Tele1 Europe Holding AB Announces Results for the First Quarter, 2000

Tele1 Europe Holding AB Announces Results for the First Quarter, 2000 Stockholm, Sweden - May 15, 2000 - Tele1 Europe Holding AB ("Tele1 Europe"), (Stockholm Stock Exchange: TEUR, NASDAQ: TEUR), the fast grow- ing, pan-Nordic competitive provider of broadband communications services, today reported first quarter financial and operating results. Commenting on the results, Ivar Stromberg, Tele1 Europe's Chief Executive Officer said: "We made impressive progress during the first quarter. We achieved rapid growth in both revenues and our corporate customer base, and the gross margin continued to improve. The build-out of our local fiber net- works network continued ahead of schedule during the quarter. In March , we were pleased to complete a successful Initial Public Offering (IPO), raising more than SEK 4.55 billion (USD 528 million) for the Company to fund the continued build out of our networks throughout the Nordic region. " Financial Highlights: * First quarter revenues rose to SEK 166.4 million (USD 19.3 million), an increase of 67% over Q4 revenues and 395% over the same quarter last year. * Gross margin was 33% for the first quarter, an increase of 315 basis points over the fourth quarter. * Revenues from corporate customers rose by 128% in the first quarter ver- sus the fourth quarter. * The number of corporate customers rose by 1 818 to 9 284 and directly connected customers rose to 1 495 from 986 during the quarter. * Strong growth in data and Internet revenues amounting to 57% of the or- ganic growth of the first quarter. * Switched minutes rose by 77% to 489 million in the first quarter, com- pared to the fourth quarter 1999. The significant increase was due in part to the acquisition of part of Global One's Swedish customer base. * Issued 28.3 million new shares in connection with the successful comple- tion of an Initial Public Offering, raising 4.55 billion SEK (approxi- mately US$ 528 million), excluding the over allotment option, exercised in April. Operational Highlights: * Tele1 Europe completed an additional 140 km of local access fiber, for a total of 208 km. * The company has 1084 km deployed back-bone network in total. * Signed a strategic agreement with Netcom GSM A/S on February 2, which enables Tele1 Europe to offer mobile services to its business customers in Norway. * Signed an agreement with Föreningssparbanken, the largest retail bank in Sweden on February 22, to provide the company broadband services. * Signed an agreement with Stokab to add 15 km of new city fiber in Stock- holm. * Launched new Internet Protocol (IP)/Virtual Private Network (VPN) serv- ices. * Successful sales in the first fiber pockets * By the end of the quarter, 26 on-net local access corporate customers were connected, on own fiber. Acquisition Highlights: * On January 28, the company finalized the agreement to acquire part of GlobalOne's Swedish corporate and government customer base. Results of Operations Tele1 Europe's revenues for the first quarter of 2000 reached SEK 166.4 million (USD 19.3 million), an increase of 67% compared to the fourth quarter of 1999 and a 395% increase over the first quarter of 1999. Gross margin for the first quarter was 33%, an increase of 315 basis points over 1 the fourth quarter of 1999. Revenues from corporate customers reached SEK 121 million (USD 14 million) from SEK 53 million (USD 6.1 million) in the fourth quarter 1999, an increase of 128%. The total number of corporate customers reached 9 284, of which 1 495 are directly connected. Data and Internet revenues excluding ISP (Internet Service Providers) ter- minating revenue increased by SEK 14 million (USD 1.6 million) to SEK 35 million (USD 4.1 million) compared to the fourth quarter 1999. On a pro- forma fourth quarter basis, 57% of the total revenue increase in the first quarter comes from data and Internet. The acquisition of a part of Global One's customer base accounts for 42% of the growth in switched minutes. A key customer contract was signed dur- ing the quarter with Föreningssparbanken, a large retail bank. Revenue growth was driven primarily by consolidation of the acquisitions but also strong organic growth. "During the first quarter corporate revenue rose by an impressive 128% ", said Ivar Stromberg. Tele1Europe's service costs in the first quarter were SEK 110.9 million (USD 12.9 million), compared to SEK 69.6 million (USD 8.1 million) in the fourth quarter of 1999. Sales, general and administrative (SG&A) costs for the first quarter decreased to SEK 145.8 million (USD 16.9 million) from SEK 154.2 million (USD 17.9 million) in the fourth quarter 1999. Excluding provisions for social taxes payable relating to the company's stock option plan in Norway and Finland, then the SG&A increased from SEK 103.2 million (USD 12.0 million) in the fourth quarter to SEK 130 million (USD 15.1 mil- lion) in the first quarter. The SG&A adjusted for the provisions as a per- centage of net revenues improved from 102% in the fourth quarter to 78% in the first quarter. The increase in SG&A in absolute terms resulted primar- ily from the aquired businesses of Wineasy and Global One which were con- solidated into the income statement as of January 1st 2000, as well as continued build-up in human resources to support the network build-out and the continued growth. Tele1Europe's loss before interest, tax, depreciation and amortization (EBITDA) improved in the first quarter to SEK 87.1 million (USD 10.1 mil- lion) from SEK 146.5 million (USD 17 million) in the fourth quarter 1999. EBITDA as percentage of revenues adjusted for provisions have improved from -94% to -43%. Financial net decreased from SEK 67.9 million (USD 7.9 million) for the three months ended December 31, 1999 to SEK 67.4 million (USD 7.8 million) for the quarter ended March 31,2000. The interest on the senior notes is- sued in December 1999 by Tele1Europe´s wholly owned subsidiary Tele1 Europe N.V., was offset by interest income and foreign exchange gains. The company's net loss in the first quarter was SEK 189.5 million (USD 22.0 million) compared to SEK 213.5 million (USD 24.8 million) in the fourth quarter 1999. Capital expenditures during the first quarter amounted to SEK 310.7 mil- lion (USD 36 million) versus SEK 277.1 million (USD 32.1 million) in the fourth quarter of 1999. The increase in expenditures can be attributed to the construction of the Tele1Europe fiber network and the acquisition of part of Global One's Swedish business. As of March 31, the company had SEK 5, 711.1 million (USD 662.3 million) in cash and cash equivalents, excluding restricted cash, versus SEK 1, 975.6 million (USD 229.1 million) in the fourth quarter of 1999. The in- creased cash balance resulted from the issuing of shares in connection with the IPO, and the proceeds are invested short term in fixed income se- curities. Business Development 1 Corporate customers defined as excluding carriers, ISP's, resellers and residentials. The Company successfully connected customers to its new IP/VPN services, becoming the first Nordic Operator to launch services on virtual private network over Internet protocol. During the first quarter fifteen customer sites have been connected and are actively using these new services. During the first quarter, Tele1 Europe added 26 on-net local access cus- tomers. Sales in the first operational fiber-pockets were highly success- ful. "Strong initial sales reinforce our belief that there is significant demand among our target customer base for high-quality broadband serv- ices", commented Ivar Stömberg. On February 2, the company signed a strategic agreement with Netcom GSM A/S, which enables Tele1 Europe to offer mobile services to its business customers in Norway. Similar to the mobile arrangement which the company signed with Telia Mobile of Sweden, the Netcom agreement allows Tele1 Europe to pay wholesale rates for originating and terminating traffic, gain control over customers' Subscriber Identification Module (SIM) cards and invoice its customers directly. On February 22 the company signed an agreement to provide broadband serv- ices to Föreningssparbanken, the largest consumer bank in Sweden. Föreningssparbanken selected Tele1Europe as the main supplier of data and telecom solutions for their largest offices. Network Construction As of March 31, 2000, Tele1 Europe had completed the installation of 208 km of local access fiber network in seven cities across the four Nordic countries, an increase of 140 km compared to the fourth quarter 1999. As of April, three business areas (pockets) were completed in Copenhagen and Helsinki, construction of an additional 40 pockets was initiated or was contracted and an additional 37 pockets are in a planning- or design stage. In all, Tele1 Europe expects to complete 80 pockets in nine cities during 2000 and 2001. Tele1 Europe's back-bone fiber totaled 1084 km at the end of March. An ad- ditional 3609 km has been contracted. As of March Tele1Europe had 102 active DSL co-locations in Denmark, Fin- land and Sweden. An extensive agreement was signed in March, between Tele1 Europe and Sto- kab for the continued expansion of Tele1 Europe's broadband network in central Stockholm. According to the agreement, Stokab will install fiber for Tele1 Europe in areas, which covers large areas of central Stockholm, in total 15 km. In the end of the fourth quarter, Tele1 Europe connected Funet, the Fin- nish University Network, as the first customer on its Nordic broadband network. By the end of the first quarter, 2000, Tele1 Europe had success- fully connected 26 on-net local access corporate customers, on own fiber. Acquisitions On January 28, the company finalized the agreement to acquire part of GlobalOne's Swedish corporate and government customer base. During the first quarter, the contingent payment was finalized on Eurocon- nect. Financing In March 2000, Tele1 Europe successfully completed its initial public of- fering. The offering consisted of 33.3 million ordinary shares, comprised of 28.3 million shares sold by Tele1 Europe in a capital increase and 5 million secondary shares sold by existing shareholders. The offering raised 5.36 billion SEK (USD 622 million) of which 4.55 billion SEK (USD 528 million) is primary capital and the remainder represents proceeds to existing shareholders selling in the offering. The total net proceeds amount to 4,28 billion SEK (USD 496 million). The proceeds of the offering will be used to fund the continued build out of the Company's local access fiber and back-bone networks. Tele1 Europe also granted the lead under- writers an option to sell an additional 5 million shares consisting of 1.7 million primary shares and 3.3 million secondary shares. This over allot- ment option was exercised in April, and an additional 1.6 million primary shares were issued. Subsequent Events On April 4, Tele1 Europe announced that the company is starting mobile te- lephony services in Denmark. Tele1 Europe has reached an agreement with Tele Denmark and will have its own number series and SIM cards. On April 5, Tele1 Europe secured access to Telenor's network, becoming the first data- and telecommunications operator to enter into an agreements with Telenor concerning "operator access" (LLUB) in Norway. On April 7, Tele1 Europe also became the first operator to enter a similar agreement with Telia in Sweden. Company disclosure An English translation of the Company's 1999 Annual Report and Accounts is available at Tele1 Europe's offices at Hangövägen 25, Positionen 146, 115 74 Stockholm. The Annual Report is also available in PDF-format on our website: www.tele1europe.com Tele1 Europe Holding AB's second quarter of 2000 financial and operating results for the period ending June 30, 2000, will be released on August 14, 2000. Stockholm, May 15, 2000 On behalf of The Board of Directors of Tele1 Europe Holding AB Ivar Strömberg, CEO Corporate facts: Tele1 Europe is a fast-growing data and telecommunications operator with operations in Denmark, Finland, Norway and Sweden, headquartered in Stock- holm. The Company offers broadband data, Internet and voice solutions, in- cluding server/web hosting and value-added data services to large and me- dium-sized business customers in the Nordic countries. Tele1 Europe is currently the only pan Nordic data- and telecommunications operator in- vesting in local access networks with broadband capacity. The company is currently constructing networks in the nine largest cities in the Nordic region. The group also operates DSL networks. Tele1 Europe plans to build local access networks using fiber or DSL in 79 additional cities, accross the four countries. The access networks, which are linked together with a long-distance network, will be one of Europe's fastest data and Internet super-highways with an initial capacity for customers of up to one giga- byte. More information is available on www.tele1europe.com The information and statements contained in this release that are not his- torical facts are forward-looking statements, which involve predictions by Tele1 Europe's management. Tele1 Europe can give no assurance that the fu- ture results expressed or implied by such statements will be achieved or that, if achieved, such results will be indicative of the results in sub- sequent periods. Actual events or results may differ materially as a re- sult of risks facing Tele1 Europe. Such risks include, but are not limited to: changes in business conditions; changes in the telecommunications in- dustry and general economy; competition; changes in service offerings; and risks associated with Tele1 Europe's limited operating history, entry into developing markets, managing rapid growth, and acquisitions and strategic investments; international operations; dependence on effective information and billing systems; future capital needs; and risks of regulatory devel- opments; any of which could cause actual results to vary materially from the future results indicated, expressed or implied in such forward-looking statements. For further discussion of these and additional risks associated with the business operations of the Tele1 Europe group, please refer to the regis- tration statement on form F-1 filed by Tele1 Europe Holding AB, together with the exhibits thereto, reports and other information filed at the Pub- lic Reference Section of the U.S. Securities and Exchange Commission at 450 Fifth Street, N.W., Washington D.C. 20549; Seven World Trade Center, th 13 Floor, New York, New York 10048; and 500 West Madison Street, Chi- cago, Illinois 60661. Corporate Information Principal Executive Offices Tele1 Europe Holding AB Positionen 146 SE-115 74 Stockholm Sweden Visiting address: Hangovagen 25 Tel: +46 8 56 31 00 00 Fax: +46 8 56 31 01 01 Web Site: www.tele1europe.com Enquiries Ivar Stromberg, CEO Tel. +46 8 56 31 00 01 E-mail: ivar.stromberg@tele1europe.se Liia Nõu, CFO Tel. + 46 8 56 31 02 33 E-mail: liia.nou@tele1europe.se Cecilia Johansson, Investor Relations Tel. + 46 8 56 31 02 19 E-mail: cecilia.johansson@tele1europe.se ------------------------------------------------------------ Please visit http://www.bit.se for further information The following files are available for download: http://www.bit.se/bitonline/2000/05/15/20000515BIT00400/bit0001.doc The full report http://www.bit.se/bitonline/2000/05/15/20000515BIT00400/bit0002.pdf The full report