LONDON -- COLT Telecom Group plc today announced results for the three and twelve months ended 31 December 2003.

Highlights

Commenting on the results for the year COLT Telecom Group Chairman Barry Bateman said:

"In a continuing difficult trading environment it is encouraging that COLT managed to deliver further improvement in its key operating results. Turnover grew by 14% to £1,166.3 million in 2003 with EBITDA up 128% to £163.4 million.

"COLT remains strong financially. We reduced operating cash consumption from £300.0 million in 2002 to £30.4 million in 2003. Taking into account the repurchase and redemption of some of our bonds for a cash consideration of £144.5 million we ended the year with cash and liquid resources of £802.4 million. We remain confident in achieving our goal of being free cash flow positive on a sustainable basis during 2005.

"2004 is likely to be another challenging year and as yet, it is too early to determine whether the improving economic environment will lead to any significant upturn in demand for telecom services across Europe. Nevertheless our reputation for world class customer service, expanding product range and financial stability positions us well for another year of progress and to take advantage of any improvement in the market."

Commenting on the results for the fourth quarter Steve Akin, COLT's President and Chief Executive Officer said:

"Fourth quarter turnover and EBITDA have continued to improve with turnover growing by 16% to £306.3 million and EBITDA by 74% to £48.2 million. Not only has turnover continued to grow but we have achieved an accelerating rate of constant currency turnover growth from 3% in the first quarter to 8% in the fourth quarter.

"Turnover growth and improved turnover mix combined with continuing tight management of operating costs have contributed to the improvement in gross margin before depreciation to 35.5% in the fourth quarter compared with 33.2% in the comparable quarter of 2002 with EBITDA margin expanding to 16% from 11%.

"COLT continues to be recognised for its outstanding customer service and the contribution made to the communities in which we operate. In Germany, for the second time, we won the IT-Elite award for customer service. We won the Greenfield prize in recognition of our contribution in providing Turin with one of the most advanced technology infrastructures in Italy and in the UK COLT was the only telecommunications company to win the Westminster Gold Award for considerate contracting.

"Underpinning our financial performance has been our success in selling more to existing customers as well as winning new customers. At the end of the quarter we had 19,565 network and data solutions customers, an increase of 26% over the position at the end of 2002. Corporate customer revenues grew by 16% with wholesale customer revenue growth of 17%. We further reinforced our longstanding relationship with Deutsche Bank. Among the more significant new business wins during the quarter were ToldSkat, the Danish taxation authority where COLT will be providing service in Copenhagen and 29 regional offices. In Rome, new contracts have been awarded by the Department of Education and La Sapienza University for high bandwith data services and in Germany we have continued to expand the level of business we do with Commerzbank and EDS.

"We continue to tightly manage costs and have further reduced staff numbers. At the end of the quarter employee numbers were 4,044, including temporary and contract staff compared with 4,855 at the end of 2002. We also sold our Fitec subsidiary during the quarter, which accounted for 103 of the reduction in staff numbers.

"We are looking at further opportunities to improve customer service and achieve further operating efficiencies. In particular we are examining the possibility of establishing a new support organisation in India.

"I am confident that COLT is moving in the right direction and am encouraged by our performance during 2003. As we move through 2004 we will continue to focus on profitable revenue growth and tight management of operating costs and capital expenditure. In doing so I believe we will continue to grow and be successful."

Colt Telecom Group plc