ALPHANET TELECOM INC. ANNOUNCES SUBSTANTIAL REVENUE INCREASE IN THE SECOND QUARTER
TORONTO, Aug. 5 /CNW/ - AlphaNet Telecom Inc. today announced a
substantial quarter-over-quarter increase in revenue. For the three months
ended June 30, 1998, consolidated revenue was US$2.9 million, up from US$2.2
million in the first quarter of 1998. For the six months ended June 30, 1998,
revenue rose to US$5.1 million, up from US$4.0 million in the corresponding
period for the prior year.
''This growth in revenue is primarily a reflection of the rapid build in
international long distance traffic carried by our Telecommunications business
unit,'' said Andr‚ LeBel, president and chief executive, AlphaNet Telecom Inc.
''We expect to sustain this momentum as we continue to service carrier
customers in the international telecommunications market.''
The Corporation reported that traffic had increased from a daily average
of 8,000 minutes in the first quarter of 1998 to a daily average of 187,000
minutes for the last five business days in June. On July 31, 1998, the unit
achieved a new traffic milestone of 471,000 billed minutes for the day, a more
than fifty-fold increase over the first quarter of 1998. This represents an
annualized run rate of approximately 170 million minutes.
At the end of the second quarter, 40 carrier customers were under
contract, up from 26 at December 31, 1997. At this time, 24 customers are
sending traffic, while the balance are in various stages of interconnecting.
The Telecommunications business unit has points-of-presence in 12 countries
worldwide and is in the process of adding an additional four countries,
anticipated to be operational by the end of August 1998.
''AlphaNet's Telecommunications business unit is well positioned to
continue to build its international traffic base,'' stated Mr. LeBel. ''We
have worked hard to ensure that the network meets the performance standards
demanded by our commercial customers and in the coming months we will add new
features and functionality to further enhance our service offering to
customers.''
AlphaNet recorded a net loss of US$7.3 million, or US$0.70 per share, in
the three months ended June 30, 1998, compared to a net loss of US$6.0
million, or US$0.58 per share, in the first quarter of 1998. The net loss for
the six months ended June 30, 1998, was US$13.3 million, or US$1.28 per share,
versus a loss of US$5.5 million, or US$0.54 per share, in the corresponding
period for the prior year. The year-over-year increase in losses was directly
related to the costs associated with building the infrastructure for the
Telecommunications business unit.
Cash of US$4.0 million was used to fund operating activities in the
second quarter of 1998. In the first quarter of 1998, cash of US$6.8 million
cash was required. For the six months ended June 30, 1998, cash of US$10.8
million was used in operating activities, compared to US$1.3 million in the
corresponding period for the prior year. At June 30, 1998, AlphaNet had
US$10.4 million in cash and short-term investments to finance further
deployment of the telecommunications network and fund operating activities.
Telecommunications Business Unit
For the three months ended June 30, 1998, telecommunications revenue
increased to US$0.8 million -- representing 6.2 million billed minutes of
traffic. Revenue was US$0.1 million for the first quarter of 1998. Network
costs totaled US$3.4 million in the three months just ended, a result of
building network transmission capacity to meet future traffic expansion,
versus US$2.3 million in the first quarter. For the six months ended June 30,
1998, network costs totaled US$5.7 million, compared to US$0.7 million in the
corresponding period for the prior year.
Operating expenses for the three months just ended were US$3.8 million,
up from US$3.0 million in the first quarter of 1998. For the six months just
ended, operating expenses totaled US$6.8 million, versus US$3.4 million in the
corresponding period for the prior year. This increase is a result of
personnel-related expenses and other costs associated with operating the
commercial service.
The Telecommunication business unit reported an operating loss of US$6.4
million, or US$0.60 per share for the three months ended June 30, 1998,
compared to an operating loss of US$5.2 million, or US$0.49 per share in the
first quarter of 1998. The operating loss for the six months just ended was
US$11.6 million, or US$1.09 per share, versus US$4.1 million, or US$0.41 per
share, in the corresponding period for the prior year.
Hospitality Business Unit
For the three months just ended, the Hospitality business unit generated
revenue of US$2.1 million, consistent with the first quarter of 1998. For the
six months ended June 30, 1998, hospitality revenue was US$4.3 million, a 7%
increase over last year. At the end of the second quarter, the total installed
InnFax customer base, including international licensee rooms, increased to
56,463 rooms, up 21% from 46,792 rooms a year earlier. ''The Office'', an
unattended hotel business center which provides hotel guests with credit card
activated access to a range of business services, including the Corporation's
Business Traveler Services, CyberConnections suite of information and on-line
services 24 hours a day, continued to gain market acceptance with a total of
37 contracted installations at North American hotels.
Direct costs and operating expenses for the hospitality business amounted
to US$4.6 million for the six months just ended, consistent with the
corresponding period for the prior year. The Hospitality business unit
reported an operating loss of US$158,000, or US$0.01 per share, in the three
months ended June 30, 1998, versus operating income of US$109,000, or US$0.01
per share, in the corresponding period for the prior year. For the six months
just ended, the operating loss was US$340,000, or US$0.03 per share, compared
to US$583,000, or US$0.06 per share, in the corresponding period last year.
+ + +
On August 4th, AlphaNet Telecom Inc. announced that the Board of
Directors of the Corporation authorized an equity financing of approximately
CDN$24.6 million by the issuance of up to 1,540,000 special warrants at
CDN$16.00 per special warrant. Each special warrant will be exercisable for
one common share of AlphaNet Telecom Inc. to be qualified under a planned
prospectus filing by the Corporation, expected to occur by mid September. The
proceeds from this issue will be used to further expand the Telecommunications
business unit's international network and fund its operating activities.
AlphaNet Telecom Inc. is a communications provider specializing in the
development of digital technologies and services for the telecommunications
and hospitality industries. Its Telecommunications business, which provides
low cost, high quality international long distance services for the wholesale
market, utilizes innovative, proprietary technology to convert traditional
voice signals into data packets for transmission over a data network. AlphaNet
Telecom's Hospitality business unit provides communications and business
services to the hospitality industry.
AlphaNet Telecom Inc. common shares are listed on the Toronto Stock
Exchange and trade under the FAX symbol.
AlphaNet is headquartered in Toronto and maintains offices in New York,
Washington, and London, England. Additional information is available through
the Corporation's web site at alphanet.net.
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AlphaNet Telecom Inc.
Summary Financial Information
For the Periods Ended June 30, 1998 and May 31, 1997
(in millions of U.S. dollars, except per share amounts)
Three months ended Six months ended
Financial Results June 30, May 31, June 30, May 30,
1998 1997 1998 1997
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Revenue
Telecommunications US$ 0.8 US$ - US$ 0.9 US$ -
Hospitality 2.1 2.3 4.2 4.0
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US$ 2.9 US$ 2.3 US$ 5.1 US$ 4.0
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Operating revenues
Telecommunications US$ (2.6) US$ (0.7) US$ (4.8) US$ (0.7)
Hospitality 1.9 1.9 3.8 3.2
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US$ (0.7) US$ 1.2 US$ (1.0) US$ 2.5
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Expenses
Operations, selling,
general and
administrative US$ 4.8 US$ 3.1 US$ 9.0 US$ 6.1
Amortization and
depreciation 1.6 1.0 3.2 2.1
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US$ 6.4 US$ 4.1 US$ 12.2 US$ 8.2
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Net loss for the
period US$ 7.3 US$ 2.4 US$ 13.3 US$ 5.5
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Loss per common share US$ 0.70 US$ 0.23 US$ 1.28 US$ 0.54
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Other Financial Information
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Cash provided by (used in)
operating activities US$ (4.0) US$ 0.4 US$ (10.8) US$ (1.3)
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Cash and short-term
investments US$ 10.4 US$ 12.0 US$ 10.4 US$ 12.0
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%SEDAR: 00003200E
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For further information: please contact Brian Wilson, AlphaNet Telecom
Inc., Vice-President, Finance and Administration and Chief Financial Officer,
Tel: (416) 413-4481, Fax: (416) 413-4424, e-mail:
brian.wilson@alphanet.net; Helen Verity, AlphaNet Telecom Inc.,
Manager, Investor Relations, Financial Reporting, Tel: (416) 413-4407,
Fax: (416) 413-4424, e-mail: helen.verity@alphanet.net |
