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                                                                   EXHIBIT 10.29

                                    GUARANTY


                          (FLAG West Asia Cable System)


This GUARANTY, is made as of December 29, 2000 by FLAG Telecom Holdings Limited,
a Bermuda company (the "Guarantor"), in favor of Alcatel Submarine Networks, a
company organized and existing under the laws of France (together with its
successors and assigns, "ASN").

RECITALS

A.       ASN and FLAG Asia Limited, a Bermuda company (together with its
         successors and assigns "FLAG"), have entered into a Contract to provide
         an integrated optical fibre cable system linking Japan and Korea (as
         the same may from time to time be amended, modified or supplemented,
         the "Contract "), which is entered into contemporaneously with this
         Guaranty.

B.       ASN has required, as a condition precedent to entering into the
         Contract, that the Guarantor execute and deliver this Guaranty. ASN
         would not enter into the Contract with FLAG but for the execution and
         delivery of this Guaranty by the Guarantor.

C.       Guarantor will derive substantial benefit from the performance by ASN
         of its obligations to FLAG under the Contract.

D.       The Guarantor desires to guaranty all of the obligations of FLAG under
         the Contract as provided herein.

E.       The Guarantor is the owner either directly or indirectly of all of the
         capital stock of FLAG.

         NOW, THEREFORE, based upon the foregoing, and in order to induce ASN to
enter into the Contract to which it is a party, the Guarantor hereby agrees as
follows:

SECTION 1 DEFINITIONS. Capitalized terms not otherwise defined in this Guaranty
shall have the meanings ascribed to them in the Contract. As used in this
Guaranty, the following terms have the following meanings unless the context
otherwise requires:

1.1      "Guarantied Obligations" has the meaning ascribed to such term in
         Section 2.1.

1.2      "Guaranty" means this Guaranty, as it may be amended, supplemented or
         otherwise modified from time to time in writing signed by the Guarantor
         and ASN.

SECTION 2   GUARANTY.

2.1      Guarantied Obligations. The Guarantor hereby unconditionally and
         irrevocably Guarantys to ASN upon first written demand the full and
         punctual payment and discharge by FLAG of all its payment obligations
         under the Contract, including, without limitation, the payment of all
         damages and other remedies arising out of a failure of payment
         including interest payable pursuant to Article 15.2 of the Contract
         (collectively, the "Guarantied Obligations"). Such Guarantied
         Obligations will extend to any assignment of Flag's rights and
         obligations under the Contract pursuant to Article 28.1 of the
         Contract. The Guarantied Obligations shall conclusively be deemed to
         have been created in reliance upon this Guaranty.

2.2      Term of Guaranty.

         2.2.1    This Guaranty shall remain in full force and effect until the
                  Guarantied Obligations are paid or discharged in full.
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         2.2.2    The Guarantor's payment or discharge of a portion, but not
                  all, of the Guarantied Obligations shall in no way limit,
                  affect, modify or abridge the Guarantor's liability, as set
                  forth herein, for any portion of the Guarantied Obligations
                  that has not been completely paid in full.

2.3      Guaranty Unconditional. The Guarantor agrees that it is liable
         hereunder as a principal debtor by way of indemnity and not merely as
         surety and that the obligations of the Guarantor hereunder shall be
         unconditional and absolute and, without limiting the generality of the
         foregoing, shall not be released, discharged or otherwise affected by
         any of the following, whether with or without notice to or assent by
         the Guarantor:

         2.3.1    any extension, renewal, settlement, compromise, waiver or
                  release in respect of any payment obligation of FLAG under the
                  Contract, by operation of law or otherwise;

         2.3.2    any modification or amendment of or supplement to the
                  Contract;

         2.3.3    any release, impairment, non-perfection or invalidity of any
                  direct or indirect security for any payment obligation of FLAG
                  under the Contract;

         2.3.4    any change in the corporate existence, structure or ownership
                  of FLAG, or any insolvency, bankruptcy, reorganization or
                  other similar proceeding affecting FLAG or its assets or any
                  resulting release or discharge of any obligation of FLAG
                  contained in the Contract;

         2.3.5    the existence of any claim, set-off or other rights which the
                  Guarantor may have at any time against ASN, FLAG, or any other
                  corporation or person, whether in connection herewith or any
                  unrelated transactions, provided that nothing herein shall
                  prevent the assertion of any such claim by separate suit;

         2.3.6    any invalidity or unenforceability relating to or against
                  FLAG, for any reason, of the Contract, or any provision of
                  applicable law or regulation purporting to prohibit the
                  payment by FLAG of any other amount payable by FLAG under the
                  Contract; or

         2.3.7    any other act or omission to act or delay of any kind by ASN,
                  FLAG, or any other corporation or person or any other
                  circumstance whatsoever which might, but for the provisions of
                  this paragraph, constitute a legal or equitable discharge of
                  or defense to the Guarantor's obligations hereunder.
                  Notwithstanding any provision of this Guaranty to the
                  contrary, the Guarantor shall be entitled to assert as a
                  defense to any claim for payment or performance of the
                  Guarantied Obligations, that:

                  2.3.7.1  such Guarantied Obligations are not currently due
                           under the terms of the Contract; or

                  2.3.7.2  that such Guarantied Obligations have previously been
                           paid or discharge in full; or

2.4      Maximum Liability. Notwithstanding any other provision to the contrary,
         in no event shall the obligations of Guarantor hereunder exceed the
         obligations Guarantor would have had if it were itself a party to the
         Contract, and Guarantor shall have the full benefit of all defenses,
         set-offs, counterclaims, reductions or diminution of any obligation or
         limitation or exclusion of liability available to FLAG under the
         Contract.

2.5      Waivers of Notices and Defenses. The Guarantor hereby waives acceptance
         hereof, presentment, demand, protest and any notice not provided for
         herein, as well as any requirement that at any time any action be taken
         by any corporation or person against FLAG or any other corporation or
         person.

2.6      Stay. The Guarantor agrees that, notwithstanding anything to the
         contrary herein, if ASN is stayed upon the insolvency, bankruptcy, or
         reorganization of FLAG from exercising its rights to enforce or
         exercise any right or remedy with respect to the Guarantied
         Obligations, or is prevented from giving any notice or demand for
         payment or taking any action to realize on any security or collateral
         or is prevented from collecting any of the Guarantied Obligations, in
         any such case, by such proceeding or action, the Guarantor shall pay or
         render to ASN upon demand therefor the amount that would otherwise have
         been due had such rights and remedies been permitted to be exercised by
         ASN.


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2.7      No Enforcement of Subrogation. Upon making any payment with respect to
         any Guarantied Obligation hereunder, the Guarantor shall be subrogated
         to the rights of ASN against FLAG with respect to such payment;
         provided that the Guarantor shall not enforce any payment right by way
         of subrogation until all Guarantied Obligations have been paid in full.

SECTION  3 REPRESENTATIONS AND WARRANTIES. The Guarantor hereby represents and
         warrants to ASN that the following statements are true and correct:

3.1      Binding Obligation. This Guaranty has been duly and validly executed
         and delivered by the Guarantor and constitutes the legal, valid and
         binding obligations of the Guarantor enforceable against the Guarantor
         in accordance with its terms, except as the enforceability thereof may
         be limited by bankruptcy, insolvency or other similar laws affecting
         the enforcement of creditors' rights generally and by equitable
         principles relating to the availability of equitable remedies.

3.2      Relationship to FLAG. As of the date hereof, the Guarantor is the
         owner, directly or through one or more wholly-owned subsidiaries, of
         all of the issued and outstanding capital stock of FLAG; the agreement
         of ASN to enter into the Contract to which it is a party with FLAG is
         of substantial and material benefit to the Guarantor; and the Guarantor
         has reviewed and approved copies of the Contract and all other related
         documents and is fully informed of the remedies ASN may pursue upon the
         occurrence of a default under the Contract. This Guaranty will remain
         in full force and effect if FLAG ceases to be a direct or indirect
         subsidiary of Guarantor.

3.3      Status. Guarantor is duly organized and existing under the laws of
         Bermuda.

SECTION 4          MISCELLANEOUS.

4.1      Delivery. Any notices, consent, approval, or other communication
         pursuant to this Agreement shall be in writing, in the English
         language, and shall be deemed to be duly given or served on a party if
         sent to the party at the address stipulated below and if sent by any of
         the following means only:

         4.1.1    Sent by hand: Such communication shall be deemed to have been
                  received on the Day of delivery provided receipt of delivery
                  is obtained.

         4.1.2    Sent by facsimile: Such communication shall be deemed to have
                  been received, under normal service conditions, twenty-four
                  (24) hours following the time of dispatch or on confirmation
                  by the receiving party, whichever is earlier.

         4.1.3    Sent by an internationally recognized courier service: Such
                  communication shall be deemed to have been received, under
                  normal service conditions, on the day it was received or on
                  the third day after it was dispatched, whichever is earlier.

         4.1.4    Sent by first class or air mail: Such communication shall be
                  deemed to have been received, under normal service conditions,
                  on the day it was received or on the day which is seven days
                  after the mailing thereof.

4.2      Addresses. For purposes of this Section, the names, addresses and fax
         numbers of the Parties are as detailed below. Any change to the name,
         address, and facsimile numbers may be made at any time by giving thirty
         (30) days' prior written notice.

                  If to the Guarantor:
                                            FLAG Telecom Holdings Limited
                                            Suite 770
                                            48 Par-la-Ville Road
                                            Hamilton HM11
                                            Bermuda


                  With a copy to:
                                            FLAG Telecom Limited
                                            9 South Street


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                                            London W1K 2XA
                                            U.K.
                                            Attn:  General Counsel
                                            Fax: +44 (20) 7317 0808

                  If to ASN:
                                            Alcatel Submarine Networks
                                            72 Avenue de la Liberte
                                            92723 Nanterre
                                            France
                                            Attn: General Counsel
                                            Fax: +33 1 5551 6365

4.3      No Waivers. No failure or delay by ASN in exercising any right, power
         or privilege hereunder or under the Contract shall operate as a waiver
         thereof nor shall any single or partial exercise thereof preclude any
         other or further exercise thereof or the exercise of any other right,
         power or privilege. The rights and remedies herein provided shall be
         cumulative and not exclusive of any rights or remedies provided by law.

4.4      Amendments and Waivers. This Guaranty constitutes the complete
         agreement of ASN and the Guarantor with respect to the subject matter
         hereof and supersedes all prior or contemporaneous negotiations,
         promises, covenants, Contract or representations. No amendment,
         modification, termination or waiver of any provision of this Guaranty,
         shall in any event be effective without the written consent of ASN and
         Guarantor.

4.5      Successors and Assigns; Beneficiaries. This Guaranty is a continuing
         Guaranty and shall be binding upon the Guarantor and its successors and
         assigns, provided, however, that the Guarantor may not assign this
         Guaranty or transfer any of the rights or obligations of the Guarantor
         hereunder without the prior written consent of ASN and ASN may not
         assign this Guaranty as collateral without the prior written consent of
         the Guarantor (such consent not to be unreasonably withheld or
         delayed). This Guaranty shall inure to the benefit of and may be
         enforced by ASN and its successors and assigns. Nothing contained in
         this Guaranty shall be deemed to confer upon anyone other than the
         parties hereto and the other beneficiaries described in the preceding
         sentence any right to insist upon or to enforce the performance or
         observance of any of the obligations contained herein.

4.6      Applicable Law. This Guaranty is governed by, and shall be construed in
         accordance with, English law. The parties agree that the courts of
         England are (subject to Section 4.7) to have exclusive jurisdiction to
         settle any disputes (including claims for set-off and counterclaims)
         which may arise in connection with the creation, validity, effect,
         interpretation or performance of, or the legal relationships
         established by, this Guaranty or otherwise arising in connection with
         this Guaranty and for such purpose irrevocably submit to the
         jurisdiction of the English courts.

4.7      Other Jurisdiction. The agreement contained in Section 4.6 is included
         for the benefit of ASN. Accordingly, notwithstanding the exclusive
         agreement set forth in Section 4.6 hereof, ASN shall retain the right
         to bring proceedings in any other court which has jurisdiction by
         virtue of the Convention on Jurisdiction and Enforcement of Judgments
         signed 16 September 1988 (as from time to time amended and extended)
         and the Guarantor irrevocably waives any objections to the jurisdiction
         of any courts referred to in this Section 4.7. The Guarantor
         irrevocably agrees that a judgment or order of any court referred to in
         this Section 4.7 in connection with this Guaranty is conclusive and
         binding on it and may be enforced against it in the courts of any other
         jurisdiction.

4.8      Service of Process. The Guarantor irrevocably consents to service of
         process or any other document in connection with proceedings in any
         court by personal service, delivery at any address specified in this
         Guaranty or any other usual address, mail or in any other manner
         permitted by English law, the law of the place of service or the law of
         the jurisdiction where proceedings are instituted.

4.9      Severability. If any provision in or obligation under this Guaranty
         shall be invalid, illegal or unenforceable in any jurisdiction, the
         validity, legality and enforceability of the remaining provisions or
         obligations, or of such provision or obligation in any other
         jurisdiction, shall not in any way be affected or impaired thereby.


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4.10     Interpretation. Section headings in this Guaranty are included herein
         for convenience of reference only and shall not constitute a part of
         this Guaranty for any other purpose or be given any substantive effect.

4.11     Further Assurances. At any time or from time to time, upon the request
         of ASN, the Guarantor shall execute and deliver such further documents
         and do such other acts and things as ASN may reasonably request in
         order to effect fully the purposes of this Guaranty. The Guarantor
         agrees to be liable for any reasonable expenses incurred by ASN and/or
         its successors and assigns with respect to any action or proceeding to
         enforce this Guaranty.

                  IN WITNESS WHEREOF, the Guarantor has executed this Guaranty
as of the date first above written.

                                                  FLAG TELECOM HOLDINGS LIMITED


                                              By: _____________________________
                                                  Name:
                                                  Title:


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