STOCKHOLM, Sweden, Feb. 14, 2002 (PRIMEZONE) -- Song Networks (Nasdaq:SONW) Revenues in the Fourth Quarter 2001 were up 72% compared to the Fourth Quarter 2000. For Fiscal Year 2001, the Company's Revenues increased 107% compared to the Fiscal Year 2000. The Fourth Quarter Revenues 2001 decreased 1% compared to the Third Quarter 2001 due to a Conscious Decision of the Company to move out of Non-Core, Low Margin Business. The Company added 1,183 Directly Connected Sites during the Quarter for a total of 10,498. At the end of the Quarter the Number of Corporate Customers was 20,728, 5,605 of which were Directly Connected. Planned Network Build-Out was completed more than a Year ahead of Schedule. The Company continued to make Strong Progress in its Core Business - Direct Revenues and Data. Direct Revenues increased to 46% of Total Revenues in the Fourth Quarter compared with 42% in the Third Quarter. Revenues from Data and Internet increased to 35% of Total Revenues in the Fourth Quarter compared with 32% the Previous Quarter. Fiber Revenue increased 29% during the Quarter, and DSL Revenue increased 12% from the Third Quarter to the Fourth Quarter.
Song Networks Holding AB ("Song Networks"), formerly Tele1 Europe Holding AB (Stockholm Stock Exchange:SONW) (Nasdaq:SONW), the leading pan-Nordic competitive provider of broadband communications services, today reported fourth quarter financial and operating results. Commenting on the results, Ivar Stromberg, Chief Executive Officer, said: "The Company delivered solid improvements and growth in its core business despite difficult market conditions. Quarter-on-quarter growth in revenues from directly connected customers reached 9%. The ramp-up of gross margin is in line with our previously communicated plans and consistent with the ramp-up curve needed to bring the company to EBITDA break-even. The effect of the SG&A reduction program was according to plan. Adjusted for cost reductions achieved during the fourth quarter, and some incremental cost savings going forward, we believe that the quarterly run-rate for SG&A in the first half of 2002 will be around SEK 310 million (USD 30 million). The Company is strongly committed to keeping its overall cost base under tight control. An important milestone was reached when all material parts of the network build-out were completed at the end of the year. The Company is now fully focused on selling to on-net customers, and on further reducing the Company's exposure to lower margin non-core revenues."
Financial Highlights:
-- Fourth quarter revenues totalled SEK 621 million (USD 59 million).
This is a 72% increase over the same quarter last year. Full year
2001 revenues totalled SEK 2,168 million (USD 207 million),
representing a 107% increase compared to the previous year. Fourth
quarter revenues decreased 1% compared to the third quarter due to
divestments as a result of sharpening focus on the core activities
and a conscious decision of the Company to move out of low margin
business.
-- Revenues from continuing operations1 were SEK 568 million (USD 54
million) in the quarter, up 7% from SEK 529 million (USD 51
million) in the third quarter.
-- Direct revenues(2) totalled SEK 284 million (USD 27 million) in
the quarter, up 9% from SEK 261 million (USD 25 million) in the
third quarter and represented 46% of total revenues in the fourth
quarter, compared with 42% in the previous quarter.
-- Revenues from data and internet services(3) totalled SEK 220
million (USD 21 million) or 35% of total revenue in the fourth
quarter, compared to 32% third quarter.
-- Fiber revenue increased with 29% and DSL revenue with 12% from the
third quarter to the fourth quarter.
-- Gross margin increased to 36.1% for the fourth quarter compared
with 34.1% in the previous quarter.
-- Adjusted sales, general and administration (SG&A) costs(4) were in
line with internal plans of SEK 330-335 million (USD 32 million)
when we exclude the effect of provisions for bad debts related
largely to certain special situations provisions pertaining to
carriers with severe financial difficulties in 2001.
-- Adjusted EBITDA margin, excluding non-recurring restructuring
charges improved to -20 % in the fourth quarter, compared with -
22% in the third quarter. The adjusted EBITDA is negatively
impacted by the above mentioned bad debts of SEK 19 million (USD 2
million), if the Company were to exclude the special situations
provisions the adjusted EBITDA margin would have been -17%.
-- On December 31, 2001 the Company had approximately SEK 1,747
million (USD 167 million) in cash and cash equivalents. This
includes restricted cash of SEK 247 millions (USD 24 million) and
an unused secured bank facility of SEK 300 million (USD 29
million).
-- The Finnish subsidiary continued to deliver positive adjusted
EBITDA during the quarter
1 Continuing operations see page 5, 6.
2 Direct revenues include on-net revenues, hosting revenues and
revenues from leasing capacity to corporate customers.
3 Revenues from data and internet services include hosting revenues
and revenues from leasing capacity to corporate customers.
4 As defined on page 4.
Operational Highlights:
-- After adding 244 fiber sites during the quarter, the Company had
1,208 fiber sites connected to its fiber network throughout
Sweden, Norway, Finland and Denmark.
-- Directly connected customers increased by 301 to 5,605 and
directly connected sites increased by 1,183 to 10,498 during the
fourth quarter. The number of sites connected through DSL
increased by 607 to 4,355 during the fourth quarter.
-- The Company ended the quarter with 2,546 km of local access fiber
and 12,706 km back-bone fiber (including the Euroring of
2,501 km).
-- The Company increased the number of active IP/VPN sites to
approximately 1,600 versus 1,300 previous quarter.
-- Song Networks and ICL Invia signed a strategic partnership
agreement for network services. In the short term this agreement
is expected to generate SEK 49 million (USD 5 million).
-- Song Networks AB and Telia International Carrier AB reached an IRU
agreement whereby Telia International Carrier will hire fiber
capacity from Song Networks for 15 years. The order is worth
approximately SEK 65 million (USD 6 million).
-- In order to sharpen its focus on core activities, Song Networks
reached an agreement with Spinbox AB, whereby Spinbox will take
over responsibility for the Swedish subsidiary Song Networks AB's
mobile activities. Operations in Norway have been streamlined
through the sale of the Company's PBX activities and its
consulting activities in Stavanger. Song Networks is also co-
ordinating and centralising activities in Sweden. A number of
central positions will move from local offices to the Swedish head
office. The Swedish subsidiary Wineasy AB's activities will also
be integrated into Song Networks.
-- Ari-Jussi Knaapila was appointed Chief Operational Officer (COO)
for Song Networks Holding AB in December. He takes charge of the
Nordic Group's operations and reports directly to the CEO.
-- Peter Lovgren was appointed MD for the Swedish subsidiary, Song
Networks AB, in November. Mr Lovgren's recent professional
experience includes being Managing Director of Iterium.net and
deputy Managing Director for Microsoft AB.
-- The Company secured a bank facility with Svenska Handelsbanken
with an initial commitment limit and draw-down potential of SEK
300 million (USD 29 million). The facility is secured by the
Company's receivables.
Subsequent Events:
In January 2002, Song Networks acquired the Euroring for SEK 12 million 5) (USD 1 million) from the bankruptcy estate of Enitel (Norway). The Euroring is a 2,501 km fiber network ring in Europe.
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