PR Newswire, Wednesday, November 05, 1997 at 18:56
Company Continues European Network Expansion in Anticipation of Deregulation
NEW YORK, Nov. 5 /PRNewswire/ -- Viatel, Inc. (NASDAQ:VYTL), a national
and international long-distance telecommunications company serving Europe, the
United States, Latin America and the Pacific Rim, today announced record
revenue for the third quarter and nine months ended Sept. 30, 1997.
Revenue for the quarter rose 46% to $19.1 million from $13.1 million in
the year-earlier period. Billable minutes of use increased 142% to
40.4 million from 16.7 million in the third quarter of 1996 while the number
of billed customers increased 41% to 22,940 in the recent quarter compared
with 16,319 in the year-earlier period.
Viatel President and Chief Executive Officer Michael J. Mahoney said, "Key
top-line indicators for the quarter, including revenue, customers and billable
minutes, continue to demonstrate growth by the company at levels that are in
line with our expectations. We believe that the company is well positioned to
add products and services, such as basic long distance, in 1998 as regulatory
barriers are eliminated. Our success in establishing market presence for
Viatel will now permit us to manage various key factors, such as increasing
market penetration, capturing a greater share of customers' telecommunications
spending and reducing transmission costs. This will allow Viatel to remain
competitive, while improving operating results."
The EBITDA loss for the third quarter was $6.7 million, compared with
$5.5 million in the year-ago quarter, reflecting Viatel's ongoing investment
in its network and operating infrastructure. The net loss for the third
quarter of 1997 was $11.2 million, or $0.49 a share, compared with
$9.3 million, or $0.68 a share, for the same quarter in 1996.
"The slight widening of EBITDA losses reflects market conditions,
including third-quarter seasonality typical in Europe, significant price
reductions by incumbent telecommunications operators in certain countries and
static infrastructure costs. These factors continue to exert pressure on
gross margins across the industry," said Allan L. Shaw, Chief Financial
Officer of Viatel. "In response, we have taken strong steps to manage costs,
by reducing SG&A expenses to 45% of revenue from 56% a year earlier. We
expect transmission costs to continue to decrease as markets are deregulated
and incumbent operators are obliged to enter into interconnection agreements
at favorable rates. We also are aggressively pursuing fiber optic cable
acquisitions in European countries so that Viatel can originate and terminate
calls at the lowest possible cost. Over time, replacement of leased lines
with company-owned facilities will allow us to reduce our cost structure,
while maintaining end-to-end quality."
"The company is currently augmenting its sales force and developing new
marketing strategies. Over the coming quarters, we will be refocusing our
pricing and marketing strategy to target high-usage, high-revenue small and
medium-sized businesses. We believe this should significantly improve the
quality of our customer portfolio," Mahoney said.
Viatel is committed to continuing conversion of its international
submarine cable circuits, from a leased to owned basis, as regulatory and
market barriers fall. Over the current year, the company has more than
quadrupled its transatlantic traffic capacity, with completion of its New York
switching center, upgrading its London gateway switch, and the purchase of
fiber capacity on TAT 12/13, FLAG, CANUS-1 and CANTAT-3.
"Fiber optic ownership and enhanced switching capabilities are essential
to our strategy of further reducing costs and improving margins. For example,
ownership of international submarine cable facilities that are currently
leased by the company would have increased the company's gross margins as a
percentage of revenue by approximately eight percentage points over the first
nine months of this year," Shaw said. Contingent on Viatel's ability to
acquire such ownership, the company currently expects to become EBITDA
positive in the first half of 1999, a full year ahead of its original
estimates.
During the third quarter, Viatel also added new network points of presence
(POPs) in Belgium, France, Germany, Italy, the Netherlands, Spain and
Switzerland, more than tripling the number of its operational switching and
interconnection locations in Europe to a total of 30 since the beginning of
the year, and exceeded its 1997 goal of 29 locations.
"Viatel's established world-class network in Europe represents a
significant strategic advantage. Expansion of our calling access and
termination locations in key business centers throughout Europe, through both
POPs and interconnection agreements, makes our services more attractive and
accessible to prospective customers and should permit the company to exercise
increased control over service offerings, quality of service and costs when
European deregulation begins in earnest in mid-1998," Mahoney said. "Our
investments in switches, fiber capacity and new POPs throughout Europe
represent high-quality fixed assets that can be directly leveraged to drive
revenues and improve operating results.
The company's European operations accounted for 43% of third-quarter
revenue, rising 53% to $8.3 million from the year-earlier period. Minutes of
use during the quarter in the European markets in which the company does
business increased 169% to 17.4 million from a year ago, while the number of
customers rose 50% to 12,367.
The company's Latin American operations, which accounted for approximately
21.1% of total third quarter revenues, increased 8% to $4.0 million over the
third quarter of 1996. Minutes of use in the Latin American markets rose 30%
to 3.3 million from 2.5 million in the third quarter of 1996 and the number of
Latin American customers billed increased 13% to 3,537 at the end of the third
quarter of 1997 over the number of customers at the end of the third quarter
of 1996.
For the first nine months of 1997, total revenue rose 47% to $52.1 million
from $35.4 million in the comparable period of 1996. Billable minutes of use
in the nine-month period rose 138% to 99.4 million from 41.8 million a year
earlier.
EBITDA loss for the first nine months of the year was $19.9 million,
compared with $19.4 million for the year-earlier period. The net loss for the
nine months was $30.8 million, or $1.36 a share, compared with $30.0 million,
or $2.19 a share, a year earlier. The number of shares outstanding rose to
22.6 million, from 13.7 million a year earlier due to the company's initial
public offering of approximately 8.7 million shares during October 1996.
Viatel, which has its headquarters in New York, N.Y., is a
facilities-based provider of telecommunications services. The company offers
a broad array of competitively priced, value-added international and domestic
long-distance services primarily to small and medium-sized businesses. Viatel
provides long-distance service to more than 230 countries and territories
worldwide through its international network. The company is listed on the
Nasdaq stock market under the symbol "VYTL." For more information, visit
Viatel's website at viatel.com .
Except for the historical information contained herein, the matters
discussed in this release are forward-looking statements that involve risks
and uncertainties, including the continued deregulation of the European Union
member states in which the company does business, the ability of the company
to implement its marketing strategy and its ability to continue to convert its
international submarine cable facilities from leased to owned facilities and
other risks detailed from time to time in the company's reports filed with the
Securities and Exchange Commission, including those contained in the company's
Annual Report, on Form 10-K for the year ended December 31, 1996. As a
result, actual results, events or conditions, financial or otherwise, could
differ materially from those statements. Viatel undertakes no duty to update
such forward-looking statements.
VIATEL, INC.
Unaudited Summary Consolidated Financial and Other Data
Three Months Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
Statement of Operations Data:
Telecommunications
revenue $19,148,941 $13,107,477 $52,149,570 $35,389,706
Operating expenses:
Cost of telecommunications
services 17,176,851 11,212,010 44,946,680 29,789,776
Selling, general and
administrative
expense 8,702,015 7,356,845 27,069,575 25,017,526
Depreciation and
amortization 2,062,311 1,156,946 4,782,913 3,388,769
Total operating
expenses 27,941,177 19,725,801 76,799,168 58,196,071
Operating loss (8,792,236) (6,618,324) (24,649,598) (22,806,365)
Interest expense,
net (2,357,811) (2,723,353) (6,173,842) (7,154,653)
Share in loss
of affiliate -- (1,938) -- (6,879)
Net loss $(11,150,047) $(9,343,615)$(30,823,440) $(29,967,897)
Net loss
per share $(0.49) $(0.68) $(1.36) $(2.19)
Weighted average
shares outstanding 22,634,081 13,707,648 22,615,028 13,707,648
Other Financial Data:
EBITDA(a) $(6,729,925) $(5,463,316)$(19,866,685) $(19,424,475)
Other Operating Data(b):
Billable minutes
(000's)(c) 40,427 16,681 99,370 41,791
Average revenue
per billable
minute(d) $0.47 $0.78 $0.52 $0.84
Average cost
per billable
minute(e) $0.42 $0.67 $0.45 $0.70
Switches(f) 16 13 16 13
European cities(f) 30 9 30 9
Customers(f) 22,940 16,319 22,940 16,319
Balance Sheet Data (000's):
Cash, cash equivalents
and other
liquid investments(f) $48,295 $6,296 $48,295 $6,296
Working Capital 12,949 2,592 12,949 2,592
Property and
equipment, net 40,681 18,289 40,681 18,289
Total assets 113,673 43,999 113,673 43,999
Long-term debt,
excluding current
installment 87,339 75,219 87,339 75,219
Stockholders' equity
(deficit) 3,826 (47,426) 3,826 (47,426)
(a) As used herein, "EBITDA" consists of earnings before interest (net),
income taxes and depreciation and amortization. EBITDA is a measure commonly
used in the telecommunications industry to analyze companies on the basis of
operating performance. EBITDA is not a measure of financial performance under
generally accepted accounting principles and should not be considered as an
alternative to net income as a measure of performance nor as an alternative to
cash flow as a measure of liquidity.
(b) Information derived from operating records prepared by the Company.
(c) Billable minutes are those minutes during which a call is connected at
any Company switch and for which the Company bills a customer.
(d) Represents the gross call usage revenue per billable minute. Amounts
include other revenue and revenue related items such as hardware sales,
software licensing, credits, discounts and other non-usage charges.
(e) Represents the cost associated with the Company's provision of
telecommunication services per billable minute. Amounts exclude
nontransmission costs such as hardware and software purchased for resale.
(f) Information presented as of the end of the period indicated.
SOURCE Viatel, Inc.
-0- 11/05/97
/CONTACT: Allan L. Shaw, Chief Financial Officer of Viatel, 212-350-9200
or allan_shaw@viatel.com ; or Henry Ling or Christine Davies of Stern & Co.,
212-888-0044/
/Web site: viatel.com |
