  A new interpretation of the optical and energy-loss spectra of hexagonal
boron nitride is provided based on first-principle calculations. We show that
both spectra cannot be explained by independent-particle transitions but are
strongly dominated by excitonic effects. The lowest direct and indirect gaps
are much larger than previously reported. The direct gap amounts to 6.8 eV. The
first absorption peak at 6.1 eV is due to an exciton with a binding energy of
0.7 eV. We show that this strongly bound Frenkel exciton is also responsible
for the low frequency shoulder of the pi plasmon in the energy-loss function.
Implications for nanotube studies are discussed.
