Exhibit 99.1
Carrier1 Reports Record Third Quarter Results; Total Revenue Grows 183%
Year Over Year to US$77.3 Million Driven by Strong Demand for Value-Added
Communication Services
ZURICH, Switzerland--(BUSINESS WIRE)--Nov. 7, 2000--Carrier1 International
S.A. (Neuer Markt: CJN; NASDAQ:CONE)--
All financial figures are in US dollars
Financial Highlights
-- Total revenue up 34% from second quarter 2000
-- Data revenue up 55% from second quarter 2000
-- Large order backlog of of $271 million
-- EBITDA loss reduced by 32% over second quarter 2000
-- Positive cash flow from operations for the second consecutive
quarter
-- Solid unrestricted cash position of $453 million
-- Fully funded long-term business plan
Carrier1 International S.A. (Neuer Markt: CJN; NASDAQ:CONE) a leading
European provider of end-to-end Internet, voice, bandwidth, data centre and
access solutions to large users of communication services, today reported third
quarter revenue of US$77.3 million, an increase of 183% over the third quarter
1999. Sequentially, revenue increased 34% from the second quarter 2000,
reflecting strong demand in both voice and data services.
A SUCCESSFUL QUARTER AND ONGOING ACHIEVEMENTS
-- AOL agreement signed and being implemented
-- Two additional VISP contracts signed
-- Wide Media Network service launched
-- Strategic relationship with a leading streaming media company
-- A seventh metropolitan build in Frankfurt
-- Data centre deployment accelerated with additional Carrier1
facilities
Carrier1 improved its competitive position during the third quarter,
providing more value-added services to large users of communication services
across Europe. The reach, scope and quality of Carrier1's services has attracted
AOL, a leading company, for access services in the United Kingdom, as well as
other Virtual ISP (VISP) customers for value-added services across Carrier1's
top tier Internet backbone.
The demand for outsourced telecommunications services continues to expand
in Europe. "Whether it be to focus on core marketing strengths, or to accelerate
time to market, or to conserve capital, more and more companies are turning to
Carrier1 to provide outsourced value-added communication services," said Stig
Johansson, President and CEO of Carrier1. "This outsourcing market opportunity
in Europe is large and fast-growing, and it is a market approach unique to
Carrier1" he continued.
During the quarter, Carrier1 announced the launch of its Wide Media
Network service, which will provide production studios, broadcasters, and others
in the media industry with a 270 Mb broadband service with no compression and
high studio quality. This service, utilising state-of-the-art technology, will
be offered at a lower rate than satellite transmission services that currently
dominate this market. This end-to-end broadband service is being rolled out in
line with the deployment of Carrier1's metropolitan fibre rings.
Mr. Johansson commented: "I am very pleased with our achievements in the
third quarter. We intend to continue this fast-paced growth by reinforcing our
organisation to face increasing demand for reliable and flexible outsourced
communication services across Europe. We are on target to complete the
construction of six metropolitan fibre rings to provide high speed broadband
fibre services. In addition, we now have four data centres in service, with four
additional data centres coming on-line by year end. The data centre deployment
is executed on two fronts: first, through our Digiplex joint venture and second,
by taking advantage of developing our own facilities in selected markets when
deploying our metropolitan rings."
THIRD QUARTER FINANCIAL RESULTS REVENUES: VOICE IS UP 30% SEQUENTIALLY WHILE
DATA INCREASED 55%
The company reported revenue of $77.3 million for the quarter, an increase
of 183% compared to revenue of $27.3 million in the third quarter 1999 and an
increase of 34% compared to revenue of $57.5 million in the second quarter 2000.
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Voice revenue reached $62.4 million for the quarter, an increase of 30%
over the second quarter of 2000 and up 144% over the same period in 1999.
Revenue per minute remained stable at approximately 14 cents, while traffic
increased 27% over the second quarter to 436 million minutes during the quarter.
Data-related revenue reached $14.9 million for the quarter, an increase of
55% over the second quarter of 2000 as Carrier1 experienced continued growth in
Internet, managed bandwidth, hosting/colocation services and infrastructure
sales.
Carrier1's backlog of bandwidth, VISP and infrastructure orders stood at
$271 million at the end of the third quarter. This is excluding the AOL
agreement.
OPERATING COSTS, GROSS MARGIN AND EBITDA
Total cost of services grew less than revenue during the third quarter,
resulting in gross margin before depreciation improving to $1.8 million or 2% of
revenue from a loss of $0.9 million or (2%) of revenue in the second quarter
2000 and a loss of $5.2 million or (19%) of revenue in the year-earlier quarter.
Gross margin improved due to a favorable revenue mix between voice and data
services.
Despite significant revenue growth, SG&A was $8.7 million or 11% of
revenue in the third quarter, compared to $9.2 million or 16% of revenue in the
second quarter 2000 and compared to $4.2 million or 15% of revenue in the third
quarter 1999.
EBITDA loss for the third quarter was $6.9 million, an improvement of 32%
over the EBITDA loss of $10.1 million in the second quarter 2000 and an
improvement of 27% over the EBITDA loss of $9.4 million reported in the third
quarter 1999. EBITDA margins continue to improve to (9%) of revenue in the third
quarter 2000, compared with (18%) of revenue in the second quarter of 2000 and
(35%) of revenue in the third quarter 1999.
Commenting on this strong financial performance, Carrier1's Chief
Financial Officer Joachim Bauer said: "We are on track to achieve positive
EBITDA in 2001, after less than three years in operation, due to our strategic
positioning as the outsourcer of choice in Europe and the capital efficient
approach we took in developing our pan-European network."
Mr. Johansson commented: "The number of employees was 267 in the third
quarter 2000, enabling us to achieve what we believe is one of the strongest
revenue per employee levels in European telecommunications. Each employee of
Carrier1 should feel proud of building one of the leanest and most efficient
alternative carriers in Europe."
NET LOSS
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Net loss for the third quarter reached $29.0 million compared to a net
loss of $12.8 million in the second quarter of 2000 and a net loss of $18.4
million in the third quarter of 1999. Included in the net loss for the third
quarter of 2000 was a currency exchange loss of $10.3 million.
CHANGE IN FUNCTIONAL CURRENCY
Carrier1 determined that the functional currency of the Luxembourg holding
company, Carrier1 International S.A., had clearly changed from the U.S. dollar
to the Euro during the third quarter of 2000 due to significant changes in
economic facts and circumstances underlying the company's business. The
functional currencies of Carrier1's subsidiaries have not changed and, in all
instances, are the respective local currency.
Some of the economic changes that led to this change in functional
currency include:
-- A steadily-increasing, significant portion of our revenues and
costs being generated in Euros,
-- The completion of the German network which became operational
in the third quarter,
-- The provisioning of major investments through Euro-based
contracts including city ring builds and data center
investments,
-- The migration of a majority of our refiling business to
Euro-denominated contracts in Europe rather than New York, and
-- Reduced reliance on the U.S. dollar as shown through our
repayment of U.S. dollar-denominated vendor financing loans.
Carrier1 applied this change prospectively as of the beginning of the
quarter. As a result of this change, transactions entered into by the holding
company that are denominated in currencies other than the Euro are now
translated into Euros in accordance with Statement of Financial Accounting
Standards No. 52, Foreign Currency Translation.
The net effect of this change in functional currency for the three months
ended September 30, 2000 was to reduce the currency exchange loss (net) and the
net loss reported in the statement of operations by approximately $17.8 million
and to increase
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the negative currency translation adjustment component of other comprehensive
income (loss) reported in the statement of shareholders' equity by approximately
$17.8 million.
FINANCIAL RESOURCES
Delivery of bandwidth contracts on the German ring brought positive cash
flow from operating activities for the second consecutive quarter. During the
third quarter 2000, cash flow from operating activities was $34 million.
Carrier1's unrestricted cash balance at the end of the third quarter remains
significant at $453 million, allowing Carrier1 to maintain a cash reserve while
simultaneously pursuing additional growth opportunities. Carrier1's long term
business plan is fully funded.
INFRASTRUCTURE DEVELOPMENTS METROPOLITAN FIBRE RING DEPLOYMENT
During the third quarter, we made significant progress in our metropolitan
fibre ring deployment. Construction of a seventh metropolitan city ring in
Frankfurt has been announced. This project will expand Carrier1's network by
approximately 60 route kilometres and will further increase the reach and scope
of our German national network.
This initiative will expand Carrier 1's actual metropolitan network to a
total of approximately 460 route kilometres. Other cities are under development
with an objective to reach a total of 1,500 route kilometres of metropolitan
fibre rings.
"Carrier1's cost-effective extension of our pan-European fibre optic
network into metropolitan rings in major European cities dramatically increases
the number of broadband services we can offer to our customers," said Mr.
Johansson. "Importantly, all of our metropolitan ring builds will be completed
on a highly capital efficient basis, with Carrier1 taking advantage of a
combination of trench-sharing arrangements, joint builds, swaps and/or pre-sales
to minimise overall cost and maximise time to market," he continued.
DATA CENTRE DEPLOYMENT
Carrier1's Digiplex joint venture has announced the construction of eight
large-scale data centres. Carrier1 has a 15% ownership interest in Digiplex, has
access to 10% of Digiplex's data centre space across Europe at preferential
rates, and is connecting the Digiplex facilities to its metropolitan fibre rings
and long haul networks. Digiplex recently completed a bank facility for Euro170
million and received additional equity commitments from its investors of $50
million. Carrier1 followed the increase in equity by committing an additional
$8.8 million.
"Our capital-efficient approach to building our metropolitan fibre rings,
our long haul networks, and our data centres has enabled us to develop
significant operational capabilities quickly, while at the same time retaining
an exceptionally strong balance sheet with low debt relative to many of our
competitors and a strong
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cash position," said Mr. Johansson. "This capital efficiency will enable
Carrier1 to have one of the lowest cost networks in Europe, which we expect will
enable us to price our services competitively while still enjoying attractive
margins over the long term," Mr. Johansson continued.
Figures prepared in accordance with U.S. GAAP (unaudited)
$ 000, except per share data
Three Months Ended September 30:
2000 1999
Revenue 77,280 27,311
Cost of services 75,500 32,543
Gross Margin 1,780 (5,232)
Selling, general
and administrative expenses 8,699 4,216
EBITDA (1) (6,919) (9,448)
Depreciation and
amortisation 9,201 4,183
Loss from Operations (16,120) (13,631)
Other Income (Expense):
Interest expense (8,057) (8,718)
Interest income 5,494 2,009
Other Income (expense) 4 (25)
Currency exchange loss, net (10,298) 1,931
Total other income (expense) (12,857) (4,803)
Loss before Income
Tax Benefit (28,977) (18,434)
Income tax benefit 0 0
Net Loss (28,977) (18,434)
Earnings (Loss) per Share
Loss from operations in $ (0.39) (0.44)
Net loss in $ (0.70) (0.59)
Weighted average shares 41,648 31,019
Nine Months Ended September 30:
2000 1999
Revenue 186,078 59,798
Cost of services 188,503 71,904
Gross Margin (2,425) (12,106)
Selling, general and
administrative expenses 25,502 10,681
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EBITDA (1) (27,927) (22,787)
Depreciation and amortisation 22,580 7,817
Loss from Operations (50,507) (30,604)
Other Income (Expense):
Interest expense (27,682) (21,323)
Interest income 14,584 5,087
Other Income (expense) (2) (438)
Currency exchange loss, net (26,123) (5,218)
Total other income (expense) (39,223) (21,892)
Loss before Income Tax
Benefit (89,730) (52,496)
Income tax benefit 0 0
Net Loss (89,730) (52,496)
Earnings (Loss) per Share
Loss from operations in $ (1.27) (1.06)
Net loss in $ (2.25) (1.83)
Weighted average shares 39,923 28,764
September 30:
2000 1999
Balance Sheet Data
Unrestricted Cash 453,355 13,931
Restricted cash 21,354 7,217
Restricted investments 29,375 103,743
Working Capital 496,640 67,639
Property and equipment, net 286,861 142,350
Investment in Joint Venture 32,431 4,681
Total Assets 955,214 341,462
Deferred Revenue 83,785
Long term debt 234,699 265,017
Equity 520,381 (5,863)
(1) EBITDA is not a U.S. GAAP measure. EBITDA stands for earnings before
interest, taxes, depreciation, amortization, foreign currency
exchange gains or losses and other income/expense.
ABOUT CARRIER1
Carrier1 International S.A. is a leading European provider of end-to-end
Internet, voice, bandwidth, data centre, and access solutions to large users of
communication services. Carrier1 provides its clients with carrier-grade
transport and
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network solutions as well as end-user ready value added services. Carrier1
customers brand and market these solutions and services to their respective
end-users.
The Carrier1 pan-European inter-city fibre network connects 12 countries
and currently spans over approximately 11,000 route kilometres connecting
points-of-presence in over 20 European cities. Carrier1 is operational in all 12
countries and has secured all the necessary interconnects and operational
licenses that allow it to provide network solutions and end-user ready value
added services. Carrier1 is also constructing 7 city ring fiber networks and
plans to build/acquire at least another 13 city ring fibre networks. Through its
investment in the joint venture Digiplex, Carrier1 has space available for
service in Digiplex' Frankfurt and Oslo data centre facilities. Digiplex is
building a further 6 full-service data centre facilities and plans to build at
least another 12 data centre facilities.
FORWARD LOOKING STATEMENTS
The information contained in this press release contains
"forward-looking statements" within the meaning of the U.S. Federal
Securities Laws. These statements include: (i) under Financial Highlights:
the statement that our long term business plan is fully funded, (ii) under A
successful quarter and ongoing achievements: statements relating to the
growth in demand for outsourced communication services, increase in demand
for such services from Carrier1, the development, quality and cost and
pricing of our Wide Media Network services and demand for such services and
the development and completion of our metropolitan rings and data centres,
(iii) under Third Quarter Financial Results Revenues: Voice is up 30%
sequentially while Data increased 55%: statements relating to our backlog,
(iv) under Operating Costs, Gross Margin and EBITDA: the statement relating
to the expected timing when the Company will be EBITDA positive, (v) under
Change in Functional Currency: statements relating the continued increase of
the portion of our revenues and costs in Euros, the currency denomination of
future infrastructure contracts and the continued migration of our refiling
business, (vi) under Financial Resources: statements relating to the
Company's cash position and its long term business plan being fully funded,
(vii) under Infrastructure Developments Metropolitan Fibre Ring Development:
statements relating to the timing, cost,scope and implementation of planned
or announced metropolitan rings and datacentres and the statement relating to
the Company's ability to price our services competitively on long term basis.
These statements are based on the current expectations of the management
of Carrier 1 International S.A., and performance is subject to risks,
uncertainties and other factors that could cause actual results to differ
materially from these statements. Such risks include, but are not limited to,
adverse regulatory, technological or competitive developments, decline in demand
for the company's services or products, inability to timely develop and
introduce new technologies, products and services, pressure on pricing resulting
from competition, unforeseen construction delays, and failure to receive on a
timely basis necessary permits or other governmental approvals, and failure to
obtain any necessary financing if management's business plan assumptions are not
met, and failure of third parties with whom the Company has
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contracted including for the supply or maintainance of infrastructure
components. For a more detailed discussion of these risks, uncertainties and
other factors affecting the company, please refer to the company's prospectus
and 10-K, 10-Q and 8-K reports filed with the U.S. Securities and Exchange
Commission, including its 10-K for the year ended 31 December 1999 and its 10-Q
for the 3-month period ended 31 March 2000 and the 3-month period ended 30 June
2000.
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