Tele1 Europe Holding AB Reports Fourth Quarter and Year 2000 Results

Tele1 Europe Holding AB Reports Fourth Quarter and Year 2000 Results Annual revenue increase of 351% and quarterly growth of 22% driven by strong demand for data services. Stockholm, Sweden - February 12, 2001 - Tele1 Europe Holding AB (Stockholm Stock Exchange: TEUR, NASDAQ: TEUR), the rapidly growing Nordic provider of broadband communication services, today announces its financial and operating results for the fourth quarter and full year ending 31 December 2000. Commenting on the results, CEO Ivar Strömberg stated: "Demand for broadband services in the Nordic region continues to be strong and is reflected in our results. Fourth quarter revenue rose by 263% over the same period in 1999 and year on year growth was 351%. Our gross margin improved in the fourth quarter to 37,8%, compared to 30,2% in the fourth quarter of 1999. Tele1 Europe added 597 corporate customers during the fourth quarter to hit a total of 12,980, with directly connected customers climbing from 2,144 to 2,458. We completed the installation of 686km of local access fiber for a total of 1,704km, and connected another 149 sites to our fiber network to bring the total number of sites to 451. The company's business plan continues to be fully funded" Financial Highlights · Fourth quarter revenue grew to SEK 362 million (USD 38 million), an increase of 22% over third quarter revenues and 263% over the same quarter last year. · Gross margin was 37,8% in Q4, an increase of 757 basis points over the same period in 1999. · Adjusted EBITDA, as a percentage of revenue, was -35% in Q4, compared to -24% in Q3. Adjusted EBITDA includes SEK 20 million (USD 2 million) in allowance for doubtful accounts. Adjusted EBITDA also includes SEK 15 million (USD 1,6 million) in contractual payments related to prior acquisitions and nonrecurring costs related to UMTS applications in Sweden and Norway. · Corporate On-net and hosting revenue represented 45% of year 2000 revenue. · Revenue from data and Internet services increased to SEK 93 million (USD 10 million) or 26% of total revenue in the fourth quarter. · Switched minutes rose with 32% to 800 million in Q4. · The business plan continues to be fully funded with approximately SEK 3,6 billion (USD 376 million) in cash and cash equivalents, including investments in bonds and other securities, and restricted cash. · In January 2001, Tele1 completed an offering of Euro 175 million. The proceeds of the offering will be used to capitalise on acquisition opportunities which complement the company's current business plan and to further accelerate the expansion of the company's business. Operational Highlights · The number of sites connected to the company's own local fiber network rose by 149 to 451 in Q4. · The number of corporate customers increased by 597 to 12,980. Directly connected customers totaled 2,458 an increase of 314, and directly connected sites totaled 3,736, an increase of 426. · The number of DSL sites rose to 1,885, an increase of 153 over Q3. · The number of dedicated hosting customers rose to 166. · Completed construction of an additional 689km of local access fiber, for a total of 1,704km · Deployed or acquired 2,651km of back-bone fiber, for at total of 6,652km. Financial and Operating Summary: Q1 Q2 Q3 Q4 FULL FULL 2000 2000 2000 2000 YEAR YEAR 1999 2000 Net revenues (MSEK) 166.4 223.2 296.5 361.8 232.4 1047. 8 Growth in net revenues, 67% 34% 33% 22% 260% 351% %, sequential quarters Gross Margin, % 33.4% 34.7% 37.0% 37.8% 23.7% 36.2% SG&A1 % adjusted for -78% -69% -61% -73% -102% -69% option provisions EBITDA2 adjusted for -73,9 -77.9 -70.1 -126.5 - - option provisions (MSEK) 182,8 348.5 EBITDA3 adjusted for -44% -35% -24% -35% -79% -33% option provisions, % Local access fiber - IRU 208 619 1015 1704 68 1704 or own fiber/Fiber ready duct (route km) 95 481 540 944 36 944 - including intra-city 113 138 475 760 32 760 network, km - including business concentration area fiber, km No. of buildings 28 93 566 1165 10 1165 connected with fiber Back-bone network - IRU 1084 1767 4001 6652 0 6652 or own fiber/Fiber ready duct (route km) DSL co-locations (POPs) 102 113 145 232 92 232 Corporate customers 9284 10830 12383 12980 7466 1298 (number)4 1495 1695 2144 2458 986 0 - incl. On Net 66 102 164 166 0 2458 directly connected 166 customers - incl. On Line, dedicated hosting customers No. of direct-connection 2028 2427 3310 3736 1200 3736 sites5 Switched minutes 452 472 608 800 860 2332 (millions/quarter) Employees 481 638 839 971 369 971 Results of Operations Tele1 Europe's revenue for the fourth quarter of 2000 reached SEK 362 million (USD 38 million), an increase of 22% over Q3 and up 263% on the same period in 1999. For the full year, revenue was up 351% compared to 1999. Gross margin for Q4 was 37,8%, an 80 basis-point improvement over Q3 2000. Data and Internet revenues, excluding ISP (Internet Service Provider) terminating revenue, were SEK 93 million (USD 10 million) in the fourth quarter. Corporate On-net and hosting revenue constituted 45% of year 2000 revenue. For the year 2000, carriers, resellers and ISP's, accounted for 27% of revenue, while indirect and other revenue constituted 27%. Liia Nõu, Chief Financial Officer, commented, "The improvement in margins can be attributed to increases in the number of customers on our owned fiber network, and rising demand for data and Internet services." Sweden accounted for 48% of total revenue in Q4, Norway 17%, Denmark 24% and Finland 11%. Tele1 Europe's costs of services sold in Q4 were SEK 225 million (USD 24 million), compared to SEK 187 million (USD 20 million) in Q3 of 2000. Sales, general and administrative (SG&A) costs were SEK 250 million (USD 26 million) in Q4 compared to SEK 174 million (USD 18 million) in Q3 2000. Adjusted SG&A, which excludes provisions for social taxes payable and compensation expense relating to the company's stock option plan, rose from SEK 180 million (USD 19 million) in Q3 to SEK 263 million (USD 28 million) in Q4. Adjusted SG&A rose as a percentage of net revenues from 61% in Q3 to 73% in Q4. The increase in SG&A, in absolute terms, resulted primarily from continued growth in human resources, related expenses to support the network build-out and the expansion of the business. SG&A in Q4 includes SEK 20 million (USD 2 million) in allowance for doubtful accounts, the largest portion of which is related to customers in Internet related businesses. SG&A in Q4 also includes SEK 15 million (USD 1,6 million) in contractual payments related to prior acquisitions completed earlier in the year and nonrecurring costs related to UMTS applications in Sweden and Norway. The payment of additional purchase price for acquisitions is treated as SG&A under US GAAP. Adjusted EBITDA in Q4, which excludes provisions for social security fees and compensation expense related to employee stock options and foreign exchange gains and losses, declined, as a percentage of revenue from -24% to -35%, from SEK -70 million (USD -7 million) to SEK -126 million (USD - 13 million). Financial net for the fourth quarter of 2000 was SEK -57 million (USD -6 million) compared to SEK -68 million (USD -7 million) in the third quarter. The Company's net loss in Q4 was SEK 262 million (USD 28 million), compared to a loss of SEK 206 million (USD 22 million) in Q3. The net loss for the full year was SEK 808 million (USD 85 million), compared to SEK 404 million (USD 43 million) in 1999. The change was driven primarily by greater depreciation on fixed assets and goodwill, and the change in net financial interest. Capital expenditures during Q4 amounted to SEK 1 209 million (USD 127 million), out of which approximately 500 MSEK (USD 53 million) is payable in 2001, versus SEK 448 million (USD 46 million) in Q3 2000. Expenditures for the full year totaled SEK 2 292 million (USD 241 million), out of which approximately 500 MSEK (USD 53 million) is payable in 2001. The increase in expenditures can be attributed to the continued construction of the Tele1 Europe fiber network and the build-out of DSL co-locations. Gross PP&E amounted to SEK 3 154 million (USD 332 million), and net PP&E totaled SEK 2 956 million (USD 311 million). As of December 31, 2000 the Company had SEK 2 903 million (USD 305 million) in cash and cash equivalents, including investments in bonds and other securities, and SEK 672 million (USD 71 million) in restricted cash, for a total SEK 3 575 million (USD 376 million). The cash balance is invested short-term in fixed-income securities. Tele1 Europe ended the final quarter with 971 employees, compared to 369 at the end of 1999. Business development Operational growth continued to be strong during Q4. As of December 31, 2000 the company had 12,980 corporate customers, of which 2,458 customers were directly connected to the Tele1 Europe network through a total of 3,736 sites. This represents a gain of 314 directly connected customers and 426 sites over Q3. As of December 31, 451 sites were connected through owned fiber. The number of DSL sites increased to 1,885. Sites on leased lines amounted to 1,353, and point-to-point radio sites totaled to 47. The Company had 166 dedicated hosting customers at the end of the quarter. During the quarter, the Company continued to successfully connect customers to its IP/VPN services. Tele1 Europe was the first Nordic Operator to launch virtual private network services using the Internet protocol. Network construction As of December 31, 2000, Tele1 Europe had completed the installation of 1,704 km of local access fiber in the four Nordic countries, an increase of 689km over Q3 of 2000. Total local fiber kilometers are expected to reach more than 2,000km by the end of 2002. By the end of the fourth quarter, 21 business areas (pockets) were completed in the four countries. Construction of 51 additional pockets was initiated or contracted for and 37 additional pockets are in the planning or design stage. Tele1 Europe's backbone fiber totaled 6,652 km at the end of December, an increase of 2,651 km over the third quarter. The total number of backbone kilometers in the Tele1 Europe network is expected to reach more then 11,000km by the end of 2001, including leased lines. As of December 31, Tele1 Europe had 232 active DSL co-locations in the four Nordic countries. The total number of DSL co-locations is expected to reach more than 350 by the end of 2003. Acquisitions Tele1 Europe successfully completed several acquisitions during the year 2000. In January, the company acquired Global One's Swedish business and local government customer base. In May, the company acquired seven Finish distribution channels and in June, it signed an agreement to acquire ElTele Rogaland, a leading Norwegian data and broadband operator. In the third and fourth quarter, the company acquired Explore IT, an outsourcing and value added service provider, and Cegal AS, an application service provider. Commenting on the acquisitions, Ivar Stromberg said: "Our approach to buying companies in the year 2000 was to find businesses that would augment our business customers base, strengthen our product portfolio and expand our network presence. Each of the companies we acquired has helped us achieve these goals and improved our position as a leading provider of broadband services in the region." Financing Tele1 Europe ended the fourth quarter with a total of SEK 3 575 million (USD 376 million) in cash and cash equivalents (including investments in bonds, other securities and restricted cash), which fully funds the Company's business plan. Subsequent Events In January 2001, Tele1 completed an offering of Euro 175 million 12 3/8% Senior Notes due 2008 through its wholly owned subsidiary, Tele1 Europe N.V. The proceeds of the offering will be used to capitalise on acquisition opportunities which complement the company's current business plan and to further accelerate the expansion of the company's business. Kilroy Travel International A/S, which includes Benns Rejser and Team Travel, signed a three-year agreement with Tele1 Europe for IP-VPN services. Commenting on the addition of Kilroy as a customer Ivar Stromberg said: "This contract further validates Tele1 Europe's strong virtual private network product offering and the company's ability to service companies with multiple office locations." Tele1 Europe's wholly owned subsidiary WinEasy commenced operations at its state-of-the art data center located in Lidingö, Stockholm. Construction of the center was initiated in the late spring of 2000, with a total investment to date of approximately SEK 100 million. The data center, which will have a total floor area of approximately 2000 square metres, consists of five halls with varying levels of security and support. Outlook Tele1 Europe expects to achieve EBITDA break-even in the second quarter of 2002, to be EBITDA positive for the full year 2002, and to turn cash flow positive in early 2004. Notwithstanding these expectations, Tele1's ability to generate positive EBITDA and cash flow is subject to numerous risks and uncertainties, some of which are beyond the company's control. Company disclosure An English translation of the Company's 2000 Annual Report and Accounts will be available at the end of April from Tele1 Europe's offices at Hangövägen 25, Positionen 146, 115 74 Stockholm. The Annual Report and quarterly results are also available on our website: www.tele1europe.com The Annual General Meeting (AGM) will be held at 1.30 pm on May 16, 2001 at the World Trade Center in Stockholm, address Kungsbron 1. Tele1 Europe Holding AB's financial and operating results for the January- March period will be released on May 15, 2001. Tele1 Europe will hold a telephone conference call at 15.30 CET, February 12, to present the fourth quarter results for the year ending 31 December, 2000, and answer questions. The conference will be hosted by Ivar Strömberg (CEO) and Liia Nõu (CFO). The dial in number will be: UK + 44 20 8240 8245, US + 1 303 267 10 02. A recorded version of the conference will be available from 16.30 CET, directly after the conference call is finished, until 17 February, on: UK + 44 20 8288 4459, access code 618 752, US + 1 303 804 18 55, access code 910 878. Livecasting is also available during the presentation at www.tele1europe.com Stockholm, February 12, 2001 On behalf of The Board of Directors of Tele1 Europe Holding AB Ivar Strömberg, CEO Tele1 Europe Holding AB in summary Tele1 Europe is a rapidly expanding data and telecommunications operator with activities in Denmark, Finland, Norway and Sweden. The company provides broadband solutions for data, Internet and voice to large and mid- range businesses and organizations in the Nordic region. Tele1 Europe is currently the only pan-Nordic data and telecommunications operator investing in local access networks with broadband capacity. The company is constructing networks in the nine largest cities in the Nordic region. The access networks, which are linked together by a long-distance network, will be Europe's fastest data and Internet super-highway with an initial capacity for customers of up to one gigabyte. www.tele1europe.com The information and statements contained in this release that are not historical facts are forward-looking statements, which involve predictions by Tele1 Europe's management. Tele1 Europe can give no assurance that the future results expressed or implied by such statements will be achieved or that, if achieved, such results will be indicative of the results in subsequent periods. Actual events or results may differ materially as a result of risks facing Tele1 Europe. Such risks include, but are not limited to: changes in business conditions; changes in the telecommunications industry 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 developments; 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 registration statement on form F-1 filed by Tele1 Europe Holding AB, together with the exhibits thereto, reports and other information filed at the Public Reference Section of the U.S. Securities and Exchange Commission at 450 Fifth Street, N.W., Washington D.C. 20549; Seven World Trade Center, 13th Floor, New York, New York 10048; and 500 West Madison Street, Chicago, Illinois 60661. Consolidated Income Statements Three month ended Twelve month ended 31 December 31 December 1999 2000 2000 1999 2000 2000 SEK ' SEK ' $ ' SEK ' SEK ' $ ' 000 000 000 000 000 000 Operating 99 790 361 38 069 232 376 1 047 110 revenue 804 860 255 Cost of -69 -225 -23 -177 -668 -70 Services sold 646 070 682 325 384 327 Gross Profit 30 144 136 14 387 55 051 379 477 39 928 735 Gross Margin 30,21% 37,79% 37,79% 23,69% 36,21% 36,21% Operating expenses Selling -40 -64 -6 744 -76 930 -197 -20 205 095 520 783 General and -113 -186 -19 -214 -518 -54 administrative 995 149 586 928 312 536 Depreciation -19 -93 -9 871 -33 931 -239 -25 and 366 814 054 153 amortization Total operating -173 -344 -36 -325 -954 -100 expenses 566 058 201 789 886 472 Operating Loss -143 -207 -21 -270 -575 -60 422 323 814 738 409 544 Financial net -67 -57 -6 049 -130 -237 -24 940 485 916 067 944 Loss before -211 -264 -27 -401 -812 -85 income taxes 362 808 863 654 476 488 Income tax -2 098 2 916 307 -2 098 4 568 481 benefit Net loss -213 -261 -27 -403 -807 -85 460 892 556 752 908 007 Net loss per -2,73 -1,67 -0,18 -5,31 -5,79 -0,61 share Weighted 78 209 157 157 75 967 139 642 139 average number 957 032 032 879 274 642 of shares 114 114 274 outstanding EBITDA -152 -121 -12 -242 -375 -39 676 041 736 680 556 516 * 28 620 7 532 793 5 873 39 201 4 125 Capital 277 1 209 127 381 738 2 291 241 expenditures 096 016 211 724 133 Acquisitions of 388 18 243 1 920 428 713 998 464 105 Businesses 666 057 Notes: 1. All financial data is recorded in accordance with US GAAP. 2. The financial data for the three months periods ending December 31, 1999 and 2000 are unaudited. The financial data for the twelve months periods ending December 31, 1999 and 2000 are audited. 3. Solely for the convenience of the reader the financial statements ended December 31, 2000 have been translated into USD at the rate of SEK 9,504 per US$ 1.00. 4. EBITDA is defined as earning/(loss) before interest, tax, depreciation and amortization. * Items found under Financial net, such as foreign exchange gains and losses etc, included in EBITDA Consolidated Balance Sheets 31 31 31 December December December 1999 2000 2000 SEK ' 000 SEK ' 000 $ '000 ASSETS Current assets: Cash 729 077 1 083 337 113 987 Restricted current assets 289 734 530 371 55 805 Other current assets 1 473 493 2 730 831 287 335 Total current assets 2 492 304 4 344 539 457 127 Investments - 55 570 5 847 Restricted non-current 370 659 141 838 14 924 assets Property and equipment, net6 473 113 2 955 886 311 015 Goodwill, net 416 563 1 087 128 114 386 TOTAL ASSETS 3 752 639 8 584 961 903 300 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities 601 858 1 297 900 136 564 Long term debt, net 3 278 330 3 513 382 369 674 Redeemable preferred shares 183 638 - - Shareholder's equity (deficit): Share capital 3 920 7 861 827 Additional paid-in capital 167 998 4 968 746 522 806 Other comprehensive income -2 071 86 014 9 050 (loss) Accumulated deficit -481 034 -1 288 942 -135 621 Total Shareholder's equity -311 187 3 773 679 397 062 (deficit) TOTAL LIABILITIES AND 3 752 639 8 584 961 903 300 SHAREHOLDERS' EQUITY Notes: 1. All financial data is recorded in accordance with US GAAP. 2. The financial data for the twelve months periods ending December 31, 1999 and 2000 are audited. 3. Solely for the convenience of the reader the financial statements ended December 31, 2000 have been translated into USD at the rate of SEK 9,504 per US$ 1.00. Total Cash including investments and other securities 31 Dec 31 December 31 December 1999 (SEK '000) 2000 (SEK '000) 2000 ($ '000) Cash 729 077 1 083 337113 987 Investments, current (including in other current assets) 1 246 483 1 819 723191 469 Restricted cash, current 289 734 530 371 55 805 Restricted cash, non current 370 659 141 838 14 924 Total 2 635 9533 575 269376 185 Consolidated Cash Flow Statements 12 months 12 months 12 month ended ended ended 31 31 31 December December December 1999 2000 2000 SEK ' 000 SEK ' 000 $ ' 000 Cash Flow from operating activities: Net loss -403 752 -807 908 - 85 007 Adjustments for: Unrealized foreign exchange 5 873 36 025 3 791 gains Depreciation and 33 931 239 054 25 153 amortization Other non-cash items -130 11 842 1 246 Changes in non-cash working 321 406 -856 010 -90 068 capital Cash Flow from investing activities: Additions to networks and -381 738 -1 662 -174 943 equipment, net 661 Acquisitions of subsidiary -428 713 -812 923 -85 535 entities, including additional acquisition consideration Purchase of equity interest - -55 570 -5 847 Change in restricted and -1 905 516 -275 715 -29 010 other assets, net Cash Flow from financing activities: Share capital, net of issue 223 480 4 512 533 474 804 costs Increase in long-term 3 339 906 -156 880 -16 507 borrowings, net Other financial activities - 183 094 19 265 Translation adjustment -2 303 - - Effect of exchange rate -76 024 -621 -65 changes on cash Net increase (decrease) in 726 420 354 260 37 275 cash Cash, beginning of period 2 657 729 077 76 713 CASH, END OF PERIOD 729 077 1 083 337 113 987 Notes: 1. All financial data is recorded in accordance with US GAAP. 2. The financial data for the twelve months periods ending December 31, 1999 and 2000 are audited. 3. Solely for the convenience of the reader the financial statements ended December 31, 2000 have been translated into USD at the rate of SEK 9,504 per US$ 1.00. 4. 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 Strömberg, 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 _______________________________ 1 Before provisions for social security fees and compensation expense related to employee stock options. 2 Before provisions for social security fees and compensation expense related to employee stock options, foreign exchange gains and losses, and other items found under other income (expense). 3 See footnote 2 above 4 Corporate customers exclude carriers and ISP's. 5 A "site" is defined as a customer connection/office 6 The historical cost of PP&E as of December 31, 2000 amounts to SEK 3 154 million (USD 332 million) ------------------------------------------------------------ This information was brought to you by BIT http://www.bit.se The following files are available for download: http://www.bit.se/bitonline/2001/02/12/20010212BIT00980/bit0001.doc http://www.bit.se/bitonline/2001/02/12/20010212BIT00980/bit0001.pdf