Song Networks Holding AB Announces Second Quarter 2002 Results

Song Networks Holding AB Announces Second Quarter 2002 Results Song Networks´ revenues in the second quarter totalled SEK 559 million (USD 61 million). This represents a 5% decrease over last quarter and an 11% increase compared to the same period of the previous year. Gross margin improved by 65 basis points, from 40.1% in the first quarter of 2002 to 40.7% or by 1,000 basis points from the same period the previous year. Adjusted sales, general and administration costs (SG&A) 1) improved to 47% of revenues or to SEK 261 million (USD 28 million) during the second quarter from 48% or from SEK 284 million (USD 31 million) the previous quarter. Adjusted SG&A was 62% of revenues or SEK 314 million (USD 34 million) during the second quarter in 2001. The Company has taken the decision to further reduce SG&A gradually, to reach a level of SEK 230 million (USD 25 million) by the first quarter of 2003. Adjusted EBITDA 2) was -6% or SEK -33 million (USD -4 million) compared to -8% or SEK -47 million (USD 5 million) in the first quarter of 2002 and -32% or SEK -159 million (USD 17 million) in the second quarter of 2001. The Company added 1,368 directly connected sites 3) during the quarter totalling 12,989 in all. At the end of the quarter, the number of corporate customers was 21,721, of which 6,644 were directly connected. Direct revenues 4) increased to 56% of total revenues in the second quarter of 2002 compared to 53% in the first quarter of 2002 or 44% the second quarter 2001. Revenues from data and internet services 5) increased to 42% from 38% of total revenues previous quarter. Due to the adoption of new accounting rules an impairment charge of SEK 1,147 million (USD 125 million) has been recorded for goodwill. In addition an impairment charge of SEK 416 million (USD 45 million) was recorded pertaining to construction in progress, for a total impairment charge of SEK 1,563 million (USD 170 million). The business combination agreement that Song Networks entered into with Telenor Business Solutions Holding AS on July 9 was terminated on August 13. The termination of the business combination agreement with Telenor resulted from the lack of support of an ad hoc committee of bondholders of Song Networks regarding the restructuring terms resulting from the agreement, as well as the committee's positive view regarding Song Networks restructuring potential. Song Networks and the committee are considering a number of potential restructuring alternatives and Song Networks will make further announcements regarding its restructuring as appropriate. Song Networks expects to complete a restructuring, conclude an Extraordinary General Meeting and close these transactions by the end of October 2002. On August 1, 2002, Song Networks announced that its wholly owned subsidiary Song Networks N.V. would not make the interest coupon payment scheduled on August 1, 2002 on the EUR 175 million 12?% Senior Notes due 2008. During the restructuring process, and assuming Song Networks does not make payment on any of its bonds, the Company believes that its existing operating cash resources will suffice until the end of 2002. Stockholm, Sweden - August 13, 2002 - Song Networks Holding AB ("Song Networks" or the "Company"), formerly Tele1 Europe Holding AB (Stockholmsbörsen: SONW, NASDAQ: SONW), the leading pan-Nordic competitive provider of broadband communications services, today reported second quarter financial and operating results. Commenting on the results, Tomas Franzén, Chief Executive Officer, said: "The operations are continuing to develop in the right direction. A continued focus on high margin services, data and direct revenues, in combination with measures taken to reduce our costs, will secure an adjusted EBITDA break-even in the end of the fourth quarter, 2002". Financial Highlights: · Second quarter revenues totalled SEK 559 million (USD 61 million). This represents a 5% decrease over last quarter but an 11% increase of revenues from the same period during previous year. · Direct revenues totalled SEK 314 million (USD 34 million) in the second quarter, up from SEK 311 million (USD 34 million) in the first quarter of 2002 and represented 56% of total revenues in the second quarter, compared to 53% in the previous quarter. · Revenues from data and internet services totalled SEK 232 million (USD 25 million) or 42% of total revenues in the second quarter, compared to 38% in the previous quarter. · Gross margin improved to 40.7% in the second quarter compared to 40.1% previous quarter. · Adjusted sales, general and administration costs (SG&A) improved to 47% or SEK 261 million (USD 28 million) in the second quarter of 2002, from 48% or SEK 284 million (USD 31 million) in the previous quarter. · Adjusted EBITDA margin improved to -6% or SEK -33 million (USD -4 million) in the second quarter. Adjusted EBITDA margin in the first quarter was -8% or SEK -47 million (USD -5 million). · EBITDA was SEK 92 million (USD 10 million) which was due to an unrealised foreign exchange gain of SEK 146 million (USD 16 million). EBITDA was SEK 72 million (USD 8 million) in the first quarter of 2002. · As of June 30, 2002, the Company had approximately SEK 394 million (USD 43 million) in cash and cash equivalents (including other securities, restricted cash and used credit facility), as compared to SEK 917 million (USD 100 million) as of March 31, 2002. Song Networks has access to a credit facility of a maximum of SEK 300 million (USD 33 million), of which SEK 70 million (USD 8 million) has been used as per June 30, 2002. The total amount that can be borrowed pursuant to this credit facility, which is secured by Song Networks' receivable, is limited to 65% of our receivables not older than 60 days. As of August 8, 2002, the Company had SEK 304 million (USD 33 million) in cash and cash equivalents (including other securities, restricted cash and used credit facility of SEK 105 million (USD 11 million)). In addition the Company has sold net operating losses (NOLs) from Song Networks AB amounting to SEK 2,180 million (USD 237 million) for SEK 150 million (USD 16 million) for which payment is expected in the end of September, 2002. · Due to the adoption of new accounting rules an impairment charge of SEK 1,147 million (USD 125 million) has been recorded for goodwill. In addition an impairment charge of SEK 416 million (USD 45 million) was recorded pertaining to construction in progress, for a total impairment charge of SEK 1,563 million (USD 170 million). · The Company has during the second quarter of 2002 repurchased an additional 8.8% of its outstanding bonds for SEK 67 million (USD 7 million). The Company has during the first and second quarter of 2002 repurchased a total of 17% of its outstanding bonds for a total of SEK 139 million (USD 15 million). In the second quarter the cash effect of the repurchase was SEK -83 million (USD -9 million) plus accrued interest of SEK -20 million (USD -2 million). · The Company expects to be adjusted EBITDA break-even in the end of the fourth quarter 2002 and expects full year 2002 revenues of SEK 2.3- 2.4 billion (USD 250-260 million). · Operational Highlights: · The Company added 238 fiber sites during the quarter resulting in a total of 1,582 fiber sites connected to its fiber network throughout Sweden, Norway, Finland and Denmark. · Directly connected customers increased by 306 to 6,644 during the second quarter of 2002. · Directly connected sites increased by 1,368 to 12,989 during the second quarter, while the total number of sites connected through DSL increased by 670 to 5,722. · The Company increased the number of active IP/VPN sites to approximately 2,900 versus 2,300 in the previous quarter. · In April 2002, Song Networks signed an agreement with Bilia Personbilar Region Väst AB to supply a full range of telephony services. The two-year agreement has an initial estimated value of SEK 5 million (USD 0.5 million). · In May 2002, the consultancy company, Asplan Viak, chose Song Networks as supplier of a uniform communications network for its 15 branch offices in Norway. Song Networks will supply Asplan Viak with an IP/VPN solution. The agreement has a term of 2 years and an estimated value of SEK 3.9 million (USD 0.4 million). · On May 29, 2002, Song Networks announced that Song Networks AS, Song Networks´ Norwegian subsidiary, had signed a 5-year contract for the operation of Visma Provider's ASP platform. The parties have also signed a framework agreement for the supply of infrastructure and communication services for a period of 3 years. With the growth that Visma Provider is anticipating, the value of the contract comes to around SEK 49 million (USD 5 million). · On June 3, 2002, Song Networks announced that Song Networks AB, the Swedish subsidiary, had signed a 2 year-contract for the supply of data communication to the Swedish Customs Office. The solution comprises 81 IP/VPN ports divided between 73 offices. The contract is worth approximately SEK 13 million (USD 1.4 million). · On June 6, 2002, Song Networks announced that Song Networks AB, the Swedish subsidiary, had signed an agreement with Scandic Hotels regarding supply of data communications. The value of the agreement is approximately SEK 30 million (USD 3 million) over 3.5 years. The agreement is Song Networks' largest agreement involving data communications in Sweden. · On June 19, 2002, Song Networks announced that, together with its subsidiary Song Networks AB as subcontractor Tele Danmark InterNordia has received an order from Sweco AB for delivery of a group-wide telephony solution for both fixed and mobile telephony. It is a 5-year contract, and the deal is worth SEK 20 million (USD 2 million) each for Tele Danmark InterNordia and Song Networks. · On June 26, 2002, Song Networks announced that Song Networks A/S in Denmark and the Danish listed company Jysk (formerly known as Jysk Sengetøjslager A/S) had signed a deal for 3 years. Adding to 178 locations throughout Denmark and Sweden connected earlier this year, Jysk has ordered 51 locations in Norway and 30 in Finland to be connected by a data communications network provided by Song Networks. · In April Customer care of Song Networks in Finland was chosen Help Desk of the Year 2002 by the Nordic Help Desk Institute. · On June 25, 2002, Song Networks announced organisational changes in Sweden and in Norway for an additional focus on synergies and to gain further efficiency within the Group. · On June 20, 2002, Song Networks announced a change of Board composition. Lars Windfeldt stepped down as Chairman and resigned from the Board of Song Networks Holding AB and was replaced by Lars Grönberg. · The Annual General Meeting of Song Networks Holding AB was held on April 17. · Subsequent Events: · On July 9, 2002, Song Networks announced that Telenor Business Solutions Holding AS and Song Networks Holding AB had entered into a business combination agreement as part of an overall financial restructuring of the Song Networks Group, whereby Song Networks would issue new shares and a convertible bond to Telenor Business Solutions Holding AS in exchange for the contribution of the Telenor Business Solutions AB business together with a cash balance of SEK 550 million (USD 60 million). · On August 1, 2002, Song Networks announced that its wholly owned subsidiary Song Networks N.V. would not make the interest coupon payment scheduled on August 1, 2002 on the EUR 175 million 12?% Senior Notes due 2008. · On August 12, 2002, the Board of Song Networks Holding AB decided to delist the Company's ADRs from Nasdaq. · On August 12, 2002, the Company sold Net operating losses from Song Networks AB amounting to SEK 2,180 million (USD 237 million) for SEK 150 million (USD 16 million). · On August 13, 2002, Song Networks terminated the business combination agreement that was signed on July 9. · "Adjusted" SG&A is defined as SG&A before provisions for social security fees and compensation expense related to employee stock options and non-recurring restructuring charges. The non-recurring restructuring charges amounted to SEK 10 million (USD 1 million) for Q2 2002. The Company did not have any non-recurring restructuring charges during Q1 2001 or Q1 2002. Non-recurring restructuring charges totalled SEK 19 million (USD 2 million) for Q2 2001, which amount was included in SG&A. In addition non-recurring restructuring charges of SEK 108 million (USD 11.7 million) in Q3 2001 and SEK 56 million (USD 6 million) in Q4 2001 were recorded as items affecting comparability and were thus excluded from SG&A. With new SEC guidance effective as of previous quarter, we also give the following information: SG&A was SEK 261 million (USD 28 million) or 47% of total revenues for the second quarter of 2002, as compared to SEK 330 million (USD 36 million) or 66% of total revenues for the second quarter of 2001. SG&A totalled SEK 259 (USD 28 million) for Q1 2001, SEK 350 million (USD 38 million) in Q3 2001, SEK 350 million (USD 38 million) for Q4 2001, SEK 283 million (USD 31 million) for Q1 2002. Song Networks defines EBITDA as earnings (loss) before interest, income taxes, depreciation and amortization. "Adjusted" EBITDA is defined as EBITDA before provisions for social security fees and compensation expense related to employee stock options, non-recurring restructuring charges, foreign exchange gains and losses, and all other reported as Other income/ expense. EBITDA was SEK 92 million (USD 10 million), or 17% of total revenues for the second quarter of 2002, as compared to SEK -191 million (USD -21 million) or -38% for the second quarter of 2001. With new SEC guidance effective as of previous quarter, we also give the following information: EBITDA totalled SEK -77 million (USD -8 million) for Q1 2001, SEK -253 million (USD -27 million) in Q3 2001, SEK -137 million (USD -15 million) for Q4 2001 and SEK 72 million (USD 8 million) for Q1 2002. A "site" is defined as a customer connection/ office. Direct revenues include on-net revenues, hosting revenues and revenues from leasing capacity to corporate customers. Revenues from data and internet services include hosting revenues and revenues from leasing capacity to corporate customers. ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2002/08/13/20020813BIT00960/wkr0001.doc The Full Report http://www.waymaker.net/bitonline/2002/08/13/20020813BIT00960/wkr0002.pdf The Full Report

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Song network is a fast growing Nordic data and telecommunications operator. The business concept is as a leading supplier to offer broadband-solutions for data, telephony and Internet to large and medium-sized business and organisations in the Nordic coun