The creation of these two new companies represents a great opportunity for their growth.

Their common objectives will be to consolidate leadership in telecommunication satellite systems and services, to acquire a strong position in the most important European programs, such as Galileo and GMES, and to strengthen space defence and security, as well as observation, exploration and science.

Alcatel Alenia Space, of which Alcatel holds 67% and Finmeccanica 33%, now combines the activities of Alcatel Space and Alenia Spazio.

It focuses on the design, development, and manufacturing of space systems, satellites, payloads, orbital infrastructures and space transportation, instruments and associated ground systems for civilian and military applications.

The operational headquarters of Alcatel Alenia Space are located in Cannes, France, with plants in France, Italy, Belgium and Spain. With estimated 2004 sales of 1.8 billion euros and around 7,200 employees, it is the European leader in satellite systems.

Telespazio Holding, of which Finmeccanica holds 67% and Alcatel 33%, combines Telespazio with Alcatel Space Services and Operations activities.

It concentrates on operations and services for satellite solutions, which include control and exploitation of space systems as well as value-added services for networking, multimedia and earth observation.

Its headquarter is located in Rome, Italy with plants in Italy, France and Germany. With estimated 2004 sales of 350 millions euros and around 1,400 people, it is a key player in the space services market.

Alcatel and Finmeccanica will account for Alcatel Alenia Space and Telespazio Holding using proportional consolidation. The creation of the new companies has a cash/debt impact of EUR109m for the two companies' shareholders.

Alcatel and Finmeccanica also announced Friday the nomination of the senior management responsible for each of the two European space companies:

Alcatel Alenia Space

Mr. Giorgio Zappa, Chief Operating Officer Finmeccanica, will hold the position of Chairman of the supervisory board of Alcatel Alenia Space.

Mrs. Pascale Sourisse will hold the position of President and CEO of this new company.

Telespazio

Mr. Olivier Houssin, Executive Vice President of Alcatel and President of its Private Communications Group that includes Alcatel's Space activities, will hold the position of Chairman of the board of directors of Telespazio Holding.

Mr. Giuseppe Veredice will hold the position of CEO of this new company.

For the purposes of this transaction, Alcatel was advised by BNP Paribas, while Finmeccanica was advised by Lazard.

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