Q3 cijfers COLT Telecom

23 October 2003

COLT TELECOM GROUP PLC ANNOUNCES RESULTS FOR THE THREE AND NINE MONTHS ENDED 30 SEPTEMBER 2003

THIRD QUARTER HIGHLIGHTS

• Turnover up 14% to £295 million compared with Q3 2002
• Constant currency turnover growth of 6% over Q3 2002
• Corporate customer turnover up 19% to £177 million
• Wholesale customer turnover up 7% to £118 million
• Gross margin before depreciation and exceptional items improved from 31.0% to 34.5%
• EBITDA (1)  up 123% to £43 million
• Capital expenditure of £33 million
• Positive free cash flow of £9.1 million
• Strong liquidity position with cash and liquid resources of £934 million
• Three new accolades for excellent customer service
• Staff levels including temporary and contract workers reduced by 126 during the quarter to 4,353

Commenting on the results for the quarter COLT Telecom Group Chairman Barry Bateman said:

"We have continued to make progress during the seasonally weaker third quarter. Our success in what remains a difficult market, combined with the strength of the Euro, has resulted in revenue growth of 14% over the third quarter of last year.

"COLT was free cash flow positive during the quarter primarily due to improvements in working capital and the timing of cash interest payments. This quarter's performance further reinforces our confidence of reaching sustainable positive free cash flow during 2005. Capital expenditure in the quarter was £33 million and we now expect capital expenditure for the year to be less than the £170 million to £200 million range previously indicated.

"A strong cash position is an important competitive advantage in today's market and with cash and liquid resources of £934 million COLT is well positioned to continue to grow successfully and meet its customers' needs for high quality advanced services."

Steve Akin, COLT's President and Chief Executive Officer added:
"As we celebrate the tenth anniversary of providing service to our first customer, COLT is recognised as being one of Europe's best in class telecommunications service companies. Our reputation for first class customer service, our extensive product range, the benefits of our extensive pan-European network coverage and our underlying financial strength are all reflected in our third quarter performance. "We continue to improve our position as a preferred supplier to the European corporate market with revenues from corporate customers growing by 19% compared with the third quarter of 2002.

"Improved revenue mix at both the customer and product level has contributed to the improvement in gross margin before depreciation to 34.5% from 31.0 % in the third quarter last year with EBITDA up 123% to £43 million.

"COLT has built its reputation on first class customer service. This continues to be recognised by our customers when for the third consecutive year COLT won the prestigious World Communication Award for Customer Care. Once again we have been named as the number one fixed telephony and internet services company in Switzerland by Bilanz magazine, a leading Swiss business publication. We have also been recognised by EA Games, the leading interactive software company, as offering the best performing hosting infrastructure for its online games in the UK.

"Among our more significant corporate customer wins during the quarter was AGA Gas. COLT is providing AGA with a 50 site IPVPN in Sweden, Denmark, Norway and Finland. In the UK COLT is providing voice and data communications services into Swiss Re's new headquarters at 30 St. Mary Axe in London. Other important new customers include the Belgian postal service, the Portugese national railway, the Portugese public television network and in the Netherlands, Tenovis, the communications facilities company. "As well as winning new customers we are growing business with existing customers and COLT is now the majority supplier of IPVPN services to SWIFT in Europe, serving over 60% of its sites across 13 countries. "We continue to tightly manage operating costs. SG&A costs now represent 19.9% of revenues compared with 23.5% in the third quarter of 2002. As part of the reorganisation of our business over the past year we have reduced the number of Network Operating Centres from ten to two, with one used as a back up site. To date we have also reduced our real estate requirements by 465,000 square feet as part of our longer term plan to reduce real estate requirements from a peak of 4.25 million square feet to 2.9 million square feet. We remain on track to achieve our previously announced work force reduction target of 1,400 staff with staff numbers, including temporary and contract staff, of 4,353 at the end of the third quarter. We will continue to look at ways to further improve our operating efficiency."

Stefan de Krijger
PR Force Nederland
Breestraat 2 - D
1941 EJ Beverwijk
T. +31 (0) 251 - 211 322
F. +31 (0) 251 - 220 111
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E. sdekrijger@prforce.nl
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