Completel Reports Q4

Completel announced its results for the quarter and the year ended December 31, 2005

March 13, 2006

3 Min Read

PARIS -- Completel Europe NV, a national infrastructure-based operator providing telecom services to the French business market, announced today its results for the quarter and the year ended December 31, 2005.

Jerome de Vitry, President and CEO of Completel Europe N.V., commented: "In addition to the launch of a further major development of our network, 2005 has been another year of strong operational achievement for Completel. Our business continued to grow steadily quarter on quarter during 2005, with a 20% increase of revenue and customers connected with fibre to our network in 2005, compared to 2004. Revenue growth in Q4'05 exceeded our original guidance for both corporate and wholesale revenue. This encouraging market response to our expansion plan announced last summer reinforces our confidence in our ability to accelerate our revenue growth in 2007 after the completion of our extended network and the ramp in sales employees.

Deployment of our extended network is being implemented according to the plan we announced last year. Our backbone is being progressively commissioned, and we have now more than 100 DSL co-location sites in service. As announced on January 10, 2006, we are enlarging our network coverage to more metropolitan areas than initially planned, with the same target returns.

In parallel, more than 120 new employees joined the company in the past 6 months, as the basis of the organization needed to address this expanded market. We will continue to increase our sales force in the coming months consistent with our network roll-out.

We started the year 2006 with the signing of a very promising long-term contract to provide nationwide, starting end of 2006, DSL based residential oriented services on a wholesale basis to a service provider offering Triple Play services to the residential market.

After the long term contract signed with Afone last summer, this second long term contract demonstrates the ability of our technical teams and the capacity of our network to offer innovative solutions to wholesale customers serving all market segments nationwide.

2006 will, as we announced, be a year of transition. We will successively complete our network extension, increase our sales force, and address our expanded market. Meanwhile, we will continue to benefit from the positive business trends experienced in the past quarters, before progressively accelerating the pace of our revenue growth, starting late in the second half of 2006.

Alexandre Westphalen, Chief Financial Officer, added: "Q4'05 confirmed our current 20% annual growth trend for revenue and customers, which we anticipate will increase when we begin to benefit from our extended network and expanded addressable market. In Q4'05, gross margin and EBITDA margin was reduced as anticipated, due to the incremental fixed network costs and SG&A expenses we are incurring as we implement our expansion plan. This trend will continue until new sales in our expanded addressable market progressively cover the fixed costs of our enlarged network.

Quarterly capital expenditures increased in Q4'05 as we deployed our network. The project remains within our initial cost estimates and on schedule. The residential DSL services wholesale contract signed in February 2006 will require an additional capital expenditure of less than EUR10 million, which will be partially covered by customer installation fees. Revenue ramp-up expected from this customer will commence starting in 2007.

2005 call termination tariffs remain subject to regulatory uncertainty. Accordingly, our Annual Results are based on call termination revenue estimates, and could later be restated upwards or downwards retrospectively. Several operators initiated disputes before ARCEP on call termination early February 2006. ARCEP rulings, expected in May or June 2006, should clarify this matter."

Completel S.A.S. (Paris: CPT)

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