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TUESDAY OCTOBER 27 1998 UK & Ireland
COLT: Telecoms company surpasses expectations
By Alan Cane
Colt Telecom, the UK-based telecommunications operator that targets big commercial customers in Europe's main cities, yesterday turned in third-quarter results well above market expectations.
Turnover for the quarter was £61.1m compared with analysts' projections of £53m-£55m. It was 32 per cent higher than the second quarter of the current year and almost three times the figure recorded for the same period last year.
Gross profit at £11.6m was 34 per cent higher than the second quarter and almost 2.5 times that for the third quarter of 1997.
Losses before tax, however, rose to £15.4m (£9.1m) as the group continued to invest heavily in network construction in continental Europe. Losses per share were 3p (2p). Colt is not expected to become profitable overall until 2002.
The shares rose 17p to 662p.
Paul Chisholm, chief executive, said the key to the company's financial performance was a successfully executed business plan: "A measure of the success of our pan-European expansion strategy is the fact that 39 per cent of our third-quarter turnover was generated outside the UK." He said the continental market had opened up far faster than expected.
Colt's strategy is to build high-capacity fibre-optic rings around Europe's leading business centres, thereby connecting customers directly to its backbone network. It has seen its share price rise steeply this year, partly on the belief that it would be acquired by an overseas operator which would value it highly for its customer connections.
The price also reflects its reputation for service, recognised by awards from telecoms managers and customer associations.
Mr Chisholm said the company opened for business in four new markets - Amsterdam, Brussels, Düsseldorf and Madrid in the latest quarter. It expects to initiate service in Milan early next year and is planning to add Barcelona, Cologne, Geneva, Lyon, Stuttgart and Vienna next year.
This will involve significant expenditure and the company expects growing cash deficits to continue in each market until enough customers have been signed up.
Jim Hynes, chairman, said Colt was in a strong financial position: "The equity, debt and convertible offerings completed during the quarter raised over £626m of new capital. At the end of the quarter, cash resources amounted to £764m, leaving us well positioned to finance our growth and expansion plans."
The company has strengthened its position in the internet market through new services in London and Frankfurt and has bought a French internet company. Results>>>> |
