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Global TeleSystems jumps on FLAG sell off

    Global TeleSystems Inc. (Nyse: GTS) shares bumped up 20 percent Tuesday on the news that it has agreed to sell its 50 percent stake in FLAG Atlantic Limited to FLAG Telecom for $175 million.

    Shares of GTS rose 50 cents to 2.63 in early trading.

    Under the deal, GTS, the European e-business and broadband services provider, will retain ownership "over certain" FLAG Atlantic Limited infrastructure, most notably a trans-Atlantic fiber network.

    GTS will receive $135 million in cash from FLAG Telecom. The additional $40 million comes from valuation of avoided future costs relating to infrastructure and sub sea capacity, including additional duct and dark fiber infrastructure and the right to acquire backhaul fibers from FLAG Atlantic going forward.

    Earlier in the month, GTS announced its new GTS Streaming Media Service with the support of Compaq Computer Corp. (Nyse: CPQ) and Microsoft Corp. (Nasdaq: MSFT). The new venture - combining GTS’ Ebone optical Internet backbone network, the Windows 2000 server, and Compaq’s server technology – will create Europe’s largest streaming media service.

    Reuters contributed to this story.