Business Operations to Begin in 1999 from London

Paris, December 21, 1998 - Alcatel and Loral Space & Communications
announced today that they have completed negotiations for the formation of
Europe*Star Limited, a new satellite-services company. Europe*Star will provide a
sophisticated range of video broadcast and telecommunications services throughout
five growth markets: Europe, the Middle East, South Africa, India and Southeast

Europe*Star will be a member of the Loral Global Alliance, a network comprising
the satellite capacity of Loral Skynet, Loral Orion and Satmex. As a member of the
alliance, Europe*Star will be capable immediately of providing global satellite
solutions, while focusing on the local and inter-regional needs within its coverage

"Europe*Star is the strategic European-based component of the Alliance," said
Benoit Tellier, vice president, Alcatel Space activities. "Alcatel is committed,
through Europe*Star and other Alcatel companies, to expand its presence in
satellite-based services. This partnership with Loral is central to that strategic

Terry J. Hart, president of Loral Skynet, added, "Loral has taken an important
strategic step by collaborating with Alcatel to create and operate Europe*Star and
to integrate it into the Loral Global Alliance. Europe*Star is a template for future
such ventures, and creates a unique and valuable tool to meet global customer
needs through locally run satellite operators."

Alcatel and Loral signed shareholder agreements and established contracts
governing the construction and deployment of the initial two-satellite system,
co-located at 45 E.L., as well as specific operational elements. Beginning in the
first quarter of 1999, Europe*Star Limited will base its operations in London, with
additional facilities in Germany and France.

Europe*Star Limited is owned by Alcatel, as majority shareholder, and Loral
Space & Communications, with interest held by the Dr. Schulte Hillen Group of
Germany. The Dr. Schulte Hillen Group initiated the project and filed for
Europe*Star’s three orbital positions (43, 45 and 47.5 East) with German
authorities in 1991 through Europe*Star GmbH.

As prime contractor for the satellite system, Alcatel will develop Europe*Star’s
space and mission segments and will provide the telecommunications payload.
Space Systems/Loral, a wholly owned subsidiary of Loral Space &
Communications, will supply the integrated bus under subcontract to Alcatel.
Satellite telemetry, tracking and control operations will be directed from Alcatel’s
Toulouse, France, center with support from Loral Skynet’s control facilities in
Hawley, Pa. The launch of the Europe*Star 1 satellite is scheduled for mid-2000. A
second satellite, Europe*Star 2, is expected to be launched in 2002 and will be
co-located with Europe*Star 1 at 45 degrees East longitude.

The Europe*Star system’s technical design focuses on high power transmission
capacity and regional interconnectivity. Europe*Star will be the first to deliver Ku
band connections with direct-to-home (DTH) high power and quality between
Europe and Southeast Asia due to its 45 East longitude orbital position.
Europe*Star will also be the first to interconnect all five regions within its footprint,
delivering the same high power for small receiver dish applications, all from a single
satellite system. Europe*Star will enable broadcasters, network operators and
service providers to offer the full range of television, data and telecommunications
services, including video broadcast, DTH, Internet access, high-speed data
exchange and rural telephony.

A world leader in telecommunications systems and equipment, as well as related cables and
components activities, Alcatel operates in over 130 countries. Alcatel provides complete
solutions and services to operators, service providers, enterprises and consumers, ranging
from backbone networks to user terminals. Alcatel, the third largest satellite manufacturer in
the world, designs, develops, and manufactures all types of satellites, including those for
communications, navigation, Earth observation, and scientific applications. The Company
forecasts a 1998 turnover for space activities of 10 billion French francs.

Loral Space & Communications is a high technology company that primarily concentrates
on satellite manufacturing and satellite-based services, including broadcast transponder
leasing and value added services, domestic and international corporate data networks,
global wireless telephony, broadband data transmission and content services, Internet
services and international direct-to-home satellite services..


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