Versatel Reports Q1

Revenues were €140.2M, up 36% from €103M in 1Q06; net loss rose from €22.5M to €22.8M

May 2, 2007

2 Min Read

AMSTERDAM -- Versatel Telecom International N.V., today reported first quarter 2007 financial and operating results.

For the quarter ended March 31, 2007, revenues were €140.2 million, up 36.0 percent from 1Q06revenues of €103.0 million and up 19.3 percent compared with 4Q06 revenues of €117.5 million.

The quarter over quarter increase in revenue is due to both organic growth in our residential and businesssegments as well as the acquisitions of Tele2 Netherlands and Tele2 Belgium. The operations of bothTele2 Netherlands and Tele2 Belgium are consolidated as of March 6, 2007. The organic growth, nottaking into account the acquisitions of Tele2 Netherlands and Tele2 Belgium, equalled 14.4 percentcompared with 1Q06.

Versatel's gross margin as a percentage of revenue in the first quarter of 2007 was 48.2 percentcompared with 50.8 percent in 1Q06 and 55.3 percent in 4Q06.Selling, general and administrative expenses (SG&A) in the first quarter of 2007 were €48.6 millioncompared with €38.5 million in the first quarter of 2006 and €46.1 million in 4Q06. Versatel's marketingexpenditures were €10.9 million during the first quarter of 2007 compared with €5.1 million and €7.1million in 1Q06 and 4Q06 respectively. The increase in marketing expenses are mainly due to intensifiedmarketing campaigns in the residential market in order to increase the intake of dual-and triple playservices, as well as the re-branding campaign of the Dutch business segment into "Tele2 Zakelijk". Also,the expenses related to the marketing efforts of Tele2 Netherlands have been included as of March 1,2007 which are mainly related to the mobile products offered by Tele2 Netherlands.

For the first quarter of 2007, Versatel’s earnings before interest, tax, depreciation and amortization(EBITDA) were €19.0 million compared with €13.9 million for the first quarter of 2006 and €19.0 millionin the previous quarter.

Versatel's net result for continued operations for 1Q07 amounted to a loss of €22.8 million compared with a loss of €22.5 million in 1Q06 and a loss of €19.7 million in 4Q06.

Capital expenditures (“Capex”) from continuing operations for the first quarter were €26.0 million,compared with Capex of €33.9 million and €22.2 million, for 1Q06 and 4Q06 respectively.

Free Cash Flow (“FCF”, calculated as EBITDA less Capex) for the first quarter of 2007 was negative€7.0 million compared with negative €20.0 million in the same quarter of 2006 and negative €3.2 millionin 4Q06. The year over year FCF continued to increase as a result of lower Capex levels.

As of March 31, 2007, Versatel had €69.7 million in cash on its balance sheet compared with €77.1million at the end of the first quarter of 2006 and €87.8 million at the end of 4Q06.

The company had a positive shareholders’ equity position of €289.2 million as at March 31, 2007compared with €138.0 million at the end of the first quarter of 2006 and €60.6 million at December 31,2006. As a consequence of the completion of the rights offering in March 2007, the shareholders’ equityhas increased. Subsequently the net result (loss) for the period decreased the shareholders’ equity.

Versatel Telecom International N.V. (Pink Sheets: VRSAF)

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