PSE Circular for Brokers No. 447-00

February 23, 2000 PSE CIRCULAR FOR BROKERS NO. 447-00 Globe Telecom Set To Combine With Islacom Agreement Signed for All-Stock Transaction Valued at US$2.3 Billion Agreement Paves Way for Ayala, SingTel, Deutsche Telekom To Become Partners Combination Has 1.2 Million Digital Wireless Subscribers, 320,000 Wireline Subscribers. Complementary Service Areas Globe Telecom to change capital structure with declassification of existing common shares into single class of common, reverse stock split of common shares, creation of preferred shares, and increase in authorized capital MANILA, PHILIPPINES (COMPANY PRESS RELEASE) 23 February 2000 Ayala Corporation, Singapore Telecom International (STI), a wholly owned subsidiary of Singapore Telecom, and Deutsche Telekom today announced the signing of a definitive agreement on the combination between Globe Telecom, Inc. (Globe) and Isla Communications, Inc. (Islacom). The agreement follows the signing last November of a preliminary agreement outlining the broad terms. With the agreement. Globe and Islacom will combine in an all stock transaction. The agreement paves the way for the creation of a telecommunications powerhouse with leadership in digital wireless, a wireline service area footprint covering significant parts of Metro-Manila, southern Luzon, Visayas and parts of Mindanao, and full service offerings. By putting together the Philippines' two leading GSM wireless companies, the three shareholders believe that the new company will be uniquely positioned to speed the development of the digital wireless medium and the growth in postpaid and prepaid businesses. The new company will provide an important digital platform in both wireless and wireline that can be used to drive subscriber and revenue growth through new service offerings, better value to customers, and better access to technology and capital. The transaction involves an exchange of a package of new Globe common and preferred shares to Islacom's shareholders. The transaction values the equity of both companies at a combined US$2.3 billion. As part of the terms of the agreement, Globe will execute a 1 for 50 reverse stock split, and a declassification of its common shares, after which it intends to issue 28.8 million new common shares to Islacom's shareholders. Globe will also issue 158.5 million new voting convertible preferred shares to a holding company that will be owned 60% by Ayala Corp, 20% by Singapore Telecom International and 20% by Deutsche Telekom. Glove also intends to provide its other shareholders the opportunity to purchase an additional 31.5 million new preferred shares. The all-stock transaction will create a three-way partnership among Ayala Corp., Singapore Telecom (through Singapore Telecom International) and Deutsche Telekom (through DeTeAsia Holdings). The partnership will be embodied through direct holdings of the new Globe Telecom common shares, and through indirect holdings of the new preferred shares through the holding company. As of 31 December 1999, Globe had a total of 3.33 billion common shares outstanding. Assuming full conversion or Its existing listed warrants, Globe will have a total of 3.871 billion common shares outstanding in two share classes A and B. The reverse stock split and declassification of common shares will result in a total of 77.4 million outstanding common shares in a single class. As a result of this combination, Globe will have 106.3 million common shares and 190 million preferred shares outstanding. The three major shareholders will each own approximately 27.8% of the common shares of Globe Telecom, with other shareholders holding about 16.6%. The three major shareholders have also renewed their commitment to meet the 30% public float requirement. Should such a public float be achieved, the three parties will be slightly but equally diluted. The boards of all the parties have approved the transaction, which is expected to close between October and December 2000. The combination will be accounted for as a purchase transaction. The transaction is subject to certain closing conditions, including various regulatory, shareholder and certain third party approvals. Globe intends to seek approval from its shareholders at a shareholder meeting in April 2000. In the interim, both Globe and Islacom will continue to operate separately but work will begin immediately to maximize operating synergies. The new company will have the ability to create new and expanded services to drive increased customer usage, and marketing scale to fuel rapid growth. Among the many opportunities for value creation which will be available to the combined company are: The creation of an entity that has the critical mass necessary to most efficiently access capital, technology and customers The ability to offer a much broader range of integrated products and improved levels of customer service to the subscribers of both companies cdlex The potential integration of sales, marketing, administration, information technology and corporate functions which will ultimately lead to greater efficiencies The opportunity to achieve economies of scale in network planning and development which should result in significant capital expenditure savings Mr. Jaime Augusto Zobel de Ayala, President of Ayala Corporation and Chairman of Globe Telecom, commented, "We believe in the opportunities in Philippine telecommunications. This is a key milestone in the transformation of the industry into a fast growing industry where scale leads to ever decreasing prices and wider offerings for customers. This transaction allows us an even better platform to be clearly the Philippines' second largest telecommunications company, and an even more entrenched leader in digital wireless services." Mr. Axel Hass, President of DT Asia (a subsidiary of Deutsche Telekom) said, "The Globe and Islacom combination is an ideal strategic move that will create exceptional long term growth and value for shareholders, customers and employees. We will be able to quickly integrate the two complementary companies to achieve synergies, to broaden the range of services, and to better meet the needs of its customers for high-quality and innovative services." Mr. Sin Hang Boon, CEO of STI said, "The partnership of the three shareholders and the combination of Globe and Islacom highlights the commitment we have not only to Philippine telecommunication of but also to its bright and highly attractive future as well. The transaction will allow as to serve customers better, offer a wider range of value-added products and services, and complete effectively. The new company will be an even stronger linchpin to our regional presence." On a proforma basis, Globe will have a market capitalization of US$1.4 billion based on the closing price of the common shares on Tuesday, 22 February 2000, making it the eighth largest publicly listed company in the Philippines and the sixth largest telecom company in South East Asia. On a proforma basis, the combined company will enjoy a leading position in the Philippine telecommunications market with over 1.2 million digital wireless subscribers and over 320,000 wireline subscribers, and the transaction will strengthen the new company's dominance in digital wireless. Morgan Stanley Dean Witter advised Globe Telecom on this transaction, while Goldman Sachs advised Deutsche Telekom. Globe is one of the largest telecommunications companies in Philippines, offering domestic and international services. Globe is currently the Philippines' fastest growing telecommunications company, the dominant digital cellular operator and the second largest cellular operator overall. As of 31 December 1999, Globe had 916,000 wireless subscribers in its GSM based network, 141,000 wireline subscribers, and PHP 36.5 billion (US$ 905 million) in total assets. Islacom is one of the leading telecommunications companies in the Philippines, offering domestic and international services. It has a dominant position in the fixed line market in the Visayas and is the second largest nationwide digital cellular operator after Globe. As of 31 December 1999, Islacom had 181,000 wireless subscribers in its GSM network, 186,000 wireline subscribers, and PHP 22.4 billion (USD 561 million) in total assets. Singapore Telecom is a world class provider of domestic, international and mobile telecommunications as well as postal services. Turnover and net profit for the Group in 1998/99 were US$4.88 billion (US$2.92 billion) and US$1.96 billion (US$1.17 billion) respectively. Listed on the Singapore Exchange since November 1993, SingTel is Singapore's largest company in terms of market capitalization (about US$25 billion). The Singapore Telecom Group has invested more than US$1.82 billion in telecommunications-related projects around the world, especially in the Asia Pacific. It owns interests in 69 ventures and strategic investments in 20 countries including Thailand, the Philippines, Indonesia, China, Japan and Belgium. Deutsche Telekom is Europe's largest telecommunications company and a world class global service provider with a focus on mobile communications, consumer internet services, data IP and systems solutions, and access/PSTN. At the end of 1999, the revenue for the group was EUR 35.3 billion, with 47.8 million telephony subscribers (including ISDN), 4.2 million Internet accounts and 9.2 million mobile telephony customers. The number of Deutsche Telekom's employees is 172,900. Deutsche Telekom has worldwide presence in Europe, America and Asia. Some of the recent key acquisitions and activities in Europe are One2One, SIRIS and Club Internet. In Asia, Deutsche Telekom's regional headquarters is in Singapore, with offices in China, Hongkong, India and Japan. The Joint Ventures in Asia are Satelindo in Indonesia, TRI/Celcom in Malaysia and Islacom in the Philippines.