China Netcom selects Alcatel’s IP solution to enhance triple play service offering in Shanxi and Shandong provinces

Paris, July 12, 2006 - Alcatel (Paris: CGEP.PA and NYSE: ALA) today announced that Shandong and Shanxi Netcom, two subsidiaries of China Netcom, have selected Alcatel’s IP solution to expand and optimize their metropolitan networks across the Shandong and Shanxi provinces and broaden their IP-based data service portfolio. The Alcatel solution will enable the two service providers to offer triple play services, including voice, data and video, as well as faster, highly reliable Internet access services for consumers and enterprises. The two contracts were won through Alcatel Shanghai Bell, Alcatel’s flagship Chinese company.

Under the terms of the contracts, Alcatel will deploy its industry-leading 7750 Service Router (SR) in Qingdao, the major city in Shandong Province, and in Changzhi and Jincheng in Shanxi province. Upon completion of the projects in August 2006, residential customers of Shandong Netcom and Shanxi Netcom can enjoy high quality triple play and advanced Internet access services. Enterprise users will also have access to Service Level Agreement (SLA)-based networking services like Layer 2 Virtual Private LAN service (VPLS) and Layer 3 virtual private networks (VPN), which are provided with IP/MPLS Quality of Service.

At present, Qingdao has the largest number of broadband customers in Shandong Province with over 500,000 subscribers, resulting in huge demand for advanced data services.

Today, all major Chinese operators including China Netcom, China Telecom, China Unicom, and China Mobile have selected the Alcatel 7750 Service Router to optimize the delivery of high-performance carrier data, voice and video services. Alcatel is involved in more than 40 triple play projects worldwide, and projects that the number of IPTV subscribers will grow to more than 70 million by 2010. According to Synergy Research Group, Alcatel is #2 in the Services Edge Router category in Q1 2006, with 18% market share, following four consecutive quarters of market share gain.

About China Netcom
A major state-owned enterprise, China Netcom Corporation Ltd. was co-established by the local telecom companies in 10 provinces, autonomous regions or municipalities directly under the central government, With fixed assets of more than 220 billion RMB, China Netcom Corporation Ltd provides a variety of domestic and international fixed telecom network services and facilities, including wireless local loop, telecom network-based voice, data, image and multimedia communications and information services, as well as corresponding system integration and technical development. It also promotes domestic and overseas investment and financing opportunities, as well as other operations approved by the state.

About Alcatel
Alcatel provides communications solutions to telecommunication carriers, Internet service providers and enterprises for delivery of voice, data and video applications to their customers or employees. Alcatel brings its leading position in fixed and mobile broadband networks, applications and services, to help its partners and customers build a user-centric broadband world. With sales of EURO 13.1 billion and 58,000 employees in 2005, Alcatel operates in more than 130 countries. For more information, visit Alcatel on the Internet: http://www.alcatel.com

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Mark Burnworth

Corporate Media Relations

Alcatel

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