Song Networks Holding AB Announces Fourth Quarter and Fiscal Year 2001 Results

Song Networks Holding AB Announces Fourth Quarter and Fiscal Year 2001 Results Song Networks Revenues in the Fourth Quarter 2001 were up 72% compared to the Fourth Quarter 2000. For Fiscal Year 2001, the Company's Revenues increased 107% compared to the Fiscal Year 2000. The Fourth Quarter Revenues 2001 decreased 1% compared to the Third Quarter 2001 due to a Conscious Decision of the Company to move out of Non-Core, Low Margin Business. The Company added 1,183 Directly Connected Sites during the Quarter for a total of 10,498. At the end of the Quarter the Number of Corporate Customers was 20,728, 5,605 of which were Directly Connected. Planned Network Build-Out was completed more than a Year ahead of Schedule. The Company continued to make Strong Progress in its Core Business - Direct Revenues and Data. Direct Revenues increased to 46% of Total Revenues in the Fourth Quarter compared with 42% in the Third Quarter. Revenues from Data and Internet increased to 35% of Total Revenues in the Fourth Quarter compared with 32% the Previous Quarter. Fiber Revenue increased 29% during the Quarter, and DSL Revenue increased 12% from the Third Quarter to the Fourth Quarter. Stockholm, Sweden - February 14, 2002 - Song Networks Holding AB ("Song Networks"), formerly Tele1 Europe Holding AB (Stockholm Stock Exchange: SONW, NASDAQ: SONW), the leading pan-Nordic competitive provider of broadband communications services, today reported fourth quarter financial and operating results. Commenting on the results, Ivar Strömberg, Chief Executive Officer, said: "The Company delivered solid improvements and growth in its core business despite difficult market conditions. Quarter-on-quarter growth in revenues from directly connected customers reached 9%. The ramp-up of gross margin is in line with our previously communicated plans and consistent with the ramp-up curve needed to bring the company to EBITDA break-even. The effect of the SG&A reduction program was according to plan. Adjusted for cost reductions achieved during the fourth quarter, and some incremental cost savings going forward, we believe that the quarterly run-rate for SG&A in the first half of 2002 will be around SEK 310 million (USD 30 million). The Company is strongly committed to keeping its overall cost base under tight control. An important milestone was reached when all material parts of the network build-out were completed at the end of the year. The Company is now fully focused on selling to on-net customers, and on further reducing the Company's exposure to lower margin non-core revenues." Financial Highlights: · Fourth quarter revenues totalled SEK 621 million (USD 59 million). This is a 72% increase over the same quarter last year. Full year 2001 revenues totalled SEK 2,168 million (USD 207 million), representing a 107% increase compared to the previous year. Fourth quarter revenues decreased 1% compared to the third quarter due to divestments as a result of sharpening focus on the core activities and a conscious decision of the Company to move out of low margin business. · Revenues from continuing operations 1) were SEK 568 million (USD 54 million) in the quarter, up 7% from SEK 529 million (USD 51 million) in the third quarter. · Direct revenues 2) totalled SEK 284 million (USD 27 million) in the quarter, up 9% from SEK 261 million (USD 25 million) in the third quarter and represented 46% of total revenues in the fourth quarter, compared with 42% in the previous quarter. · Revenues from data and internet services 3) totalled SEK 220 million (USD 21 million) or 35% of total revenue in the fourth quarter, compared to 32% third quarter. · Fiber revenue increased with 29% and DSL revenue with 12% from the third quarter to the fourth quarter. · Gross margin increased to 36.1% for the fourth quarter compared with 34.1% in the previous quarter. · Adjusted sales, general and administration (SG&A) costs 4) were in line with internal plans of SEK 330-335 million (USD 32 million) when we exclude the effect of provisions for bad debts related largely to certain special situations provisions pertaining to carrriers with severe financial difficulties in 2001. · Adjusted EBITDA margin, excluding non-recurring restructuring charges improved to -20 % in the fourth quarter, compared with -22% in the third quarter. The adjusted EBITDA is negatively impacted by the above mentioned bad debts of SEK 19 million (USD 2 million), if the Company were to exclude the special situations provisions the adjusted EBITDA margin would have been -17%. · On December 31, 2001 the Company had approximately SEK 1,747 million (USD 167 million) in cash and cash equivalents. This includes restricted cash of SEK 247 millions (USD 24 million) and an unused secured bank facility of SEK 300 million (USD 29 million). · The Finnish subsidiary continued to deliver positive adjusted EBITDA during the quarter. · Operational Highlights: · After adding 244 fiber sites during the quarter, the Company had 1,208 fiber sites connected to its fiber network throughout Sweden, Norway, Finland and Denmark. · Directly connected customers increased by 301 to 5,605 and directly connected sites increased by 1,183 to 10,498 during the fourth quarter. The number of sites connected through DSL increased by 607 to 4,355 during the fourth quarter. · The Company ended the quarter with 2,546 km of local access fiber and 12,706 km back-bone fiber (including the Euroring of 2,501 km). · The Company increased the number of active IP/VPN sites to approximately 1,600 versus 1,300 previous quarter. · Song Networks and ICL Invia signed a strategic partnership agreement for network services. In the short term this agreement is expected to generate SEK 49 million (USD 5 million). · Song Networks AB and Telia International Carrier AB reached an IRU agreement whereby Telia International Carrier will hire fiber capacity from Song Networks for 15 years. The order is worth approximately SEK 65 million (USD 6 million). · In order to sharpen its focus on core activities, Song Networks reached an agreement with Spinbox AB, whereby Spinbox will take over responsibility for the Swedish subsidiary Song Networks AB's mobile activities. Operations in Norway have been streamlined through the sale of the Company's PBX activities and its consulting activities in Stavanger. Song Networks is also co-ordinating and centralising activities in Sweden. A number of central positions will move from local offices to the Swedish head office. The Swedish subsidiary Wineasy AB's activities will also be integrated into Song Networks. · Ari-Jussi Knaapila was appointed Chief Operational Officer (COO) for Song Networks Holding AB in December. He takes charge of the Nordic Group's operations and reports directly to the CEO. · Peter Lövgren was appointed MD for the Swedish subsidiary, Song Networks AB, in November. Mr Lövgren's recent professional experience includes being Managing Director of Iterium.net and deputy Managing Director for Microsoft AB. · The Company secured a bank facility with Svenska Handelsbanken with an initial commitment limit and draw-down potential of SEK 300 million (USD 29 million). The facility is secured by the Company's receivables. · Subsequent Events: · In January 2002, Song Networks acquired the Euroring for SEK 12 million 5) (USD 1 million) from the bankruptcy estate of Enitel (Norway). The Euroring is a 2,501 km fiber network ring in Europe. · ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2002/02/14/20020214BIT01270/bit0002.doc The full year-end report http://www.waymaker.net/bitonline/2002/02/14/20020214BIT01270/bit0002.pdf The full year-end report