February 21, 2002 -- GT Group Telecom announced that it will reorganize its operations to reduce costs, while it concentrates on managing the business to profitability and becoming EBITDA-positive in the fourth quarter of fiscal 2002. The reorganization will result in the loss of approximately 350 positions across all levels of the company in Canada.

The workforce reduction will reduce cash expenses by approximately $30 million per year. The reduction will be initiated immediately and will result in a one-time cash cost of approximately $20 million in the second quarter of Group Telecom's 2002 fiscal year.

"This is a difficult day for Group Telecom," said Dan Milliard, chief executive officer Group Telecom. "We have achieved many successes over the past two years including the completion of our network and successful back office improvements which have created more employee efficiencies. In addition, during this difficult time in the economy we have a responsibility to our shareholders, customers, and employees to ensure the company's financial well-being while we continue to execute on our business plan. We believe that this reorganization will have a positive impact on our ability to turn EBITDA-positive in the fourth quarter of fiscal 2002."

With this reorganization, Group Telecom now will shift its focus from network deployment to leveraging its network assets to profitability, increasing operational efficiency and customer service.

"The decision to reduce our workforce is certainly not an action we take lightly," said Milliard. "I would personally like to acknowledge all of the employees that are impacted by this restructuring. Their dedication has contributed greatly to our success and we are grateful for their contributions."

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