COLT Telecom Group S.A. announces results for the quarter ended 30 September 2008

Q3 FINANCIAL RESULTS / Compared to Q3 2007

(PresseBox) ( Frankfurt am Main, )
- Revenue increased by 0.3% to ¤420.7m and increased by 3.2% on a constant currency basis
- Data revenue grew by 8.2% to ¤232.3m and grew by 12.1% on a constant currency basis
- Gross margin before depreciation increased by 1.0 percentage point to 39.8%
- EBITDA(1) increased by ¤6.8m or 9.7% to ¤76.7m
- Profit before tax increased by ¤9.9m from ¤8.7m to ¤18.6m
- Free cash inflow(2) increased from ¤15.8m to ¤18.8m
- Capital expenditure increased from ¤66.9m to ¤78.0m

The Group's financial position continues to be strong, with cash and cash equivalents of ¤252.0m and net debt of ¤10.2m at the end of the quarter.

Commenting on the results, Rakesh Bhasin, Chief Executive Officer, said:

"Despite increasingly uncertain markets, COLT continues to make progress with further data revenue growth and improved earnings. I am confident that 2008 will be another year of progress for COLT and we continue to be comfortable with expectations for the year."

This Press Release is also available via the COLT website at

Unless indicated otherwise, the following commentary is based on nominal variances including exchange rate movements.

All comparatives are against the equivalent period of the prior year.

Total revenue
Revenue for the quarter increased by ¤1.3m, or 0.3%, to ¤420.7m. Higher margin Data revenue grew by ¤17.7m or 8.2%. Lower margin Voice revenue fell by ¤16.4m or 8.0%. After excluding the impact of reductions in fixed to mobile prices, Voice revenue declined by 5.9% and total revenue increased by 1.3%. On a constant currency basis, total revenue for the quarter increased by 3.2%, Data revenue grew by 12.1% and Voice revenue fell by 6.1%. Data revenue as a percentage of total revenue increased to 55.2% (2007: 51.2%).

At 30 September 2008 deferred revenue (which mainly relates to Data revenue) was ¤199.3m (30 September 2007: ¤176.8m), a year on year increase of ¤22.5m. The increase during Q3 2008 was ¤9.6m (30 June 2008: ¤189.7m).

Major Enterprise revenue
Total revenue for the Major Enterprise division increased by ¤7.9m to ¤176.4m (2007: ¤168.5m).

Data revenue from Major Enterprise customers increased by 8.3% to ¤134.1m (2007: ¤123.8m) due to growth in demand for Ethernet products and increased Managed Services revenues.

Voice revenue from Major Enterprise customers for the quarter decreased by 5.4% to ¤42.3m (2007: ¤44.7m), with 5.2pp of the decline arising in Germany due to continuing competitive pressures across the Voice market and reductions in mobile termination rates.

SME revenue
Total revenue for the SME division decreased by ¤4.6m to ¤113.8m (2007: ¤118.4m).

Data revenue from SME customers increased by 5.9% to ¤46.5m (2007: ¤43.9m), driven by growth in COLT Total, our combined Voice/Access product for this market, and Ethernet.

Voice revenue from SME customers for the quarter was ¤67.3m (2007: ¤74.5m). The rate of decline slowed to 9.7% from 11.9% in Q2 2008 of which 8.2pp related to Germany. The decline in Germany was driven by the continued decline in our legacy Carrier Pre-Select (CPS) product. The situation is exacerbated by mobile termination rate reductions and the disruption from the mobile operators' court challenge which has still not been wholly resolved.

Wholesale revenue
Total revenue for the Wholesale division decreased by ¤2.0m to ¤130.5m (2007: ¤132.5m).

Data revenue from Wholesale customers increased by 10.2% to ¤51.7m (2007: ¤46.9m), driven by demand from our larger customers for Ethernet products.

Voice revenue from Wholesale customers for the quarter decreased by 7.9% to ¤78.8m (2007: ¤85.6m) of which 5.7pp was in Germany, driven by the Carrier Voice decline arising from the market disruption in that country.
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