CAIS Internet and Microsoft Advance Internet Services for Consumers

WASHINGTON, D.C., and REDMOND, Wash., May 3, 2000 — CAIS Internet Inc. (Nasdaq
) and Microsoft Corp. (Nasdaq
“MSFT” ) today announced a broad, three-tiered alliance that will advance broadband access and content services for consumers nationwide and selected international markets. CAIS and Microsoft will develop a co-branded portal that will distribute Internet content via CAIS’s broadband networks in the hospitality industry, with an option for Microsoft to participate with CAIS in multifamily dwelling unit industries. In addition, Microsoft® BackOffice® will be an operating platform for CAIS and MSN TM services. In connection with this agreement, Microsoft has also agreed to make a $40 million equity investment in CAIS Internet in convertible preferred stock at a conversion price of $24 per share.

Under terms of the agreement, Microsoft will provide CAIS Internet, a leading broadband access solutions provider for hotels, apartments and small to medium-sized businesses, with a co-branded version of the MSN portal as well as award-winning properties such as MSN Hotmail® Web-based e-mail service, MSN eShop,® , MSNBC News, MSN Messenger Service, the MSN MoneyCentral TM online personal finance service, MSN Entertainment and the MSN HomeAdvisor TM online real estate service. In addition, users of CAIS Internet services will be able to connect instantly to the 33 existing international MSN portals in 17 languages, providing tremendous benefit to international travelers who want an easy way to stay connected when on the road.

“Today’s announcement is yet another solid step in delivering the Everyday Web to consumers,”
said Yusuf Mehdi, vice president of the Consumer Group at Microsoft.
“Now consumers can access MSN from their desk via their PC, stay connected while traveling via MSN Mobile, and reconnect once they reach their destination through CAIS Internet services and the co-branded MSN portal. This agreement furthers our commitment to delivering award-winning MSN services to consumers any time, any place and on any device.”

CAIS Internet will work with Microsoft to accelerate adoption of key Microsoft technologies and software that support CAIS’s broadband services. The investment aspect of the transaction, which is subject to certain regulatory approvals, is expected to close in the next six weeks.

CAIS Internet has signed agreements with industry-leading hotel chains, collectively representing over 9,800 properties and 1.3 million hotel rooms, to provide specialized Internet content and broadband Internet access to business and recreational travelers. Major hotels signed up to extend their customer services with CAIS Internet include Cendant Corp., Carlson Hospitality Worldwide, Bass Hotels, Prime Hospitality and Hilton Hotels Corp. CAIS Internet also has signed service agreements with apartment community organizations that collectively represent more than 730 properties and more than 215,000 individual residences.

“This relationship takes advantage of our broad customer base and market position, and combines it with Microsoft’s strong platforms and clear leadership in the Internet media business,”
said Ulysses G. Auger II, CEO of CAIS Internet.
“We believe that this agreement will complete the CAIS broadband access customer’s experience to provide the most convenient, high-speed and maximum utility of going online with CAIS Internet.”

“Business travelers will now enjoy faster dial-up connections when working from hotels nationwide, allowing them to download critical documents from their companies or last-minute information from the Internet,”
said Charles Stevens, vice president of the Enterprise and Partner Group at Microsoft.
“By combining our technology strengths with CAIS Internet’s broadband technology and industry expertise, we can ensure that the hospitality industry and businesses travelers receive all the benefits possible from Windows® 2000, Microsoft’s entire enterprise platform and MSN services.”

About the Deal

Hotels that subscribe to the CAIS Internet service enhance their guests’ experience with several key benefits:

  • Flat-rate Internet connectivity up to 50 times faster than dial-up modems – giving business travelers fast, cost-effective and convenient broadband access

  • Easy access to the Everyday Web on MSN, offering best-of-breed communications, search, shopping, travel, news and personal finance services to help consumers get the most from their Web experience

Enterprising hoteliers will be able to differentiate their properties and build guest loyalty. The CAIS Internet service also offers four financial benefits directly to hoteliers:

  • A cost-effective and unobtrusive broadband Internet solution that uses patented technology to turn existing in-building wiring into voice and data path without an end-user modem and avoids expensive installation

  • A timely solution to clogged PBX systems that bypasses the hotel phone systems and helps hoteliers manage costs

  • Revenue-sharing opportunities associated with top brands and media-rich portal advertising and content

  • The reliability, scalability and affordability of the world-class Microsoft BackOffice Server platform

Apartment residents could subscribe to the services when CAIS broadband services are rolled out nationwide.

About CAIS Internet

CAIS Internet Inc. is a leading broadband solutions company. CAIS provides the mobile workforce with comprehensive high-speed Internet solutions while at home in apartments, at work during the day in small to medium-sized businesses, or on-the-go at airports, travel plazas, cruise ships, retail stores, and in hotel guest and meeting rooms.

The customer experience is the result of a one-stop, integrated solutions package of innovative CAIS network access and technologies, IPORT software, customer support, portal content and systems.

Strategic investors include Kohlberg Kravis Roberts (KKR), Qwest Communications, Cisco Systems, Nortel Networks and 3Com Corp.

CAIS Internet is headquartered in Washington, D.C., with two subsidiaries in California, CAIS Software Solutions and Business Anywhere. CAIS Internet operates a Cisco-Powered, clear-channel Internet and ATM Network, and peers with public and private partners, and at national exchange points.

More information on the company is available by calling the corporate offices at (202) 715-1325.

About Microsoft

Founded in 1975, Microsoft (Nasdaq
) is the worldwide leader in software for personal and business computing. The company offers a wide range of products and services designed to empower people through great software, services and Internet technologies – any time, any place and on any device.

Microsoft, BackOffice, MSN, Hotmail, MoneyCentral, HomeAdvisor and Windows are either registered trademarks or trademarks of Microsoft Corp. in the United States and/or other countries.

Expedia and are either registered trademarks or trademarks of Expedia Inc. in the United States and Canada.

The names of actual companies and products mentioned herein may be the trademarks of their respective owners.

This press release contains forward-looking statements under the federal securities law. These statements are based on current expectations, estimates and projections about the industry and markets, management’s beliefs and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which may cause actual results, performance or achievements of the company to be materially different from the results or plans expressed or implied by such statements.

Note to editors: If you are interested in viewing additional information on Microsoft, please visit the Microsoft Web page at on Microsoft’s corporate information pages.

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