- EBITDA at EUR 13.2 million in 4Q02
- Revenues at EUR 200.8 million in 4Q02, up 12% on 3Q
- Gross margin at 51% in 4Q02
- FY02 EBITDA positive at EUR 1 million, from a loss of EUR 170.4 million in 2001
- FY revenues of EUR 748.4 million, up 18% on 2001
- 7.3 million internet users, including 214,000 ADSL customers
Cagliari, 13 February 2003. Tiscali, Europe's leading internet operator, posted positive EBITDA of EUR 1 million in 2002, confirming the effectiveness of its strategy and the success of its business model. In 2002 Tiscali focused on launching new dial-up and ADSL products, integrating effectively all the technology platforms to allow local operations to offer high-quality, reliable narrowband and broadband services to consumers and businesses, while keeping a tight grip on direct and indirect costs. As a result, the group saw a significant improvement in revenues in 4Q02, a sharp rise in EBITDA, while reducing dramatically the financial needs. In particular, EBITDA rose to EUR 13.2 million, or 7% of revenues. This is the best operating performance in Tiscali's history, and confirms the strength of the group's business model and its leading role in the European internet arena. The achievement of EBITDA breakeven in full-year 2002 is particularly significant when compared with the result for 2001, as the company made an EBITDA loss of 170.4 million last year-and given the global economic downturn that hit the internet market throughout 2002. It is also noteworthy as broadband only began to make a positive impact in the second half of the year, following liberalisation delays in several countries that held back the roll-out of ADSL services by independent operators such as Tiscali. On this point, an important recommendation on telecoms liberalisation was published yesterday by the EU competition regulator ("Recommendation on relevant product and service markets within the electronic communications sector susceptible to ex-ante regulation"), which should pave the way for growth and competition in the broadband access sector. Tiscali believes that this recommendation will promote rapid development of high-speed access in Europe, ultimately ending the de facto monopolies of the former incumbents, and allowing alternative operators to construct successful business models in this major growth segment-with undoubted advantages for consumers.
4Q02 results
Revenues in 4Q came in at EUR 200.8 million, up 12% on 3Q and 7% on the same 2001 quarter. Internet access revenues, accounting for 68% of the total, were EUR 137 million, up 13% on the previous quarter and 16% on 4Q01, mainly driven by a strong rise in the ADSL segment. Business revenues continued their steady rise, advancing 21% vs. 4Q01 to around EUR 32.2 million, and becoming the group's second biggest revenue source. Portal revenues were up 20% on 3Q02 at EUR 11.3 million, but were down 53% on 4Q01, owing to the ad market downturn. Revenues from telephone services were EUR 14.6 million, up 14% on 3Q02. The group showed a satisfactory operating performance over the quarter: the gross margin stood at 51%, up 27% on 4Q01, thanks to significant efficiency gains in the internet access segment. Operating costs fell by 4% on the previous quarter, to EUR 89.5 [MSOffice1] million, and break down as follows:
- EUR 32 million - sales and marketing costs
- EUR 33.8 million - personnel costs
- EUR 23.7 million - admin and overheads
EBITDA was positive at EUR 13.2 million, reversing the negative trend of the two previous quarters when the group posted losses, mainly due to problems in rolling out the integrated technological platform in some countries, as well as to the delayed launch of broadband services- because of regulatory difficulties preventing independent operators from providing competitive ADSL services. EBIT was negative to the tune of EUR 67.5 million, a 24% improvement on 3Q01, and 60% better than in 4Q01. Net debt stood at EUR 134.7 million. Cash burn over the quarter was EUR 31.7 million, a fall of 66% vs. the previous quarter thanks to higher profitability.
FY 2002 results
Full-year revenues rose by 18% on the previous year to EUR 748.4 million. Internet access (both narrowband and broadband) remains the group's main revenue source, generating EUR 517.2 million-around 69% of total revenues. The 26% increase in internet access revenues vs. 2001 was mainly due to the expansion of narrowband services and growth in a number of the European countries in which Tiscali operates. Business revenues rose by 25% vs. 2001 to EUR 106.5 million. This was thanks to the integration and roll-out of domestic and international networks, which have enabled the group to develop a well-rounded product portfolio. Portal revenues were EUR 47.9 million, a fall of 26% on the previous year due to the downturn in the advertising market. Gross profit shot up 104%, from EUR 179 million to EUR 364.8 million thanks chiefly to synergies emerging from the integration process and the migration of internet traffic to Tiscali's proprietary IP network. The gross margin stood at 49%. Operating costs were in line with 2001, at EUR 363.8 million, and break down as follows:
- EUR 122.8 million - marketing costs
- EUR 140 million - personnel costs
- EUR 100.9 million - admin and overheads
The achievement of EBITDA breakeven was extremely important, especially compared to a loss of EUR 170.4 million in 2001. This was reached thanks to synergies emerging from the integration process, and from a cost-control policy that generated significant economies of scale. EBIT was negative to the tune of EUR 505 million, a major improvement on the EUR 668.2 million loss posted the previous year.
All the aforementioned financial and operating figures do not take into account the recent acquisitions of Airtelnet and Wanadoo Belgium.
Forecasts for 2003
In 2003 Tiscali plans to focus on maintaining its European leadership as an independent and innovative operator on the internet market. The group aims to boost growth and profitability by increasing its ADSL user base, strengthening its competitive position in the narrowband market and further increasing the efficiency and profitability of all its business units. Tiscali expects revenues to grow by around 20% in 2003, and its EBITDA margin to reach at least 5-6%. The number of ADSL customers is forecast to rise to over 600,000 by the end of the year.
Following the resignation of board member James Kinsella, to whom we express our sincere gratitude for his hard work and dedication, Gabriel Pretre-a senior manager from the Sandoz Foundation-has been co-opted to the board and will take his place from the next shareholders' meeting.
Tiscali
Tiscali is Europe's leading internet communications company, providing internet access and content, as well as value-added business applications and services. As of 31 December 2002, Tiscali had 7.3 million active users and 13.7 million unique visitors during the month, confirming Tiscali as one of Europe's major web properties. Tiscali's website is at www.tiscali.com
- Ends-
This press release includes forward-looking statements. These forward-looking statements are based on current expectations and projections about future events. These forward-looking statements are subject to certain risks, uncertainties and assumptions. This press release also contains unaudited proforma figures.
Tiscali undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. In light of these risks, uncertainties, and assumptions, the forward-looking events discussed in this press release might not occur. Any statements regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future.
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Giuliana Paoletti
Simona Vecchies
Mara Baldessari