Song Networks Holding AB Announces Third Quarter, 2001 Results

Song Networks Holding AB Announces Third Quarter, 2001 Results Song Networks Reports 111% Revenue Growth over the Third Quarter 2000, 25% Revenue Growth over the Second Quarter, 2001, 964 Sites Connected to its Fiber Network and 5,304 Directly Connected Corporate Customers. Stockholm, Sweden - November 14, 2001 - Song Networks Holding AB ("Song Networks"), former Tele1 Europe Holding AB, (Stockholm Stock Exchange: SONW, NASDAQ: SONW), the leading pan-Nordic competitive provider of broadband communications services, today reported third quarter financial and operating results. Commenting on the results, Ivar Strömberg, Song Networks´ Chief Executive Officer said: "In the third quarter we saw strong growth in revenues and a significant improvement in gross margin. We have also taken decisive steps to reduce and control sales, general and administrative (SG&A) costs. As part of the restructuring program the number of employees has been reduced by 12%, almost exclusively confined to the Norwegian and Swedish operations." During the quarter we added 779 corporate customers for a total of 20,505, and directly connected customers rose by 250 to 5,304 connected by a total of 9,315 directly connected sites. As per September 30 the Company´s network comprised of a total of 2,456 km of local access fiber and 10,014 km backbone fiber. Financial Highlights: · Third quarter revenues rose by SEK 124 million (USD 12 million) to SEK 627 million (USD 59 million), a 25% increase over the second quarter revenues and 111% over the same quarter last year. · Gross margin was 34.1% for the third quarter versus 30.7% for the second quarter of 2001. · Adjusted EBITDA, excluding non-recurring restructuring charges, as a percentage of revenues was -22% versus -32% for the second quarter 2001. · Direct corporate revenues 1) represented 42% of total revenue in third quarter, compared with 44% in the second quarter of 2001, the expected decline was due to the integration of Song Communications Oy (formerly Telia Finland). · Revenues from data and internet services 2) totalled SEK 168 million (USD 16 million) or 27% of total revenue, which is in line with second quarter 2001. Despite seasonal variances the organic sequential quarterly growth in data and internet revenue was 6%. · The Finnish operations, including Song Communications Oy turned EBITDA positive during the quarter. · The Company has approximately SEK 2.4 billion (USD 225 million) in cash and cash equivalents (including restricted cash) plus an unused secured bank facility of SEK 300 million (USD 28 million). The Company continues to believe it has sufficient reserves to fully fund the business plan. Operational Highlights: · At the end of the quarter, 964 sites were connected to our fiber network in all four countries. This is a gross increase of 201 from second quarter*. · The number of corporate customers rose by 779 to 20,505. Directly connected customers totalled 5,304, an increase of 250, and directly connected sites totalled 9,315, an increase of 568. · The number of sites connected through DSL increased by 473. The total number of DSL sites increased from 3,275 to 3,748. · Added 400 km of local access fiber, for a total of 2,456 km. · Deployed 2,039 km of back bone fiber, for a total of 10,014 km. · Successfully increased the number of active IP/VPN sites to approximately 1,300. · The Norwegian municipalities of Stavanger, Sandnes and Rogaland extended their broadband services framework agreement with Song Networks AS. The agreement runs for two years and will generate revenues of SEK 40 million (USD 4 million). · Handelsbanken´s Norwegian affiliate signed a four-year service agreement with Song Networks AS. The contract is worth SEK 3.2 million (USD 0.3 million) per year, or SEK 12.5 million (USD 1.2 million) in total. · Song Networks entered into a contract worth SEK 14 million (USD 1.3 million) with a large international consulting firm. Under the contract, Song Networks will provide IP/VPN services for a three-year period. · Launched business solutions for IP telephony in Sweden and Finland. The service is named Hosted IP PBX. · Peter Lövgren, the former Managing Director of Iterium.net. and deputy Managing Director for Microsoft AB, joined the Swedish subsidiary, Song Networks AB as Managing Director. From the second half of August until November 5, Ivar Strömberg, CEO of Song Networks Holding AB, has been acting head of the Swedish subsidiary · Ketil Kivedahl, the former Managing Director of Xerox AS, was appointed Managing Director of Song Networks AS, Norway. · Cegal AS of Norway was sold to Intellinet ASA for SEK 6.5 million (USD 0.6 million). The proceeds were paid in Intellinet shares. Subsequent Events: · On October 9, Song Networks and ICL Invia signed strategic partnership agreement for network services. Song Networks will run ICL Invia´s Nordic backbone and access network from beginning in the autumn of 2002. Initially this is expected to generate SEK 49 million (USD 4.5 million). · A bank facility with Svenska Handelsbanken with an initial commitment limit and draw-down potential of SEK 300 million (USD 28 million) was put in place, secured by Company receivables. *The gross increase in number of fiber sites is 201 while the net figure is 149. The difference is related to one specific country subsidiary previously overstated the number of sites due to internal site definition. In the second quarter the organic increase in fiber sites were 142. 3,748 sites are connected through fiber DSL, this is an increase of 473 versus 792 organically in Q2. 4,475 sites are connected through leased lines. The net decrease of 73 sites versus organic increase in Q3 of 467 is like the fiber sites negatively impacted by previous overstatements why the gross increase of leased line sites was approximately 127 or 200 sites higher. 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/2001/11/14/20011114BIT00680/bit0001.doc The full report http://www.waymaker.net/bitonline/2001/11/14/20011114BIT00680/bit0001.pdf The full report