
|Other                                                        |  |      | (1.0 | )    |  |   | 2.7  |  
|                                                             |  |      |      |      |  |   |      |  
|Actuarial present value of benefit obligation at end of year |  | $    | 34.9 |      |  | $ | 84.4 |  
|                                                             |  |      |      |      |  |   |      |  

|                                                   |  |      |      |      |  |   |      |  
|-------------------------------------------------- |  | ---- | ---- | ---- |  | - | ---- | -
|Years ended December 31                            |  | 2000 |      | 2001
|                                                   |  |      |      |     
|Fair value of plan assets at beginning of year     |  | $    | 19.8 |      |  | $ | 28.7 |  
|Actual return on plan assets                       |  |      | 1.7  |      |  |   | (6.1 | )
|Employers contributions                           |  |      | 4.0  |      |  |   | 5.4  |  
|Employees contributions                           |  |      | 1.5  |      |  |   | 2.4  |  
|Acquisition                                        |  |      | 5.1  |      |  |   | 29.6 |  
|Benefits paid                                      |  |      | (0.8 | )    |  |   | (3.0 | )
|Currency
          translation adjustment          |  |      | (2.5 | )    |  |   | (1.0 | )
|Administrative expenses                            |  |      | (0.1 | )    |  |   | 2.5  |  
|                                                   |  |      |      |      |  |   |      |  
|Fair
          value of plan assets at end of year |  | $    | 28.7 |      |  | $ | 58.5 |  
|                                                   |  |      |      |      |  |   |      |  

The increase in the benefit obligation over the related fair value of plan
assets during the year ended December 31, 2000, reflected in the net
periodic pension cost, is mostly attributable to the United Kingdoms
post-retirement benefit plan. This results from the increase in the number
of participants and the impact of the transfer of the LNO group for the
United Kingdom from September 1, 2000 (see Note 5, Acquisition and disposal
of businesses and investments).

The increase in the benefit obligation during the year ended December 31,
2001 is mainly attributable to the acquisition of Global One on June 29,
2001.

F-42



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##### 



Equant N.V.

Notes to the Consolidated Financial Statements continued
(US dollars in millions, unless otherwise stated)

20. Employee Benefitscontinued

Pension planscontinued

Defined benefit planscontinued

The funded status of the defined benefit plans and amounts recognized in the
Consolidated Balance Sheets consist of the following:

|                                                        |  |      |      |      |  |   |       |  
|------------------------------------------------------- |  | ---- | ---- | ---- |  | - | ----- | -
|At December 31                                          |  | 2000 |      | 2001
|                                                        |  |      |      |     
|Funded status                                           |  | $    | (6.4 | )    |  | $ | (25.9 | )
|Unrecognized transition asset                           |  |      | (0.4 | )    |  |   |      |  
|Unamortized
          prior service cost                |  |      |     |      |  |   | 2.2   |  
|Unrecognized net actuarial loss                         |  |      | 6.8  |      |  |   | 14.0  |  
|                                                        |  |      |      |      |  |   |       |  
|Net
          prepaid pension asset/(accrued liability) |  | $    |     |      |  | $ | (9.7  | )
|                                                        |  |      |      |      |  |   |       |  

Other programs

As required in most European countries by labor legislation, an accrual for
end of service indemnities has been provided for a portion of employees
annual salaries, indexed for inflation. At December 31, 2000 and 2001, the
indemnity accruals were $4.4 and $3.0 respectively. The total charge to
income during the years ended December 31, 1999, 2000 and 2001 were $0.9,
$2.0 and $0.7 respectively. The expected cost of such agreements is accrued
over the period of the expected employee service based on actuarial
assumptions.

Compensation of the members of the Supervisory Board and Management Board

The aggregate amount of compensation paid to members of the Supervisory
Board of the Company, as a result of their position on that Board and
excluding reimbursement of expenses incidental to their attendance at such
Board meetings, amounted to $0.2, $0.6 and $0.5 in the years ended December
31, 1999, 2000 and 2001, respectively.

Members of the Management Board of the Company receive no incremental
compensation as a result of their position on that Board, other than
reimbursement of expenses incidental to their attendance at such Board
meetings. A portion of their remuneration is payable and subject to taxation
in The Netherlands.

Other post-retirement benefit plans

As a result of the acquisition of Global One, the Company has assumed a
number of unfunded post-retirement benefit plans. At December 31, 2001 these
covered 840 employees in the United States and the accrued benefit liability
was $1.4. The unrecognized net loss at this date was $0.4. The charge in the
Consolidated Statement of Operations for the year ended December 31, 2001 in
respect of these plans was $0.1.

F-43



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##### 



Equant N.V.

Notes to the Consolidated Financial Statements continued
(US dollars in millions, unless otherwise stated)

21. Stock Based Compensation

Employee share award plan

Background

Under the terms of an agreement between SITA and the Company, 850,000
certificates in the SITA Foundation (which was, until the France Telecom
Transactions, the largest holder of ordinary shares in the Company), were
transferred to an Employee Trust for the benefit of eligible employees of
SITA, the SITA Equant network Joint Venture, the Company and their
respective subsidiary companies (the Participating Employers). Each
certificate represents the right to obtain 20 ordinary shares. The
independent trustees of the Employee Trust are empowered to use these
certificates under the Deferred Share Award Plan (the Award Plan) for the
granting of Ordinary and Discretionary Awards.

All permanent employees who work on a full-time or part-time basis are
eligible to participate, subject to being employed by one of the
Participating Employers on the eligibility date.

The award of certificates to eligible employees is free of charge. The
number of certificates included in Ordinary Awards to each eligible employee
is calculated as a proportion of his/her annual salary to the total annual
salary cost of all Participating Employers at each award date. The selection
of participants and the number of certificates or shares for the grant of
Discretionary Awards is discretionary. In the case of Discretionary Awards,
the Employee Trust retains the right to the first US$77.78 per certificate
(where the certificate represents the right to obtain 20 ordinary shares) or
share of the ultimate sale proceeds of each certificate or share.

In general, the vesting of both Ordinary Awards and Discretionary Awards
requires certificates either to convert into shares, or become transferable,
both of which were firstly contingent upon the Company attaining an IPO, and
then upon exercise of the discretion of the Board of the SITA Foundation.
Full vesting also requires that at least three years have passed from the
relevant Eligibility Date (unless this vesting period is reduced by the
trustees of the Employee Trust) during which time those granted awards must
remain with the Participating Employers. The life of the awards is 10 years.

On June 29, 2001, all awards with eligibility dates of November 30, 1997 and
November 30, 1998 (Awards 3 and 4 Ordinary and Discretionary Awards) were
subject to vesting as a result of the completion of the France Telecom
Transactions. As a result of these transactions the SITA Foundation sold the
Equant shares that related to the unvested awards from the Employee Trust
prior to June 29, 2001 (8.5 million Equant shares) to France Telecom in
exchange for France Telecom shares. Every 2.2 Equant shares were exchanged
for 1 France Telecom share. In the case of Discretionary France Telecom
shares, the Employee Trust retains the right to the first US$8.556 (or Euro
equivalent) per share of the ultimate sale proceeds of each share.

On November 15, 2001, as a result of the closing of the France Telecom
Transactions, Equant and SITA terminated the Employee Trust and established
their own company specific employee trusts to govern the disposition of all
Awards granted after November 30, 1998. Coincident with the formation of the
Equant Employee Trust, the Company resolved to vest all Awards granted
between December 1, 1998 and December 31, 2000.

On December 21, 2001, as a result of a Management Board resolution an Award
of 40,000 Equant Discretionary shares, granted on January 17, 2001, was
subject to early vesting.

F-44



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##### 



Equant N.V.

Notes to the Consolidated Financial Statements continued
(US dollars in millions, unless otherwise stated)

21. Stock Based Compensationcontinued

Employee share award plancontinued

Vesting details

In February 1999, all Award 1 Ordinary and Discretionary Awards, granted in
1996, vested. This resulted in a payment of $10.8 of social charges by the
Company during 1999. A further payment of $0.7 was made in 2000. Award 2
Ordinary and Discretionary Awards, granted in 1997, vested in January 2000.
This resulted in a payment of $15.7 of social charges by the Company during
2000.

In July 2001, all Award 3 and 4 Ordinary and Discretionary Awards, granted
during 1997 and 1998, vested. This resulted in a payment of $6.3 of social
charges by the Company during 2001.

In November 2001, all other Awards granted between December 1, 1998 and
December 31, 2000 vested. Further, all Awards granted between December 1,
1998 and December 31, 2000 in respect of LNO groups that SITA transferred to
the Company in November and December 2001 vested.
In addition, in December 2001 an Award of 40,000 Equant Discretionary shares
was subject to early vesting. This resulted in a payment of $0.1 of social
charges by the Company during 2001.

Shares granted since November 30, 1998

In 1999, a further 1,300 Discretionary Awards were awarded to existing and
at hire employees. The grant date and fair value per share of these awards
ranged from September 13, 1999 at a fair value of US$82.00 to December 7,
1999 at a fair value of US$97.81. These shares vested in November 2001.

In 2000, a further 9,625 Discretionary Awards were awarded to existing and
at hire employees. The grant date and fair value per share of these awards
ranged from February 22, 2000 at a fair value of US$116.75 to December 7,
2000 at a fair value of US$29.88. These shares vested in November 2001.

In 2001, a further 58,910 Equant Discretionary shares were awarded to
existing and at hire employees. The grant date and fair value per share of
these awards ranged from January 17, 2001 at a fair value of US$30.50 to
September 12, 2001 at a fair value of US$11.20. Of these 58,910 shares
granted a total of 40,410 vested during the year leaving a balance of 18,500
shares unvested. These have now been converted to the equivalent number of
unvested France Telecom shares of approximately 8,409 unvested France
Telecom shares.

Unvested awards as at December 31, 2001

In addition to the 8,409 France Telecom shares granted above a further
28,034 France Telecom shares in respect of LNO groups that SITA has
transferred to the Company remain unvested. Therefore, as at December 31,
2001, a total of 36,443 France Telecom shares granted to eligible employees
of Equant remain unvested.

Amounts expensed

The Company will pay social security contributions and other charges related
to the Share Awards in the years in which the awards vest. These
contributions and charges will depend on various factors, including the
employees tax jurisdiction, local laws in these countries and the share
price at the time of vesting. The social charges credit of $7.1 in the
Consolidated Statement of Operations in 2001 includes the release of a
surplus provision for social charges of $8.3 as a result of the actual share
price of each Share Award on the date of vesting being lower than the
estimated fair value at December 31, 2000.

F-45



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##### 



Equant N.V.

Notes to the Consolidated Financial Statements continued
(US dollars in millions, unless otherwise stated)

21. Stock Based Compensationcontinued

Share option plan

The Company adopted a Share Option Plan (the Option Plan) in June 1998.
The Option Plan provided that the Company may grant options and restricted
shares covering up to 5% of its shares outstanding after the IPO. As of
December 31, 2001 the Company has granted options and awards under the
Option Plan covering 5,138,570 shares at exercise prices ranging from
US$11.08 to US$117.81 and vesting periods from July 21, 2000 to July 19,
2006. The first of these grants was made effective on July 21, 1998 to all
eligible employees at an exercise price of US$27.00 (the IPO price). Since
then, the Company has granted further options to its employees, including
members of its Management and Supervisory Boards. Under the terms of the
Option Plan, the exercise price of options can be no less than the average
price of the Companys shares on the New York Stock Exchange on the date of
grant. However, with respect to newly hired employees, including employees
of LNO groups that SITA transfers to the Company or of any business the
Company acquires, the exercise price for options granted is generally set
during a certain period. In certain circumstances the exercise price may be
specified within the terms of the hiring agreement for a newly hired
employee.

In some countries, the Company has adopted a phantom plan rather than an
actual share option plan. The phantom plan is designed to approximate for
certain Company employees the incentives of owning share options without
involving the actual transfer of options or shares.

During the course of 2001, the Company approved awards of restricted shares
of 25,348 shares in total. On August 27, 2001, the Company approved awards
of restricted shares to a recently hired employee of 25,000 shares. In
addition further retrospective awards of 348 restricted shares were made to
existing employees, previously not included in the June 30, 2000 grant of
295,451 shares. These awards are included in the total granted options and
awards covering 5,138,570 shares as described above.

On May 25, 2001, the Company offered to purchase outstanding options (the
Option Buyback) that were granted under the Option Plan on or before
November 19, 2000 with an exercise price greater than or equal to US$88.00
per share in exchange for a one time cash payment of US$2.00 per option.
This was subject to the completion of the France Telecom Transactions, which
occurred on June 29, 2001. As a result of the Option Buyback the Company
paid $1.9 to employees in respect of 947,153 options and 10,731 phantom
options.

On June 29, 2001, all options and restricted shares that were granted under
the Option Plan on or before November 19, 2000 were subject to accelerated
vesting as a result of the completion of the France Telecom Transactions.
This resulted in a payment of $0.5 of social charges by the Company during
2001.

The Company will pay social security contributions and other charges related
to the options and restricted shares in the years in which the options are
exercised and the restricted shares vest. These contributions and charges
will depend on various factors, including the employees tax jurisdiction,
local laws in these countries and the share price at the time of vesting.
The social charges were adjusted to reflect the actual share price of
restricted shares on the date of vesting, resulting in a credit of $0.4 in
2001.

|               |  |              |      |            |  |          |      |       |  |      |      |              |  |   |   |            |  |   |     | 
|-------------- |  | ------------ | ---- | ---------- |  | -------- | ---- | ----- |  | ---- | ---- | ------------ |  | - | - | ---------- |  | - | --- | 
|               |  | Balance at   |      |            |  |          |      |       |  |      |      |              |  |   |   | Balance at
|               |  | December 31, |      | Additions/ |  | Reserves |      |       |  |      |      | December 31,
|               |  | 2000         |      | (releases) |  | utilized |      | Other |  | 2001
|               |  |              |      |            |  |          |      |       |  |     
|Social charges |  | $            | 15.6 |            |  | $        | (9.0 | )     |  | $    | (6.5 | )            |  | $ |  |            |  | $ | 0.1 | 
|Option buyback |  |              |     |            |  |          | 1.9  |       |  |      | (1.9 | )            |  |   |  |            |  |   |    | 
|               |  |              |      |            |  |          |      |       |  |      |      |              |  |   |   |            |  |   |     | 
|               |  | $            | 15.6 |            |  | $        | (7.1 | )     |  | $    | (8.4 | )            |  | $ |  |            |  | $ | 0.1 | 
|               |  |              |      |            |  |          |      |       |  |      |      |              |  |   |   |            |  |   |     | 

F-46



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##### 



Equant N.V.

Notes to the Consolidated Financial Statements continued
(US dollars in millions, unless otherwise stated)

21. Stock Based Compensationcontinued

Share option plancontinued

The table below provides details of unexercised options granted and weighted
average exercise price as of December 31, 1999, 2000 and 2001.

|                                                          |  |                                                             |           |  |            |           |          |                  |        |  |       | 
|--------------------------------------------------------- |  | ----------------------------------------------------------- | --------- |  | ---------- | --------- | -------- | ---------------- | ------ |  | ----- | 
|                                                          |  |                                                             |           |  |            | Number    |          | Weighted average
|                                                          |  |                                                             |           |  |            | of shares |          | exercise price  
|                                                          |  |                                                             |           |  |            |           |          |                 
|Unexercised
          options granted - December 31, 1999 |  |                                                             | 2,622,766 |  |            | US$       | 59.70    |                 
|Options
          granted                                 |  | - At exercise price range of
        US$nil to US$50.00     |           |  | 2,155,532  |           |          |                  | 35.63  | 
|                                                          |  | - At exercise price range of
        US$50.01 to US$100.00  |           |  | 30,500     |           |          |                  | 70.34  | 
|                                                          |  | - At exercise price range of
        US$100.01 to US$150.00 |           |  | 40,778     |           |          |                  | 106.81 | 
|                                                          |  |                                                             |           |  |            |           |          |                  |        |  |       | 
|                                                          |  | - Total options granted in year                             |           |  | 2,226,810  |           |          |                  | 37.40  | 
|Options
          exercised                               |  |                                                             |           |  |            |           | (81,509  | )                |        |  | 16.72 | 
|Options
          forfeited                               |  | - At exercise price range of
        US$nil to US$50.00     |           |  | (61,735    | )         |          |                  | 30.29  | 
|                                                          |  | - At exercise price range of
        US$50.01 to US$100.00  |           |  | (107,623   | )         |          |                  | 89.95  | 
|                                                          |  | - At exercise price range of
        US$100.01 to US$150.00 |           |  | (15        | )         |          |                  | 102.13 | 
|                                                          |  |                                                             |           |  |            |           |          |                  |        |  |       | 
|                                                          |  | - Total options forfeited in
        year                   |           |  | (169,373   | )         |          |                  | 68.21  | 
|                                                          |  |                                                             |           |  |            |           |          |                  |        |  |       | 
|Unexercised
          options granted - December 31, 2000 |  |                                                             | 4,598,694 |  |            | US$       | 49.35    |                 
|                                                          |  |                                                             |           |  |            |           |          |                  |        |  |       | 
|Options
          granted                                 |  | - At exercise price range of
        US$nil to US$50.00     |           |  | 233,809    |           |          |                  | 15.58  | 
|Options
          exercised                               |  |                                                             |           |  |            |           | (528,246 | )                |        |  | 0.06  | 
|Options
          forfeited                               |  | - At exercise price range of
        US$nil to US$50.00     |           |  | (160,746   | )         |          |                  | 26.11  | 
|                                                          |  | - At exercise price range of
        US$50.01 to US$100.00  |           |  | (981,753   | )         |          |                  | 90.09  | 
|                                                          |  | - At exercise price range of
        US$100.01 to US$150.00 |           |  | (32,961    | )         |          |                  | 106.51 | 
|                                                          |  |                                                             |           |  |            |           |          |                  |        |  |       | 
|                                                          |  | - Total options forfeited in
        year                   |           |  | (1,175,460 | )         |          |                  | 81.80  | 
|                                                          |  |                                                             |           |  |            |           |          |                  |        |  |       | 
|Unexercised
          options granted - December 31, 2001 |  |                                                             | 3,128,797 |  |            | US$       | 42.96    |                 
|                                                          |  |                                                             |           |  |            |           |          |                  |        |  |       | 

The exercise dates of the number of options outstanding at December 31, 2001 are as follows:

|                     |  |  |           | 
|-------------------- |  |  | --------- | 
|At December 31, 2001 |  |  | 2,892,546 | 
|2002                 |  |  | 72,394    | 
|2003                 |  |  | 72,439    | 
|2004                 |  |  | 73,058    | 
|2005                 |  |  |          | 
|2006                 |  |  | 18,360    | 
|                     |  |  |           | 
|                     |  |  | 3,128,797 | 
|                     |  |  |           | 

Of the options exercised in 2001, 527,020 related to the early vesting of
restricted shares. Of the options forfeited in 2001, 947,153 related to the
Option Buyback.

F-47



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##### 



Equant N.V.

Notes to the Consolidated Financial Statements continued
(US dollars in millions, unless otherwise stated)

22. Commitments and Contingent Liabilities

Lease commitments

Rentals for office space, equipment and motor vehicles, including
non-cancelable leases, amounted to approximately $27.4, $41.9 and $101.9 in
the years ended December 31, 1999, 2000 and 2001 respectively. At December
31, 2001, the approximate future minimum lease payments under non-cancelable
operating leases that have remaining lease terms in excess of one year are
as follows:

|                    |  |   |       | 
|------------------- |  | - | ----- | 
|2002                |  | $ | 53.7  | 
|2003                |  |   | 40.7  | 
|2004                |  |   | 32.5  | 
|2005                |  |   | 28.6  | 
|2006 and thereafter |  |   | 121.7 | 
|                    |  |   |       | 
|                    |  | $ | 277.2 | 
|                    |  |   |       | 

The amounts stated above include obligations on leases where the Company is
currently negotiating with lessors to terminate leases and for which
provisions have been recognized as part of the Restructuring and
integration of Equant, Global One and SITA Equant network Joint Venture.

Radianz commitments

Pursuant to the joint venture agreements with Reuters, the Company is
expected to provide $125 of services to Radianz over a period of up to 10
years, of which approximately $6.3 and $12.5 was provided during the years
ended December 31, 2000 and 2001 respectively. At December 31, 2000 and
2001, the Company has recorded the net present value of the outstanding
liability totaling $83.8 and $71.3 respectively, of which $74.8 and $59.7
respectively is the long-term element reported within Other non-current
liabilities.

Contingent liabilities

The Company and its subsidiaries are involved in legal proceedings, claims
and litigation arising in the ordinary course of business. Management does
not believe that there are currently any asserted or unasserted claims that
will have a material adverse effect on the financial position, results of
operations or cash flows of the Company.

The Company and its subsidiaries have other contingent liabilities,
including guarantees provided to non-consolidated entities, totaling $4.3 at
December 31, 2001.

Contingent liabilities from consortia agreements

The Company and its subsidiaries are party to a number of agreements under
which they may be required to contribute to future commitments of various
consortia created to own and maintain network assets. Should other members
of individual consortia elect not to meet their own commitments,
and thereby sacrifice benefits of consortia membership, the remaining
consortia members (including the Company) may be required to increase their
contributions and percentage membership. It is not possible to quantify this
commitment.

F-48



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##### 



Equant N.V.

Notes to the Consolidated Financial Statements continued
(US dollars in millions, unless otherwise stated)

23. Related Party Transactions and Cost Sharing Agreement

SITA Equant network Joint Venture

Until June 29, 2001, the Company held a 50% share in the equity of the SITA
Equant network Joint Venture (the Joint Venture), a co-operative
registered in Belgium, in which SITA, also registered in Belgium, held the
remaining 50% interest. Under a separate agreement, the Company and SITA
shared the costs of the jointly owned and operated telecommunications
network according to an agreed formula linked to network usage. The cost
sharing arrangement had been applied from January 1, 1996. Under the
agreement, the Company funded future expansion of this common network on the
basis of an annual jointly agreed budget. SITA also provided various
services to the Company, which included the provision of technical services,
equipment purchases, secondment of staff and provision of office space.

The Company recorded its allocated share of the Joint Venture network costs
in the Consolidated Statement of Operations. The Joint Venture network costs
included network circuits and the related costs, and also equipment and
maintenance costs, personnel costs and costs of central services (including
the SITA Equant network Joint Venture management, product development,
bookkeeping and accounting functions). The Joint Venture network costs were
incurred by Equant, SITA and the Joint Venture and until June 29, 2001 each
parent party was allocated its share according to the cost sharing formula
set out in the Joint Venture agreement, or by negotiated agreement.
Non-Joint Venture costs included access circuits, the costs of customer
premises, equipment, selling costs and general and administrative costs. The
Joint Venture network costs did not include share plan costs. For the years
ended December 31, 1999, 2000 and the period ended June 29, 2001, the
Companys total network cost was $328, $498 and $187 respectively, of which
$181, $272 and $168 respectively was the Companys share of the Joint
Venture network costs.

As a result of the France Telecom Transactions, Equant and SITA terminated
the existing SITA Equant network Joint Venture and replaced it with a series
of new agreements (see Note 1). The resultant relationship is one where
Equant assumed operational control and management of the network and now
provides telecommunications services to SITA to support the air transport
community.

Trade payables due to the SITA Equant network Joint Venture at December 31,
2000 were $1.8.

SITA

Under the revised agreements with SITA that came into effect on June 29,
2001 the Company is responsible for operating and managing the network.
However, in certain countries SITA continues to operate the network locally.
The Company is charged all the costs of operating in such countries by SITA.
SITA will continue to operate locally in certain countries until the Company
can assume full ownership of all of the local network assets. The Company
will assume ownership as soon as it becomes possible in each of the affected
countries. The Company invoices SITA for use of the Companys global
network.

In the normal course of business, the Company engages in transactions with
SITA. The Company received revenues from SITA for providing goods and
services to its customers of $254.3, $442.1 and $654.0 for the years ended
December 31, 1999, 2000 and 2001 respectively. The Company was also charged
$225.4, $279.3 and $512.8, respectively, related to goods and services
provided by SITA in the years ended December 31, 1999, 2000 and 2001.

Trade receivables from SITA at December 31, 2000 and 2001 were $65.5 and
$297.4 respectively, and at December 31, 2000 and 2001, amounts of $1.2 and
$nil respectively were included in Long-term lease receivables. In
addition, at December 31, 2000 $10.8 had been prepaid by the Company to SITA
in respect of circuit costs for 2001. Trade payables to SITA at December 31,
2000 and 2001 were $44.2 and $235.9 respectively.

F-49



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##### 



Equant N.V.

Notes to the Consolidated Financial Statements continued
(US dollars in millions, unless otherwise stated)

23. Related Party Transactions and Cost Sharing Agreementcontinued

Radianz and Reuters

As described in Note 15, on February 3, 2000, the Company set up a joint
venture with Reuters called Radianz. Equant contributed approximately $225
in cash at the incorporation of the joint venture, in June 2000. In
addition, Equant has agreed to provide approximately $125 in services to
Radianz over a period of up to ten years, of which approximately $6.3 and
$12.5 were provided during the years 2000 and 2001 respectively. See also
Note 22, Commitments and contingent liabilities.

In the normal course of business, the Company earned revenues from Radianz
for providing core-bandwidth and other services totaling approximately $39.7
and $85.2 during the years ended December 31, 2000 and 2001 respectively.

Trade receivables from Radianz at December 31, 2000 and 2001 were
approximately $34.5 and $67.0 respectively. In addition, at December 31,
2000 and 2001 amounts of $9.1 and $nil respectively are included in
Accounts receivable relating to certain costs incurred by Equant on behalf
of Radianz.

In the normal course of business, the Company earned revenues from Reuters
for providing core-bandwidth and other services totaling approximately $4.5
during the year ended December 31, 2001. The Company was also charged $45.6
by Reuters in the year ended December 31, 2001 related to the costs of
network access and transmission capacity which has yet to be migrated over
to the Companys network. These costs are included in the $85.2 charged to
Radianz during the year. Trade receivables from Reuters at December 31, 2001
were approximately $1.2. Trade payables and accrued liabilities to Reuters
at December 31, 2001 totaled $44.6.

France Telecom

During the year the Company acquired Global One from France Telecom and
received reimbursement for Restructuring and integration expenses
(see Notes 1, 5 and 6). The Company also entered into trading transactions
with France Telecom during the year ended December 31, 2001 which are set
out below:

|                                                                |                                |   |        |       |                |              |                |   |                |       |  |                  |                  |  |  |  | 
|--------------------------------------------------------------- | ------------------------------ | - | ------ | ----- | -------------- | ------------ | -------------- | - | -------------- | ----- |  | ---------------- | ---------------- |  |  |  | 
|                                                                |                                |   | Income |       | Expense       
|                                                                |                                |   |        |       |               
|                                                                |                                |   | Amount |       | Classification |              | Amount         |   | Classification
|                                                                |                                |   |        |       |                |              |                |   |               
|Commercial relationships with respect to end user customers     |                                |   |        |       |                |              |                |   |                |       |  |                  |                  |  |  | 
|                                                                | Equant sales to France Telecom |   | $      | 134.7 |                |              | Revenue        |   |                |       |  |                  | Not applicable  
|                                                                | France Telecom sales to Equant |   |        |       |                |              | Not applicable |   | $              | 194.8 |  |                  | Cost of services
|Commercial relationships with respect to the network            |                                | $ | 48.5   |       |                | Other income |                | $ | 48.5           |       |  | Cost of services
|Switched voice services                                         |                                | $ | 97.9   |       |                | Other income |                | $ | 97.9           |       |  | Cost of services
|Pre-paid and post-paid calling cards and voice carrier services |                                | $ | 51.3   |       |                | Shown net    |                | $ | 51.3           |       |  | Shown net       

F-50



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##### 



Equant N.V.

Notes to the Consolidated Financial Statements continued
(US dollars in millions, unless otherwise stated)

23. Related Party Transactions and Cost Sharing Agreementcontinued

France Telecomcontinued

Commercial relationships between the Company and France Telecom with respect to end user customers

On June 29, 2001, the Company and France Telecom, through its France-based
subsidiary, Transpac S.A. (Transpac), entered into numerous agreements,
three of which (Umbrella, Affiliation and Reseller) together govern the
commercial relationship between the Company and France Telecom in France.
These agreements establish the terms and conditions that govern the joint
business planning and monitoring process between the Company and Transpac as
well as the sale and support of each others products and services (except
voice carrier and calling card services) in their respective markets.
Transpac has agreed to minimum revenue guarantees to the Company, rising to
$185 for 2002 and 2003. Revenues from these sales will be included in revenues as accrued. For 2004 and subsequent years the minimum revenue
guarantees will be negotiated between the parties. Various ancillary
agreements establish the terms and conditions for support services including
trademark licensing and product development. These commercial relationships
will continue under varying terms so long as France Telecom continues to own
at least 34% of the Companys outstanding shares.

Commercial relationships between France Telecom and the Company with respect
to the network

France Telecom supplies transmission capacity and IP services to the Company
in certain geographic regions where France Telecom has competitive prices
and services. The Company provides transmission capacity and IP services to
France Telecom in countries where France Telecom does not have a presence.
Pricing for these services is based on market price. In addition, the
Company may also supply ancillary support services on a cost plus basis.
These commercial relationships will continue under varying terms so long as
France Telecom continues to own at least 34% of the Companys outstanding
shares. Revenues for these services are included within Other operating
income.

Switched voice services

The Company and France Telecom have agreed to transfer the operation,
management and financial responsibility for the Companys switched voice
business and switched voice platform (most of which was acquired in the
merger with Global One) to France Telecom. The Company and France Telecom
have planning and financial arrangements in place to ensure that the
switched voice business does not materially affect the Companys
profitability. The Company expects to migrate gradually its voice business
to a voice over IP platform by the end of 2005. Revenues earned by the
Company from France Telecom in relation to these arrangements for voice
services are shown within Other operating income.

Calling cards and voice carrier services

The Company acts as France Telecoms agent on a limited risk basis for its
pre-paid and post-paid calling cards in various countries. The Company is
also the distributor for France Telecoms voice carrier business outside
France. In light of this limited risk to the Company of providing these
services, the Company earns a fee of 0.5%. The amounts invoiced are passed
through to France Telecom less the Companys fees. In view of the limited
risk the revenues from this activity of $51.3 for the period from July 1,
2001 are netted against costs and the fee is also netted against costs. Both
of these commercial relationships derive from distribution agreements
originally executed by France Telecom and Global One. Agreements in most of
the countries should terminate by the end of 2002.

Trade receivables from France Telecom at December 31, 2001 are $324.0. Trade
payables to France Telecom at December 31, 2001 are $215.5.

At December 31, 2001, the Company had deposited $237.5 of surplus funds with
France Telecom under a centralized cash management program. These funds bear
interest at market rates and are repayable on demand by the Company.
Interest earned on amounts on deposit with France Telecom totaled $5.6 in
the year ended December 31, 2001.

F-51



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##### 



Equant N.V.

Notes to the Consolidated Financial Statements continued
(US dollars in millions, unless otherwise stated)

23. Related Party Transactions and Cost Sharing Agreementcontinued

Other related party
transactions

Included in Other current assets and prepaid costs at December 31, 2000
were $0.1 in respect of public offering costs recorded by the Company
to be borne by the shareholders.

Included in Accounts receivable at December 31, 2000 and 2001 was a
receivable from a former Management Board member of $0.8 and $0.4
respectively. The amount receivable at December 31, 2001 will be recovered
through withholding proceeds from the exercise of stock based remuneration,
which the Company controls.

In 2000, the Company generated revenue from iPass, Tripeze and STSN of $3.2,
$0.3 and $0.3 respectively. Accounts receivable from these companies at
December 31, 2000 were $0.3, $nil and $0.3, respectively.

In 2001, the Company generated revenue from iPass, Tripeze and STSN of $3.3,
$nil and $1.0 respectively. Accounts receivable from these companies at
December 31, 2001 were $0.3, $nil and $0.9, respectively.

24. Segmental Information

During the fourth quarter of 2000, the Company initiated a plan to integrate
its two larger divisions  Equant Network Services and Equant Integration
Services  into a single organization. This integration became effective on
January 1, 2001.

On June 29, 2001, concurrent with the France Telecom Transactions, Equant
assumed management of the entire network previously under joint management
between Equant and SITA (see Notes 1 and 23). This resulted in the
elimination of the cost sharing agreement and the signing of new commercial
arrangements with SITA for their use of the Companys network.

On October 1, 2001, the Company disposed of its Equant Application Services
division.

The effect of these three events when combined with the Companys
reorganization of its management according to function and specialization,
rather than geographic or divisional reporting lines, resulted in the
Company having a single reportable segment for the period subsequent to
June 29, 2001, although revenues continue to be measured by lines of business.

Revenues by lines of business

|                        |  |      |         |      |  |      |         |  |  |   |         | 
|----------------------- |  | ---- | ------- | ---- |  | ---- | ------- |  |  | - | ------- | 
|Years ended December 31 |  | 1999 |         | 2000 |  | 2001
|                        |  |      |         |      |  |      |         |  |  |   |         | 
|Network services        |  | $    | 550.8   |      |  | $    | 717.0   |  |  | $ | 1,258.5 | 
|Integration services    |  |      | 314.1   |      |  |      | 434.7   |  |  |   | 447.1   | 
|Other services          |  |      | 2.8     |      |  |      | 10.3    |  |  |   | 142.3   | 
|SITA network contract   |  |      | 163.6   |      |  |      | 311.4   |  |  |   | 542.8   | 
|                        |  |      |         |      |  |      |         |  |  |   |         | 
|                        |  | $    | 1,031.3 |      |  | $    | 1,473.4 |  |  | $ | 2,390.7 | 
|                        |  |      |         |      |  |      |         |  |  |   |         | 

F-52



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##### 



Equant N.V.

Notes to the Consolidated Financial Statements continued
(US dollars in millions, unless otherwise stated)

24. Segmental Informationcontinued

Geographic information

The following table presents revenue by country based on country of invoice
origin, and long-lived assets by country, based on the location of the
assets:

|                  |                                  |  |         |       |             |  |        |       |         |  |           |       |       |  |   |       |  |  |   |       |  |  |   |         | 
|----------------- | -------------------------------- |  | ------- | ----- | ----------- |  | ------ | ----- | ------- |  | --------- | ----- | ----- |  | - | ----- |  |  | - | ----- |  |  | - | ------- | 
|                  |                                  |  |         |       |             |  | The    |       | United  |  | United    |       | Other |  |   |       | 
|                  |                                  |  | Ireland |       | Netherlands |  | States |       | Kingdom |  | countries |       | Total
|                  |                                  |  |         |       |             |  |        |       |         |  |           |       |      
|December 31, 2001 |                                  |  |         |       |             |  |        |       |         |  |           |       |       |  |   |       |  |  |   |       |  |  |   |        
|                  | Revenues from external
customers |  | $       | 573.0 |             |  | $      | 52.7  |         |  | $         | 636.5 |       |  | $ | 609.8 |  |  | $ | 518.7 |  |  | $ | 2,390.7 | 
|                  | Long-lived assets(1)             |  |         | 12.3  |             |  |        | 152.5 |         |  |           | 331.1 |       |  |   | 180.5 |  |  |   | 699.5 |  |  |   | 1,375.9 | 
|December 31, 2000 |                                  |  |         |       |             |  |        |       |         |  |           |       |       |  |   |       |  |  |   |       |  |  |   |        
|                  | Revenues from external
customers |  |         | 68.5  |             |  |        | 88.1  |         |  |           | 528.7 |       |  |   | 455.7 |  |  |   | 332.4 |  |  |   | 1,473.4 | 
|                  | Long-lived assets(1)             |  |         | 3.8   |             |  |        | 155.2 |         |  |           | 106.7 |       |  |   | 109.0 |  |  |   | 276.0 |  |  |   | 650.7   | 
|December 31, 1999 |                                  |  |         |       |             |  |        |       |         |  |           |       |       |  |   |       |  |  |   |       |  |  |   |        
|                  | Revenues from external
customers |  |         | 18.9  |             |  |        | 58.8  |         |  |           | 323.4 |       |  |   | 364.3 |  |  |   | 265.9 |  |  |   | 1,031.3 | 
|                  | Long-lived assets(1)             |  | $       | 2.5   |             |  | $      | 20.8  |         |  | $         | 79.1  |       |  | $ | 81.9  |  |  | $ | 299.8 |  |  | $ | 484.1   | 
|                  |                                  |  |         |       |             |  |        |       |         |  |           |       |       |  |   |       |  |  |  



---

|(1) |  | Long-lived assets are defined as Property and equipment, IRUs and
Software applications.
|--- |  | ----------------------------------------------------------------------------------------

Reliance on major customers

The following table presents sales of services and products to major customers:

|                  |                                   |   |         |      |            |   |        |     |       |   |         |      |   |   |         |  | 
|----------------- | --------------------------------- | - | ------- | ---- | ---------- | - | ------ | --- | ----- | - | ------- | ---- | - | - | ------- |  | 
|                  |                                   |   |         |      |            |   | France |     |       |   |         |      |   |   |        
|                  |                                   |   | SITA(1) |      | Telecom(2) |   | Other  |     | Total
|                  |                                   |   |         |      |            |   |        |     |      
|December 31, 2001 |                                   | $ | 654.0   |      |            | $ | 134.7  |     |       | $ | 1,602.0 |      |   | $ | 2,390.7 | 
|                  | As a percentage of total revenues |   |         | 27.4 | %          |   |        | 5.6 | %     |   |         | 67.0 | % |   |         |  | 
|December 31, 2000 |                                   | $ | 442.1   |      |            | $ |       |     |       | $ | 1,031.3 |      |   | $ | 1,473.4 | 
|                  | As a percentage of total revenues |   |         | 30.0 | %          |   |        | 0.0 | %     |   |         | 70.0 | % |   |         |  | 
|December 31, 1999 |                                   | $ | 254.3   |      |            | $ |       |     |       | $ | 777.0   |      |   | $ | 1,031.3 | 
|                  | As a percentage of total revenues |   |         | 24.7 | %          |   |        | 0.0 | %     |   |         | 75.3 | % |   |         |  | 
|                  |                                   |   |         |      |            |   |        |     |       |   |         |      |  



---

|(1) |  | In 1999, excluding revenue from the Air Transport Community billed
through SITA.  
|--- |  | ----------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | Revenues from France Telecom are for the period from June 29 to December
31, 2001.

F-53



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##### 



Equant N.V.

Notes to the Consolidated Financial Statements continued
(US dollars in millions, unless otherwise stated)

25. Minority Interests

Changes in minority interests are as follows:

|                                 |  |      |      |      |  |   |      |  
|-------------------------------- |  | ---- | ---- | ---- |  | - | ---- | -
|Years ended December 31          |  | 2000 |      | 2001
|                                 |  |      |      |     
|Balance at beginning of the year |  | $    | 0.6  |      |  | $ | 0.4  |  
|Loss for the year                |  |      | (0.3 | )    |  |   | (0.6 | )
|Other changes                    |  |      | 0.1  |      |  |   | 0.6  |  
|                                 |  |      |      |      |  |   |      |  
|Balance at end of the year       |  | $    | 0.4  |      |  | $ | 0.4  |  
|                                 |  |      |      |      |  |   |      |  

Other changes include the acquisition of Global One subsidiaries that were
not wholly owned.

26. Shareholders Equity

Authorized share capital

The composition of authorized and issued share capital as at December 31, 2001 is as follows:

|                              |  |               |      |                  |  |               |             |           |  |         |             |                       |  |  |       |  |  |  |       | 
|----------------------------- |  | ------------- | ---- | ---------------- |  | ------------- | ----------- | --------- |  | ------- | ----------- | --------------------- |  |  | ----- |  |  |  | ----- | 
|                              |  | Nominal value |      |                  |  |               |             |           |  |         |             | Issued and fully paid
|                              |  | per share     |      | Number of shares |  | share capital
|                              |  |               |      |                  |  |              
|                              |  | EURO          |      | Authorized       |  | Issued        |             | EURO '000 |  | US$'000
|                              |  |               |      |                  |  |               |             |           |  |        
|Ordinary shares               |  |               | 0.01 |                  |  |               | 989,000,000 |           |  |         | 282,704,149 |                       |  |  | 2,827 |  |  |  | 3,257 | 
|Convertible preference shares |  |               | 0.01 |                  |  |               | 11,000,000  |           |  |         | 10,000,000  |                       |  |  | 100   |  |  |  | 85    | 

During the year, the composition of the share capital was changed as
follows: the denomination of the share capital was changed to Euros
resulting in ordinary shares with a nominal value of NLG 0.02 being converted to
shares with a nominal value of Euro 0.01; the Company increased the
authorized share capital by 469 million ordinary shares and 11 million
preference shares; and, the Company issued 80,617,348 ordinary shares and 10 million convertible preference shares to Atlas as a part of the France
Telecom Transactions. On June 29, 2006, the fifth anniversary of their
issue, the preference shares will automatically convert into ordinary
shares.

Under the Articles of Association of the Company, if preference shares are
outstanding on the date of termination of the Company, all that will remain
after paying all debts of the terminated company will be divided equally
amongst all shareholders, based on the number of shares held at
that time, regardless of the type of shares.

Statutory reserves

In certain countries in which the Company operates, the local regulations
require a proportion of the net earnings to be classified as statutory
reserves. Where this is applicable, accumulated reserves have been set aside
at the stipulated rate. These reserves are for the most part not available
for distribution, except on closure of operations. Statutory reserves are
reviewed annually in conjunction with the preparation of the Annual Reports
of relevant subsidiaries.

F-54



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##### 



Equant N.V.

Notes to the Consolidated Financial Statements continued
(US dollars in millions, unless otherwise stated)

27. Subsequent Events

As discussed in Note 2, subsequent to December 31, 2001, France Telecom has
offered to make available to the Company a revolving credit facility
agreement and a treasury management agreement totaling $300.

During January 2002, the Company received the second installment of proceeds
from the disposal of EAS, amounting to $3.8.

28. Publicly Available Financial Information

The Company files financial information with the Securities and Exchange
Commission in the United States on form 20-F. A copy of this document can be
obtained from the Companys website, www.equant.com, or from the Companys
Investor Relations department at Betjeman Place,
215-217 Bath Road, Slough, SL1 4AA, United Kingdom.

This filing will include a reconciliation to accounting principles generally
accepted in the United States.

29. List of Subsidiaries and Affiliates

The main changes in the scope of consolidation in 2001 are stated in Note 5.
The subsidiaries and affiliates of the Company at December 31, 2001 are
stated below:

Fully consolidated subsidiaries

|                    |  |                                                   |  |             |     |              |  |  |       |  |  | 
|------------------- |  | ------------------------------------------------- |  | ----------- | --- | ------------ |  |  | ----- |  |  | 
|Country             |  | Name of company                                   |  | Control (%) |     | Interest (%)
|                    |  |                                                   |  |             |     |             
|Argentina           |  | Equant Argentina S.A.                             |  |             | 100 |              |  |  | 100   | 
|Argentina           |  | Global One Communications S.A.                    |  |             | 100 |              |  |  | 99.9  | 
|Austria             |  | Equant Austria Telekommunikations Dienste GmbH    |  |             | 100 |              |  |  | 100   | 
|Belgium             |  | SITA Equant S.C.                                  |  |             | 100 |              |  |  | 50    | 
|Belgium             |  | Global One Communications S.A.                    |  |             | 100 |              |  |  | 100   | 
|Bermuda             |  | Equant (Bermuda) Ltd.                             |  |             | 100 |              |  |  | 100   | 
|Bermuda             |  | Equant (Bermuda) II Ltd.                          |  |             | 100 |              |  |  | 100   | 
|Brazil              |  | Equant Integration Services, Ltda.                |  |             | 100 |              |  |  | 99    | 
|Brazil              |  | Global One Comunicacoes, Ltda.                    |  |             | 100 |              |  |  | 100   | 
|British West Indies |  | Equant Proton Holdings Ltd.                       |  |             | 100 |              |  |  | 100   | 
|Bulgaria            |  | Equant Bulgaria Inc.                              |  |             | 100 |              |  |  | 100   | 
|Bulgaria            |  | Equant Bulgaria Ltd.                              |  |             | 100 |              |  |  | 100   | 
|Canada              |  | Equant Canada, Inc                                |  |             | 100 |              |  |  | 100   | 
|Canada              |  | Global One Communications Inc. (Canada)           |  |             | 100 |              |  |  | 100   | 
|Chile               |  | Equant Chile S.A.                                 |  |             | 100 |              |  |  | 100   | 
|Chile               |  | Global One Communications S.A.                    |  |             | 100 |              |  |  | 99.99 | 
|China               |  | Global
One Telecommunications (Beijing) Co., Ltd. |  |             | 100 |              |  |  | 100   | 
|Colombia            |  | Equant de Colombia                                |  |             | 100 |              |  |  | 94    | 
|Colombia            |  | Global One Communications S.A.                    |  |             | 100 |              |  |  | 100   | 

F-55



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##### 



Equant N.V.

Notes to the Consolidated Financial Statements continued
(US dollars in millions, unless otherwise stated)

29. List of Subsidiaries and Affiliatescontinued

Fully consolidated subsidiariescontinued

|               |  |                                                  |  |             |     |              |  |  |       |  |  | 
|-------------- |  | ------------------------------------------------ |  | ----------- | --- | ------------ |  |  | ----- |  |  | 
|Country        |  | Name of company                                  |  | Control (%) |     | Interest (%)
|               |  |                                                  |  |             |     |             
|Cyprus         |  | Global One Communications Ltd.                   |  |             | 100 |              |  |  | 100   | 
|Czech Republic |  | Equant Czech Republic s.r.o.                     |  |             | 100 |              |  |  | 100   | 
|Denmark        |  | Global One Communications A/S                    |  |             | 100 |              |  |  | 100   | 
|Egypt          |  | Global Communications Egypt                      |  |             | 100 |              |  |  | 57.5  | 
|El Salvador    |  | Global One Communications, S.A. de C.V.          |  |             | 100 |              |  |  | 100   | 
|Finland        |  | Global One Communications OY                     |  |             | 100 |              |  |  | 100   | 
|France         |  | Equant S.A.S.                                    |  |             | 100 |              |  |  | 100   | 
|France         |  | Equant Telecommunications S.A.                   |  |             | 100 |              |  |  | 100   | 
|France         |  | Equant Holdings France S.A.S.                    |  |             | 100 |              |  |  | 100   | 
|France         |  | Global One Communications S.A.                   |  |             | 100 |              |  |  | 94    | 
|Germany        |  | Equant Germany GmbH                              |  |             | 100 |              |  |  | 100   | 
|Ghana          |  | Equant Ghana Ltd.                                |  |             | 100 |              |  |  | 100   | 
|Gibraltar      |  | Equant Gibraltar Ltd.                            |  |             | 100 |              |  |  | 100   | 
|Greece         |  | GOC Hellas, S.A.                                 |  |             | 100 |              |  |  | 100   | 
|Guam           |  | Equant Guam LLC                                  |  |             | 100 |              |  |  | 100   | 
|Guatemala      |  | Global One Communications, S.A. de C.V.          |  |             | 100 |              |  |  | 100   | 
|Honduras       |  | Equant Honduras                                  |  |             | 100 |              |  |  | 100   | 
|Hong Kong      |  | Equant Integration Services Limited              |  |             | 100 |              |  |  | 100   | 
|Hong Kong      |  | Global One Communications Services               |  |             | 100 |              |  |  | 100   | 
|Hong Kong      |  | Global One Communications, Ltd.                  |  |             | 100 |              |  |  | 100   | 
|Hungary        |  | Equant Hungary Telecommunications Services Ltd.  |  |             | 100 |              |  |  | 100   | 
|Iceland        |  | Equant Iceland Ehf                               |  |             | 100 |              |  |  | 100   | 
|India          |  | Equant India Pte. Ltd.                           |  |             | 100 |              |  |  | 100   | 
|India          |  | Global
One Private (India) Ltd.                  |  |             | 100 |              |  |  | 99.99 | 
|Ireland        |  | Equant Network Services International Ltd.       |  |             | 100 |              |  |  | 100   | 
|Ireland        |  | Equant Network Systems Ltd.                      |  |             | 100 |              |  |  | 100   | 
|Ireland        |  | Global One Communications Limited                |  |             | 100 |              |  |  | 100   | 
|Israel         |  | Global One (Telecommunications World Group) Ltd. |  |             | 100 |              |  |  | 100   | 
|Italy          |  | Global One Communications SpA.                   |  |             | 100 |              |  |  | 100   | 
|Japan          |  | Equant Co. Ltd.                                  |  |             | 100 |              |  |  | 100   | 

F-56



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Equant N.V.

Notes to the Consolidated Financial Statements continued
(US dollars in millions, unless otherwise stated)

29. List of Subsidiaries and Affiliatescontinued

Fully consolidated subsidiariescontinued

|                |  |                                                |  |             |     |              |  |  |       |  |  | 
|--------------- |  | ---------------------------------------------- |  | ----------- | --- | ------------ |  |  | ----- |  |  | 
|Country         |  | Name of company                                |  | Control (%) |     | Interest (%)
|                |  |                                                |  |             |     |             
|Japan           |  | Global One Communications Network Inc. (Japan) |  |             | 100 |              |  |  | 100   | 
|Korea           |  | Equant Network Services (Korea) Ltd.           |  |             | 100 |              |  |  | 100   | 
|Korea           |  | Equant Integration Services Co. Ltd.           |  |             | 100 |              |  |  | 100   | 
|Latvia          |  | Equant Latvia Ltd.                             |  |             | 100 |              |  |  | 100   | 
|Luxembourg      |  | Equant S.A.                                    |  |             | 100 |              |  |  | 100   | 
|Malaysia        |  | Equant Network Services (Malaysia) Sdn. Bhd.   |  |             | 100 |              |  |  | 100   | 
|Malaysia        |  | Equant Integration Services Sdn. Bhd.          |  |             | 100 |              |  |  | 99.99 | 
|Malaysia        |  | EGN (Malaysia) Sdn. Bhd.                       |  |             | 100 |              |  |  | 30    | 
|Mauritius       |  | Equant Mauritius Holdings Ltd.                 |  |             | 100 |              |  |  | 100   | 
|Mexico          |  | Equant S.A. de C.V.                            |  |             | 100 |              |  |  | 99.9  | 
|Mexico          |  | Equant de Mexico                               |  |             | 100 |              |  |  | 98    | 
|Mexico          |  | Global One Communications Trading S.A. de C.V. |  |             | 100 |              |  |  | 99.99 | 
|Morocco         |  | Equant Morocco Inc.                            |  |             | 100 |              |  |  | 100   | 
|The Netherlands |  | Equant Finance B.V.                            |  |             | 100 |              |  |  | 100   | 
|The Netherlands |  | EGN B.V.                                       |  |             | 100 |              |  |  | 100   | 
|The Netherlands |  | Equant European Networks B.V.                  |  |             | 100 |              |  |  | 100   | 
|The Netherlands |  | Equant Netherlands B.V.                        |  |             | 100 |              |  |  | 100   | 
|The Netherlands |  | NOVUS International B.V.                       |  |             | 100 |              |  |  | 100   | 
|The Netherlands |  | Global One Communications B.V.                 |  |             | 100 |              |  |  | 100   | 
|The Netherlands |  | Global One Communications Holding B.V.         |  |             | 100 |              |  |  | 100   | 
|The Netherlands |  | Global One Communications World Holding B.V.   |  |             | 100 |              |  |  | 100   | 
|Norway          |  | Global One Communications A.S.                 |  |             | 100 |              |  |  | 100   | 
|Panama          |  | Equant Panama Inc.                             |  |             | 100 |              |  |  | 100   | 
|Peru            |  | Global One Communications, S.A.                |  |             | 100 |              |  |  | 100   | 
|Poland          |  | Equant Poland Sp.z.o.o.                        |  |             | 100 |              |  |  | 100   | 
|Poland          |  | Equant Communications Poland Sp.z.o.o.         |  |             | 100 |              |  |  | 100   | 
|Portugal        |  | Global One Communicaçoes S.A.                  |  |             | 100 |              |  |  | 99    | 
|Puerto Rico     |  | Equant Puerto Rico                             |  |             | 100 |              |  |  | 100   | 
|Romania         |  | Equant Romania S.A.                            |  |             | 100 |              |  |  | 99.5  | 
|Russia          |  | Equant LLC                                     |  |             | 51  |              |  |  | 51    | 
|Russia          |  | Equant O.O.O.                                  |  |             | 100 |              |  |  | 100   | 

F-57



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##### 



Equant N.V.

Notes to the Consolidated Financial Statements continued
(US dollars in millions, unless otherwise stated)

29. List of Subsidiaries and Affiliatescontinued

Fully consolidated subsidiariescontinued

|                |  |                                             |  |             |      |              |  |  |      |  |  | 
|--------------- |  | ------------------------------------------- |  | ----------- | ---- | ------------ |  |  | ---- |  |  | 
|Country         |  | Name of company                             |  | Control (%) |      | Interest (%)
|                |  |                                             |  |             |      |             
|Russia          |  | Global One JSC                              |  |             | 100  |              |  |  | 100  | 
|Russia          |  | Global One Networks JSC                     |  |             | 79.8 |              |  |  | 79.8 | 
|Russia          |  | Global One Marketing                        |  |             | 100  |              |  |  | 100  | 
|Saudi Arabia    |  | Equant Co. Ltd. Saudi Arabia                |  |             | 100  |              |  |  | 100  | 
|Singapore       |  | Equant Network Services Pte. Ltd.           |  |             | 100  |              |  |  | 100  | 
|Singapore       |  | Equant Pte. Ltd.                            |  |             | 100  |              |  |  | 100  | 
|Singapore       |  | Equant Integration Services Pte. Ltd.       |  |             | 100  |              |  |  | 100  | 
|Singapore       |  | Global One Communications Pte. Ltd.         |  |             | 100  |              |  |  | 100  | 
|Singapore       |  | Global One Communications Service Pte. Ltd. |  |             | 100  |              |  |  | 100  | 
|Slovak Republic |  | Equant Slovakia s.r.o.                      |  |             | 100  |              |  |  | 100  | 
|South Africa    |  | Global One Communications S.A. (Dormant)    |  |             | 100  |              |  |  | 100  | 
|Spain           |  | Equant
Spain S.A.U.                         |  |             | 100  |              |  |  | 100  | 
|Sweden          |  | Global One Services A.B.                    |  |             | 100  |              |  |  | 100  | 
|Sweden          |  | F.T. Nordphone A.B.                         |  |             | 100  |              |  |  | 100  | 
|Sweden          |  | Global One Communications A.B.              |  |             | 100  |              |  |  | 100  | 
|Switzerland     |  | Equant Integration Services S.A.            |  |             | 100  |              |  |  | 99.7 | 
|Switzerland     |  | Equant (Switzerland) S.A.                   |  |             | 100  |              |  |  | 100  | 
|Switzerland     |  | Equant Communications Service S.A.          |  |             | 100  |              |  |  | 100  | 
|Switzerland     |  | Lablaq S.A.                                 |  |             | 100  |              |  |  | 100  | 
|Tanzania        |  | Equant Tanzania Ltd.                        |  |             | 100  |              |  |  | 100  | 
|Thailand        |  | Equant Integration Services Co. Ltd.        |  |             | 100  |              |  |  | 30   | 
|Thailand        |  | Equant (Thailand) Ltd.                      |  |             | 100  |              |  |  | 99.9 | 
|Thailand        |  | Global One Communications Ltd. (Thailand)   |  |             | 100  |              |  |  | 100  | 
|Turkey          |  | Equant
Istanbul Telekom AS                  |  |             | 100  |              |  |  | 100  | 
|Turkey          |  | Artemis Iletsim Hizmeleri Anonim Sirketi    |  |             | 100  |              |  |  | 100  | 
|Turkey          |  | Global One Telekomünikasyon Ltd. Sirkati    |  |             | 100  |              |  |  | 99.9 | 
|Ukraine         |  | Equant Ukraine Ltd.                         |  |             | 100  |              |  |  | 100  | 
|UK              |  | Equant Holdings UK Ltd.                     |  |             | 100  |              |  |  | 100  | 
|UK              |  | Equant Security Services Ltd.               |  |             | 100  |              |  |  | 100  | 
|UK              |  | Equant Network Services Ltd.                |  |             | 100  |              |  |  | 100  | 
|UK              |  | Equant Network Services (Europe) Ltd.       |  |             | 100  |              |  |  | 100  | 

F-58



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##### 



Equant N.V.

Notes to the Consolidated Financial Statements continued
(US dollars in millions, unless otherwise stated)

29. List of Subsidiaries and Affiliatescontinued

Fully consolidated subsidiariescontinued

|                                                 |  |                                                                         |  |             |     |              |  |  |       |  |  | 
|------------------------------------------------ |  | ----------------------------------------------------------------------- |  | ----------- | --- | ------------ |  |  | ----- |  |  | 
|Country                                          |  | Name of company                                                         |  | Control (%) |     | Interest (%)
|                                                 |  |                                                                         |  |             |     |             
|UK                                               |  | Equant Integration Services, Ltd.                                       |  |             | 100 |              |  |  | 100   | 
|UK                                               |  | Equant UK Ltd.                                                          |  |             | 100 |              |  |  | 100   | 
|UK                                               |  | Warpcrest Ltd.                                                          |  |             | 100 |              |  |  | 100   | 
|UK                                               |  | Global One Communications Holding Ltd.                                  |  |             | 100 |              |  |  | 100   | 
|UK                                               |  | Global One Communications Operations                                    |  |             | 100 |              |  |  | 100   | 
|UK                                               |  | Global One Communications Ltd.                                          |  |             | 100 |              |  |  | 100   | 
|UK                                               |  | Global One Communications Services                                      |  |             | 100 |              |  |  | 100   | 
|UK                                               |  | Global One (UK) Limited                                                 |  |             | 100 |              |  |  | 100   | 
|UK                                               |  | UK SPC                                                                  |  |             | 100 |              |  |  | 100   | 
|UK                                               |  | Roe Finco                                                               |  |             | 100 |              |  |  | 100   | 
|UK                                               |  | Row Finco                                                               |  |             | 100 |              |  |  | 100   | 
|US                                               |  | Equant Holdings U.S., Inc.                                              |  |             | 100 |              |  |  | 100   | 
|US                                               |  | Equant Network Services International Corp.                             |  |             | 100 |              |  |  | 100   | 
|US                                               |  | Equant Operations, Inc.                                                 |  |             | 100 |              |  |  | 100   | 
|US                                               |  | Equant Inc.                                                             |  |             | 100 |              |  |  | 100   | 
|US                                               |  | Global One Communications Central America Inc.                          |  |             | 100 |              |  |  | 100   | 
|US                                               |  | Global One Communications East, Inc.                                    |  |             | 100 |              |  |  | 100   | 
|US                                               |  | Global One Communications Technical Operation & Management Services Co. |  |             | 100 |              |  |  | 100   | 
|US                                               |  | Global One Communications Services, Inc.                                |  |             | 100 |              |  |  | 100   | 
|US                                               |  | Global One Communications (Australia), Ltd.                             |  |             | 100 |              |  |  | 100   | 
|US                                               |  | Global One Communications (New Zealand) Ltd.                            |  |             | 100 |              |  |  | 100   | 
|Uruguay                                          |  | Equant Telecommunications Uruguay S.A.                                  |  |             | 100 |              |  |  | 100   | 
|Uzbekistan                                       |  | Equant Global Networks Uzbekistan                                       |  |             | 100 |              |  |  | 100   | 
|Venezuela                                        |  | Global One Telecomunicaciones S.A.                                      |  |             | 100 |              |  |  | 100   | 
|Venezuela                                        |  | Equant Venezuela S.A.                                                   |  |             | 100 |              |  |  | 100   | 
|Venezuela                                        |  | Equant Integration Services S.A.                                        |  |             | 100 |              |  |  | 99.99 | 
|US Virgin Islands                                |  | Equant U.S. Virgin Islands Inc.                                         |  |             | 100 |              |  |  | 100   | 
|Zambia                                           |  | Equant Zambia Limited                                                   |  |             | 100 |              |  |  | 100   | 
|                                                
|Affiliates accounted for under the equity method |  |                                                                        
|UK                                               |  | Radianz Ltd.                                                            |  |             | 50  |              |  |  | 49    | 
|US                                               |  | Radianz Inc.                                                            |  |             | 50  |              |  |  | 49    | 

F-59



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##### 



Equant N.V.
Notes to Consolidated Financial Statements
(U.S. dollars in millions, unless otherwise stated)

30.     Summary of Differences Between the Companys Accounting Policies and those
Generally Accepted in the United States

a) Introduction

The financial statements, analyses and reconciliations presented in this
note represent the financial information which would be required if accounting
principles generally accepted in the United States (U.S. GAAP) had been applied
instead of French GAAP.

The consolidated financial statements of Equant have been prepared in
accordance with French accounting principles which differ in certain respects
from generally accepted accounting principles in the United States.

The primary difference relates to the accounting treatment of the merger
between Equant and Global One:



| |  |  | Under French GAAP, this business combination has been accounted for
under the purchase method of accounting method based on net book values
(see Note 5). Equant is treated as the accounting acquirer. As a result,
the combined statement of operations for the year ended December 31,
2001 includes those of Equant for the whole year, and those of Global
One for the period from June 29, 2001 to December 31, 2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Under U.S. GAAP, this business combination is accounted for as a
reverse acquisition of Equant by Global One in accordance with EITF
90-13 Accounting for Simultaneous Common Control Mergers, since France
Telecom, the former sole shareholder of Global One, acquired a majority
interest in the merged company. The historic financial statements of the
registrant prior to the merger are those of Global One. Consequently,
the combined consolidated statement of operations for the year ended
December 31, 2001 includes the operations of Global One for the whole
year, and those of Equant for the period from June 29, 2001 to December
31, 2001. The combined consolidated financial statements reflect the
acquisition of Equant under the purchase method of accounting. The
reconciliation has been provided for 2001 only as the financial
statements of Global One relating to the years ended December 31, 2000
and 1999 were prepared in accordance with U.S. GAAP.

The other principal differences between French GAAP and U.S. GAAP as they
relate to Equant are discussed in further detail below.

b) Other principal differences between the Companys accounting policies and
those generally accepted in the United States

Acquisition and disposal of businesses and investments

Under the purchase method of accounting, the difference between the cost
of acquisition and the fair value of the assets and liabilities of Equant is
recorded as goodwill.

The cost of acquisition of the 54.27% of Equant acquired by Global One is
set out in the table below. The nature of these concurrent transactions are
set out in the description of France Telecom Transactions in Note 1:

|                                    |                     |                                                            |  |  |       |   |         |   |         |     |   |         |         |    
|----------------------------------- | ------------------- | ---------------------------------------------------------- |  |  | ----- | - | ------- | - | ------- | --- | - | ------- | ------- | ---
|Consideration and transaction costs
|                                    |                     | Contribution of Global One companies with net cash of $300 |  |  |       |   |         | $ | 5,168.0 | (a) |   |         |         |    
|                                    |                     | Cash paid for issue of Equant preference shares            |  |  |       |   |         |   | 1,000.0 | (b) |   |         |         |    
|                                    |                     | Restructuring and integration reimbursement                |  |  |       |   |         |   | 270.0   | (c) |   |         |         |    
|                                    |                     |                                                            |  |  |       |   |         |   |         |     |   |        
|                                    |                     |                                                            |  |  |       | $ | 6,438.0 |   |         |     |   |        
|                                    |                     | Interest attributable to Equant minority shareholders      |  |  | 45.73 | % |         |   |         |     |   | $       | 2,944.1 |    
|                                    |                     | Purchase of Equant shares held by SITA                     |  |  |       |   |         |   |         |     |   |         | 2,837.6 | (d)
|                                    |                     | Value of Contingent Value Rights                           |  |  |       |   |         |   |         |     |   |         | 1,107.6 | (e)
|                                    |                     | Transaction costs                                          |  |  |       |   |         |   |         |     |   |         | 33.2    |    
|                                    |                     |                                                            |  |  |       |   |         |   |         |     |   |        
|                                    | Total consideration |                                                            |  |  |       |   |         |   |         |     | $ | 6,922.5 |        
|                                    |                     |                                                            |  |  |       |   |         |   |         |     |   |        

F-60



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##### 



Equant N.V.
Notes to Consolidated Financial Statements
(U.S. dollars in millions, unless otherwise stated)

30.     Summary of Differences Between the Companys Accounting Policies and those
Generally Accepted in the United States (continued)

Acquisition and disposal of businesses and investments (continued)

The purchase price has been allocated as follows:

|                                                                |                                                       |  |  |       |   |  |       |        |      |  |   |         |    
|--------------------------------------------------------------- | ----------------------------------------------------- |  |  | ----- | - |  | ----- | ------ | ---- |  | - | ------- | ---
|Fair value of Equant assets and liabilities as at June 29, 2001 |                                                       |  |  |       |   |  |       |        |      |  |   |        
|                                                                | Cash and cash equivalents                             |  |  |       |   |  | $     | 81.8   |      |  |   |         |    
|                                                                | Receivables from customers, net                       |  |  |       |   |  |       | 492.3  |      |  |   |         |    
|                                                                | Land, buildings, equipment and furniture and fixtures |  |  |       |   |  |       | 684.1  |      |  |   |         |    
|                                                                | Investment in affiliated company                      |  |  |       |   |  |       | 310.6  |      |  |   |         |    
|                                                                | Other assets                                          |  |  |       |   |  |       | 220.0  |      |  |   |         |    
|                                                                | Accounts payable and accrued liabilities              |  |  |       |   |  |       | (383.7 | )    |  |   |         |    
|                                                                | Bank loans payable                                    |  |  |       |   |  |       | (603.7 | )    |  |   |         |    
|                                                                | Other liabilities                                     |  |  |       |   |  |       | (277.2 | )    |  |   |         |    
|                                                                |                                                       |  |  |       |   |  |       |        |      |  |   |        
|                                                                |                                                       |  |  |       |   |  | 524.2 | (f)    |      |  |   |        
|Identified intangibles assets and liabilities                   |                                                       |  |  |       |   |  |       |        |      |  |   |        
|                                                                | Customer Contracts                                    |  |  |       |   |  |       | 93.0   |      |  |   |         |    
|                                                                | Licenses                                              |  |  |       |   |  |       | 1.3    |      |  |   |         |    
|                                                                | Trademarks                                            |  |  |       |   |  |       | 290.0  |      |  |   |         |    
|                                                                |                                                       |  |  |       |   |  |       |        |      |  |   |        
|                                                                |                                                       |  |  |       |   |  | 384.3 | (g)    |      |  |   |        
|                                                                | Deferred tax liability                                |  |  |       |   |  |       | (134.5 | )(h) |  |   |         |    
|                                                                |                                                       |  |  |       |   |  |       |        |      |  |   |        
|                                                                |                                                       |  |  |       |   |  | 249.8 |        |      |  |   |        
|                                                                |                                                       |  |  |       |   |  |       |        |      |  |   |        
|Total fair value of identified assets and liabilities           |                                                       |  |  |       |   |  | 774.0 |        |      |  |   |        
|                                                                | Interest attributable to France Telecom               |  |  | 54.27 | % |  |       |        |      |  |   | 420.0   |    
|                                                                | Goodwill                                              |  |  |       |   |  |       |        |      |  | $ | 6,502.5 | (i)
|                                                                |                                                       |  |  |       |   |  |       |        |      |  |   |        
|                                                                |                                                       |  |  |       |   |  |       |        |      |  | $ | 6,922.5 |    
|                                                                |                                                       |  |  |       |   |  |       |        |      |  |   |        



|(a) |  | France Telecom contributed to Equant, through Atlas, 100% of the share capital of Global One Communications
World Holding B.V. and Global One Communications Holding B.V., in exchange
for 80,617,348 newly issued Equant ordinary shares. France Telecom
retained Global Ones carrier voice and the majority of its calling card
business lines which were excluded from the transaction. This contribution
has been valued on the basis of discounted future cash flows of Global One
at $5,168, including contributed cash amounting to $300.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(b) |  | France Telecom, through Atlas, subscribed for 10 million newly issued
Equant convertible preference shares for $1 billion in cash; each
preference share has the same voting rights as one Equant ordinary share
and will automatically convert into one new Equant ordinary share on June
29, 2006.                                                                                                                                                                                                                                             
|   
|(c) |  | Under the terms of the contribution agreement, within a two-year period,
France Telecom is to pay to Equant 50% of costs related to the
cancellation of up to 2,500 employment contracts for the combined company
and certain restructuring and integration costs other than those relating
to employees up to a maximum of $210. The company has estimated the total
amount of the reimbursement of these costs at $270 (see Note 6).                                                                                                           
|   
|(d) |  | France Telecom acquired 67,950,000 Equant ordinary shares from the SITA
Foundation for France Telecom shares at a ratio of 2.2 Equant shares per
France Telecom share. Based on an average share price for the period of 2
trading days before and after November 19, 2000, or 112.4 per share, the
price per Equant share paid to SITA equals 51.1 per share.                                                                                                                                                                                 

F-61



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##### 



Equant N.V.
Notes to Consolidated Financial Statements
(U.S. dollars in millions, unless otherwise stated)

30.     Summary of Differences Between the Companys Accounting Policies and those
Generally Accepted in the United States (continued)

Acquisition and disposal of businesses and investments (continued)



|(e) |  | France Telecom issued Contingent Value Rights (CVRs) to the holders of
Equant ordinary shares. The CVRs entitle the holder to receive a cash
payment from France Telecom on June 29, 2004, equal to the excess, if any,
of 60 over Equants average share price, subject to a maximum of 15 per
CVR. Equants average share price is calculated as the average of the
closing Euronext price for 30 trading days prior to June 29, 2004. The
fair value of CVRs has been estimated at U.S.$8 per CVR as of November 19,
2000, based on an option pricing model.                                                                                                                                                                                                      
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(f) |  | Fair value adjustments were recorded on the acquisition of Equant to
record unfunded pension liabilities of Equant, write off deferred tax
assets that are unlikely to be used in the foreseeable future and to write
off intangible assets and goodwill on the balance sheet of Equant at the
date of acquisition.                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   
|(g) |  | An independent valuation was performed by on the intangible assets
acquired by Global One within the Equant business. These intangible
assets comprised Customer contracts, Trade name and Licenses, and their
book values are being amortized over their estimated useful lives of 4, 20
and 20 years respectively. The value of Customer contracts was based on
the discounted expected future debt free net income of individual
contracts in excess of the returns on requisite assets over the life of
the customer base. The value of Trade name was based on an estimate of the
royalties the Company would have to pay to use the trade names if it did
not already own them. The value of Licenses was based on the estimated
cost to acquire existing licenses.
|   
|(h) |  | Deferred taxes have been computed on the excess of fair value over book
value of identified intangible assets, using the applicable weighted
average statutory tax rates. These deferred tax liabilities are being
amortized over the estimated useful lives of the related intangible
assets.                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   
|(i) |  | The excess of total consideration over the fair value of net assets
acquired represents goodwill. Goodwill is being amortized over its
expected economic life of 20 years.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

The following selected unaudited pro forma combined results of operations
of Global One and Equant for the years ended December 31, 2001
and 2000 have been
prepared assuming that the acquisitions occurred on the first day of
the respective periods. The following selected unaudited pro forma financial information is
not necessarily indicative of the results that would have occurred had the
acquisition been completed on the date indicated nor is it
indicative of future operating results:

|                                                 |  |                         |             |   |             |  |             |  
|------------------------------------------------ |  | ----------------------- | ----------- | - | ----------- |  | ----------- | -
|                                                 |  | Year
ended December 31,
|
|                                                 |  |                        
|                                                 |  | 2000                    |             |   | 2001       
|                                                 |  | (unaudited)             |             |   | (unaudited)
|                                                 |  |                         |             |   |            
|Revenues                                         |  |                         | $2,759.4    |   |             |  | $3,064.8    |  
|Net loss                                         |  |                         | ($1,179.1   | ) |             |  | ($8,862.1   | )
|Net loss per share                               |  |                         | ($4.18      | ) |             |  | ($31.38     | )
|Shares used in calculation of net loss per share |  |                         | 282,120,681 |   |             |  | 282,425,370 |  

Goodwill

In accordance with French GAAP, goodwill amortization has been classified
as a non-operating expense whereas it is classified as an
operating expense under U.S. GAAP. The amortization of
goodwill related to the investment in Radianz has been included, under French
GAAP, in Goodwill amortization whereas it is recorded as part of
the Equity in loss of affiliate in the statement of operations and as part of
the Investments accounted for under the equity method under U.S. GAAP. The net
reclassification of goodwill amortization would have increased operating loss
by $7.9 to $274.9.

Historical Global One goodwill and intangible
assets

In March 2000,
Global One became wholly owned by France Telecom. Under French GAAP,
no adjustment to Global Ones accounting bases was recorded. Under
U.S. GAAP, the fair value of the assets acquired and liabilities
assumed, as recognized by the acquirer, were pushed down to the
financial statements of Global One.

Impairment of Long Lived Assets and Goodwill

Under both French and U.S. GAAP long lived assets, including goodwill, are
subject to an impairment review when events or circumstances occur indicating
impairment exist. The need for recording an impairment is made with reference
to undiscounted cash flows. Under French GAAP, the carrying value of long
lived assets and goodwill did not exceed the undiscounted cash flows, and
therefore no impairment charge was recognized. Under U.S. GAAP, the
significant goodwill created on acquisition and the goodwill previously held
within Global One resulted in the carrying value of long lived assets and
goodwill exceeding the undiscounted cash flows. An impairment charge of
$7,478.7 was recorded under U.S. GAAP calculated by comparison of the carrying
value of the assets to their fair value, based on quoted market price
adjusted for a control premium and working capital.

Reimbursement of Restructuring and Integration Costs

Under French GAAP, amounts to be recovered from France Telecom under Annex
4 of the Contribution Agreement (see Note 6) are recorded as a reduction of
Non-recurring expenses. Under U.S. GAAP these amounts are accounted for as
capital contributions recorded as an increase in Additional paid in capital,
contained within Shareholders equity. Reimbursements not yet
received are deducted from equity.

Stock Based Compensation

Under French GAAP, Stock option and share award plans are not accounted
for until such time the grant or award is vested. If the Company issues new
shares to satisfy the exercise, then the difference between the par value and
the exercise price is recorded as an addition to Additional paid-in capital, a
component of Shareholders Equity, with no impact to the Statement of
Operations. If the Company repurchases shares on the open market or issues
shares held in treasury, the difference between the repurchase price of the
shares and the exercise price is recorded as a charge to income on the
Statement of Operations, within Share Plan Costs. Social charges payable by
the Company on the fair value of shares granted are accrued over the period
between the dates of granting and vesting, based on the expected exercise
rates, and are charged to Share Plan Costs.

F-62



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##### 



Equant N.V.
Notes to Consolidated Financial Statements
(U.S. dollars in millions, unless otherwise stated)

30.     Summary of Differences Between the Companys Accounting Policies and those
Generally Accepted in the United States (continued)

Stock Based Compensation (continued)

Under U.S. GAAP, as permitted by SFAS No. 123 Accounting for Stock-based
Compensation, the Company applies Accounting Principles Board Opinion No. 25
(APB 25) Accounting for Stock Issued to Employees. Under APB 25,
compensation expense is recognized as the difference between the quoted market
price of the stock, at the measurement date, and the exercise price of the
award. Any compensation cost is charged to expense over the period in which
the related services are provided. The compensation expense under U.S. GAAP does
not include social charges until such time that such charges are payable upon
exercise of the awards.

EBITDA computation

EBITDA is computed as operating profit/(loss) before Share plan costs,
Non-recurring charges and Depreciation and Amortization. EBITDA is not allowed
on the face of the income statement under U.S. GAAP, is not a measurement of
operating performance calculated in accordance with U.S. GAAP, and should not
be considered a substitute for operating income, net income, cash flows from
operating activities or other statement of income or cash flow statement data
prepared in accordance with U.S. GAAP, or a measure of profitability or
liquidity. EBITDA may not be indicative of the historical operating results of
the Company; nor is it meant to be predictive of potential results. Because all
companies do not calculate EBITDA identically, the presentation of EBITDA
contained in these Consolidated Financial Statements may not be comparable to
similarly entitled measures of other companies.

Other Operating Income

Under French GAAP, as explained in Note 23, income from Commercial
relationships with respect to the network and Switched voice services that
the Company provides to France Telecom on a limited risk basis are shown as
Other operating income and totaled $146.4 for the year ended December 31,
2001. Under U.S. GAAP, the income would be recorded as a reduction of the
costs for providing the services.

Software

Under French GAAP, certain Software costs are capitalized as intangible
fixed assets and amortized over their expected useful lives. Under U.S. GAAP,
these would be classified as tangible fixed assets and depreciated over their
useful lives. This difference between French and U.S. GAAP has no impact on
Shareholders Equity or the Net profit / (loss) for the year of the Company.
The net book value of Software applications at December 31, 2001 was $101.3.

Comprehensive Income

Under U.S. GAAP, comprehensive income is the term used to define all
non-owner changes in Shareholders equity. The Company accounts for
comprehensive income in accordance with SFAS 130 Reporting Comprehensive
Income. The Companys comprehensive income includes net income and foreign
currency translation adjustments. Comprehensive income is a concept not
addressed by French GAAP. Set out below is an analysis of comprehensive income
prepared in accordance with U.S. GAAP, using the basis of preparation adopted
under French GAAP.

|                                          |                                                |   |                          |       |      |   |       |       |   |   |        |       |  
|----------------------------------------- | ---------------------------------------------- | - | ------------------------ | ----- | ---- | - | ----- | ----- | - | - | ------ | ----- | -
|                                          |                                                |   | Years ended December 31,
|                                          |                                                |   |                         
|                                          |                                                |   | 1999                     |       | 2000 |   | 2001 
|                                          |                                                |   |                          |       |      |   |      
|Net income/(loss) based on French GAAP    |                                                | $ | 12.0                     |       |      | $ | (47.9 | )     |   | $ | (376.4 | )    
|                                          | Exchange rate differences based on French GAAP |   |                          | (33.0 | )    |   |       | (25 2 | ) |   |        | (45.9 | )
|                                          |                                                |   |                          |       |      |   |       |       |   |   |        |      
|Comprehensive income based on French GAAP |                                                | $ | (21.0                    | )     |      | $ | (73.1 | )     |   | $ | (422.3 | )    
|                                          |                                                |   |                          |       |      |   |       |       |   |   |        |      

F-63



---



##### 



Equant N.V.
Notes to Consolidated Financial Statements
(U.S. dollars in millions, unless otherwise stated)

30.     Summary of Differences Between the Companys Accounting Policies and those
Generally Accepted in the United States (continued)

c) Reconciliation to U.S. GAAP

Set out below are
reconciliations of Net income and Shareholders equity
as reported in the Condensed Combined Consolidated Statements of Operations of
Equant under French GAAP to Net income and Shareholders equity as adjusted for
the effects of the application of U.S. GAAP. Explanations for the reconciling
items are set out in Note 30a and 30b above.

Reconciliation of Net Income to U.S. GAAP

The following is a
reconciliation of Net income as reported in the
Condensed Combined Consolidated Statements of Operations of Equant under French
GAAP to Net income as adjusted for the effects of the application of U.S. GAAP
for the year ended December 31, 2001:

|                                                                                |                                                                                        |       |                   |          |  
|------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------- | ----- | ----------------- | -------- | -
|                                                                                |                                                                                        |       | Year ended       
|                                                                                |                                                                                        |       | December 31, 2001
|                                                                                |                                                                                        |       |                  
|Net loss as reported in the Consolidated Statement of Operations                |                                                                                        | $     | (376.4            | )       
|Adjustments to conform to U.S. GAAP                                             |                                                                                        |       |                   |         
|                                                                                | Exclusion of Equant net loss under French GAAP for period January 1 to June 29, 2001   |       | 22.8              |          |  
|                                                                                | Inclusion of Global One net loss under U.S. GAAP for period January 1 to June 29, 2001 |       |                   | (532.7   | )
|                                                                                | Impairment of goodwill                                                                 |       |                   | (7,478.7 | )
|                                                                                | Amortization
of goodwill and intangible assets arising on acquisition of Equant        |       |                   | (172.8   | )
|                                                                                | Amortization
of historical Global One goodwill and intangible assets                   |       |                   | (120.4   | )
|                                                                                | Reimbursement of restructuring and integration costs                                   |       |                   | (79.2    | )
|                                                                                | Stock based compensation                                                               |       |                   | (6.3     | )
|                                                                                | Tax
effect of above reconciling items                                                  |       |                   | 3.6      |  
|                                                                                | Reversal of deferred tax asset write off                                               |       |                   | 29.8     |  
|                                                                                | Other                                                                                  |       |                   | (2.0     | )
|                                                                                |                                                                                        |       |                   |         
|Net loss as adjusted for U.S. GAAP                                              |                                                                                        | $     | (8,712.3          | )       
|                                                                                |                                                                                        |       |                   |         
|Loss per share as adjusted for U.S. GAAP
 Net loss per share, basic and diluted |                                                                                        | U.S.$ | (46.19            | )       
|Weighted
average number of shares, basic and diluted                            |                                                                                        |       | 188,614,419       |         

Reconciliation of Shareholders Equity to U.S. GAAP

The following is a
reconciliation of Shareholders equity as reported in
the Consolidated Balance Sheet of Equant to Shareholders equity as adjusted
for the effects of the application of U.S. GAAP as of December 31, 2001:

|                                                                  |                                                                      |                                                |         |                   |   | 
|----------------------------------------------------------------- | -------------------------------------------------------------------- | ---------------------------------------------- | ------- | ----------------- | - | 
|                                                                  |                                                                      |                                                |         | As at            
|                                                                  |                                                                      |                                                |         | December 31, 2001
|                                                                  |                                                                      |                                                |         |                  
|Shareholders equity as reported in the Consolidated Balance Sheet |                                                                      | $                                              | 2,277.5 |                  
|Adjustments to conform to U.S. GAAP                              
|                                                                  | Historical Global One goodwill and intangible assets                 |                                                |         | 3,682.6           |  
|                                                                  | Amortization of historical Global One goodwill and intangible assets |                                                |         | (120.4            | )
|                                                                  | Business combination adjustments                                     |                                                |         |                   |  
|                                                                  |                                                                      | Goodwill                                       |         | 6,502.5           |  
|                                                                  |                                                                      | Intangible assets                              |         | 208.6             |  
|                                                                  |                                                                      | Deferred tax liabilities                       |         | (73.0             | )
|                                                                  |                                                                      | Fair value adjustments                         |         | (66.9             | )
|                                                                  |                                                                      | Amortization of goodwill and intangible assets |         | (172.8            | )
|                                                                  | Impairment of goodwill                                               |                                                |         | (7,478.7          | )
|                                                                  | Reimbursement of restructuring and integration                       |                                                |         | (67.2             | )
|                                                                  | Reversal
of deferred tax asset write off                             |                                                |         | 29.8              |  
|                                                                  | Other                                                                |                                                |         | (4.1              | )
|                                                                  |                                                                      |                                                |         |                  
|Shareholders equity as adjusted for U.S. GAAP                    |                                                                      | $                                              | 4,717.9 |                  
|                                                                  |                                                                      |                                                |         |                  

F-64



---



##### 



Equant N.V.
Notes to Consolidated Financial Statements
(U.S. dollars in millions, unless otherwise stated)

30.     Summary of Differences Between the Companys Accounting Policies and those
Generally Accepted in the United States (continued)

d) U.S. GAAP Condensed Consolidated Financial Statements

Set out below are condensed Consolidated Statements of Operations and Cash
Flows for the year ended December 31, 2001, presented under U.S. GAAP, after
reflecting the differences between U.S. GAAP and French GAAP set out above.

Condensed Consolidated Statements of Operations under U.S. GAAP

|                                                                    |  |              |             |  
|------------------------------------------------------------------- |  | ------------ | ----------- | -
|                                                                    |  | Year ended  
|                                                                    |  | December 31,
|                                                                    |  | 2001        
|                                                                    |  |             
|Revenues                                                            |  | $            | 2,102.5     |  
|Cost of products and services                                       |  |              | (1,909.7    | )
|                                                                    |  |              |             |  
|Gross Profit                                                        |  |              | 192.8       |  
|                                                                   
|Selling, general & administrative expenses                          |  |              | 1,196.5     |  
|Loss on impairment of goodwill                                      |  |              | 7,478.7     |  
|Non-recurring charges                                               |  |              | 170.8       |  
|                                                                    |  |              |             |  
|Total operating costs and expenses                                  |  |              | 8,846.0     |  
|                                                                    |  |              |             |  
|Operating loss                                                      |  |              | (8,653.2    | )
|Equity in Loss Of Affiliate                                         |  |              | (25.8       | )
|Interest (net)                                                      |  |              | (7.1        | )
|Loss on impairment of investments accounted at cost                 |  |              | (13.1       | )
|                                                                    |  |              |             |  
|Loss from continuing operations before taxes and minority interests |  |              | (8,699.2    | )
|Income taxes                                                        |  |              | (27.6       | )
|                                                                    |  |              |             |  
|Net loss from continuing operations                                 |  |              | (8,726.8    | )
|Net income from and gain on disposal of discontinued operations     |  |              | 14.5        |  
|                                                                    |  |              |             |  
|Net loss                                                            |  | $            | (8,712.3    | )
|                                                                    |  |              |             |  
|Loss per share  basic and diluted                                  |  | U.S.$        | (46.19      | )
|Weighted average number of shares                                   |  |              | 188,614,419 |  

Included in the net loss above are amounts charged for rent expense
and bad debt expense amounting to $108.0 and $46.9 respectively.

Amortization of intangible assets other than goodwill and depreciation of
fixed assets has been charged to Cost of products and services and, Selling,
general and administrative expenses in the amounts of $310.5 and $40.6
respectively.

F-65



---



##### 



Equant N.V.
Notes to Consolidated Financial Statements
(U.S. dollars in millions, unless otherwise stated)

30.     Summary of Differences Between the Companys Accounting Policies and those
Generally Accepted in the United States (continued)

Condensed Consolidated Statements of Cash Flows under U.S. GAAP

|                                                                           |  |              |          |  
|-------------------------------------------------------------------------- |  | ------------ | -------- | -
|                                                                           |  | Year ended  
|                                                                           |  | December 31,
|                                                                           |  | 2001        
|                                                                           |  |             
|Net loss                                                                   |  | $            | (8,712.3 | )
|Depreciation                                                               |  |              | 351.6    |  
|Amortization                                                               |  |              | 488.7    |  
|Loss on impairment of goodwill                                             |  |              | 7,478.7  |  
|Other adjustments to reconcile net loss to funds generated from operations |  |              | 49.2     |  
|                                                                           |  |              |          |  
|Funds generated from operations                                            |  |              | (344.1   | )
|Changes in operating assets and liabilities (net)                          |  |              | (593.6   | )
|                                                                           |  |              |          |  
|Net cash provided by operating activities                                  |  |              | (937.7   | )
|                                                                          
|Purchase of property and equipment                                         |  |              | (454.3   | )
|Proceeds from retirement and disposal of fixed assets                      |  |              | 152.7    |  
|Proceeds from retirement and disposal of intangible assets                 |  |              | 82.3     |  
|Net cash effect of acquisitions                                            |  |              | 181.8    |  
|Other investing activities (net)                                           |  |              | 3.6      |  
|                                                                           |  |              |          |  
|Net cash used in investing activities                                      |  |              | (33.9    | )
|                                                                          
|Proceeds from issuance of preference shares                                |  |              | 1,000.0  |  
|Capital contribution from France Telecom                                   |  |              | 835.9    |  
|Repayment of loans payable to affiliates                                   |  |              | (511.4   | )
|Other financing activities (net)                                           |  |              | (11.4    | )
|                                                                           |  |              |          |  
|Net cash provided by financing activities                                  |  |              | 1,313.1  |  
|Effect of changes in exchange rates on cash and cash equivalents           |  |              | 3.7      |  
|                                                                           |  |              |          |  
|Increase in cash and cash equivalents                                      |  |              | 345.2    |  
|Cash and cash equivalents at beginning of the year                         |  |              | 40.6     |  
|Cash and cash equivalent at end of the year                                |  |              | 385.8    |  
|                                                                           |  |              |          |  

The only significant non cash investing and financing activity in the year
ended December 31, 2001 was the reverse acquisition of Equant by Global One.
As set out in Note 30b, the Global One companies were contributed in exchange
for 80.6 million ordinary shares of Equant.

During the year, the
Company paid $23.2 in interest and $7.3 in income
taxes.

F-66



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##### 



Equant N.V.
Notes to Consolidated Financial Statements
(U.S. dollars in millions, unless otherwise stated)

30.     Summary of Differences Between the Companys Accounting Policies and those
Generally Accepted in the United States (continued)

e) Supplementary Income Statement Disclosure for Global One under U.S. GAAP

As stated above, under U.S. GAAP, Global One acquired Equant and therefore
the results presented in the Consolidated Statement of Operations should
include the results of Global One for the full year, and the results of Equant
since acquisition. Set out below are supplementary disclosures for Global One
under U.S. GAAP.

Non-recurring charges

Non-recurring charges consist of the following:

|                                                                          |  |              |       | 
|------------------------------------------------------------------------- |  | ------------ | ----- | 
|                                                                          |  | Year ended  
|                                                                          |  | December 31,
|                                                                          |  | 2001        
|                                                                          |  |             
|Restructuring of Equant, Global One and SITA Equant network Joint Venture |  | $            | 69.6  | 
|Write-down of assets                                                      |  |              | 51.5  | 
|Integration of Equant, Global One and SITA Equant network Joint Venture   |  |              | 49.7  | 
|                                                                          |  |              |       | 
|                                                                          |  | $            | 170.8 | 
|                                                                          |  |              |       | 

Set out below is an analysis of Restructuring costs incurred in the year
ended December 31, 2001.

|                            |  |            |   |           |  |          |      |          |  |          |       |            |  |   |      | 
|--------------------------- |  | ---------- | - | --------- |  | -------- | ---- | -------- |  | -------- | ----- | ---------- |  | - | ---- | 
|                            |  | Balance at |   |           |  |          |      |          |  |          |       | Balance at
|                            |  | December   |   |           |  |          |      | Reserves |  | December
|                            |  | 31, 2000   |   | Additions |  | Utilized |      | 31, 2001
|                            |  |            |   |           |  |          |      |         
|Employee termination        |  |            |  |           |  | $        | 32.3 |          |  | $        | (23.9 | )          |  | $ | 8.4  | 
|Lease exit cost             |  |            |  |           |  |          | 35.4 |          |  |          | (10.0 | )          |  |   | 25.4 | 
|Legal, consulting and other |  |            |  |           |  |          | 1.9  |          |  |          | (1.9  | )          |  |   |     | 
|                            |  |            |   |           |  |          |      |          |  |          |       |            |  |   |      | 
|                            |  | $          |  |           |  | $        | 69.6 |          |  | $        | (35.8 | )          |  | $ | 33.8 | 
|                            |  |            |   |           |  |          |      |          |  |          |       |            |  |   |      | 

Employee termination costs include severance and contractual benefits
determined in accordance with an approved plan to eliminate 898 positions. The
cost also includes costs for outplacement services, medical and supplemental
vacation. At December 31, 2001, 680 identified positions included in the plan
had been eliminated. The Company anticipates completion of identified
terminations in the year 2002.

The Company expects to incur substantial future costs to restructure and
integrate Equant, Global One and the SITA Equant network Joint Venture. As
described in Note 5, certain costs incurred on Restructuring and integration of
Equant, Global One and the SITA Equant network Joint Venture are reimbursed to
the Company by France Telecom. This reimbursement will be available until June
2003 and is accounted for as a capital contribution under U.S. GAAP.

Interest (net)

Interest (net) consists of the following:

|                 |  |              |       |  
|---------------- |  | ------------ | ----- | -
|                 |  | Year ended  
|                 |  | December 31,
|                 |  | 2001        
|                 |  |             
|Interest income  |  | $            | 17.5  |  
|Interest expense |  |              | (24.6 | )
|                 |  |              |       |  
|                 |  | $            | (7.1  | )
|                 |  |              |       |  

F-67



---



##### 



Equant N.V.
Notes to Consolidated Financial Statements
(U.S. dollars in millions, unless otherwise stated)

30.     Summary of Differences Between the Companys Accounting Policies and those
Generally Accepted in the United States (continued)

Income Taxes

The tax provision / (benefit) consists of the following:

|                      |                 |   |              |      |  
|--------------------- | --------------- | - | ------------ | ---- | -
|                      |                 |   | Year ended  
|                      |                 |   | December 31,
|                      |                 |   | 2001        
|                      |                 |   |             
|Current income taxes  |                 |   |              |     
|                      | The Netherlands |   |              | (5.6 | )
|                      | Other           |   |              | 25.3 |  
|                      |                 |   |              |     
|                      |                 |   | 19.7         |     
|                      | Total current   |   |              |     |  
|Deferred income taxes |                 |   |              |     
|                      | The Netherlands |   |              |     |  
|                      | Other           |   |              | 7.9  |  
|                      |                 |   |              |     
|                      | Total deferred  |   |              | 7.9  |  
|                      |                 |   |              |     
|Total tax charge      |                 | $ | 27.6         |     
|                      |                 |   |              |     

The source of net profit / (loss) from continuing operations before
minority interests and taxes for the years ended December 31, 2001 is as
follows:

|                                                                                          |  |              |          |  
|----------------------------------------------------------------------------------------- |  | ------------ | -------- | -
|                                                                                          |  | Year ended  
|                                                                                          |  | December 31,
|                                                                                          |  | 2001        
|                                                                                          |  |             
|The Netherlands                                                                           |  | $            | (114.0   | )
|Other countries                                                                           |  |              | (8,585.2 | )
|                                                                                          |  |              |          |  
|Net profit / (loss) from continuing operations before
minority interests and income taxes |  | $            | (8,699.2 | )
|                                                                                          |  |              |          |  

The tax charge for the year has been reconciled to the standard tax rate
applicable in The Netherlands for corporate income. A reconciliation of
Equants statutory and effective income tax rate for the year ended December
31, 2001 is as follows:

|                                             |  |              |       |   
|-------------------------------------------- |  | ------------ | ----- | --
|                                             |  | Year ended  
|                                             |  | December 31,
|                                             |  | 2001        
|                                             |  |             
|Statutory rate applicable in The Netherlands |  |              | 35.0  | % 
|Loss on impairment of goodwill               |  |              | (30.8 | )%
|Change in valuation allowance                |  |              | (1.9  | )%
|Jurisdictional differences in tax rates      |  |              | (0.6  | )%
|Other permanent differences                  |  |              | (2.0  | )%
|                                             |  |              |       |   
|Effective tax rate                           |  |              | (0.3  | )%
|                                             |  |              |       |   

F-68



---



##### 



Equant N.V.
Notes to Consolidated Financial Statements
(U.S. dollars in millions, unless otherwise stated)

30.     Summary of Differences Between the Companys Accounting Policies and those
Generally Accepted in the United States (continued)

Equity in Loss of Unconsolidated Affiliate

Equity in Loss of Unconsolidated Affiliate comprises the following, relating
entirely to Radianz (see note 15):

|                         |  |              |      | 
|------------------------ |  | ------------ | ---- | 
|                         |  | Year ended  
|                         |  | December 31,
|                         |  | 2001        
|                         |  |             
|Share of loss of Radianz |  | $            | 8.0  | 
|Amortization of goodwill |  |              | 17.8 | 
|                         |  |              |      | 
|                         |  | $            | 25.8 | 
|                         |  |              |      | 

For the period July 1, 2001 to
December 31, 2001 Radianz recorded revenues of $223.6, an
operating loss of $42.0 and a net loss of $38.7.

Stock Based Compensation

Employee Share Award Plan

On November 15, 2001 as a result of the closing of the France Telecom
transaction. Equant and SITA terminated the SITA / Equant Employee Trust in
order to establish their own company specific Employee Trusts to govern the
disposition of all Awards granted after November 30, 1998. Coincident with the
formation of the Equant Employee Trust the Company resolved to vest all Awards
granted between December 1, 1998 to December 31, 2000. This resulted in an
accelerated vesting compensation cost of $3.5 (this charge would have been $9.1
under SFAS 123).

On December 21, 2001 as a result of a Management Board resolution by the
Company an Award of 40,000 Equant Discretionary shares granted on January 17,
2001 was subject to early vesting. This resulted in an accelerated vesting
compensation cost of $0.8 (this charge would have been $0.7 under SFAS 123).

The total compensation cost expensed for the year ended December 31, 2001
in respect of the Employee Share Award Plan is $5.9 (this charge would have
been $12.7 under SFAS 123).

The Company will pay social security contributions and other charges
related to the Share Awards in the years in which the awards vest. These
contributions and charges will depend on various factors, including the
employees tax jurisdiction, local laws in these countries and the share price
at the time of vesting. The social charges credit totaling $8.7 is based on the
share price on vesting being significantly lower than estimated as of the time
of acquisition.

F-69



---



##### 



Equant N.V.
Notes to Consolidated Financial Statements
(U.S. dollars in millions, unless otherwise stated)

30.     Summary of Differences Between the Companys Accounting Policies and those
Generally Accepted in the United States (continued)

Stock Based Compensation (continued)

Share Option Plan

The total compensation cost expensed for the year ended December 31, 2001
in respect of the Share Option Plan is $0.4 (this charge would have been $0.5
under SFAS 123).

The movement on unexercised options during the year is set out below:

|                                                              |                                                   |                                                        |           |           |          |          |       |          |        | 
|------------------------------------------------------------- | ------------------------------------------------- | ------------------------------------------------------ | --------- | --------- | -------- | -------- | ----- | -------- | ------ | 
|                                                              |                                                   |                                                        |           |           |          |          |       | Weighted
|                                                              |                                                   |                                                        |           |           |          |          |       | Average 
|                                                              |                                                   |                                                        |           | Number of |          | Exercise
|                                                              |                                                   |                                                        |           | shares    |          | Price   
|                                                              |                                                   |                                                        |           |           |          |         
|Unexercised options granted  January 1, 2001                 |                                                   |                                                        |           |           |          |          |       |         
|Unexercised options assumed as a result of purchase of Equant |                                                   |                                                        | 3,654,603 |           |          | $        | 39.97 |         
|Options granted since acquisition of Equant                   |                                                   |                                                        |           |           |          |          |       |         
|                                                              | At Exercise Price Range of U.S.$nil to U.S.$50.00 |                                                        |           | 170,864   |          |          |       | 11.24    |       
|                                                              | Options exercised since acquisition of Equant     |                                                        |           | (500,184  | )        |          |       |          |       
|Options forfeited since acquisition of Equant                 |                                                   |                                                        |           |           |          |          |       |         
|                                                              |                                                   | At Exercise Price Range of U.S.$nil to U.S. $50.00     |           |           | (81,711  | )        |       |          | 35.87  | 
|                                                              |                                                   | At Exercise Price Range of U.S.$50.01 to U.S. $100.00  |           |           | (95,850  | )        |       |          | 90.02  | 
|                                                              |                                                   | At Exercise Price Range of U.S.$100.01 to U.S. $150.00 |           |           | (18,925  | )        |       |          | 106.53 | 
|                                                              |                                                   |                                                        |           |           |          |          |       |         
|                                                              |                                                   | Total options forfeited in year                        |           |           | (196,486 | )        |       |          | 69.07  | 
|                                                              |                                                   |                                                        |           |           |          |          |       |         
|Unexercised options granted  December 31, 2001               |                                                   |                                                        | 3,128,797 |           |          | $        | 42.96 |         
|                                                              |                                                   |                                                        |           |           |          |          |       |         

The following table provides, per range of exercise price, the weighted
average exercise price of unexercised options granted outstanding at December
31, 2001:

|                |  |             |           |                      |  |           |        |          |  |  |           |          |  |   |        | 
|--------------- |  | ----------- | --------- | -------------------- |  | --------- | ------ | -------- |  |  | --------- | -------- |  | - | ------ | 
|                |  | Outstanding |           | Of which exercisable
|                |  |             |           |                     
|                |  |             |           |                      |  | Weighted  |        |          |  |  |           | Weighted
|                |  |             |           |                      |  | average   |        |          |  |  |           | average 
|                |  | Number of   |           | exercise             |  | Number of |        | exercise
|                |  | shares      |           | price                |  | shares    |        | price   
|                |  |             |           |                      |  |           |        |         
|$nil to $50     |  |             | 2,643,197 |                      |  | $         | 35.11  |          |  |  | 2,406,946 |          |  | $ | 37.01  | 
|$50.01 to $100  |  |             | 474,799   |                      |  |           | 85.22  |          |  |  | 474,799   |          |  |   | 85.22  | 
|$100.01 to $150 |  |             | 10,801    |                      |  |           | 106.20 |          |  |  | 10,801    |          |  |   | 106.20 | 
|                |  |             |           |                      |  |           |        |          |  |  |           |          |  |   |        | 
|                |  |             | 3,128,797 |                      |  | $         | 42.96  |          |  |  | 2,892,546 |          |  | $ | 45.19  | 
|                |  |             |           |                      |  |           |        |          |  |  |           |          |  |   |        | 

Pro forma SFAS 123 information regarding net loss and net loss per share
as if the Company had accounted for its stock-based awards to employees under
the fair value method is presented below. The fair value of the Companys
stock-based awards to employees was estimated using the Black-Scholes option
valuation model. The Black-Scholes option valuation model was developed for use
in estimating fair value of traded options that have no vesting restrictions
and are fully transferable. The Black-Scholes model requires the input of
highly subjective assumptions including the expected stock price volatility.
Because the Companys stock-based awards to employees have characteristics
significantly different from those of traded options, and because changes in
the subjective input assumptions can materially affect the fair value estimate,
in managements opinion, the existing models do not necessarily provide a
reliable single measure of the fair value of its stock-based awards to
employees.

F-70



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##### 



Equant N.V.
Notes to Consolidated Financial Statements
(U.S. dollars in millions, unless otherwise stated)

30.     Summary of Differences Between the Companys Accounting Policies and those
Generally Accepted in the United States (continued)

Stock Based Compensation (continued)

The fair value of the Companys stock-based awards to employees for 2001
was estimated assuming no expected dividends and the following weighted-average
assumptions:

|                                   |  |            |      |  
|---------------------------------- |  | ---------- | ---- | -
|Risk-free interest rate            |  |            | 4.47 | %
|Weighted average volatility factor |  |            | 0.6  |  
|Weighted average expected life     |  | 4.25 years

The weighted-average estimated fair value of stock options granted during
the year was $11.24 per share. For pro forma purposes, the estimated fair
value of the Companys stock-based awards to employees is generally amortized
over the vesting period of four years for options. The Companys pro forma
information is as follows:

|                                                    |  |  |  |   |        |   |          |  
|--------------------------------------------------- |  |  |  | - | ------ | - | -------- | -
|Proforma SFAS 123 net loss                          |  |  |  |   |        | $ | (8,713.1 | )
|Proforma SFAS 123 per share amounts (basic diluted) |  |  |  | $ | (46.20 | )

Employee Benefits

Pension Plans

The Company sponsors various retirement and pension plans including
defined benefit and defined contribution schemes that cover the majority of
world-wide employees.

Defined contribution plans

Total contributions charged to income for defined contribution plans was
$8.7 for the year ended December 31, 2001.

Defined benefit plans

Plan benefits are primarily based on the employees compensation during
the last three to five years before retirement and the number of years of
service. The cost of these defined benefit plans for the year ended December
31, 2001 can be analyzed as follows:

|                               |                                    |  |                         |  |                       |   |      |      |      |   |     |      |  
|------------------------------ | ---------------------------------- |  | ----------------------- |  | --------------------- | - | ---- | ---- | ---- | - | --- | ---- | -
|                               |                                    |  | Year ended December 31,
|                               |                                    |  |                        
|                               |                                    |  | Defined benefit         |  | Other post retirement
|                               |                                    |  | pension plans           |  | benefits             
|                               |                                    |  |                         |  |                       |   | 2001 |      | 2001
|                               |                                    |  |                         |  |                       |   |      |      |     
|Components of net benefit cost |                                    |  |                         |  |                       |   |      |      |      |   |     |     
|                               | Service cost                       |  |                         |  |                       |   | $    | 6.3  |      |   | $   | 0.1  |  
|                               | Interest cost                      |  |                         |  |                       |   |      | 3.7  |      |   |     | 0.1  |  
|                               | Expected return on assets          |  |                         |  |                       |   |      | (3.4 | )    |   |     |     |  
|                               | Amortization of prior service cost |  |                         |  |                       |   |      | 0.1  |      |   |     | 0.1  |  
|                               | Amortization of loss / (gain)      |  |                         |  |                       |   |      | 0.0  |      |   |     | (0.0 | )
|                               | Net curtailments & settlements     |  |                         |  |                       |   |      |     |      |   |     |     |  
|                               |                                    |  |                         |  |                       |   |      |      |      |   |     |     
|Net benefit cost               |                                    |  |                         |  |                       | $ | 6.7  |      |      | $ | 0.3 |     
|                               |                                    |  |                         |  |                       |   |      |      |      |   |     |     

F-71



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##### 



Equant N.V.
Notes to Consolidated Financial Statements
(U.S. dollars in millions, unless otherwise stated)

30.     Summary of Differences Between the Companys Accounting Policies and those
Generally Accepted in the United States (continued)

Employee Benefits (continued)

The following assumptions were utilized in determining the funded status
of the Companys defined benefit pension plans:

|                                          |  |                         |                     |  |  |      |            |      |  |  |      |  
|----------------------------------------- |  | ----------------------- | ------------------- |  |  | ---- | ---------- | ---- |  |  | ---- | -
|                                          |  | Year ended December 31,
|                                          |  |                        
|                                          |  | Defined benefit         | Other post         
|                                          |  | pension plans           | retirement benefits
|                                          |  |                         |                    
|                                          |  |                         |                     |  |  | 2001 |            | 2001
|                                          |  |                         |                     |  |  |      |            |     
|Discount rate                             |  |                         |                     |  |  |      | 2.50-7.00  | %    |  |  | 7.25 | %
|Long-term rate of compensation increase   |  |                         |                     |  |  |      | 3.00%-5.00 | %    |  |  | 4.00 | %
|Long-term rate of return on funded assets |  |                         |                     |  |  |      | 5.50%-9.50 | %    |  |  |      |  

The changes in the actuarial assumptions reflect movements in interest
rates, salary increases, and expected rates of return in the respective local
countries where the benefit plans reside. These assumptions are used in the
actuarial calculation of the benefit obligation and fair value of plan assets
for the following year.

The change in status of the Companys post-retirement benefit plans for
the year ended December 31, 2001 is reported in the tables below. The increase
in the benefit obligation over the related fair value of plan assets, reflected
in the net periodic pension cost. This results from the increase in the number
of participants and the impact of the acquisition of Equant. See Note 5,
Acquisitions of Businesses and Investments.

|                                  |                                 |  |                         |                     |            |   |      |      |      |   |     |     | 
|--------------------------------- | ------------------------------- |  | ----------------------- | ------------------- | ---------- | - | ---- | ---- | ---- | - | --- | --- | 
|                                  |                                 |  | Year ended December 31,
|                                  |                                 |  |                        
|                                  |                                 |  | Defined benefit         |                     | Other post
|                                  |                                 |  | pension plans           | retirement benefits
|                                  |                                 |  |                         |                     |            |   | 2001 |      | 2001
|                                  |                                 |  |                         |                     |            |   |      |      |     
|Change in benefit obligation      |                                 |  |                         |                     |            |   |      |      |      |   |     |    
|                                  | Benefit obligation at January 1 |  |                         |                     |            |   | $    | 29.7 |      |   | $   | 1.4 | 
|                                  | Service cost                    |  |                         |                     |            |   |      | 6.3  |      |   |     | 0.1 | 
|                                  | Interest cost                   |  |                         |                     |            |   |      | 3.7  |      |   |     | 0.1 | 
|                                  | Plan amendments                 |  |                         |                     |            |   |      | 0.3  |      |   |     |    | 
|                                  | Actuarial loss / (gain)         |  |                         |                     |            |   |      | (4.4 | )    |   |     | 0.1 | 
|                                  | Benefits paid                   |  |                         |                     |            |   |      | (2.7 | )    |   |     |    | 
|                                  | Foreign exchange rate changes   |  |                         |                     |            |   |      | (1.0 | )    |   |     |    | 
|                                  | Acquisitions & other            |  |                         |                     |            |   |      | 52.6 |      |   |     |    | 
|                                  |                                 |  |                         |                     |            |   |      |      |      |   |     |    
|Benefit obligation at December 31 |                                 |  |                         |                     |            | $ | 84.5 |      |      | $ | 1.7 |    
|                                  |                                 |  |                         |                     |            |   |      |      |      |   |     |    

|                          |                                        |  |                         |  |                     |   |      |      |   |   |   |   | 
|------------------------- | -------------------------------------- |  | ----------------------- |  | ------------------- | - | ---- | ---- | - | - | - | - | 
|                          |                                        |  | Year ended December 31,
|                          |                                        |  |                        
|                          |                                        |  | Defined benefit         |  | Other post         
|                          |                                        |  | pension plans           |  | retirement benefits
|                          |                                        |  | 2001                    |  | 2001               
|                          |                                        |  |                         |  |                    
|Change in plan assets     |                                        |  |                         |  |                     |   |      |      |   |   |   |  
|                          | Fair value at January 1                |  |                         |  |                     |   | $    | 24.2 |   |   | $ |  | 
|                          | Actual return on assets                |  |                         |  |                     |   |      | (4.6 | ) |   |   |  | 
|                          | Foreign exchange rate changes          |  |                         |  |                     |   |      | (0.1 | ) |   |   |  | 
|                          | Employer contributions                 |  |                         |  |                     |   |      | 5.1  |   |   |   |  | 
|                          | Employee contributions                 |  |                         |  |                     |   |      | 1.3  |   |   |   |  | 
|                          | Benefits paid                          |  |                         |  |                     |   |      | (2.7 | ) |   |   |  | 
|                          | Payments made directly to participants |  |                         |  |                     |   |      | 1.5  |   |   |   |  | 
|                          | Acquisitions & other                   |  |                         |  |                     |   |      | 33.9 |   |   |   |  | 
|                          |                                        |  |                         |  |                     |   |      |      |   |   |   |  
|Fair value at December 31 |                                        |  |                         |  |                     | $ | 58.6 |      |   | $ |  |  
|                          |                                        |  |                         |  |                     |   |      |      |   |   |   |  

F-72



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##### 



Equant N.V.
Notes to Consolidated Financial Statements
(U.S. dollars in millions, unless otherwise stated)

30.     Summary of Differences Between the Companys Accounting Policies and those
Generally Accepted in the United States (continued)

Employee Benefits (continued)

The funded status of the defined benefit plans and amounts recognized in
the Consolidated Balance Sheets consist of the following:

|                                     |  |                         |                     |            |  |      |       |      |  |   |      |  
|------------------------------------ |  | ----------------------- | ------------------- | ---------- |  | ---- | ----- | ---- |  | - | ---- | -
|                                     |  | Year ended December 31,
|                                     |  |                        
|                                     |  | Defined benefit         |                     | Other post
|                                     |  | pension plans           | retirement benefits
|                                     |  |                         |                     |            |  | 2001 |       | 2001
|                                     |  |                         |                     |            |  |      |       |     
|Funded (unfunded) benefit obligation |  |                         |                     |            |  | $    | (25.9 | )    |  | $ | (1.7 | )
|Unamortized prior service cost       |  |                         |                     |            |  |      | 2.3   |      |  |   | 0.7  |  
|Unrecognized net loss (gain)         |  |                         |                     |            |  |      | (1.5  | )    |  |   | (0.4 | )
|                                     |  |                         |                     |            |  |      |       |      |  |   |      |  
|Net amount recognized                |  |                         |                     |            |  | $    | (25.1 | )    |  | $ | (1.4 | )
|                                     |  |                         |                     |            |  |      |       |      |  |   |      |  

Derivative Instruments and Hedging Activities

On January 1, 2001, Equant adopted SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities as amended by SFAS No. 137, Accounting for
Derivative Instruments and Hedging Activities  Deferral of the Effective Date
of FASB Statement No. 133, an amendment of FASB Statement No. 133 and SFAS No.
138, Accounting for Certain Derivative Instruments and Certain Hedging
Activities, an amendment of FASB Statement No. 133 (referred to hereafter as
SFAS 133). Under SFAS 133, all derivative instruments (including certain
derivative instruments embedded in other contracts) are recognized in the
balance sheet at their fair values and changes in fair value are recognized
immediately in earnings. If the derivative is designated as a fair value hedge,
the changes in the fair value of the derivative and of the hedged item
attributable to the hedged risk are recognized in earnings. If the derivative
is designated a cash flow hedge, the effective portions of changes in the fair
value of the derivative are recorded in Other Comprehensive Income (OCI) and
are recognized in the income statements when the hedged item affects earnings.
Ineffective portions of changes in the fair value of cash flow hedges are
recognized in earnings.

Equant uses derivative instruments to manage exposures to foreign
currency, in accordance with the risk management policy about market risks
discussed in Item 11. Quantitative and Qualitative Disclosures About Market
Risk of the 2001 Annual Report on Form 20-F.

Equant had no derivative instruments designated as hedges on January 1,
2001.

Related Party Transactions

France Telecom is considered to be a related party of the Company for the
year ended December 31, 2001. SITA, Reuters and Radianz are considered to be
related parties of the Company for the period from June 29, 2001 to December
31, 2001.

Details of related party transactions with France Telecom for the period
from June 29, 2001 to December 31, 2001 are set out in Note 23. Details of
related party transactions with France Telecom for the period from January 1,
2001 to June 29, 2001 are set out below. Details of related party transactions
with SITA, Reuters and Radianz for the period from June 29 to December 31, 2001
are set out below.

SITA

In the normal course of business, the Company engages in transactions with
SITA. The Company received revenues from SITA for providing goods and services
to its customers of $342.9 for the period from June 29, 2001 to December 31,
2001. The Company was also charged $338.2 related to goods and services
provided by SITA in the equivalent period.

F-73



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##### 



Equant N.V.
Notes to Consolidated Financial Statements
(U.S. dollars in millions, unless otherwise stated)

30.     Summary of Differences Between the Companys Accounting Policies and those
Generally Accepted in the United States (continued)

Related Party Transactions (continued)

Radianz and Reuters

In the normal course of business, the Company earned revenues from Radianz
for providing core-bandwidth and other services totaling approximately $40.5
for the period for the period from June 29 to December 31, 2001.

In the normal course of business, the Company earned revenues from Reuters
for providing core-bandwidth and other services totaling approximately $2.6
during the period from June 29 to December 31, 2001. The Company was also
charged $xx by Reuters in for the period from June 29 to December 31, 2001
related to the costs of network access and transmission capacity which has yet
to be migrated over to the Companys network. These costs are included in the
amount charged to Radianz during the year.

France Telecom

The global products and services of Global One were produced and rendered
through a set of entities: mainly FTLD, the long distance division of France
Telecom; GPS; and Global Ones local sales and services units (LSSUs). All
these entities provided services to the others based on a series of agreements
implemented in the second half of 2000.

These agreements require FTLD to sell switched voice minutes, bandwidth
and IP connectivity to GPS, combining FTLDs resources with the resources owned
by the LSSUs for which FTLD is invoiced by the LSSUs. Under these agreements,
all costs invoiced by FTLD, as well as the central function costs, including
global products, global sales, finance and corporate services, were accounted
for within GPS. The LSSUs then purchased their manufactured global products and
services from GPS. The net effect of these agreements totaled $64.6 for the
period ended June 29, 2001, which is recorded as a reduction of cost of
revenues in the combined statement of operations.

For the period ended June 29, 2001, Global One recorded $31.9 in
telecommunications services revenue from France Telecom. The services provided
to France Telecom primarily represent the use of Global Ones network by France
Telecom. In addition, Global One had arrangements in place such that when
Global One sold France Telecom telecommunication services to an external
customer, Global One earned commission on such sales. In the aggregate, Global
One recorded $1.0 in revenues for the for the period ended June 29, 2001,
related to these commissions. Such commissions were recorded on a net basis as
Global One was acting as an agent for France Telecom.

For the period ended June 29, 2001, Global One recorded $39.8 in cost of
revenue from France Telecom. The services provided France Telecom primarily
represented the use of its network by Global One. Also included within the cost
of revenue amounts disclosed above, is rental expense for transmission line
leases with France Telecom totaling $7.1 for the period ended June 29, 2001.

For the period ended June 29, 2001, Global One recorded $23.2 in interest
expense on loans from France Telecom

Under the terms of the Contribution Agreement dated November 19, 2000, the
Global One companies, which were indirectly wholly owned by France Telecom,
were contributed to Equant along with other consideration in exchange for newly
issued shares of Equant. A summary of the related transactions is set out in
Note 1. France Telecom acquired Global Ones calling card, carrier voice and
GIP-IPL (access to the world-wide web through international private lines for
carrier customers) businesses as they were excluded from the transaction.

As part of the transaction, France Telecom also retained a number of non
operating legal entities that had previously been included in the Combined
Financial Statements of Global One. The entities which Global One retained were
Global One Communications Holdings B.V. and Global One Communications World
Holdings B.V. and their subsidiaries.

On June 20, 2001, France Telecom entered into an agreement with Global One
to purchase certain submarine cables and related assets from Global One. The
total purchase price of the cables was $139.2, which approximated the net book
value of the cables transferred as of that date.

F-74



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##### 



Equant N.V.
Notes to Consolidated Financial Statements
(U.S. dollars in millions, unless otherwise stated)

30.     Summary of Differences Between the Companys Accounting Policies and those
Generally Accepted in the United States (continued)

Segmental disclosure

The effect of the France Telecom Transactions and the disposal of Equant
Application Services when combined with the Companys reorganization of its
management according to function and specialization, rather than geographic or
divisional reporting lines, resulted in the Company having a single reportable
segment for the period subsequent to June 29, 2001, although revenues continue
to be measured by lines of business.

Revenues by Lines of Business

The following table presents revenue by line of business:

|                          |  |              |         | 
|------------------------- |  | ------------ | ------- | 
|                          |  | Years ended 
|                          |  | December 31,
|                          |  | 2001        
|                          |  |             
|Network Services          |  | $            | 1,100.8 | 
|Integration Services      |  |              | 292.5   | 
|Other services            |  |              | 345.4   | 
|Sita network contract     |  |              | 268.4   | 
|Card and Carrier services |  |              | 95.4    | 
|                          |  |              |         | 
|                          |  | $            | 2,102.5 | 
|                          |  |              |         | 

Geographic Information

The following table presents revenue by region, based on country of
invoice origin:

|                                  |  |         |       |          |  |        |       |       |  |   |         |   |  |   |         | 
|--------------------------------- |  | ------- | ----- | -------- |  | ------ | ----- | ----- |  | - | ------- | - |  | - | ------- | 
|                                  |  | Asia    |       |          |  |        |       |       |  |   |         |   |  |  
|                                  |  | Pacific |       | Americas |  | Europe |       | Total
|                                  |  |         |       |          |  |        |       |      
|December 31, 2001                 |  |         |       |          |  |        |       |       |  |   |         |   |  |   |         | 
|Revenues from external customers  |  | $       | 113.1 |          |  | $      | 556.2 |       |  | $ | 1,433.2 |   |  | $ | 2,102.5 | 
|As a percentage of total revenues |  |         | 5.4   | %        |  |        | 26.5  | %     |  |   | 88.2    | % |  |   |         | 

Reliance on Major Customers

The following table presents sales of services and products to major
customers:

|                                  |  |      |       |         |  |        |       |       |  |   |         |   |  |   |         | 
|--------------------------------- |  | ---- | ----- | ------- |  | ------ | ----- | ----- |  | - | ------- | - |  | - | ------- | 
|                                  |  |      |       |         |  | France |       |       |  |   |         |   |  |  
|                                  |  | SITA |       | Telecom |  | Other  |       | Total
|                                  |  |      |       |         |  |        |       |      
|December 31, 2001                 |  | $    | 345.5 |         |  | $      | 167.6 |       |  | $ | 1,589.4 |   |  | $ | 2,102.5 | 
|As a percentage of total revenues |  |      | 16.4  | %       |  |        | 8.0   | %     |  |   | 75.6    | % |  |   |         | 

Preference Shares

In the event that the Company declares a dividend on the ordinary shares, the
holders of Preference shareholders are entitled to receive a number of newly
issued preference shares equal to 0.045 times the number of preference shares
held.

F-75



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##### 



Equant N.V.
Notes to Consolidated Financial Statements
(U.S. dollars in millions, unless otherwise stated)

30.     Summary of Differences Between the Companys Accounting Policies and those
Generally Accepted in the United States (continued)

f) New accounting pronouncements

In June 2001, the Financial Accounting Standards Board issued SFAS No.
141, Business Combinations, and No. 142, Goodwill and Other Intangible Assets.

SFAS 141 requires that the purchase method of accounting be used for all
business combinations initiated after June 30, 2001. SFAS 141 requires that the
purchase method of accounting be used for all business combinations initiated
after June 30, 2001. No significant acquisition of consolidated companies
occurred since June 30, 2001.

SFAS 141 also includes guidance on the initial recognition and measurement
of goodwill and other intangible assets acquired in a business combination
completed after June 30, 2001. SFAS 142 prohibits the amortization of goodwill
and intangible assets with indefinite useful lives. Instead, SFAS 142 requires
that these assets be reviewed for impairment at least annually. Additionally,
SFAS 142 requires that goodwill included in the carrying value of equity method
investments no longer be amortized. Intangible assets with finite lives will
continue to be amortized over their estimated useful life and reviewed for
impairment in accordance with SFAS 121.

Equant will apply Statement 142 beginning January 1, 2002. SFAS 142
prohibits the amortization of goodwill and intangible assets with indefinite
useful lives beginning January 1, 2002. Additionally, SFAS 142 requires that
goodwill included in the carrying value of equity method investments no longer
be amortized. Application of these non-amortization provisions is expected to
result in an decrease in operating loss of $169.5 (U.S.$0.60 per share) in 2002
including the effect of the non-amortization of trademarks which have been
determined as having indefinite lives. Changes in the useful lives of
intangible assets with finite lives as well as reclassifications from or to
goodwill at the date of adoption to or from identifiable intangibles as
required by SFAS 141 are not expected to result in a material change in net
loss.

SFAS 142 requires that goodwill of consolidated entities and intangible
assets with indefinite useful lives be tested for impairment at least annually
using the prescribed two-step process. The first step is a screen for potential
impairment, while the second step measures the amount of impairment, if any.
The Company has performed the first of the required impairment tests of
goodwill and indefinite lived intangible assets as of January 1, 2002. Based
on steps the Company has taken to prepare for the adoption of
Statement 142, no significant impairment will be recorded at
January 1, 2002 as a
cumulative effect of change in accounting principle.

Equant has determined it has only one operating unit and evaluates the
carrying value of goodwill accordingly. Equant will estimate its fair value
using the quoted market prices adjusted for an appropriate control premium.
Equant may be obliged to recognize significant impairment charges in connection
with SFAS 142 due to considerable volatility in the Companys quoted market prices.

In June 2001, the Financial Accounting Standards Board issued SFAS No.
143, Accounting for Asset Retirement Obligations. SFAS 143 requires the fair
value of a liability for an asset retirement obligation be recognized in the
period in which it is incurred if a reasonable estimate of fair value can be
made. The associated asset retirement costs are capitalized as part of the
carrying amount of the long-lived asset. An entity shall measure changes in the
liability for an asset retirement obligation due to passage of time by applying
an interest method of allocation to the amount of the liability at the
beginning of the period. That amount shall be recognized as an increase in the
carrying amount of the liability and as an expense classified as an operating
item in the statement of income. SFAS 143 is effective for fiscal years
beginning after June 15, 2002. Equant is currently reviewing the provisions of
this statement and its potential impact on its results of operations and
financial position.

In August 2001, the Financial Accounting Standards Board issued SFAS No.
144, Accounting for the Impairment or Disposal of Long-Lived Assets. This
Statement addresses the financial accounting and reporting for the impairment
or disposal of long-lived assets and supersedes SFAS 121, and the accounting
and reporting provisions of APB Opinion No. 30, Reporting the Results of
Operations-Reporting the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and Transactions, for
the disposal of a segment of a business (as previously defined in that
Opinion). The provisions of this Statement are effective for financial
statements issued for fiscal years beginning after December 15, 2001. Equant
does not anticipate that adoption of SFAS 144 will have a material impact on
its results of operations or its financial position.

F-76



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##### 



REPORT OF THE INDEPENDENT AUDITORS

Board of Directors
Atlas Telecommunications, S.A.

We have audited the accompanying combined balance sheet of Global One as of December 31,
2000 and the related combined statement of operations, cash flows and changes in investors equity for
the year then ended. These combined financial statements are the responsibility of the Companys
management. Our responsibility is to express an opinion on these combined financial statements based
on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United
States. Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

In our opinion, the combined financial statements referred to above present fairly, in all material
respects, the combined financial position of Global One at December 31, 2000 and the combined
results of its operations and its cash flows for the year then ended, in conformity with accounting
principles generally accepted in the United States.

Paris, France
March 30, 2001

|                                       |  |                           
|-------------------------------------- |  | --------------------------
|RSM SALUSTRO REYDEL                    |  | ERNST & YOUNG AUDIT       
|                                       |  |                           
|                                       |  |                           
|Represented by
Jean-Michel Charpentier |  | Represented by
John Mackey

F-77



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##### 



REPORT OF THE INDEPENDENT AUDITORS

Board of Directors
Atlas Telecommunications, S.A.

We have audited the accompanying combined balance sheet of Global One as of December 31,
1999 and the related combined statement of operations, cash flows and changes in investors equity for
the year then ended. These combined financial statements are the responsibility of the Companys
management. Our responsibility is to express an opinion on these combined financial statements based
on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United
States. Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

In our opinion, the combined financial statements referred to above present fairly, in all material
respects, the combined financial position of Global One at December 31, 1999 and the combined
results of its operations and its cash flows for the year then ended, in conformity with accounting
principles generally accepted in the United States.

Paris, France
March 30, 2001



| | ERNST & YOUNG AUDIT
| | -------------------



| | Represented by
John Mackey
| | --------------------------

F-78



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##### 



GLOBAL ONE

COMBINED STATEMENTS OF OPERATIONS
(U.S. dollar amounts in thousands)

|                                                                                                                    |                                                                                                                   |   |                          |         |      |   |           |         | 
|------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------- | - | ------------------------ | ------- | ---- | - | --------- | ------- | 
|                                                                                                                    |                                                                                                                   |   | Years ended December 31,
|                                                                                                                    |                                                                                                                   |   |                         
|                                                                                                                    |                                                                                                                   |   | 2000                     |         | 1999
|                                                                                                                    |                                                                                                                   |   |                          |         |     
|Telecommunications service revenue ($109,457 and $270,448
from affiliates in 2000 and 1999, respectively) (Note 12) |                                                                                                                   | $ | 1,131,715                |         |      | $ | 1,056,985 |        
|Cost of revenue ($17,108 and $418,770 from affiliates in 2000
and 1999, respectively) (Note 7 and Note 12)          |                                                                                                                   |   | 1,250,136                |         |      |   | 1,347,397 |        
|                                                                                                                    |                                                                                                                   |   |                          |         |      |   |           |        
|Gross margin                                                                                                        |                                                                                                                   |   | (118,421                 | )       |      |   | (290,412  | )      
|Operating costs and expenses:                                                                                       |                                                                                                                   |   |                          |         |      |   |           |        
|                                                                                                                    | Sales and marketing expenses                                                                                      |   |                          | 256,740 |      |   |           | 237,595 | 
|                                                                                                                    | General and administrative expenses ($3,253 and $15,708 from
affiliates in 2000 and 1999, respectively) (Note 12) |   |                          | 202,165 |      |   |           | 189,709 | 
|                                                                                                                    | Amortization of goodwill and other intangible assets (Note 6)                                                     |   |                          | 216,391 |      |   |           | 114,881 | 
|                                                                                                                    |                                                                                                                   |   |                          |         |      |   |           |        
|Total operating costs and expenses                                                                                  |                                                                                                                   |   | 675,296                  |         |      |   | 542,185   |        
|                                                                                                                    |                                                                                                                   |   |                          |         |      |   |           |        
|Operating margin                                                                                                    |                                                                                                                   |   | (793,717                 | )       |      |   | (832,597  | )      
|Interest expense ($28,303 and $16,372 from affiliates in 2000
and 1999, respectively) (Note 12)                     |                                                                                                                   |   | (36,326                  | )       |      |   | (24,502   | )      
|Interest income                                                                                                     |                                                                                                                   |   | 6,979                    |         |      |   | 5,872     |        
|Foreign currency transaction losses                                                                                 |                                                                                                                   |   | (3,948                   | )       |      |   | (40,783   | )      
|Other expense, net                                                                                                  |                                                                                                                   |   | (3,074                   | )       |      |   | (4,140    | )      
|                                                                                                                    |                                                                                                                   |   |                          |         |      |   |           |        
|Total non-operating expenses                                                                                        |                                                                                                                   |   | (36,369                  | )       |      |   | (63,553   | )      
|                                                                                                                    |                                                                                                                   |   |                          |         |      |   |           |        
|Loss before provision for income taxes                                                                              |                                                                                                                   |   | (830,086                 | )       |      |   | (896,150  | )      
|Provision for income taxes (Note 10)                                                                                |                                                                                                                   |   | (8,906                   | )       |      |   | (8,158    | )      
|                                                                                                                    |                                                                                                                   |   |                          |         |      |   |           |        
|Net loss                                                                                                            |                                                                                                                   | $ | (838,992                 | )       |      | $ | (904,308  | )      
|                                                                                                                    |                                                                                                                   |   |                          |         |      |   |           |        

See notes to combined financial statements.

F-79



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##### 



GLOBAL ONE

COMBINED BALANCE SHEETS
(U.S. dollar amounts in thousands)

|                                        |                                                                                                                                         |   |              |            |      |   |           |            |  
|--------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------- | - | ------------ | ---------- | ---- | - | --------- | ---------- | -
|                                        |                                                                                                                                         |   | December 31,
|                                        |                                                                                                                                         |   |             
|                                        |                                                                                                                                         |   | 2000         |            | 1999
|                                        |                                                                                                                                         |   |              |            |     
|ASSETS                                  |                                                                                                                                         |   |              |            |      |   |           |           
|Current assets:                         |                                                                                                                                         |   |              |            |      |   |           |           
|                                        | Cash and cash equivalents                                                                                                               |   | $            | 40,587     |      |   | $         | 74,376     |  
|                                        | Accounts receivable, net of allowance for doubtful
accounts of $88,020 and $61,669 at December 31, 2000
and 1999, respectively (Note 5) |   |              | 400,659    |      |   |           | 208,040    |  
|                                        | Receivables from affiliates (Note 12)                                                                                                   |   |              | 411,997    |      |   |           | 151,291    |  
|                                        | Prepaid expenses                                                                                                                        |   |              | 32,789     |      |   |           | 47,245     |  
|                                        | Value added tax (VAT) receivable                                                                                                        |   |              | 29,030     |      |   |           | 34,410     |  
|                                        | Other current assets                                                                                                                    |   |              | 42,126     |      |   |           | 35,731     |  
|                                        |                                                                                                                                         |   |              |            |      |   |           |           
|Total current assets                    |                                                                                                                                         |   | 957,188      |            |      |   | 551,093   |           
|                                        | Property and equipment, net (Note 7)                                                                                                    |   |              | 864,621    |      |   |           | 716,099    |  
|                                        | Goodwill ($3,753,493 at December 31, 2000 and $134,104 at
December 31, 1999) and other intangible assets, net (Note 6)                  |   |              | 4,018,491  |      |   |           | 136,522    |  
|                                        | Other assets                                                                                                                            |   |              | 24,910     |      |   |           | 18,085     |  
|                                        |                                                                                                                                         |   |              |            |      |   |           |           
|Total assets                            |                                                                                                                                         | $ | 5,865,210    |            |      | $ | 1,421,799 |           
|                                        |                                                                                                                                         |   |              |            |      |   |           |           
|LIABILITIES AND INVESTORS EQUITY       |                                                                                                                                         |   |              |            |      |   |           |           
|Current liabilities:                    |                                                                                                                                         |   |              |            |      |   |           |           
|                                        | Accounts payable                                                                                                                        |   | $            | 369,419    |      |   | $         | 116,954    |  
|                                        | Accrued expenses                                                                                                                        |   |              | 138,011    |      |   |           | 172,527    |  
|                                        | Payables to affiliates (Note 12)                                                                                                        |   |              | 307,046    |      |   |           | 201,511    |  
|                                        | Loans payable to affiliates (Note 8 and Note 12)                                                                                        |   |              | 451,294    |      |   |           | 653,000    |  
|                                        | Value added tax (VAT) payable and other current liabilities                                                                             |   |              | 126,530    |      |   |           | 129,110    |  
|                                        |                                                                                                                                         |   |              |            |      |   |           |           
|Total current liabilities               |                                                                                                                                         |   | 1,392,300    |            |      |   | 1,273,102 |           
|Other liabilities                       |                                                                                                                                         |   | 21,545       |            |      |   | 17,620    |           
|                                        |                                                                                                                                         |   |              |            |      |   |           |           
|Total liabilities                       |                                                                                                                                         |   | 1,413,845    |            |      |   | 1,290,722 |           
|Commitments and contingencies (Note 9)  |                                                                                                                                         |   |             |            |      |   |          |           
|Investors equity
Contributed capital   |                                                                                                                                         |   | 5,915,432    |            |      |   | 2,929,114 |           
|                                        | Accumulated deficit                                                                                                                     |   |              | (1,443,056 | )    |   |           | (2,760,721 | )
|                                        | Accumulated other comprehensive loss                                                                                                    |   |              | (21,011    | )    |   |           | (37,316    | )
|                                        |                                                                                                                                         |   |              |            |      |   |           |           
|Total investors equity                 |                                                                                                                                         |   | 4,451,365    |            |      |   | 131,077   |           
|Total liabilities and investors equity |                                                                                                                                         | $ | 5,865,210    |            |      | $ | 1,421,799 |           
|                                        |                                                                                                                                         |   |              |            |      |   |           |           

See notes to combined financial statements.

F-80



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##### 



GLOBAL ONE

COMBINED STATEMENTS OF CASH FLOWS

(U.S. dollar amounts in thousands)

|                                                                                      |                                                  |                                                             |          |                         |          |      |          |          |         |  
|------------------------------------------------------------------------------------- | ------------------------------------------------ | ----------------------------------------------------------- | -------- | ----------------------- | -------- | ---- | -------- | -------- | ------- | -
|                                                                                      |                                                  |                                                             |          | Year Ended December 31,
|                                                                                      |                                                  |                                                             |          |                        
|                                                                                      |                                                  |                                                             |          | 2000                    |          | 1999
|                                                                                      |                                                  |                                                             |          |                         |          |     
|Cash flows from operating activities:                                                 |                                                  |                                                             |          |                         |          |      |          |         
|                                                                                      | Net loss                                         |                                                             | $        | (838,992                | )        |      | $        | (904,308 | )      
|Adjustments to reconcile net loss to net cash used in operating activities:           |                                                  |                                                             |          |                         |          |      |          |         
|                                                                                      | Depreciation (Note 7)                            |                                                             |          | 154,704                 |          |      |          | 128,487  |        
|                                                                                      | Amortization of intangibles (Note 6)             |                                                             |          | 216,391                 |          |      |          | 114,881  |        
|                                                                                      | Write down of property and equipment (Note 7)    |                                                             |          |                        |          |      |          | 66,700   |        
|                                                                                      | Loss on disposal of fixed assets                 |                                                             |          | 34,131                  |          |      |          | 40,302   |        
|                                                                                      | Provision for doubtful accounts (Note 5)         |                                                             |          | 53,261                  |          |      |          | 34,675   |        
|                                                                                      | Change in operating assets and liabilities:      |                                                             |          |                         |          |      |          |          |        
|                                                                                      |                                                  | Accounts receivable (Note 5)                                |          |                         | (245,347 | )    |          |          | (19,103 | )
|                                                                                      |                                                  | Prepaid expenses, VAT receivable and other current assets   |          |                         | 13,411   |      |          |          | 7,151   |  
|                                                                                      |                                                  | Receivables from affiliates (Note 12)                       |          |                         | (260,140 | )    |          |          | 94,869  |  
|                                                                                      |                                                  | Other assets                                                |          |                         | (6,810   | )    |          |          | (6,759  | )
|                                                                                      |                                                  | Accounts payable                                            |          |                         | 251,918  |      |          |          | (13,342 | )
|                                                                                      |                                                  | Accrued expenses, VAT payable and other current liabilities |          |                         | (37,016  | )    |          |          | (23,265 | )
|                                                                                      |                                                  | Payables to affiliates (Note 12)                            |          |                         | 105,306  |      |          |          | (39,961 | )
|                                                                                      |                                                  | Other liabilities                                           |          |                         | 3,915    |      |          |          | (36,412 | )
|                                                                                      |                                                  |                                                             |          |                         |          |      |          |          |        
|Net cash used in operating activities                                                 |                                                  |                                                             | (555,268 | )                       |          |      | (556,085 | )       
|Cash flows from investing activities:                                                 |                                                  |                                                             |          |                         |          |      |          |         
|                                                                                      | Purchases of property and equipment              |                                                             |          | (338,100                | )        |      |          | (356,906 | )      
|                                                                                      | Other investing activities                       |                                                             |          | (3,871                  | )        |      |          | (12,653  | )      
|                                                                                      |                                                  |                                                             |          |                         |          |      |          |          |        
|Net cash used in investing activities                                                 |                                                  |                                                             | (341,971 | )                       |          |      | (369,559 | )       
|Cash flows from financing activities:                                                 |                                                  |                                                             |          |                         |          |      |          |         
|                                                                                      | Capital contributions by investors               |                                                             |          | 1,071,000               |          |      |          | 700,100  |        
|                                                                                      | Proceeds from loans payable to affiliates        |                                                             |          | 1,447,982               |          |      |          | 646,016  |        
|                                                                                      | Repayment of loans payable to affiliates         |                                                             |          | (1,649,252              | )        |      |          | (431,700 | )      
|                                                                                      |                                                  |                                                             |          |                         |          |      |          |          |        
|Net cash provided by financing activities                                             |                                                  |                                                             | 869,730  |                         |          |      | 914,416  |         
|Effect of exchange rate changes on cash and cash equivalents                          |                                                  |                                                             | (6,280   | )                       |          |      | 5,307    |         
|Net decrease in cash and cash equivalents                                             |                                                  |                                                             | (33,789  | )                       |          |      | (5,921   | )       
|Cash and cash equivalents at beginning of year                                        |                                                  |                                                             | 74,376   |                         |          |      | 80,297   |         
|                                                                                      |                                                  |                                                             |          |                         |          |      |          |          |        
|Cash and cash equivalents at end of year                                              |                                                  | $                                                           | 40,587   |                         |          | $    | 74,376   |         
|                                                                                      |                                                  |                                                             |          |                         |          |      |          |          |        
|Supplemental disclosures of cash flow information:                                    |                                                  |                                                             |          |                         |          |      |          |         
|                                                                                      | Cash paid during the year for:                   |                                                             |          |                         |          |      |          |          |        
|                                                                                      | Interest                                         |                                                             | $        | 36,058                  |          |      | $        | 22,946   |        
|                                                                                      | Income taxes                                     |                                                             | $        | 15,352                  |          |      | $        | 5,225    |        
|Supplemental disclosure of non-cash financing activities:                             |                                                  |                                                             |          |                         |          |      |          |         
|Capital contribution from France Telecom and effect of push down accounting
(Note 6): |                                                  |                                                             |          |                         |          |      |          |         
|                                                                                      | Increase in goodwill and other intangible assets |                                                             | $        | 4,093,000               |          |      |          |          |        
|                                                                                      | Increase in investors equity                    |                                                             | $        | 4,093,000               |          |      |          |          |        

See notes to combined financial statements.

F-81



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##### 



GLOBAL ONE

COMBINED STATEMENTS OF CHANGES IN INVESTORS EQUITY
Years Ended December 31, 2000 and 1999
(U.S. dollar amounts in thousands)

|                                        |  |             |           |             |  |               |            |            |  |                     |         |       |  |      |           |               |  |   |          |  
|--------------------------------------- |  | ----------- | --------- | ----------- |  | ------------- | ---------- | ---------- |  | ------------------- | ------- | ----- |  | ---- | --------- | ------------- |  | - | -------- | -
|                                        |  |             |           |             |  |               |            |            |  | Accumulated         |         |       |  |      |           | Comprehensive
|                                        |  |             |           |             |  |               |            |            |  | Other               |         | Total |  | Loss
|                                        |  | Contributed |           | Accumulated |  | Comprehensive |            | Investors' |  | For the Years Ended
|                                        |  | Capital     |           | Deficit     |  | Loss          |            | Equity     |  | December 31,       
|                                        |  |             |           |             |  |               |            |            |  |                    
|Balance at December 31, 1998            |  | $           | 2,229,014 |             |  | $             | (1,856,413 | )          |  | $                   | (44,700 | )     |  | $    | 327,901   |               |  |   |          |  
|Capital contribution by investors       |  |             | 700,100   |             |  |               |            |            |  |                     |         |       |  |      | 700,100   |               |  |   |          |  
|Net loss                                |  |             |           |             |  |               | (904,308   | )          |  |                     |         |       |  |      | (904,308  | )             |  | $ | (904,308 | )
|Foreign currency translation
adjustment |  |             |           |             |  |               |            |            |  |                     | 7,384   |       |  |      | 7,384     |               |  |   | 7,384    |  
|                                        |  |             |           |             |  |               |            |            |  |                     |         |       |  |      |           |               |  |   |          |  
|Balance at December 31, 1999            |  |             | 2,929,114 |             |  |               | (2,760,721 | )          |  |                     | (37,316 | )     |  |      | 131,077   |               |  | $ | (896,924 | )
|Effect of push down accounting
(Note 6) |  |             | 1,915,318 |             |  |               | 2,156,657  |            |  |                     | 21,025  |       |  |      | 4,093,000 |               |  |   |          |  
|Capital contribution by investors       |  |             | 1,071,000 |             |  |               |            |            |  |                     |         |       |  |      | 1,071,000 |               |  |   |          |  
|Net loss                                |  |             |           |             |  |               | (838,992   | )          |  |                     |         |       |  |      | (838,992  | )             |  | $ | (838,992 | )
|Foreign currency translation
adjustment |  |             |           |             |  |               |            |            |  |                     | (4,720  | )     |  |      | (4,720    | )             |  |   | (4,720   | )
|                                        |  |             |           |             |  |               |            |            |  |                     |         |       |  |      |           |               |  |   |          |  
|Balance at December 31, 2000            |  | $           | 5,915,432 |             |  | $             | (1,443,056 | )          |  | $                   | (21,011 | )     |  | $    | 4,451,365 |               |  | $ | (843,712 | )
|                                        |  |             |           |             |  |               |            |            |  |                     |         |       |  |      |           |               |  |   |          |  

See notes to combined financial statements.



F-82



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##### 



GLOBAL ONE
NOTES TO THE COMBINED FINANCIAL STATEMENTS

Note 1: Nature of operations and organization

Global One was formed as a joint venture between France Telecom (FT), Sprint Corporation
(Sprint) and Deutsche Telekom AG (DT). The joint venture commenced operations in
February 1996. Global One offers a single source for the provision of seamless Internet protocol, data
and voice telecommunications services for businesses, carriers and consumers around the world. Global
One primarily focuses on multinational businesses and their suppliers, distributors and customers.

The joint venture was legally organized in two subgroups covering operations in Europe Rest of
Europe) and outside Europe (Rest of World). Each subgroup consists of a number of holding
companies and operating companies. Until March 2000, each investor owned 33.33% of the Rest of
Europe division and the Rest of World ownership percentages were Sprint50%, DT25%, and FT
25%. All references to FT, DT and Sprint include those companies and their consolidated subsidiaries.

Effective April 1, 2000, FT acquired Sprint and DTs combined
approximate 72.5% interest in Global One (the FT Acquisition). As a result,
Global One as a group became wholly owned by Atlas Telecommunications S.A.
(Atlas), which is a wholly owned subsidiary of FT (see Note 6).

Global One is not organized as a single legal entity. For the years ended December 31, 2000 and
1999, Global One includes the combination of the following entities and their subsidiaries:



| |  |  | Global One Communications Europe LLC                                                           
| | - |  | -----------------------------------------------------------------------------------------------
|
| |  |  | Global One Communications Operations Ltd.                                                      
|
| |  |  | Global One Communications Service B.V.                                                         
|
| |  |  | Global One Communications GBN Holding Ltd.                                                     
|
| |  |  | Global One Communications World Services B.V.                                                  
|
| |  |  | Global One Communications World Holding B.V.                                                   
|
| |  |  | Global One Communications Holding B.V.                                                         
|
| |  |  | Global One Communications World Operations Ltd.                                                
|
| |  |  | Global One Communications Inc. (formerly ROW Interim Holdco Inc.)                              
|
| |  |  | Global One Communications LLC                                                                  
|
| |  |  | Global Products and Services (GPS)(a division of FT, included from its creation in July 2000)

Global One will require additional financing in the future to fund its operations until such time as
it becomes cash flow positive. Global One has historically obtained financing from FT and its former
investors. Global has received a commitment from FT to fund its operations through January 1, 2002.
There can be no assurances however, that any alternate financing will be obtainable on acceptable
terms if FT were to stop funding Global Ones operations.

Note 2: Summary of significant accounting policies

Basis of presentation / principles of combination

The combined financial statements of Global One have been prepared in accordance with
accounting principles generally accepted in the United States (U.S. GAAP). All material inter-company
accounts and transactions have been eliminated in combination.

F-83



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##### 



GLOBAL ONE
NOTES TO THE COMBINED FINANCIAL STATEMENTS (Continued)

Note 2: Summary of significant accounting policies (Continued)

Cash and cash equivalents

Global One classifies cash on hand and deposits in banks, including commercial paper, money
market accounts, and any other investments with a maturity of three months or less from the date of
purchase, as cash and cash equivalents. Cash equivalents are stated at cost, which approximates market
value. Global One had $3.5 million and $3.8 million of restricted cash at December 31, 2000 and 1999,
respectively, which is included in other assets on the combined balance sheets. The restricted cash
consists of cash held at various banks to back an equivalent amount of purchased guarantees that
ensure Global Ones performance or payment to third parties in accordance with specified terms and
conditions.

Property and equipment

Property and equipment is stated at cost. Depreciation, which includes the amortization of assets
recorded under capital leases and leasehold improvements, is calculated on a straight-line basis over the
lesser of the estimated useful life of the asset or the lease term, whichever is shorter. Construction in
process reflects amounts incurred for the purchase, configuration and build-out of telecommunications
equipment not yet placed into service. Maintenance and repairs are charged to expense as incurred.
The useful lives of property and equipment generally are as follows:

|                              |  |                                      |  | 
|----------------------------- |  | ------------------------------------ |  | 
|Buildings                     |  | 25 years                            
|Leasehold improvements        |  | Shorter of lease term or useful life
|Network assets                |  | 2 to 15 years                       
|Computers and other equipment |  | 3 to 5 years                        
|Furniture                     |  | 8 years                             

Assets acquired under capital lease arrangements, including network transmission capacity and
indefeasible rights of use (IRU), are depreciated in accordance with the expected useful lives
detailed above or the lease term if shorter. IRUs are included in network assets, when the lease is
treated as a capital lease.

Goodwill and other intangible assets

Goodwill represents the excess of purchase price over the fair value of the net assets of acquired
businesses and is being amortized on a straight-line basis over periods reflecting the specific nature of
each acquisition, generally ranging from five to twenty years. Other intangible assets, principally
trademarks, workforce, and customer relationship, are amortized on a straight-line basis over their
useful lives.

Impairment of long-lived assets

In accordance with Statement of Financial Accounting Standard (SFAS) No. 121, Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of, long-lived
assets to be held and used by Global One (including goodwill and other intangible assets) are reviewed
periodically to determine whether any events or changes in circumstances indicate that the carrying
amount of the asset may not be recoverable or that the remaining useful life should be adjusted.

F-84



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##### 



GLOBAL ONE
NOTES TO THE COMBINED FINANCIAL STATEMENTS (Continued)

Note 2: Summary of significant accounting policies (Continued)

For long-lived assets to be held and used, Global One bases its evaluation on such impairment
indicators as the nature of the assets, the future economic benefit of the assets, any historical or future
profitability measurements, as well as other external market conditions or factors that may be present.
If such impairment indicators are present or other factors exist that indicate that the carrying amount
of the asset may not be recoverable, Global One determines whether an impairment has occurred
through the use of an undiscounted cash flow analysis of assets at the lowest level for which identifiable
cash flows exist. If impairment has occurred, Global One recognizes a loss for the difference between
the carrying amount and the estimated fair value of the asset. The fair value of the asset is measured
using quoted market prices or, in the absence of quoted market prices, fair value is based on an
estimate of discounted cash flow analysis.

Net loss per common share

Global One computes earnings per share in accordance with SFAS No. 128 Earnings Per Share.
Since Global One is not organized as a single legal entity, there has been no capital stock outstanding
for the combined companies for any period presented and therefore, there are no loss per share
amounts.

Revenue recognition

Global One accounts for revenues in accordance with SEC Staff Accounting Bulletin No. 101
(SAB 101), Revenue Recognition in Financial Statements. SAB 101 requires that in order for
revenue to be recognized, the following criteria must be met: persuasive evidence of an arrangement
exists, delivery has occurred or services have been rendered, the sellers price to the buyer is fixed or
determinable, and collectibility is reasonably assured.

Revenue for Global Ones telecommunication products and services is recognized based on the
type of revenue associated with a particular product or service. The primary types of revenue include
fixed or flat rate revenue, usage based revenue and revenue from equipment sales.

Revenue is recognized in the period in which services are provided and when the other criteria are
met. Revenue for fixed or flat rate, non-traffic driven charges is recognized ratably over the period in
which the service is provided to the customer. Revenue for usage or traffic driven charges is recognized
when usage occurs. Revenue from sales of equipment is recognized when the equipment is delivered
and accepted by the customer.

Income taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and
liabilities are recognized for the future tax consequences attributable to operating loss and tax credit
carry forwards and to differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in future years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that the tax rate change is enacted. A
valuation allowance is recorded to reduce the deferred tax asset if it is more likely than not that some
portion of the asset will not be realized.

F-85



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##### 



GLOBAL ONE
NOTES TO THE COMBINED FINANCIAL STATEMENTS (Continued)

Note 2: Summary of significant accounting policies (Continued)

Advertising costs

Costs associated with advertising and promotions are expensed as
incurred in accordance with the provisions of Statement of Position 93-7
Reporting on Advertising Costs. Advertising expenses, which are comprised of
television, radio and print media, were $23.5 million and $20.5 million for the
years ended December 31, 2000 and 1999, respectively.

Pensions and other employee benefits

Global One operates numerous defined benefit and defined contribution pension plans. Such
benefit plans vary according to the customary benefit plans prevailing in the country concerned. In
some countries, the amount of provision is determined in accordance with the obligations under
statutory post-employment benefit schemes. The net periodic cost under the defined benefit schemes is
actuarially determined and recorded in earnings in each period.

Foreign currency translation

Global One follows a translation policy in accordance with SFAS No. 52, Foreign Currency
Translation, (as amended by SFAS No. 130, Reporting Comprehensive Income). Global One
maintains its financial records in US dollars. In most instances, the local currency is considered the
functional currency for each of Global Ones subsidiaries, except for operations in highly inflationary
economies where the functional currency is the US dollar. Assets and liabilities of Global Ones
subsidiaries are translated at the rates of exchange at the balance sheet date, while the components of
investors equity are translated at the historical rate. Income and expense accounts are translated at
average monthly rates of exchange. The resultant translation adjustments are included in accumulated
other comprehensive loss, a separate component of investors equity. Gains and losses from foreign
currency transactions are included in the results of operations during the period incurred.

For the subsidiaries operating in highly inflationary economies, monetary assets and liabilities are
translated at current exchange rates while non-monetary assets and liabilities are translated at historical
rates. Income and expense accounts are translated at average monthly rates of exchange. The resultant
translation adjustments are included in the results of operations in each period. Operating results and
net assets in highly inflationary countries have not been significant for any period presented.

Concentrations of credit risk

Financial instruments that potentially subject Global One to concentrations of credit risk primarily
consist of cash equivalents and trade receivables. Global One has cash investment policies that limit
investments to short-term, low-risk instruments. Global Ones cash is held primarily in US dollars and
euros and is concentrated in banks in the United States and Europe.

Global One sells its services and products to customers worldwide and generally, accounts
receivable are unsecured. Global One performs ongoing credit evaluations of its customers and
maintains allowances for potential credit losses when necessary.

F-86



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##### 



GLOBAL ONE
NOTES TO THE COMBINED FINANCIAL STATEMENTS (Continued)

Note 2: Summary of significant accounting policies (Continued)

Fair value of financial instruments

The carrying value of Global Ones cash and cash equivalents, accounts receivable, other assets,
accounts payable, accrued expenses, other liabilities, and loans payable to affiliates approximate their
fair value.

Use of estimates

The preparation of financial statements in accordance with generally accepted accounting
principles requires management to make estimates and assumptions that affect reported amounts of
assets and liabilities at the date of the financial statements and the reported amounts of revenues and
expenses. Actual results could differ from those estimates.

Recent accounting pronouncements

In June 1998, the Financial Accounting Standards Board (FASB) issued SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities, which establishes accounting and
reporting standards for derivative instruments, including certain derivative instruments embedded in
other contracts (collectively referred to as derivatives), and for hedging activities. The statement
requires entities that use derivative instruments to measure these instruments at fair value and record
them as assets or liabilities on the balance sheet. It also requires entities to reflect the gains or losses
associated with changes in the fair value of these derivatives, either in earnings or as a separate
component of comprehensive income, depending on the nature of the underlying contract or
transaction. Global One is adopting SFAS 133 and the corresponding amendments under SFAS 138
effective as of January 1, 2001. The impact of adopting SFAS 133, as amended, is not expected to have
a material impact on the combined financial statements.

The accounting treatment for the sale of network transmission capacity within the
telecommunications industry is currently under review by the accounting profession. Global One
currently treats the leasing of IRUs as capital additions, when such treatment is appropriate under the
accounting rules, and depreciates the capitalized amount over the estimated useful life.

Comprehensive Income

Accumulated other comprehensive loss, as presented on the accompanying combined balance
sheets, consists of the cumulative foreign currency translation adjustment.

Note 3: Contemplated acquisition of Equant

On November 20, 2000, FT announced that it had entered into an agreement to contribute to
Equant N.V. (Equant) 100% of the share capital of certain Global One entities and to acquire a
majority stake in Equant. This transaction is expected to be completed by the middle of 2001. Upon
consummation of this transaction, FT will indirectly own a 54.3% interest in the combined company.
This transaction would take place as follows:



| |  |  | FT will contribute to Equant, through Atlas Telecommunications S.A., or Atlas, 100% of the
share capital of Global One Communications World Holding B.V. and Global One
Communications Holding B.V., which will have net cash of $300 million, in exchange for
80,617,348 newly issued Equant common shares. FT will retain Global Ones carrier voice,
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-87



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##### 



GLOBAL ONE
NOTES TO THE COMBINED FINANCIAL STATEMENTS (Continued)

Note 3: Contemplated acquisition of Equant (Continued)



| |   |  | GIP-IPL and the majority of its calling card business lines which are excluded from the
transaction;                                                                                                                                                                                                                                                                                  
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | FT through Atlas, will subscribe for 10 million newly issued Equant convertible preference
shares for $1 billion; each preference share will have the same voting rights as one Equant
common share and will automatically convert into one new Equant common share five years
after the closing; and                                                                                 
|
| |  |  | FT will then acquire 67,950,000 Equant common shares from the SITA Foundation for FT
shares at a ratio of 2.2 Equant shares per FT share. Based on an average share price for the
period of 30 trading days ending November 20, 2000, or 112.4 per share, the price per share
offered to SITA equals 51.1 per share, resulting in total consideration of approximately
3.5 billion.

The proposed acquisition of Global One by Equant has been approved by the boards of Equant
and FT, and is conditional upon the approval of Equant shareholders. An Extraordinary General
Meeting will be convened to consider this proposal in due course. The combination is also conditional
upon certain regulatory approvals from the European Union and the U.S. authorities. It is also subject
to certain customary termination provisions.

Upon completion of the transaction FT will issue to all Equant shareholders other than the SITA
Foundation one contingent value right (CVR) in respect of each common share held on the trading
day immediately prior to the closing date of these transactions. FT will also issue CVRs to certain
holders of options and restricted share awards under the Equant 1998 Share Option Plan.

Note 4: Financial instruments

In the normal course of business, Global One uses derivative and other financial instruments for
the purpose of hedging currency risk. Such instruments include foreign currency exchange contracts. As
a policy, Global One does not engage in speculative or leveraged transactions, nor does Global One
hold or issue financial instruments for trading purposes. Gains or losses on foreign exchange contracts
are recognized based on changes in exchange rates. The counterparties to these contracts are major
financial institutions and Global One does not have any significant exposure to any one counterparty.
Management believes that the risk of credit loss is remote and in any event would be immaterial. The
notional value of open forward exchange contracts to buy various foreign currencies totaled $13.0
million as of December 31, 2000 and $9.0 million as of December 31, 1999. For both years, all open
contracts had original maturities of six months or less. Contract amounts are marked to market, with
the changes in market value recorded to earnings as foreign exchange gains or losses in the combined
statements of operations. Such amounts were not significant for all periods presented. The fair values
of foreign exchange contracts were estimated based on quoted market prices.

During the year ended December 31, 1999, Global One purchased and sold available-for-sale
securities with a cost basis of $17.0 million. The resulting gains from these transactions were not
significant and are included in other expense, net in the combined statements of operations.

F-88



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##### 



GLOBAL ONE
NOTES TO THE COMBINED FINANCIAL STATEMENTS (Continued)

Note 5: Accounts receivable

Accounts receivable consist of the following:

|                     |                                       |   |                             |         |              |   |         |         |  
|-------------------- | ------------------------------------- | - | --------------------------- | ------- | ------------ | - | ------- | ------- | -
|                     |                                       |   | December 31,                |         | December 31,
|                     |                                       |   | 2000                        |         | 1999        
|                     |                                       |   |                             |         |             
|                     |                                       |   | (U.S. dollars in thousands)
|Accounts receivable  |                                       | $ | 424,208                     |         |              | $ | 196,108 |        
|Unbilled receivables |                                       |   | 64,471                      |         |              |   | 73,601  |        
|                     |                                       |   |                             |         |              |   |         |        
|                     |                                       |   | 488,679                     |         |              |   | 269,709 |        
|                     | Less: allowance for doubtful accounts |   |                             | (88,020 | )            |   |         | (61,669 | )
|                     |                                       |   |                             |         |              |   |         |        
|                     |                                       | $ | 400,659                     |         |              | $ | 208,040 |        
|                     |                                       |   |                             |         |              |   |         |        

During the years ended December 31, 2000 and 1999, Global One recorded
write-offs of $26.9 million and $13.5 million, respectively, against the
allowance for doubtful accounts.

The December 31, 2000 balance includes accounts receivable balances with DT and Sprint which,
at December 31, 1999 were recorded as receivable from affiliates (see Note 12).

Note 6: Goodwill and other intangible assets

Goodwill and other intangible assets include the following:

|                               |  |                             |           |              |  |   |          |  
|------------------------------ |  | --------------------------- | --------- | ------------ |  | - | -------- | -
|                               |  | December 31,                |           | December 31,
|                               |  | 2000                        |           | 1999        
|                               |  |                             |           |             
|                               |  | (U.S. dollars in thousands)
|Goodwill                       |  | $                           | 4,036,948 |              |  | $ | 593,747  |  
|Customer relationship          |  |                             | 185,000   |              |  |   |         |  
|Workforce                      |  |                             | 64,000    |              |  |   |         |  
|Trademarks                     |  |                             | 54,000    |              |  |   |         |  
|Other intangibles              |  |                             | 9,550     |              |  |   | 4,190    |  
|                               |  |                             |           |              |  |   |          |  
|                               |  |                             | 4,349,498 |              |  |   | 597,937  |  
|Less: accumulated amortization |  |                             | (331,007  | )            |  |   | (461,415 | )
|                               |  |                             |           |              |  |   |          |  
|                               |  | $                           | 4,018,491 |              |  | $ | 136,522  |  
|                               |  |                             |           |              |  |   |          |  

In accordance with SEC Staff Accounting Bulletin No. 54 (SAB 54),
Push Down Basis of Accounting in Financial Statements of Subsidiaries,
Global One has reflected for financial reporting purposes the purchase
accounting from the FT Acquisition. Accordingly, Global Ones combined financial
statements reflect a process generally referred to as push down accounting.
The cumulative effect of pushing down the $3,898.0 million purchase price paid by
FT resulted in Global One recording $185.0 million in intangible assets
associated with the customer relationship, which is amortized over five years,
$64.0 million in intangible assets associated with the workforce, which is
amortized over three years, and $54.0 million in trademarks, which are amortized
over twenty years. In addition, Global Ones combined financial statements
reflect goodwill of $3,859.0 million, which is being amortized over twenty
years. No portion of the excess purchase price was allocated to the net tangible
assets of Global One as the carrying value of those net tangible assets
approximated their fair value at the date of consummation.

F-89



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##### 



GLOBAL ONE
NOTES TO THE COMBINED FINANCIAL STATEMENTS (Continued)

Note 6: Goodwill and other intangible assets (Continued)

In connection with its formation in 1996, Global One recorded goodwill which was being amortized
over a five-year life. As of the date of the FT Acquisition, $95.2 million of this amount remained
unamortized. In accordance with APB 16, the FT Acquisition impacted Goodwill as follows:

|                                                                                                                                                           |  |               |           |  
|---------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- | --------- | -
|                                                                                                                                                           |  | Total Gross  
|                                                                                                                                                           |  | Book Value   
|                                                                                                                                                           |  |              
|                                                                                                                                                           |  | (U.S. dollars
|                                                                                                                                                           |  | in thousands)
|Beginning balance of goodwill                                                                                                                              |  | $             | 593,747   |  
|Fully amortized portion of DT and Sprints portion of goodwill from formation
(amount also deducted from accumulated amortization)                         |  |               | (346,799  | )
|Push down goodwill of $3,859,000, less $69,000 of goodwill already recorded,
representing DT and Sprints remaining portion of the goodwill from
formation |  |               | 3,790,000 |  
|                                                                                                                                                           |  |               |           |  
|                                                                                                                                                           |  | $             | 4,036,948 |  
|                                                                                                                                                           |  |               |           |  

The amortization period for the remaining $95.2 million of goodwill from
Global Ones formation was reset to twenty years as of the date of consummation
of the FT Acquisition to reflect its expected remaining useful life.

The impact
of push down accounting described above resulted in an increase to investors
equity of $4,093.0 million. Such increase was credited to accumulated deficit
and accumulated other comprehensive loss at the date of the FT Acquisition by
writing up those balances by 72.5%, which represents the approximate former
interest of DT and Sprint. The remainder of the increase was credited to
contributed capital.

The following table presents selected unaudited financial
information for the periods before and after the FT Acquisition.

|                                                     |  |                             |          |                         |  |  |          |  
|---------------------------------------------------- |  | --------------------------- | -------- | ----------------------- |  |  | -------- | -
|                                                     |  | For the three months        |          | For the nine months    
|                                                     |  | ended March 31, 2000        |          | ended December 31, 2000
|                                                     |  |                             |          |                        
|                                                     |  | (U.S. dollars in thousands)
|Telecommunications service revenue                   |  |                             | 279,519  |                         |  |  | 852,196  |  
|Amortization of goodwill and other
intangible assets |  |                             | 27,703   |                         |  |  | 188,688  |  
|Net loss                                             |  |                             | (218,915 | )                       |  |  | (620,077 | )

Pro forma net loss for the years ended December 31, 2000 and 1999, as if
the new accounting basis had been effective for the whole year, was $874.9
million and $1,045.0 million, respectively.

F-90



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##### 



GLOBAL ONE
NOTES TO THE COMBINED FINANCIAL STATEMENTS (Continued)

Note 7: Property and equipment

Property and equipment, net comprise the following:

|                                                   |  |                             |          |              |  |   |          |  
|-------------------------------------------------- |  | --------------------------- | -------- | ------------ |  | - | -------- | -
|                                                   |  | December 31,                |          | December 31,
|                                                   |  | 2000                        |          | 1999        
|                                                   |  |                             |          |             
|                                                   |  | (U.S. dollars in thousands)
|Property and equipment, at cost:                   |  |                             |          |              |  |   |          |  
|Buildings and leasehold improvements               |  | $                           | 40,518   |              |  | $ | 34,959   |  
|Network assets                                     |  |                             | 809,330  |              |  |   | 724,338  |  
|Computers and other equipment                      |  |                             | 118,766  |              |  |   | 120,138  |  
|Furniture                                          |  |                             | 16,324   |              |  |   | 13,478   |  
|                                                   |  |                             |          |              |  |   |          |  
|                                                   |  |                             | 984,938  |              |  |   | 892,913  |  
|Less: accumulated depreciation                     |  |                             | (385,001 | )            |  |   | (281,999 | )
|                                                   |  |                             |          |              |  |   |          |  
|                                                   |  |                             | 599,937  |              |  |   | 610,914  |  
|Construction in process (primarily network assets) |  |                             | 264,684  |              |  |   | 105,185  |  
|                                                   |  |                             |          |              |  |   |          |  
|Total property and equipment                       |  | $                           | 864,621  |              |  | $ | 716,099  |  
|                                                   |  |                             |          |              |  |   |          |  



In 1999, Global One recorded an impairment charge of $66.7 million to
write-down certain fixed assets to their net realizable value. This charge was
recorded following a study of Global Ones fixed assets, which also included a
worldwide physical inventory. The purpose of this study was to determine if any
fixed assets were technologically outdated or obsolete. This charge is included
in cost of revenue in the combined statement of operations for the year ended
December 31, 1999.

Note 8: Borrowings

Loans payable to affiliates

At December 31, 2000, loans payable to affiliates represented short-term
borrowings under a facility with FT and totaled $451.3 million. At the beginning
of 2000, Global One had credit facility agreements with Atlas and Sprint. During
the year, these credit facility agreements were terminated and were replaced by
new credit facility agreements with FT. The agreements with FT open at year-end
provide for loans of up to $451.3 million denominated in US dollars and euros
and are available until March 2001. The credit facilities bear interest at the
three-month LIBOR rate plus 20 basis points per annum. The interest rates
applicable to these loans range from 5.15% to 6.75%. There were no available
borrowings under these facilities at December 31, 2000.

At December 31, 1999, loans payable to affiliates represented short-term
borrowings from Atlas and Sprint and totaled $653.0 million. During 1999, Global
One entered into credit facility agreement with Atlas for a total of $406.5
million. This facility was available for use until the maturity date of June 20,
2000. The credit facilities bore interest at the three-month LIBOR rate plus 20
basis points per annum. At December 31, 1999, $377.0 million was used and $29.5
million was available. Outstanding borrowings incurred interest at 6.35%. Global
Ones credit facility with Sprint Global Venture Inc. totaled $294.5 million. At
December 31, 1999, $276.0 million was used and $18.5 million was available. For
the amounts outstanding at December 31, 1999, the interest rates ranged from
6.27% to 6.36%. This facility originally matured on June 20, 2000 and bore
interest at the three-month LIBOR rate plus 20 basis points per annum. These
facilities were assumed by FT at the time of the FT Acquisition (see Note 1).

F-91



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##### 



GLOBAL ONE
NOTES TO THE COMBINED FINANCIAL STATEMENTS (Continued)

Note 8: Borrowings (Continued)

Third party lines of credit

Global One had available lines of credit at five multinational financial
institutions as of December 31, 2000 and four as of December 31, 1999. The
available borrowings under the revolving lines of credit totaled $390.0 million
as of December 31, 2000 and $340.0 million as of December 31, 1999. $30.0
million of availability under these lines are allocated in each year for
transactions pertaining to forward rate agreements, currency options, and
interest rate swaps with a maximum maturity period of twelve months. The
interest rate for these lines of credit is the three-month LIBOR rate plus 20
basis points per annum. As of December 31, 2000 and 1999, there were no loans
outstanding on the above lines of credit. As of December 31, 2000 and 1999,
there were $29.0 million and $5.0 million, respectively, of the credit lines
that were allocated for the purpose of securing letters of credit. Amounts of
the credit lines reserved for open letters of credit totaled $23.0 million at
December 31, 2000 and $3.0 million at December 31, 1999.

Note 9: Commitments and contingencies

Global One leases certain equipment, network assets, warehouses and
office facilities under operating leases that expire at various dates through
2011. Rental expense for the years ended December 31, 2000 and 1999 amounted to
$111.4 million and $127.7 million, respectively, net of rental income on
non-cancelable leases and subleases of $0.8 million in 2000. See Note 12 for a
discussion of leases entered into with related parties.

The future minimum lease payments due under operating leases that have
initial or remaining non-cancelable lease terms in excess of one year at
December 31, 2000, are as follows:

|                    |                              |   |                             |         | 
|------------------- | ---------------------------- | - | --------------------------- | ------- | 
|                    |                              |   | Operating                  
|                    |                              |   | Leases                     
|                    |                              |   |                            
|                    |                              |   | (U.S. dollars in thousands)
|2001                |                              | $ | 87,931                      |        
|2002                |                              |   | 70,103                      |        
|2003                |                              |   | 51,940                      |        
|2004                |                              |   | 31,940                      |        
|2005                |                              |   | 11,547                      |        
|2006 and thereafter |                              |   | 15,566                      |        
|                    |                              |   |                             |        
|                    | Total minimum lease payments |   | $                           | 269,027 | 
|                    |                              |   |                             |        



Non-cancelable commitments for additions to property and equipment
amounted to approximately $218.0 million at December 31, 2000.

Global One is subject to various legal proceedings and claims which have arisen in the ordinary
course of its business and have not been finally adjudicated. It is impossible at this time for Global One
to predict with any certainty the outcome of such litigation. However, management is of the opinion,
based upon information presently available, that it is unlikely that any such liability, to the extent not
provided for through insurance or otherwise, would be material in relation to Global Ones combined
financial position or results of operations.

F-92



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##### 



GLOBAL ONE
NOTES TO THE COMBINED FINANCIAL STATEMENTS (Continued)

Note 10: Income taxes

The components of the provision for income taxes are as follows:

|                                         |                            |               |       |                         |       |      |       |       |       | 
|---------------------------------------- | -------------------------- | ------------- | ----- | ----------------------- | ----- | ---- | ----- | ----- | ----- | 
|                                         |                            |               |       | Year Ended December 31,
|                                         |                            |               |       |                        
|                                         |                            |               |       | 2000                    |       | 1999
|                                         |                            |               |       |                         |       |     
|                                         |                            |               |       | (U.S. dollars in       
|                                         |                            |               |       | thousands)             
|                                         |                            |               |       |                        
|Current                                  |                            |               |       |                         |       |      |       |      
|North America                            |                            | $             | 79    |                         |       |      | 365   |      
|Western Europe                           |                            |               | 4,000 |                         |       |      | 2,821 |      
|Russia/Eastern Europe/Middle East/Africa |                            |               | 4,369 |                         |       |      | 4,359 |      
|Asia/Pacific                             |                            |               | 272   |                         |       |      | 167   |      
|Latin America                            |                            |               | 186   |                         |       |      | 446   |      
|                                         |                            |               |       |                         |       |      |       |      
|                                         |                            | Total current |       | $                       | 8,906 |      |       | $     | 8,158 | 
|                                         |                            |               |       |                         |       |      |       |      
|Deferred                                 |                            | $             |      |                         |       | $    |      |      
|                                         |                            |               |       |                         |       |      |       |      
|                                         | Provision for income taxes |               | $     | 8,906                   |       |      | $     | 8,158 |      
|                                         |                            |               |       |                         |       |      |       |      

The components of loss before income taxes and the differences between income tax expense
reflected in the financial statements and the amounts calculated using the U.S. federal statutory rate of
35% as a reference are as follows:

|                                                |                            |  |       |     |   |   |                             |       |  |  |       |     |      |   |          |       | 
|----------------------------------------------- | -------------------------- |  | ----- | --- | - | - | --------------------------- | ----- |  |  | ----- | --- | ---- | - | -------- | ----- | 
|                                                |                            |  |       |     |   |   | Year Ended December 31,    
|                                                |                            |  |       |     |   |   |                            
|                                                |                            |  |       |     |   |   | 2000                        |       |  |  |       |     | 1999
|                                                |                            |  |       |     |   |   |                             |       |  |  |       |     |     
|                                                |                            |  |       |     |   |   | (U.S. dollars in thousands)
|United States                                   |                            |  |       |     |   | $ | (32,190                     | )     |  |  |       |     |      | $ | (37,992  | )    
|Other                                           |                            |  |       |     |   |   | (797,896                    | )     |  |  |       |     |      |   | (858,158 | )    
|                                                |                            |  |       |     |   |   |                             |       |  |  |       |     |      |   |          |      
|Loss before provision for income taxes          |                            |  |       |     |   | $ | (830,086                    | )     |  |  |       |     |      | $ | (896,150 | )    
|Income taxes at the U.S. federal statutory rate |                            |  | (35.0 | )%  |   | $ | (290,530                    | )     |  |  | (35.0 | )%  |      | $ | (313,653 | )    
|Foreign rate differential                       |                            |  | (0.2  | )%  |   |   | (1,325                      | )     |  |  | (0.1  | )%  |      |   | (4,063   | )    
|Other permanent differences                     |                            |  | 9.4   | %   |   |   | 78,164                      |       |  |  | 2.2   | %   |      |   | 20,771   |      
|Non-deductible goodwill amortization            |                            |  | 9.1   | %   |   |   | 75,737                      |       |  |  | 4.6   | %   |      |   | 41,975   |      
|Losses without tax benefits                     |                            |  | 18.8  | %   |   |   | 156,564                     |       |  |  | 18.3  | %   |      |   | 164,512  |      
|Changes in valuation allowance                  |                            |  | (1.1  | )%  |   |   | (9,704                      | )     |  |  | 11.0  | %   |      |   | 98,616   |      
|                                                |                            |  |       |     |   |   |                             |       |  |  |       |     |      |   |          |      
|                                                | Provision for income taxes |  |       | 1.0 | % |   | $                           | 8,906 |  |  |       | 1.0 | %    |   | $        | 8,158 | 
|                                                |                            |  |       |     |   |   |                             |       |  |  |       |     |      |   |          |      



Losses without tax benefit represent losses included in the combined financial statements that will
not result in any tax benefit for Global One under the tax rules of the jurisdictions in which losses were
incurred or under tax sharing arrangements.

F-93



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##### 



GLOBAL ONE
NOTES TO THE COMBINED FINANCIAL STATEMENTS (Continued)

Note 10: Income taxes (Continued)

Significant components of Global Ones deferred income tax assets and liabilities are as follows:

|                                                |                                           |   |                             |   |      |   |          |   | 
|----------------------------------------------- | ----------------------------------------- | - | --------------------------- | - | ---- | - | -------- | - | 
|                                                |                                           |   | Year Ended December 31,    
|                                                |                                           |   |                            
|                                                |                                           |   | 2000                        |   | 1999
|                                                |                                           |   |                             |   |     
|                                                |                                           |   | (U.S. dollars in thousands)
|Net operating loss carryforwards                |                                           | $ | 409,509                     |   |      | $ | 412,142  |  
|Book/tax difference on accumulated depreciation |                                           |   | 27,842                      |   |      |   | 40,230   |  
|Other deferred tax assets                       |                                           |   | 55,393                      |   |      |   | 36,432   |  
|                                                |                                           |   |                             |   |      |   |          |  
|Total deferred tax assets                       |                                           |   | 492,744                     |   |      |   | 488,804  |  
|Deferred tax liabilities                        |                                           |   | (32,801                     | ) |      |   | (19,507  | )
|                                                |                                           |   |                             |   |      |   |          |  
|Net deferred tax assets                         |                                           |   | 459,943                     |   |      |   | 469,297  |  
|Valuation allowance                             |                                           |   | (459,943                    | ) |      |   | (469,297 | )
|                                                |                                           |   |                             |   |      |   |          |  
|                                                | Net deferred income tax asset (liability) |   | $                           |  |      |   | $        |  | 
|                                                |                                           |   |                             |   |      |   |          |  



The deferred tax assets and liabilities are primarily classified as non-current. The valuation
allowance has been provided because it is more likely than not that the net deferred tax assets will not
be realized. As a result of the FT Acquisition (see Note 1), approximately $330.0 million of the
valuation allowance will be allocated to goodwill if and when the related deferred tax assets are
realized by Global One.

Net operating loss carryforwards totaling $1,227.6 million at December
31, 2000 are available to reduce future taxable income, subject to certain
limitations under the tax rules of the various jurisdictions in which the losses
were incurred. The carryforwards expire as follows:

|                    |       |   |                             |           | 
|------------------- | ----- | - | --------------------------- | --------- | 
|                    |       |   | (U.S. dollars in thousands)
|2001                |       | $ | 12,126                      |          
|2002                |       |   | 29,506                      |          
|2003                |       |   | 41,535                      |          
|2004                |       |   | 36,956                      |          
|2005 and thereafter |       |   | 1,107,509                   |          
|                    |       |   |                             |          
|                    | Total |   | $                           | 1,227,632 | 
|                    |       |   |                             |          

Global Ones provision for income taxes is determined based on the separate provisions of each of
the entities included in the combined financial statements. The entities included in the combined
financial statements have operations located in various jurisdictions throughout the world. Global One
does not have a tax sharing agreement with FT.

Note 11: Employee benefits

Global One sponsors various retirement and pension plans, including defined benefit, defined
contribution and termination indemnity plans, which cover most employees worldwide. Global One also
provides postretirement benefits, primarily health care to U.S. employees and their dependents. Plan
assets are principally invested in equity securities and corporate bonds.

F-94



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##### 



GLOBAL ONE
NOTES TO THE COMBINED FINANCIAL STATEMENTS (Continued)

Note 11: Employee benefits (Continued)

The cost of defined benefit plans was as follows:

|                                   |                  |   |                             |       |          |   |        |       |      |   |                |     |  |   |     |     | 
|---------------------------------- | ---------------- | - | --------------------------- | ----- | -------- | - | ------ | ----- | ---- | - | -------------- | --- |  | - | --- | --- | 
|                                   |                  |   |                             |       |          |   |        |       |      |   | Other         
|                                   |                  |   |                             |       |          |   |        |       |      |   | Postretirement
|                                   |                  |   | Pension Benefits            |       | Benefits
|                                   |                  |   |                             |       |         
|                                   |                  |   | 2000                        |       | 1999     |   | 2000   |       | 1999
|                                   |                  |   |                             |       |          |   |        |       |     
|                                   |                  |   | (U.S. dollars in thousands)
|Components of net benefit cost     |                  |   |                             |       |          |   |        |       |      |   |                |     |  |   |     |    
|Service cost                       |                  | $ | 3,959                       |       |          | $ | 4,332  |       |      | $ | 104            |     |  | $ | 155 |    
|Interest cost                      |                  |   | 2,408                       |       |          |   | 2,183  |       |      |   | 93             |     |  |   | 103 |    
|Expected return on assets          |                  |   | (2,308                      | )     |          |   | (1,714 | )     |      |   |               |     |  |   |    |    
|Amortization of prior service cost |                  |   | 147                         |       |          |   | 154    |       |      |   | 78             |     |  |   | 78  |    
|Amortization of (gain) loss        |                  |   | (106                        | )     |          |   | (53    | )     |      |   | (30            | )   |  |   |    |    
|                                   |                  |   |                             |       |          |   |        |       |      |   |                |     |  |   |     |    
|                                   | Net benefit cost |   | $                           | 4,100 |          |   | $      | 4,902 |      |   | $              | 245 |  |   | $   | 336 | 
|                                   |                  |   |                             |       |          |   |        |       |      |   |                |     |  |   |     |    



In addition, the costs for defined contribution plans were $5.7 million
and $5.0 million during the years ended December 31, 2000 and 1999,
respectively.

F-95



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##### 



GLOBAL ONE
NOTES TO THE COMBINED FINANCIAL STATEMENTS (Continued)

Note 11: Employee benefits (Continued)

The status of the defined benefit plans was as follows:

|                                    |                                           |                                   |   |                             |        |          |   |             |        |      |   |                |        |   |   |        |       |  
|----------------------------------- | ----------------------------------------- | --------------------------------- | - | --------------------------- | ------ | -------- | - | ----------- | ------ | ---- | - | -------------- | ------ | - | - | ------ | ----- | -
|                                    |                                           |                                   |   |                             |        |          |   |             |        |      |   | Other         
|                                    |                                           |                                   |   |                             |        |          |   |             |        |      |   | Postretirement
|                                    |                                           |                                   |   | Pension Benefits            |        | Benefits
|                                    |                                           |                                   |   |                             |        |         
|                                    |                                           |                                   |   | 2000                        |        | 1999     |   | 2000        |        | 1999
|                                    |                                           |                                   |   |                             |        |          |   |             |        |     
|                                    |                                           |                                   |   | (U.S. dollars in thousands)
|Change in benefit obligation        |                                           |                                   |   |                             |        |          |   |             |        |      |   |                |        |   |   |       
|                                    | Benefit obligation at January 1           |                                   | $ | 27,975                      |        |          | $ | 25,282      |        |      | $ | 1,089          |        |   | $ | 1,424  |      
|                                    | Service cost                              |                                   |   | 3,959                       |        |          |   | 4,332       |        |      |   | 104            |        |   |   | 155    |      
|                                    | Interest cost                             |                                   |   | 2,408                       |        |          |   | 2,183       |        |      |   | 93             |        |   |   | 103    |      
|                                    | Plan amendments                           |                                   |   | 631                         |        |          |   |            |        |      |   |               |        |   |   |       |      
|                                    | Actuarial (gain) loss                     |                                   |   | (180                        | )      |          |   | (900        | )      |      |   | 100            |        |   |   | (573   | )    
|                                    | Benefits paid                             |                                   |   | (3,360                      | )      |          |   | (2,499      | )      |      |   | (21            | )      |   |   | (20    | )    
|                                    | Foreign exchange rate changes             |                                   |   | (1,900                      | )      |          |   | (650        | )      |      |   |               |        |   |   |       |      
|                                    | Other                                     |                                   |   | 167                         |        |          |   | 227         |        |      |   |               |        |   |   |       |      
|                                    |                                           |                                   |   |                             |        |          |   |             |        |      |   |                |        |   |   |        |      
|                                    |                                           | Benefit obligation at December 31 |   | $                           | 29,700 |          |   | $           | 27,975 |      |   | $              | 1,365  |   |   | $      | 1,089 |  
|                                    |                                           |                                   |   |                             |        |          |   |             |        |      |   |                |        |   |   |        |      
|Change in plan assets               |                                           |                                   |   |                             |        |          |   |             |        |      |   |                |        |   |   |       
|                                    | Fair value at January 1                   |                                   | $ | 23,014                      |        |          | $ | 15,902      |        |      | $ |               |        |   | $ |       |      
|                                    | Actual return on assets                   |                                   |   | 140                         |        |          |   | 3,054       |        |      |   |               |        |   |   |       |      
|                                    | Foreign exchange rate changes             |                                   |   | (1,632                      | )      |          |   | (514        | )      |      |   |               |        |   |   |       |      
|                                    | Employer contributions                    |                                   |   | 3,981                       |        |          |   | 5,201       |        |      |   |               |        |   |   |       |      
|                                    | Employee contributions                    |                                   |   | 167                         |        |          |   | 227         |        |      |   |               |        |   |   |       |      
|                                    | Benefits paid                             |                                   |   | (3,360                      | )      |          |   | (2,499      | )      |      |   | (21            | )      |   |   | (20    | )    
|                                    | Payment made directly to participants     |                                   |   | 1,893                       |        |          |   | 1,643       |        |      |   | 21             |        |   |   | 20     |      
|                                    |                                           |                                   |   |                             |        |          |   |             |        |      |   |                |        |   |   |        |      
|                                    |                                           | Fair value at December 31         |   | $                           | 24,203 |          |   | $           | 23,014 |      |   | $              |       |   |   | $      |      |  
|                                    |                                           |                                   |   |                             |        |          |   |             |        |      |   |                |        |   |   |        |      
|Statement of funded status          |                                           |                                   |   |                             |        |          |   |             |        |      |   |                |        |   |   |       
|                                    | Unfunded benefit obligation               |                                   | $ | (5,497                      | )      |          | $ | (4,961      | )      |      | $ | (1,365         | )      |   | $ | (1,089 | )    
|                                    | Unamortized prior service cost            |                                   |   | 2,201                       |        |          |   | 1,870       |        |      |   | 746            |        |   |   | 824    |      
|                                    | Unrecognized net gain                     |                                   |   | (1,721                      | )      |          |   | (2,119      | )      |      |   | (535           | )      |   |   | (665   | )    
|                                    |                                           |                                   |   |                             |        |          |   |             |        |      |   |                |        |   |   |        |      
|                                    |                                           | Net liability recognized          |   | $                           | (5,017 | )        |   | $           | (5,210 | )    |   | $              | (1,154 | ) |   | $      | (930  | )
|                                    |                                           |                                   |   |                             |        |          |   |             |        |      |   |                |        |   |   |        |      
|Amounts recognized in balance sheet |                                           |                                   |   |                             |        |          |   |             |        |      |   |                |        |   |   |       
|                                    | Prepaid benefit costs                     |                                   | $ | 965                         |        |          | $ | 901         |        |      | $ |               |        |   | $ |       |      
|                                    | Accrued benefit liabilities               |                                   |   | (5,990                      | )      |          |   | (6,165      | )      |      |   | (1,154         | )      |   |   | (930   | )    
|                                    | Other                                     |                                   |   | 8                           |        |          |   | 54          |        |      |   |               |        |   |   |       |      
|                                    |                                           |                                   |   |                             |        |          |   |             |        |      |   |                |        |   |   |        |      
|                                    |                                           | Net liability recognized          |   | $                           | (5,017 | )        |   | $           | (5,210 | )    |   | $              | (1,154 | ) |   | $      | (930  | )
|                                    |                                           |                                   |   |                             |        |          |   |             |        |      |   |                |        |   |   |        |      
|Assumptions as of December 31       |                                           |                                   |   |                             |        |          |   |             |        |      |   |                |        |   |   |       
|                                    | Discount rate                             |                                   |   | 6.30%- 7 .50                | %      |          |   | 6.60%- 7.85 | %      |      |   | 7.50           | %      |   |   | 7.85   | %    
|                                    | Long-term rate of compensation increase   |                                   |   | 4.25%- 5 .60                | %      |          |   | 4.50%- 5.70 | %      |      |   | 4.25           | %      |   |   | 4.50   | %    
|                                    | Long-term rate of return on funded assets |                                   |   | 9.50%-10 .00                | %      |          |   | 9.00%-10.00 | %      |      |   |                |        |   |   |        |      

F-96



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##### 



GLOBAL ONE
NOTES TO THE COMBINED FINANCIAL STATEMENTS (Continued)

Note 11: Employee benefits (Continued)

The net liabilities relating to these plans are included in other liabilities in the combined balance
sheet for all periods presented.

Note 12: Related party transactions

Global One has entered into a series of transactions with its related parties and/or subsidiaries of
those related parties. Global Ones related parties are: FT, DT and Sprint. FT is treated as a related
party for all periods presented. DT and Sprint are treated as related parties as of and for the year
ended December 31, 1999 and for the three month period ended March 31, 2000. Effective with the FT
Acquisition (see Note 1), DT and Sprint no longer have ownership in Global One and, therefore, any
transactions with those parties subsequent to that date are reflected as third party transactions in these
combined financial statements.

The global products and services of Global One are produced and rendered through a set of
entities: mainly FTLD, the long distance division of France Telecom; GPS; and Global Ones local sales
and services units (LSSUs). All these entities provide services to the others based on a series of
agreements implemented in the second half of 2000.

These agreements require FTLD to sell switched voice minutes, bandwidth
and IP connectivity to GPS, combining FTLDs resources with the resources owned
by the LSSUs for which FTLD is invoiced by the LSSUs. Under these agreements,
all costs invoiced by FTLD, as well as the central function costs, including
global products, global sales, finance and corporate services, are accounted for
within GPS. The LSSUs then purchase their manufactured global products and
services from GPS. The net effect of these agreements totaled $98.0 million for
the year ended December 31, 2000, which is recorded as an offset to cost of
revenues in the combined statement of operations.

For the year ended December 31, 2000, Global One recorded $59.3 million
in telecommunications services revenue from FT. Global One recorded $15.5
million and $33.4 million in telecommunications service revenue from DT and
Sprint, respectively, for the three months ended March 31, 2000, the period
those entities were considered related parties. For the year ended December 31,
1999, Global One recorded $56.9 million, $43.9 million, and $152.1 million in
telecommunications services revenue from FT, DT and Sprint, respectively. The
services provided to FT, DT, and Sprint primarily represent the use of Global
Ones network by those parties.

In addition, Global One has arrangements in place such that if Global
One sells FT, DT, or Sprint telecommunication services to an external customer,
Global One earns commission on such sales. In the aggregate, Global One recorded
$1.4 million and $17.5 million in revenues for the years ended December 31, 2000
and 1999, respectively, related to these commissions. Such commissions are
recorded on a net basis as Global One is acting as an agent for those parties.

For the year ended December 31, 2000, Global One recorded $44.4 million
in cost of revenue from FT. Global One recorded $23.3 million and $47.4 million
in cost of revenue from DT and Sprint, respectively, for the three months ended
March 31, 2000, the period those entities were considered related parties. For
the year ended December 31, 1999, Global One recorded $88.9 million in cost of
revenue from FT, $97.0 million in cost of revenue from DT and $232.9 million in
cost of revenue from Sprint. The services provided by these related parties
primarily represent the use of their respective networks by Global One. Also
included within the cost of revenue amounts disclosed above, is rental

F-97



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##### 



GLOBAL ONE
NOTES TO THE COMBINED FINANCIAL STATEMENTS (Continued)

Note 12: Related party transactions (Continued)

expense for transmission line leases with related parties totaling $19.7 million
and $63.7 million for the years ended December 31, 2000 and 1999, respectively.

During the years ended December 31, 2000 and 1999, Global One recorded
$3.3 million and $15.7 million in general and administrative expenses from
Sprint, primarily relating to the cost of a lease for office space and certain
support services provided to Global One.

As of December 31, 2000, Global One had receivable and payable balances
from FT totaling $412.0 million and $307.0 million, respectively, relating to
the effects of the transactions described above. Additionally, Global One had
loans payable to FT totaling $451.3 million as of December 31, 2000 and incurred
interest expense on those loans totaling $28.3 million for the year ended
December 31, 2000 (see Note 8).

As of December 31, 1999, Global One had receivable and payable balances
from its affiliates totaling $151.3 million and $201.5 million, respectively.
Additionally, Global One had loans payable to affiliates totaling $653.0 million
as of December 31, 1999 and incurred interest expense on those loans totaling
$16.4 million for the year ended December 31, 1999.

Included within network assets are IRU lease agreements entered into
with related parties totaling $0.5 million and $63.8 million as of December 31,
2000 and 1999, respectively. The significant decrease in the related party IRU
asset balance during 2000 resulted from Sprint and DT not being treated as
related parties at December 31, 2000 following the FT Acquisition (see Note 1).

Note 13: Segment information

In accordance with the provisions of SFAS No. 131, Disclosures About
Segments of an Enterprise and Related Information, certain information is
disclosed based on the way the chief operating decision maker (CODM)
evaluates segment performance and decides how to allocate resources to segments.
Based on the current structure and reporting to the CODM, management believes
Global Ones operations comprise one reportable segment, telecommunications
services. Global One operates throughout the world. In the following table,
countries are grouped into geographic regions that are significant.

|                        |                   |              |         |                             |         |               |         |         |         |        |        |        |        |   |         |         |        |         |         |          |         |   |           |           |         | 
|----------------------- | ----------------- | ------------ | ------- | --------------------------- | ------- | ------------- | ------- | ------- | ------- | ------ | ------ | ------ | ------ | - | ------- | ------- | ------ | ------- | ------- | -------- | ------- | - | --------- | --------- | ------- | 
|As of or the year ended |                   |              |         |                             |         |               |         |         |         |        |        |        |        |   |         |         |        | Western |         | Combined
|December 31,            |                   | Asia/Pacific |         | North America               |         | Latin America |         | REEMEA  |         | Europe |        | Total 
|                        |                   |              |         |                             |         |               |         |         |         |        |        |       
|                        |                   |              |         | (U.S. dollars in thousands)
|2000                    |                   |              |         |                             |         |               |         |         |         |        |        |        |        |   |         |         |        |         |         |          |         |   |           |          
|                        | Revenue           | $            | 104,690 |                             |         | $             | 245,560 |         |         | $      | 69,854 |        |        | $ | 164,872 |         |        | $       | 546,739 |          |         | $ | 1,131,715 |          
|                        | Long Lived Assets |              |         |                             | 117,926 |               |         |         | 338,657 |        |        |        | 29,408 |   |         |         | 71,280 |         |         |          | 307,350 |   |           |           | 864,621 | 
|1999                    |                   |              |         |                             |         |               |         |         |         |        |        |        |        |   |         |         |        |         |         |          |         |   |           |          
|                        | Revenue           |              |         | 68,668                      |         |               |         | 168,264 |         |        |        | 44,886 |        |   |         | 137,148 |        |         |         | 638,019  |         |   |           | 1,056,985 |        
|                        | Long Lived Assets |              |         |                             | 84,493  |               |         |         | 251,868 |        |        |        | 23,441 |   |         |         | 75,397 |         |         |          | 280,900 |   |           |           | 716,099 | 



REEMEA consists of Russia, Eastern Europe, the Middle East and Africa. Revenues and long-lived assets are reflected based on the legal entity in which they are recorded.

The United States (included in North America) and the United Kingdom (included in Western
Europe) are individually significant to Global One. No other single country was significant for any
period presented. Revenues in the United States and the United Kingdom totaled $182.5 million and

F-98



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##### 



GLOBAL ONE
NOTES TO THE COMBINED FINANCIAL STATEMENTS (Continued)

Note 13: Segment information (Continued)

$133.5 million, respectively, for the year ended December 31, 2000. Revenue in
the United States and the United Kingdom totaled $114.9 million and $165.2
million, respectively, for the year ended December 31, 1999. Long-lived assets
in the United States and the United Kingdom as of December 31, 2000 were $333.9
million and $122.8 million, respectively. Long-lived assets in the United States
and the United Kingdom as of December 31, 1999 were $249.9 million and $92.2
million, respectively.

Long-lived assets consist of property and equipment (net of accumulated
depreciation). Long-lived assets do not include goodwill and other intangible
assets that are not allocated geographically by Global One. Goodwill and other
intangible assets balances at December 31, 2000 and December 31, 1999 were
$4,018.5 million and $136.5 million (see Note 6). Global One is not currently
organized as a single legal entity and does not have a principal country in
which it operates. Therefore, the above disclosures do not include those for a
country of domicile.

The table below presents external revenues for groups of similar
products and services:

|                           |       |   |                             |           |      |   |         |           | 
|-------------------------- | ----- | - | --------------------------- | --------- | ---- | - | ------- | --------- | 
|                           |       |   | Year Ended December 31,    
|                           |       |   |                            
|                           |       |   | 2000                        |           | 1999
|                           |       |   |                             |           |     
|                           |       |   | (U.S. dollars in thousands)
|Data and Internet Protocol |       | $ | 711,514                     |           |      | $ | 640,809 |          
|Voice                      |       |   | 340,213                     |           |      |   | 341,613 |          
|Calling Cards              |       |   | 66,379                      |           |      |   | 69,469  |          
|Other                      |       |   | 13,609                      |           |      |   | 5,094   |          
|                           |       |   |                             |           |      |   |         |          
|                           | Total |   | $                           | 1,131,715 |      |   | $       | 1,056,985 | 
|                           |       |   |                             |           |      |   |         |          

Revenues from one customer accounted for approximately 14% of combined revenues in each of
the years ended December 31, 2000 and 1999.

Note 14: Restructuring charges

During 1998, Global One recorded an $85.3 million charge to earnings
attributable to a restructuring plan. The restructuring plan primarily included
the reconfiguration of Global Ones network, the reconfiguring and consolidation
of Global Ones financial systems and the elimination of certain operational
redundancies associated with the migration to a shared services environment. The
charge consisted of amounts paid to third parties as well as the write-down of
certain assets. As of December 31, 1998, approximately $31.7 million of costs
remained unpaid and was included in accrued expenses in the combined balance
sheet at that date. As of December 31, 1999, all amounts relating to the
restructuring charge have been paid.

F-99



---



##### 



EXHIBIT INDEX

TO BE UPDATED ONCE WE DECIDE ON WHICH AGREEMENTS WILL BE FILED

Exhibit Number

|    |  |                                                                                                                                  
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------
|1.1 |  | Articles of Association of the Company (amended and restated
as of June 29, 2001)                                                
|4.1 |  | Contribution Agreement (incorporated by reference to our annual
report on Form 20-F for the fiscal year ended December 31,
2000.)
|4.2 |  | Heads of Agreement (incorporated by reference to our annual
report on Form 20-F for the fiscal year ended December 31,
2000.)    
|4.3 |  | Strategic Relationship Umbrella Agreement                                                                                        
|4.4 |  | Services Agreement                                                                                                               
|4.5 |  | Transition and Management Agreement                                                                                              
|8.1 |  | List of Subsidiaries