Tiscali Reports H1, Names Chairman

MILAN, Italy -- The board of directors of Tiscali has approved the Group’s first-half 2004 results, whichbroadly confirm the figures provided for the release of its 2Q04 results.

In August and September 2004, Tiscali also announced the sale of subsidiaries inAustria, Norway, Sweden, South Africa and Switzerland for a total of over EUR 80million in cash, as the first wave of the announced disposal plan. This plan is consistentwith the Group’s strategy of refocusing its activities and concentrating on those marketswhich offer the best growth and profitability potential.These disposals, while representing 9% of first-half revenues, correspond to ca 1% of1H04 EBITDA, less than 5% of the Group’s ADSL users and less than 6% of dial-upusers of 30th June 2004.

Resignations of Renato Soru and appointment of Vittorio Serafino as Chairmanof Tiscali

The Board of Directors of Tiscali, upon proposal by Renato Soru, has appointedVittorio Serafino, Executive Chairman of Tiscali following the resignation of RenatoSoru himself. The appointment of Vittorio Serafino as board member will have to beratified in the next shareholders’ meeting.

Serafino, 54, has a long standing experience in merchant and commercial banking: hewas deputy general manager of IMI with the responsibility of the retail and institutional banking business. Following the merger with Sanpaolo, which resulted in the creationof the largest Italian banking group, he was responsible for the commercial bankingbusiness. Until 2002, he was managing director of Banco di Napoli, within theSanpaolo IMI group, which was subsequently merged with the parent company.Lately, he acted as deputy chairman of Fideuram Vita.

“As already announced, following my appointment as President of the SardinianRegion, I have resigned from the chairmanship and from the Board of Directors ofTiscali. I leave a growing Company, with improving operating performance, afterstarting the refocusing on the key strategic markets and on the broadband accessbusiness model. During the last months I prepared the Company to my departure, withthe appointment as CEO of Ruud Huisman, with whom I have long worked with my fullsatisfaction. I have submitted to the Board of Directors the candidature of VittorioSerafino as my replacement, which has been unanimously approved. Vittorio Serafinowill bring to Tiscali his long standing experience in the financial markets”, statesRenato Soru.“I will remain a key shareholder of Tiscali and, as such, I will continue to followattentively the future of the Company”, concludes Renato Soru.

1H04 results

Revenues and gross margin

The change in the access revenues mix due to sustained growth in ADSL usernumbers—most of whom receive wholesale services—had an impact on gross profit,which came in at EUR 246.8 million, an increase of 14% on 1H03. The gross marginnarrowed to 46% of revenues, from 50% in the first half of last year. This deteriorationis due to the increasing proportion of ADSL services provided, as wholesale broadbandservices offer far lower profitability than dial-up services. The gross margin is expectedto progressively improve over the next few quarters with growth in unbundledbroadband services.

Operating performance

Operating costs fall as a proportion of revenues

Operating costs fell from 43% of revenues in 1H03 to 37% this time. In absolute terms,however, operating costs rose by +8% yoy to EUR 198.5 million. This reduction inoperating costs as a proportion of revenues is attributable to lower marketing,personnel and general and administrative costs.

Operating costs break down as follows:

Financial resources and debt

Cash burn was EUR 88.6 million in 1H04 (EUR 58.6 million in the first quarter and EUR30.0 million in the second quarter).

In July 2004, the cash burn dropped to around EUR 7 million, before thereimbursement of the 2004 bond (including payments of coupon).

As of 30th June 2004, the Tiscali Group had liquid financial resources of EUR 228.5million, while net debt (excluding liabilities to other lenders) stood at EUR 371.1 million.

Tiscali