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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

(Mark One)

Commission File Number: 001-15475

INFONET SERVICES CORPORATION

(Exact Name of Registrant as Specified in Its Charter)

2160 East Grand Avenue, El Segundo, California 90245-1022

(Address of Principal Executive Offices)

(310) 335-2600

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Securities Registered Pursuant to Section 12(g) of the Act:

None

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period as the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2).    Yes  x    No  ¨

The aggregate market value of Class B common stock held by non-affiliates of the Registrant as of September 26, 2003 was approximately $117.0 million based on the closing price on the New York Stock Exchange on September 26, 2003 of $1.99.

The number of shares of the registrant’s Class B common stock, par value $.01 per share, that was outstanding as of June 10, 2004 was 301,728,225. The number of outstanding shares of the Registrant’s Class A common stock, par value $.01 per share, was 161,403,358 as of June 10, 2004, all of which are held by affiliates.

DOCUMENTS INCORPORATED BY REFERENCE

The information required by Items 10, 11, 12, 13 and 14 of Part III is incorporated by reference to portions of the registrant’s definitive proxy statement for the 2004 Annual Meeting of Stockholders which will be filed with the Securities and Exchange Commission within 120 days after the fiscal year ended April 2, 2004.

INFONET SERVICES CORPORATION

TABLE OF CONTENTS

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PART I

CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS

Investors are cautioned that certain statements contained in or incorporated by reference into this Annual Report on Form 10-K, or which are otherwise made by us or on our behalf are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include statements that are predictive in nature and that depend upon or refer to future events or conditions, and can be identified by terminology such as “will”, “believes,” “plans,” “anticipates,” “estimates,” “expects,” “may,” “potential,” “continue” or similar expressions or the negative of these or similar expressions. In addition, we, through our management, from time to time make written and oral forward-looking statements concerning future financial performance, ongoing business strategies or prospects, and possible future actions. Any forward-looking statements are based on current expectations and projections about future events and are subject to risks, uncertainties, and assumptions about our company, economic and market factors and the industry in which we do business, among other things. These statements are not guaranties of future performance and we undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.

Actual events and results may differ materially from those expressed or forecasted in forward-looking statements due to a number of factors. Factors that could cause our actual performance and future events and actions to differ materially from such forward-looking statements, include, but are not limited to, those discussed under the subheading “Risk Factors” and elsewhere in this Annual Report on Form 10-K.

Item 1.    Business

We were incorporated under the laws of the State of Delaware in March 1988. Our fiscal year is the 52- or 53-week period ending on the Friday nearest to March 31. For simplicity of presentation, we refer to the 52-week periods ended March 29, 2002 and March 28, 2003 and the 53-week period ended April 2, 2004 as the years ended March 31, 2002, 2003 and 2004, respectively. Our Internet website address is www.infonet.com. We make our annual reports on Form 10-K, our quarterly reports on Form 10-Q and our current reports on Form 8-K, together with any amendments, available through our website, free of charge, as soon as reasonably practicable after we electronically file or furnish the report to the Securities and Exchange Commission.

Overview

We are a leading provider of cross-border managed data and communications services to over 2,600 multinational enterprises. Of these enterprises, over 2,000 are our clients, including 34% of Fortune’s Global 500 for 2003, and we service the remainder indirectly through our alternate channels, which consist of major international telecommunications carriers and value-added resellers. Our network, which we refer to as The World Network, can be accessed from over 180 countries and territories, making it one of the world’s largest secure data communications networks in terms of geographic coverage. We use The World Network to provide managed global data and communications services to our clients, an advantage over service providers that do not control and operate an extensive global network. Our country representatives actively provide our services in over 70 countries and territories and have strong working relationships with leading local telecommunications providers in these locations. Our diverse client base is comprised of multinational enterprises that require cross-border managed data and communications services.

We offer a broad range of integrated service solutions to our clients, such as:

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We take a consultative, applications-oriented approach to identifying client needs and developing customized solutions. In addition, we offer a consolidated billing, management and support system that provides a complete solution for all of the external and internal communications services that our multinational clients require. Our approach is to integrate our full range of services with the global communications and network operations of our clients. We believe that our ability to provide a comprehensive solution to our clients gives us a key competitive advantage over other service providers who would have to make a significant investment of time and money in order to replicate our approach.

We control and operate The World Network, an extensive and versatile network that provides the delivery platform for our integrated, enterprise-wide communications solutions. This global private network enables our clients to deploy and manage applications effectively by combining reliability, security, high performance and a broad range of functions using a variety of network protocols.

Our global country representative sales and support structure gives us a strong presence in each of our geographic markets. We believe this structure also provides us with a competitive advantage over other service providers who do not have comparable levels of expertise regarding local operating, regulatory and market conditions.

Our current stockholders include six of the world’s largest telecommunications companies, which, through ownership of our Class A and Class B common stock, collectively possess over 95% of our total voting power. They are:

Market Opportunity

Industry Drivers

We believe that enterprises are facing significant challenges of managing cost, complexity and risk in the information technology and telecommunications environment. According to IDC, a leading research analyst firm, one-third of U.S. medium-large companies currently purchase, or plan to purchase, management services for their network equipment, circuits and security, while over 50% of multi-national corporations purchase, or plan to purchase, management services. IDC estimates that 40% of European companies plan to outsource management of their voice and data equipment. In addition, IDC predicts that the number of European companies that outsource a portion of their converged network will triple in a year. Moreover, according to IDC research, at least 50% of multinational enterprises are planning to outsource management of wide area network customer premise equipment, security and end-to-end management.

We believe that this growing market provides an attractive opportunity for marketing global managed data and communications services to multinational enterprises that are attempting to address their mission-critical

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global communications needs. It has been our experience that these enterprises require integrated solutions that span multiple countries, have guaranteed network availability, can deliver continuous increases in speed and capacity and provide local service and support. We believe that the demand for these managed services is driven by the following factors:

Globalization of business and increased need for secure international connectivity.    Over the past several decades, corporations have significantly increased the international scope of their businesses. In connection with this geographic expansion, corporations have opened and made direct investments in branch offices, factories and other local representative facilities around the globe. It is critical for these corporations to share information accurately, securely and expediently among their geographically dispersed locations, as well as with their traveling and telecommuting employees. New technologies and advanced remote access alternatives are enabling these companies to connect their geographically dispersed offices and employees to corporate and public networks at greater speeds, as well as from more varied locations.

Rapid expansion of IP-based applications.    IP-based applications, including Web-enabled extranets, enterprise applications such as Enterprise Resource Planning, or ERP, Supply Chain Management, or SCM, and Customer Relationship Management, or CRM, are, we believe, rapidly expanding as an important medium for global communications and e-commerce with the potential to connect a large number of geographically dispersed offices, employees, customers, suppliers and partners. These IP-based applications have emerged as a strategic component of business. Given both the significant investment often made in enterprise applications and the importance of their performance for highest return on investment, many companies have turned to a private, fully managed network to complement their use of the public Internet. While the public Internet appears to have an attractive price proposition, we believe that its lack of reliability and security for mission-critical communications has caused many corporations to seek assistance from leading global network service providers to enhance the quality of their Internet communications or to design and implement high performance private networks.

Rising importance of secure communications as a service critical to a corporation’s success.    We believe that businesses are investing in communications networks to achieve higher levels of productivity and lower operating expenses. Increasingly, corporate intranets, public Internet Web sites, extranets and other managed data networks are creating competitive advantages for companies that use them to foster internal communications and e-commerce, recruit new employees, communicate with customers, penetrate new market segments and collect market information. In our experience, corporations require that their networks deliver data quickly, consistently, securely and, in many cases, globally. In addition, they want the flexibility to upgrade their networks to keep pace with the growing complexity of their applications and changing technologies. Many of these corporations also require networks that operate 24 hours a day, seven days a week, and that offer application support together with a broad range of functions, such as security, remote access and reliability.

Increased outsourcing of corporate communications and applications.    We believe that enterprises are focusing their resources on their core competencies and increasingly outsourcing their networking needs. Maintaining in-house private corporate networks is costly, requiring large investments in both resources and personnel, and difficult because of the need to keep up with technological change. We believe that the ongoing expansion of multinational businesses and new developments in technology have made it difficult for in-house solutions to keep pace with corporate needs. Therefore, enterprises have turned to third parties who can provide managed communications services on a more efficient basis. Given the costs and difficulties involved in implementing international network solutions, we expect that multinational enterprises will increasingly outsource their cross-border communications needs.

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Business Strategy

Our goal is to be the leading provider of global managed data and communications services to multinational enterprises. We currently expect to pursue the following strategic aims:

Continue to focus on multinational clients that require global communications solutions

We expect to continue to focus on multinational enterprises with cross-border managed data and communications needs. We believe that the rapid pace of technological change, and the resultant complexity of, and resources necessary to, maintain network communications services are causing large multinational enterprises to increase the outsourcing of their global communications needs so they can focus their resources on their core competencies. Our flexible network architecture, consultative sales approach and global presence through our country representatives allow us to tailor our communications solutions to meet our clients’ individual needs. Given the global reach of our network, our local support services and our reputation for reliable and innovative services, we believe we can further penetrate the market for global managed communications services. Correspondingly, as part of our strategy, we plan to continue our public relations and industry analyst program to increase awareness of our services and the Infonet brand. We may also target other companies that service multinational clients for acquisition so that we can increase our client base and supplement our service offerings.

Continue to strengthen our sales and customer support structure

Our country representatives play a vital role in the sales and marketing, local client support and implementation of our services on a global basis. We own all or a portion of 17 of our 59 country representatives. Because many of our country representatives are independent organizations, we believe that we have been able to expand geographically without the financial and managerial costs associated with building and maintaining large numbers of wholly-owned multinational sales and support organizations. We are constantly upgrading the skills of our country representatives as well as evaluating new opportunities to expand our sales channels through the addition of new country representatives and alternate sales channel partners. Our strategy is to capitalize on the strength of our country representatives and alternate sales channel partners to build market share among multinational enterprises.

Upgrade and expand our global network

We intend to continue to expand and technologically enhance The World Network to maintain our competitive advantage and to service our clients. As part of this strategy, we seek to decrease costs by deploying metropolitan fiber networks in key cities around the world and additional network infrastructure within certain countries. We believe our increased investments in optical technology, our current plans to evolve over time the backbone of The World Network towards a next-generation multi-service switching platform, and our growing support for alternate access methods will enable us to offer a broader range of value-added services that capitalize on the convergence of voice, video and data communications services. We have launched our Multi Protocol Label Switching, or MPLS, networking capability for IP Virtual Private Networks, or VPNs (both public and private), along with a comprehensive Class of Service offering, available across all Wide Area Network, or WAN, protocols. By offering Class of Service, we can manage traffic in our network by grouping similar types of traffic together, such as email, voice or streaming video, and treating each type of traffic as a class with its own level of service priority. We also continue to develop our managed security solutions, which assist our clients in leveraging the public Internet, greatly increasing the “reach” of our global networking capabilities.

Improve profitability by increasing sales while at the same time controlling costs

We plan to improve profitability by increasing sales while at the same time controlling our costs. We expect to continue our dual sales strategy of selling additional services to existing clients and attracting new clients to use our service offering. We plan to pursue this strategy while at the same time implementing several initiatives

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that are intended to lower both direct and indirect expenses. For example, we have initiatives designed to lower local access costs by expanding our in-country reach in certain high-traffic locations. We are also working on other initiatives designed to lower our local access costs. In addition, we have plans to lower our indirect expenses by leveraging our existing infrastructure and employee base across a broader base of operations. We are also making calculated investments in tools that are designed to create greater efficiencies across our enterprise. We believe that these measures will help us improve profitability and allow us to operate our business more efficiently.

Provide the highest level of quality and reliability for our services

We are committed to maintaining the highest level of quality and reliability in delivering global managed data and communications services over our network. Using our network management tools and systems, we are able to proactively monitor our global network operations and respond quickly to client problems, 24 hours a day, seven days a week. We have consistently met or exceeded our quality standards. In addition, we support our clients through our extensive local operations and certified help desks. To ensure this quality and our valued clients’ satisfaction, we continue to make investments in client service and support, and continually evaluate our performance, including via electronic customer satisfaction surveys. We also continue to hire and train experienced and technically sophisticated network support and services personnel. Our commitment to providing high quality services is evidenced by our receipt of numerous industry awards. In June 2004, for example, we were named “Best in Class” for the ninth consecutive time in a report and analysis of global service providers undertaken by Telemark Consulting Ltd.

Develop value-added services to meet our clients’ needs

We are committed to developing innovative application services designed to meet our clients’ ongoing needs. Our broad array of security, access, mobility, enterprise management, data communications, voice and video services enables us to provide our clients with a complete solution to meet all of their global communications needs. To further enhance our network service offerings, we continue to raise our standards in service level management and security. Our expanded efforts in the area of “mobility” allow us to deliver business solutions across an increasingly diverse and dispersed group of end-user devices.

Our Service Solutions

Our business focuses on providing mission critical value-added global communications services to meet our clients’ global communications needs. We use a consultative, application-oriented approach, branded as “Application Defined Networking,” to help our clients develop a network infrastructure that meets their unique needs. We analyze how efficiently the enterprise-class applications in which a client has invested—those applications that are the most network intensive and are mission critical to the client’s business—are performing in that client’s operational environment. We then use the results of our analysis to identify the client’s needs and use our extensive portfolio of products and services to provide global, customized solutions to fit those unique requirements.

We offer our clients either individual services that they can use as part of their own networks or more integrated solutions that combine several of our services. Examples of how our services and solutions meet our clients’ needs include:

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The World Network is the physical platform across which we seamlessly deliver all of our network services. Our global network management/local support infrastructure is a combination of customer care, network management, network implementation, billing and field services that allows us to offer our solutions uniformly and consistently throughout the world.

We develop client solutions by working with our country representatives. In most cases, our country representatives interface directly with our clients and have responsibility for both selling and servicing each client location in their respective territories. To ensure that our services are provisioned with the highest quality of service, our country representatives oversee the deployment of each client solution using a highly-developed set of systems, processes and infrastructure that have been developed, tested and improved over the last 30 years. After installation, our integrated global billing system enables us to provide our clients with a single invoice for all of their services.

We believe the time and capital required to duplicate our global capabilities provides us with a significant competitive advantage and creates a barrier to entry for companies aspiring to offer global managed services.

Our services are organized into four categories: Network Services; Consulting Integration and Provisioning Services; Application Services and Other Communications Services. For details of the revenue associated with each of our service categories, please see Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations in this report.

Network Services

We offer multinational enterprises global communications solutions delivered on our seamless, high performance network. Our clients use these services to manage information, including the secure delivery of mission critical enterprise applications that require predictable performance to users distributed worldwide. For example, manufacturing enterprises use our services to integrate production and inventory schedules, technology enterprises use our services to transmit design files and financial institutions use our services to connect their trading desks. Typically, clients employ these services to transmit information that is critical to their daily operations.

Included in the Network Services category are our traditional data communications solutions—our Intranet and Internet services—as well as an expanded range of innovative communications solutions aimed at addressing the evolving technological requirements of our clients. Among these communications solutions are our Multimedia and Mobility Services.

Intranet Services.    Our IP VPN Secure service supports IP VPNs to provide functionality similar to the public Internet but with the performance characteristics of The World Network. IP VPN Secure is a leading-edge service using MPLS and offering Classes of Service for data, video and voice transmissions. We offer our customers three levels of IP VPN Secure services to meet specific application performance characteristics in addition to voice and video Classes of Service. We back this capability with strong service level agreements. We were among the first providers to offer an intranet IP VPN service and have over a decade of experience in provisioning services using the world leading Internet Protocol. We believe that our IP VPN Secure services are also well designed for corporations seeking to establish extranets or engage in e-commerce.

Infonet was the first company to offer “application defined” worldwide Frame Relay services with customized performance levels. We offer this service in more than 70 countries and territories. Through our Frame Relay service, we enable our clients to assign Class of Service levels to Frame Relay traffic for each application. Our customized networking options allow our clients to maximize network performance while minimizing network costs.

Our global Asynchronous Transfer Mode, or ATM, services address the increasing demand for high speed integrated voice, video and data services, and for bandwidth-intensive applications, such as video conferencing.

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Using ATM, we can prioritize traffic using Class of Service technology and transmit voice, data and video with guaranteed quality of service at speeds up to 622 megabits per second, or Mbps. These characteristics make ATM an excellent choice for broadband communications. By using ATM to integrate data, video and voice services, we believe that our clients realize the highest performance from their applications and achieve significant cost savings.

Internet Services.    Our IP VPN Internet services enable clients to utilize Infonet as their global Internet Service Provider, or ISP, with consolidated support and billing across multiple countries to access the Internet or build an IP VPN over the public Internet. This capability is a distinct benefit for clients that would otherwise use multiple ISPs in different countries. Clients can connect to our Internet backbone from more than 55 countries and territories using access services that include managed, dedicated and dial-up Internet access. We also offer advanced encryption and authentication services through agreements with Cisco Systems and Verisign, respectively. Our IP VPN Internet service is often used to complement our private IP network service, IP VPN Secure, in locations that cannot justify the cost or do not require the higher performance and associated costs involved with private IP networking.

Multimedia Services.    For many global enterprises, critical business support functions such as telephony, faxing and video conferencing can be costly and inefficient. We believe that our Multimedia Solutions address the unique needs for global voice and video communications and provide a range of more cost-effective, managed services for our multinational clients.

Our voice over IP and video over IP services integrate multiple voice, video, fax and data networks onto The World Network to deliver a global enterprise solution. These services are available both as standalone solutions and as converged solutions that accelerate the transition from traditional switched voice and video services to packet based services. We offer Class of Service for our voice over IP and video over IP services. Because our voice over IP and video over IP services can be integrated with any of our Class of Service Intranet offerings, clients have significant flexibility to design a service solution that is customized to meet their individual needs. In addition, we offer our clients a customized dial-plan capability and bill them with a single global invoice that includes location and call details. Our video over IP services are currently available in more than 30 countries and territories, and our voice over IP services are currently available in over 45 countries and territories with the capability to terminate calls in more than 200 countries and territories.

Mobility Services.    We have been providing remote access solutions to multinational enterprises for many years. Over the past decade, we have evolved our remote access services to anticipate and satisfy our clients’ need for user mobility—the ability to access corporate information and applications wherever an end-user is working. We have increased investments in our remote service capabilities, winning recognition for our wireless innovation and global leadership. In September 2003, we publicly announced our mobility strategy under a new brand, MobileXpress. Building upon a history of addressing remote user requirements, we have expanded our service offering to include Wireless LAN/Wi-Fi and Wireless WAN/mobile services through a series of partnerships designed to complement our award-winning remote access services.

We provide switched connectivity through The World Network that is designed to ensure secure access for our clients’ employees, business partners and customers. We also provide worldwide VPN connectivity for remote offices and local area networks, or LANs, that support small office/home office and business partner/client extranet solutions as well as basic Internet access requirements. We can offer network access on telecommuters’ home computers, through toll free dial-up service, broadband access or via mobile devices, allowing clients to leverage their investment in other Infonet Network Services.

Our MobileXpress service focuses on providing our remote users secure, easy access to all of their applications. To that end, our remote access services provide our clients’ employees, who are traveling or who are located remotely, with access to the same network applications that are available at their primary office. Using our services, applications such as enterprise resource planning, file sharing, Internet access and e-mail are

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accessible with higher levels of security and performance than would normally be provided if these applications were accessed via the public Internet. We contract with some of the industry’s leading suppliers of enhanced security products to offer our clients security products that provide greater security than traditional password systems. As a result, our remote access services provide connectivity for “virtual offices” almost anywhere in the world, quickly, securely and cost-effectively.

We remain active with organizations such as the Wi-Fi Alliance, driving industry standardization and adoption of emerging technologies. Our MobileXpress strategy extends the boundary of Infonet’s World Network by allowing wireless anywhere, anytime communications. This natural extension to our global communications portfolio provides not only additional value to multinationals, but also enhances the breadth of our overall solution set.

Consulting, Integration and Provisioning

We offer provisioning and implementation services to our clients to implement our service offerings, including the “last-mile” part of the solution. Our country representatives provide on-the-ground support and the local implementation necessary to deliver these services on a global basis. As part of our integrated solution, the country representatives may provision leased lines or alternate access methods from a local telecommunications provider to connect our customer sites to The World Network. In addition, our country representatives may procure, install and maintain the appropriate customer premise equipment—the devices at the customer site that connect the client’s internal network with The World Network. We have traditionally provisioned customer premise equipment based on the local market price of the equipment. In an effort to reduce the costs of provisioning these devices, we are continually trying to negotiate more competitive prices on a global basis. We believe that few other global data communications service providers can offer similar localized services on a global scale.

Furthermore, in remote locations where wireline connectivity is impractical, we provide satellite-based clear channel network connections through our VSAT Connect Service. We currently offer this service in conjunction with G2 Satellite Solutions, a division of Panamsat Corporation. Our VSAT service has a virtually worldwide footprint and is fully supported 24 hours a day, seven days a week.

We also offer consulting services designed to assist multinational enterprises to better align their information technology investments, local area networks and wide area networks with their primary applications, end-user requirements and business goals. We also offer consultative services that analyze the relationship between our clients’ applications and their network. Through our patent pending Network Analysis Program, we provide a customized solution to balance applications and network sizing for end-user requirements.

Application Services

Our Application Services include call center, security, enterprise management, messaging and collaboration and managed extranet services. Our call center services, currently available across Europe, include four levels of customized real-time control, enabling our clients to harness what we believe to be the latest call center application technologies. This service provides our clients with the ability to dynamically monitor and control call routing based on demand. Using an Intelligent Call Routing platform, we manage all inbound call technology, including the provisioning and management of the local numbers in each country. We also provide our clients with the ability to effectively route incoming traffic from across Europe to the call center or skill group that best matches enterprise resources with customer inquiries. In this way we help our clients improve agent productivity and customer handling.

We offer layered managed security solutions that enable clients to build secure private and public network solutions. These services include private and public encryption (IPSec), authentication (Public Key Infrastructure [PKI] and digital certificates) and Secure Site services such as managed firewall, managed intrusion protection,

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anti-virus, website blocking and filtering, and threat analysis services. Also, in conjunction with our Mobility Services, we enable our remote users to run broadband-based wired and wireless applications securely by using our Secure Socket Layer, or SSL, and/or public and private key encryption and strong authentication services. With these services, our clients can implement comprehensive global security measures while controlling the associated costs.

Our Enterprise Management suite of services provides our clients global visibility and end-to-end management of the process flows of their critical business systems. Using these services, our clients can monitor the performance of their Infonet VPN services, their own IT infrastructure, including their network equipment, security devices, servers and IP Telephony technology, and their enterprise applications. By adopting an out-tasking, rather than an outsourcing model, we have enabled our clients to maintain internal control of some portions of their infrastructure, while outsourcing others. In addition, by allowing our clients to choose the level of service and management they desire for each element, we have provided them with the flexibility to design a cost-effective solution that fulfills their financial and operational requirements.

We host e-mail services for our clients using Internet based messaging software and Lotus Notes software. Our e-mail hosting activities include management of the clients’ servers, software support and services, and e-mail translations to Short Message Service, or SMS, text messaging and fax. Additionally we provide a means for our clients to leverage the electronic efficiencies of using an Extranet to connect customers, suppliers and business partners through our Managed Extranet Service.

Other Communications Services

Other Communications Services include X.25 services and other legacy communications services. As customers transition away from the X.25 legacy service to one of our other Network Services, we expect that the number of customers in this category will continue to decline.

Client Base

We power the networks of multinational clients that are diversified across both industry groups and geographic regions. We provide our services to many of the world’s largest multinationals. Our clients include 34% of Fortune’s Global 500 for 2003, evidencing the central role we play in the global communications industry. In the fiscal year ended March 31, 2004, we added 628 new client contracts. We ended the fiscal year ended March 31, 2004 with over 2,060 clients. Other than one client that comprised more than 8% of our total revenues, no other client exceeded 2% of our total revenues in the year ended March 31, 2004.

A substantial portion of our revenues is under contract for one to three years, with contracts for some clients extending even longer. Excluding Consulting, Integration and Provisioning services, which are used by substantially all of our clients, 44% of our clients use multiple services, benefiting from our broad product portfolio. To date, our most popular suite of services has been our Intranet Services, with more than 80% of clients currently using these services. We also serve a diverse client base, with our largest clients representing various industries such as manufacturing, technology, banking, pharmaceutical and consumer products.

We believe that we attract and retain clients by offering secure, high quality services and support. In addition, we believe that our clients will continue to use our services because the act of switching service providers not only has the potential to compromise the security and performance of a client’s network, but also presents a significant inconvenience. For example, the client would have to expend significant time to disconnect and reconnect the service and each service to be switched would experience disruptions during the transfer. These issues are exacerbated for our larger clients who use many of our services. As a result, we have kept our overall churn rate (measured by annual revenue lost from clients who stop using our services entirely) below 4% for each of the past three years. In addition, our larger clients typically have renewed their contracts with us and continue to use our services.

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Distribution

Infonet employs a multi-tiered distribution strategy in order to maximize growth, use of our network and economies of scale. Our sales strategy utilizes both Direct Channels and Alternate Channels.

Direct Channels

We call our direct channel in-country sales and support units our country representatives. They give us the global reach and strong local presence in the countries in which we operate. Our 59 country representatives, which may be stand-alone companies or part of another local company, actively provide services in over 70 countries and territories.

As of March 31, 2004, our consolidated country representatives, those country representatives in which we own a controlling interest, consist of 12 separate country representatives that provide services in 14 countries— Belgium, Canada, China, France, Italy, Liechtenstein, Luxembourg, Mexico, Monaco, Russia, Singapore, Turkey, the United Kingdom and the United States. Our consolidated country representatives accounted for approximately $237.8 million of our revenues in the year ended March 31, 2004, representing about 38% of total revenues. In addition to our consolidated country representatives, as of March 31, 2004, we had five country representatives in which we had an ownership interest that is less than fifty percent, and 42 country representatives in which we had no ownership stake. In the aggregate, our country representatives generated approximately $551.3 million or 89% of our revenues in the year ended March 31, 2004.

We are the principal service provider to our clients and control the delivery of all Infonet services to them on an end-to-end basis. We control, configure, and manage our network and rely on our country representatives to deliver our services and maintain The World Network locally. We support each of our country representatives by providing regionalized, as well as centralized, sales and marketing support. In addition, we conduct sales training centrally and within each sales region, and we use computerized training to reinforce classroom training.

Each of our country representatives is involved in in-country sales and marketing, operations and client support. They each maintain a sales force that directly calls on clients, coordinates the contract signing process, manages accounts on a daily basis and serves as the first point of contact for clients, generally providing service in the local language. We rely on our country representatives to apply their knowledge of the local operating, regulatory and market conditions to market our service offerings effectively to the local client base. In order to minimize our regulatory hurdles, our country representatives usually enter into the legal contracts with our clients. Sometimes, to adequately address the needs of a potential client, country representatives from different countries will collaborate with each other and make joint sales presentations. Once a new client has signed a contract, we configure the network for the service and coordinate with other country representatives to implement the solution for the client. Our country representatives take a leading role in implementing the last-mile part of the solution by provisioning local access solutions and installing equipment at the client site. In addition, the country representatives provide local support for our services by operating local network nodes and, in some cases, housing and operating components of the infrastructure for specific services on our behalf.

We have service agreements with all of our country representatives that govern our relationships. The agreements generally are non-exclusive and similar for all country representatives, with most providing for an initial one-year term with an automatic annual rollover. These agreements provide the country representatives with:

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The agreements typically give us:

The agreements outline the fees that the country representatives are required to pay us for access to our network. In addition, the agreements outline our compensation and pricing arrangements with the country representatives.

Alternate Channels

Our alternate channels accounted for approximately $71.0 million or 11% of our revenues in the year ended March 31, 2004. We do not have an ownership interest in any of the entities that comprise our alternate channels. We classify our alternate channels into two different categories:

Partners.    Our partners are generally licensed to sell the totality of our product line.

Resellers.    Resellers are value added resellers that sell very specific Infonet network services under private label as part of a larger service offering to multinational companies in their markets. Major telecommunications companies also resell specific Infonet network services to increase the reach of their network.

In almost all cases, regardless of the alternate distribution channel utilized, clients are fully aware that Infonet is the service provider because the installation and other in-country support is provided by our direct channel country representative organization. Our revenues for a channel are categorized as alternate channel revenues in those instances where the services sold are provisioned by third parties or where services provisioned by Infonet are not sold as Infonet services.

In a particular country, we may have more than one sales channel. Currently we believe that we have little channel conflict. Our alternate channels give us the opportunity to create incremental revenues from segments of the market that our direct channels do not reach. These channels also help us understand different market requirements and competitors, help us increase our total market penetration and allow us to leverage our cost to maintain The World Network.

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Reportable Segments

Summarized financial information concerning the Company’s reportable segments is as follows (in thousands):