Paris, 1 July 2003 – Alcatel (Paris: CGEP.PA and NYSE: ALA), Europe’s
largest satellite manufacturer, announced today that it will acquire Loral
Space & Communications, Ltd.’s 47% share of the Europe*Star satellite
system as part of a transaction that successfully terminates Alcatel’s
joint ventures with Loral and resolves Alcatel’s litigation against Loral
and its subsidiary, Space Systems/Loral, Inc.

Acquiring Loral’s share in Europe*Star will increase Alcatel’s stake to
95%. The Europe*Star transfer is subject to German antitrust review, which
Alcatel expects to complete this summer. Loral also agreed to pay Alcatel
$13 million in cash, $5 million now and $8 million no later than one year
from now.

In addition, Loral has transferred its interest in the SkyBridge satellite
project to Alcatel, while Alcatel has given up its interest in Loral’s
Cyberstar partnership. As part of these arrangements, Alcatel plans to
terminate its arbitration and lawsuits against Loral.

At the same time, Alcatel, Intelsat and Loral have agreed that Intelsat
will pay Alcatel directly, rather than through Loral, for Alcatel’s share
of orbital incentives on the Intelsat IX and VII satellite programs.
Alcatel expects these direct payments to reach in the range of $60 million
over the next few years.

Pascale Sourisse, Chairman and CEO of Alcatel Space, stated: “We are
pleased to resolve our disputes with Loral in this fashion. Now owning 95%
share in Europe*Star, plus present and future cash payments, provides
substantial value. Equally important, we have clarified our relationship
with Loral. Lastly, Alcatel will receive directly from Intelsat Alcatel’s
Intelsat IX and VII orbital incentives payments.”

Alcatel’s litigation against Loral began in the spring of 2001, when
Alcatel obtained a federal court order in New York prohibiting Loral and
SS/L from violating joint venture arrangements dating back to 1991. Alcatel
then initiated an ICC arbitration in Switzerland against Loral for breach
of contract. Alcatel won partial awards in that arbitration upholding
substantially all of Alcatel’s claims and rejecting all of Loral’s
counterclaims. Earlier this year Alcatel brought another lawsuit in New
York to block SS/L from transactions that would have substantially
endangered Alcatel’s future orbital incentive payments on the Intelsat IX
and VII programs.

About Alcatel, Alcatel Space, Europe*Star and SkyBridge

Alcatel provides end-to-end communications solutions, enabling carriers,
service providers and enterprises to deliver contents to any type of user,
anywhere in the world. Leveraging its long-term leadership in
telecommunications networks equipment as well as its expertise in
innovative applications and network services, Alcatel enables its customers
to focus on optimizing their service offerings and revenue streams. With
sales of EURO 16.5 billion in 2002, Alcatel operates in more than 130

Alcatel Space, a wholly-owned subsidiary of Alcatel, is the world’s third
largest satellite manufacturer and Number 1 in Europe. Deploying extensive
dual expertise in civil and military applications, Alcatel Space develops
satellite solutions for telecommunications, navigation, radar and optical
observation, meteorology and science. The company is also the leading
European prime contractor for earth observation, meteorology and navigation
ground segments, and for space system operation. For more information,
visit the Alcatel Space website:

Alcatel Space affiliate Europe*Star is a satellite owner-operator
headquartered in London, with regional marketing offices in Cape Town,
South Africa and New Delhi, India. Europe*Star operates its own mission
control centre in Toulouse, France, for tracking, telemetry & control of
the satellites. Europe*Star offers satellite capacity on its geostationary
satellites; leasing whole & fractional transponders for full-time and
occasional use requirements. Brought into service at the start of 2001, the
innovative Europe*Star 1 satellite has five high-power beams covering
Europe, Southern Africa, the Middle East, the Indian subcontinent and South
East Asia. Its Europe*Star B satellite provides additional capacity for
markets in Central and Eastern Europe.

Alcatel Space affiliate SkyBridge LP designs and delivers broadband
satellite solutions and services. SkyBridge, with its team of Alcatel-led
partners, has designed a unique global broadband satellite system. Prior to
launching this system, SkyBridge is delivering leading-edge broadband
services using geosynchronous (GEO) satellites to clients on a worldwide