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Cable and Wireless plc, the global telecommunications group, announced today (1 February 2002) that it and its wholly owned subsidiary, Digital Island, Inc (together Cable & Wireless), have completed the acquisition from Exodus Communications Inc. (Exodus), the United States leading web hosting provider, in an all-cash transaction, of selected assets and a majority of the business activities of Exodus (together the Exodus Business) in the United States. This follows the approval of the US transaction by the United States Bankruptcy Court for the District of Delaware granted on 17 January 2002.

Together with the Exodus assets in the UK, Germany and Japan, the acquisition of which is being finalised, the total enterprise value of the transaction will be approximately US$750 million. This final amount is US$100 million below the US$850 million value announced on 30 November 2001 as a result of the finalisation of certain estimates outstanding at that time.

Integration and Branding

The Exodus Business will be combined with the hosting businesses of Digital Island and Cable & Wireless to create a world leader in hosting and internet services. The combined entity will be a separate division of Cable & Wireless Global and has an annualised current run rate of revenue of approximately US$800 million. It will be supported by the powerful global infrastructure and financial strength of Cable & Wireless to provide a unique offering to business customers around the world.

Bill Austin, who joined Exodus in July 2001 and is Chief Financial Officer with additional responsibility for IT, customer care and business development, will become CEO of the new division, reporting to Don Reed, Chief Executive of Cable & Wireless Global. He will lead the process of integrating the Exodus Business with Cable & Wireless' existing hosting businesses which is expected to be largely complete by April 2002.

Based on comprehensive market research, all hosting services currently marketed by Cable & Wireless, Digital Island and Exodus in the USA will be branded Exodus, a Cable & Wireless Service. All other business activities in the USA will continue under the Cable & Wireless name. In the rest of the world all services will be marketed under the Cable & Wireless brand. Rebranding will be completed by May 2002.

Graham Wallace, Chief Executive, Cable & Wireless, said:

"Cable & Wireless' financial strength, scale and world-class IP infrastructure ensures that Exodus' customers will get the quality and guaranteed continuity of service that they are seeking from providers of mission-critical services.

"Bill Austin has helped steer Exodus successfully through the Chapter 11 process and his extensive experience of both finance and business makes him ideal to lead the business to profitability."

Bill Austin, Chief Financial Officer, Exodus, said:

"The acquisition by Cable & Wireless marks a major step forward for Exodus and strengthens our commitment to deliver the high quality of service and support that customers have come to expect from us. Leveraging the global infrastructure and financial strength of Cable & Wireless, we can now offer a broad range of integrated outsourcing solutions to support customers' evolving business needs."

Strategic Rationale and Benefits

Exodus provides managed and co-location hosting services supported by sophisticated systems as well as network management and security solutions, mainly to large corporate (enterprise) customers with mission critical internet operations. Exodus serves approximately 3,200 customers including many leading companies across the financial services, technology, healthcare, automotive and transportation sectors. 15 of the top 25 web properties have chosen Exodus (source: Nielsen/Netratings Inc., December 2001).

The acquisition fits within Cable & Wireless Globals strategy to provide global IP (Internet Protocol) and data services to business customers in the US, Europe and Japan. The acquisition accelerates the development of value-added services and integrated communications and e-commerce solutions, building on the successful acquisition of Digital Island and Cable & Wireless' existing high-performance global IP infrastructure and transactional web services capabilities. This combination positions Cable & Wireless to take full advantage of the predicted growth in managed hosting and web services.

Transaction Details

The Exodus Business comprises substantially all of the Exodus Group's US customer contracts, together with selected corporate and data centre assets, know-how, intellectual property (including the Exodus brand), high quality employee base and other resources required to support these customers and grow the business.

The selected assets include 26 of Exodus' 44 operational data centres. These data centres represent approximately 4 million square feet of gross space. Cable & Wireless has selected the centres in order to create, when combined with Cable & Wireless' existing operations, an optimum portfolio of strategically positioned and well utilised data centres that would enable the continued provision of excellent service to Exodus' customers. The acquisition by Cable & Wireless of Exodus assets and business in Japan, the UK and Germany is in the process of finalisation.

Based on its plan for the Exodus Business, Cable & Wireless anticipates up to a maximum of US$ 250 million of additional net investment will be required to take the Exodus Business to cash flow break-even. After taking synergies into account, the Exodus Business is expected to become EBITDA positive during calendar 2003.

The sale of selected assets and liabilities of Exodus to Cable & Wireless will have no impact on Exodus shareholders. As previously announced on November 12, 2001, Exodus stock trading under the symbol EXDSQ on the OTCBB is expected to have no future value.

Greenhill & Co. and Merrill Lynch International acted as co-financial advisors to Cable & Wireless in this transaction.


About Cable & Wireless
Cable & Wireless is a major global telecommunications business with revenue of over #8 billion (US$11 billion) in the year to 31 March 2001 and customers in 70 countries and consists of two core and complementary divisions: Cable & Wireless Regional and Cable & Wireless Global. Cable & Wireless Regional offers a full range of telecommunications services in 27 countries around the world. Cable & Wireless Globals focus for future growth is on IP (internet protocol) and data services and solutions for business customers. It is developing advanced IP networks and value-added services in the US, Europe and the Asia-Pacific region in support of this strategy. With the capability of its global IP infrastructure and its financial strength, Cable & Wireless holds a unique position in terms of global coverage and services to business customers.

For more information about Cable & Wireless, go to

Contacts for Cable & Wireless:

Chris Tyler, Investor Relations, +44 (0) 20 7315 4460

Valerie Gerard, Investor Relations, +1 646 735 4211

Susan Cottam, Media, +44 (0) 20 7315 4410

Peter Eustace, Media, +44 (0) 20 7315 4495

Maureen O'Connell (Exodus), +1 408 346 2218

Greenhill & Co.

London (+44 (0) 20 7440 0400)
James Lupton
David Wyles

Merrill Lynch
London (+44 (0) 20 7628 1000)
Bob Wigley
Gavin Deane

Greenhill & Co. International Limited ("Greenhill & Co.") and Merrill Lynch International ("Merrill Lynch") which are regulated in the United Kingdom by The Securities and Futures Authority Limited, are acting as financial advisers to Cable & Wireless in relation to the Transaction and to no one else and will not regard any other person as their customer or be responsible to any one other than Cable & Wireless for providing the protections afforded to customers of either Greenhill & Co. or Merrill Lynch or for providing advice in relation to the transaction.

Forward Looking Statements

This press release contains certain statements that are neither reported financial results nor other historical information. These statements are forward-looking statements within the meaning of the safe-harbour provisions of the U.S. federal securities laws. Because these forward-looking statements include risks and uncertainties, actual future results may differ materially from those expressed in or implied by the statements. Many of these risks and uncertainties relate to factors that are beyond Cable & Wireless' ability to control or estimate precisely, such as future market conditions, currency fluctuation, the behaviour of other market participants, the actions of governmental regulators and other risk factors detailed in Exodus' and Cable & Wireless' reports filed with the Securities and Exchange Commission. In particular, statements regarding the expected benefits of the transaction are subject to the risk that expected synergies will not be achieved and to the general risks associated with the companies' businesses, as described in their filings with the Securities and Exchange Commission, including Exodus; Form 10-K for the year ended 31 December 2000 and subsequent Forms 10-Q and Forms 8-K and Cable & Wireless' Form 20F for the year ended 31 March 2001 and subsequent Forms 6-K. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Cable & Wireless does not undertake any obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date of this press release.

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