RNS Number:2100R
Colt Telecom Group PLC
23 October 2003

23 October 2003


                COLT TELECOM GROUP PLC ANNOUNCES RESULTS FOR THE
                 THREE AND NINE MONTHS ENDED 30 SEPTEMBER 2003


THIRD QUARTER HIGHLIGHTS

* Turnover up 14% to #295 million compared with Q3 2002
* Constant currency turnover growth of 6% over Q3 2002
* Corporate customer turnover up 19% to #177 million
* Wholesale customer turnover up 7% to #118 million
* Gross margin before depreciation and exceptional items improved from 31.0% to
  34.5%
* EBITDA (1)  up 123% to #43 million
* Capital expenditure of #33 million
* Positive free cash flow of #9.1 million
* Strong liquidity position with cash and liquid resources of #934 million
* Three new accolades for excellent customer service
* Staff levels including temporary and contract workers reduced by 126 during
  the quarter to 4,353

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

"We have continued to make progress during the seasonally weaker third quarter.
Our success in what remains a difficult market, combined with the strength of
the Euro, has resulted in revenue growth of 14% over the third quarter of last
year.

"COLT was free cash flow positive during the quarter primarily due to
improvements in working capital and the timing of cash interest payments. This
quarter's performance further reinforces our confidence of reaching sustainable
positive free cash flow during 2005. Capital expenditure in the quarter was #33
million and we now expect capital expenditure for the year to be less than the
#170 million to #200 million range previously indicated.

"A strong cash position is an important competitive advantage in today's market
and with cash and liquid resources of #934 million COLT is well positioned to
continue to grow successfully and meet its customers' needs for high quality
advanced services."

Steve Akin, COLT's President and Chief Executive Officer added:

"As we celebrate the tenth anniversary of providing service to our first
customer, COLT is recognised as being one of Europe's best in class
telecommunications service companies. Our reputation for first class customer
service, our extensive product range, the benefits of our extensive pan-European
network coverage and our underlying financial strength are all reflected in our
third quarter performance.

"We continue to improve our position as a preferred supplier to the European
corporate market with revenues from corporate customers growing by 19% compared
with the third quarter of 2002.

"Improved revenue mix at both the customer and product level has contributed to
the improvement in gross margin before depreciation to 34.5% from 31.0 % in the
third quarter last year with EBITDA up 123% to #43 million.

"COLT has built its reputation on first class customer service. This continues
to be recognised by our customers when for the third consecutive year COLT won
the prestigious World Communication Award for Customer Care. Once again we have
been named as the number one fixed telephony and internet services company in
Switzerland by Bilanz magazine, a leading Swiss business publication. We have
also been recognised by EA Games, the leading interactive software company, as
offering the best performing hosting infrastructure for its online games in the
UK.

"Among our more significant corporate customer wins during the quarter was AGA
Gas. COLT is providing AGA with a 50 site IPVPN in Sweden, Denmark, Norway and
Finland. In the UK COLT is providing voice and data communications services into
Swiss Re's new headquarters at 30 St. Mary Axe in London. Other important new
customers include the Belgian postal service, the Portugese national railway,
the Portugese public television network and in the Netherlands, Tenovis, the
communications facilities company.

"As well as winning new customers we are growing business with existing
customers and COLT is now the majority supplier of IPVPN services to SWIFT in
Europe, serving over 60% of its sites across 13 countries.

"We continue to tightly manage operating costs. SG&A costs now represent 19.9%
of revenues compared with 23.5% in the third quarter of 2002. As part of the
reorganisation of our business over the past year we have reduced the number of
Network Operating Centres from ten to two, with one used as a back up site. To
date we have also reduced our real estate requirements by 465,000 square feet as
part of our longer term plan to reduce real estate requirements from a peak of
4.25 million square feet to 2.9 million square feet. We remain on track to
achieve our previously announced work force reduction target of 1,400 staff with
staff numbers, including temporary and contract staff, of 4,353 at the end of
the third quarter. We will continue to look at ways to further improve our
operating efficiency."

KEY FINANCIAL DATA                       Three months           Nine  months
                                            ended                  ended
                                         30 September           30 September
                                   -------------------------------------------
                                        2002      2003         2002      2003
                                         # m       # m          # m       # m
                                   -------------------------------------------

Turnover                                259.0     295.4        764.1     860.1

Interconnect and network costs before  (178.8)   (193.3)      (537.9)   (569.3)
exceptional items                  -------------------------------------------

Gross profit before depreciation and
exceptional items                        80.2     102.1        226.2     290.8

Gross profit before depreciation and
exceptional items %                      31.0%     34.5%        29.6%     33.8%

Network depreciation                    (57.5)    (54.0)      (161.3)   (154.0)

Exceptional cost of sales              (520.6)      --        (526.3)       --
                                   -------------------------------------------
Gross profit (loss)                    (497.9)     48.1       (461.4)    136.8
                                   ===========================================
Loss for the period (before             (61.8)    (35.7)      (191.3)   (111.1)
exceptional items)                 ===========================================

Loss for the period (after             (609.3)    (35.7)      (673.0)   (103.6)
exceptional items)                 ===========================================
EBITDA (1)                               19.4      43.3         43.9     115.2
                                   -------------------------------------------



OPERATING STATISTICS
                                     Q3 02            Q3 03            Growth
                                   ------------------------------------------
Customers (at end of period)
North Region                         4,115            5,334               30%
Central Region                       5,173            6,466               25%
South Region                         4,877            5,605               15%
                                   ------------------------------------------
                                    14,165           17,405               23%

Customers (at end of period)
Corporate                           13,413           16,532               23%
Wholesale                              752              873               16%
                                   ------------------------------------------
                                    14,165           17,405               23%

Switched Minutes (million) (for period)
North Region                         1,234            1,519               23%
Central Region                       2,506            2,969               18%
South Region                           852            1,010               19%
                                   ------------------------------------------
                                     4,592            5,498               20%

Private Wire VGEs (000) (at end of period)
North Region                         7,724           10,125               31%
Central Region                       8,248           10,621               29%
South Region                         2,769            4,432               60%
                                   ------------------------------------------
                                    18,741           25,178               34%

Headcount (at end of period)
North Region                         1,552            1,282              -17%
Central Region                       1,699            1,461              -14%
South Region                         1,214            1,114               -8%
Group/other                            504              315              -38%
                                   ------------------------------------------
                                     4,969            4,172              -16%


North Region comprises Belgium, Denmark, Ireland, The Netherlands, Sweden and 
UK. Central Region comprises Austria, Germany and Switzerland.  South Region
comprises France, Italy, Portugal and Spain.

Headcount excludes temporary and contract workers.

In previous quarters corporate customers were categorised as retail.


FINANCIAL REVIEW

Turnover

Turnover increased from #259.0 million and #764.1 million for the three and nine
months ended 30 September 2002 to #295.4 million and #860.1 million for the
three and nine months ended 30 September 2003, increases of #36.4 million and
#96.0 million or 14.0% and 12.6% respectively. Turnover also benefited from the
weakness of the British pound relative to the Euro; at constant exchange rates
growth over the three and nine months ended 30 September 2002 was 6% and 5%
respectively.  The increase in turnover was driven by continued demand for
COLT's services from existing and new customers and new service introductions.
However, the rates of growth have been affected by the slowdown in economic
growth across Europe generally.

Turnover from corporate customers increased from #148.7 million and #428.4
million for the three and nine months ended 30 September 2002 to #177.2 million
and #511.3 million for the three and nine months ended 30 September 2003,
increases of 19%. Turnover from corporate customers represented 60% of total
turnover in the three and nine months ended 30 September 2003 compared with 57%
and 56% in the comparable periods of 2002. Switched turnover from corporate
customers for the three and nine months ended 30 September 2003 was #85.4
million and #248.8 million, increases of 12% and 14% respectively. Non-switched
and other turnover from corporate customers for the three and nine months ended
30 September 2003 was #91.7 million and #262.5 million, increases of 27% and
25%, respectively.

Turnover from wholesale customers increased from #110.3 million and #335.7
million for the three and nine months ended 30 September 2002 to #118.2 million
and #348.7 million for the three and nine months ended 30 September 2003,
increases of 7% and 4% respectively and represented 40% of total turnover
compared with 43% and 44% in the comparable periods of 2002. Switched turnover
from wholesale customers for the three and nine months ended 30 September 2003
was #91.5 million and #265.9 million, increases of 13% and 7% respectively.
Non-switched and other turnover from wholesale customers for the three and nine
months ended 30 September 2003 was #26.7 million and #82.8 million, decreases of
9% and 4% respectively.

For the three and nine months ended 30 September 2003 5.5 billion and 15.8
billion switched minutes were carried compared with 4.6 billion and 15.0 billion
in the equivalent periods of 2002. Average switched revenue per minute decreased
by 6% for the three months and increased by 4% for the nine months ended
September 2003 compared to the equivalent periods in 2002 as a result of changes
in mix.

At 30 September 2003 COLT had 25.2 million voice grade equivalent private wires
in service, an increase of   34% compared to 30 September 2002. Growth in
non-switched services reflected the growth in demand for local, national and
international bandwidth services, partially offset by circuit cancellations. The
growth in non-switched services also reflects the growing success COLT is
achieving in the provision of IPVPN services.

Cost of Sales

Cost of sales, before exceptional items, increased from #236.4 million and
#699.2 million for the three and nine months ended 30 September 2002 to #247.3
million and #723.3 million for the three and nine months ended 30 September
2003, increases of #10.9 million and #24.1 million or 5% and 3% respectively.

Interconnection and network costs, before exceptional items, increased from
#178.8 million and #537.9 million for the three and nine months ended 30
September 2002 to #193.3 million and #569.3 million for the three and nine
months ended 30 September 2003 as a result of the overall increase in business
partially offset by ongoing cost containment measures.

Network depreciation decreased from #57.5 million and #161.2 million for the
three and nine months ended 30 September 2002 to #54.0 million and #154.0
million for the three and nine months ended 30 September 2003.  The decrease was
primarily attributable to the impairment provisions recorded in September 2002,
partially offset by further investment in fixed assets to support the growth in
demand for services and new service developments.

For the nine months ended 30 September 2002, an exceptional charge of #18.3
million was recognised for severance provisions related to the staff reduction
programmes announced in February and September 2002 and an impairment charge of
#508.0 million was recognised to ensure that the asset base remained aligned
with the realities of the market place. There were no exceptional charges for
the three and nine months ended 30 September 2003.

Operating Expenses

Operating expenses, before exceptional items, decreased from #73.7 million and
#223.0 million for the three and nine months ended 30 September 2002 to #68.5
million and #204.8 million for the comparable periods in 2003.

Selling, general and administrative (SG&A) expenses, before exceptional items,
decreased from #60.8 million and #182.3 million for the three and nine months
ended 30 September 2002 to #58.8 million and #175.6 million for the three and
nine months ended 30 September 2003 reflecting ongoing cost containment
measures. SG&A before exceptional items as a proportion of turnover in the three
months ended 30 September 2003 was 19.9% compared with 23.5% in the equivalent
period of 2002.

Other depreciation and amortisation decreased from #12.9 million and #40.7
million for the three and nine months ended 30 September 2002 to #9.8 million
and #29.2 million in the comparable periods in 2003 reflecting the effect of the
impairment provisions recorded in September 2002 and other assets being fully
depreciated, partially offset by increased investment in customer service and
support systems.

For the nine months ended 30 September 2002, an exceptional charge of #18.9
million was recognised for severance provisions related to the staff reduction
programmes announced in February and September 2002 and an impairment charge of
#43.0 million was recognised to ensure that the asset base remained aligned with
the realities of the market place. There were no exceptional charges for the
three and nine months ended 30 September 2003.

Interest Receivable, Interest Payable and Similar Charges

Interest receivable decreased from #9.2 million and #29.7 million for the three
and nine months ended 30 September 2002 to #6.0 million and #20.2 million for
the three and nine months ended 30 September 2003 due to reduced average
balances of cash and investments in liquid resources and lower rates of return
during the period.

Interest payable and similar charges decreased from #22.5 million and #72.7
million for the three and nine months ended 30 September 2002 to #22.1 million
and #67.3 million for the equivalent periods in 2003.  The decrease was due
primarily to a reduction in debt levels reflecting the cumulative purchases of
#373.8 million accreted amount of the Company's outstanding notes.

Interest payable and similar charges for the three and nine months ended 30
September 2003 included: #8.6 million and #25.8 million respectively of interest
and accretion on convertible debt; #12.9 million and #39.4 respectively of
interest and accretion on non-convertible debt; and #0.6 million and #2.1
million respectively of interest and unwinding of discounts on provisions.
Interest payable and similar charges for the three months ended 30 September
2003 comprised #16.3 million and #5.8 million of interest and accretion
respectively.

Gain on Purchase of Debt

There were no purchases of debt in the three months ended 30 September 2003.
Gains arising on the purchase of debt during the nine months ended 30 September
2003 amounted to #7.6 million. Gains arising on the purchase of debt for the
three and nine months ended September 2002 were #28.5 million and #101.7 million
respectively.

Exchange Gain (Loss)

For the three and nine months ended 30 September 2003 there were exchange gains
of #0.9 million and #4.1 million compared with exchange gains of #2.5 million
and #9.8 million in the equivalent periods in 2002.  These gains were due
primarily to movements in the British pound relative to the U.S. dollar on cash
and debt balances denominated in U.S. dollars.

Tax on Loss on Ordinary Activities

For the three and nine months ended 30 September 2002 and 2003, COLT generated
losses on ordinary activities of #609.3 million and #673.0 million and #35.7
million and #103.6 million, respectively and therefore did not incur a tax
obligation.

Financial Needs and Resources

The costs associated with the construction and expansion of COLT's networks,
including development, installation and operating expenses have resulted in
cumulative negative cash flows.  COLT does not expect to achieve sustainable
positive free cash flow until some time during 2005.

Net cash inflow from operating activities was #55.1 million and #112.4 million
for the three and nine months ended 30 September 2002 and #45.3 million and
#113.0 million for the three and nine months ended 30 September 2003. Changes to
cash flow from operations include the effect of the timing of stage billings and
payments with telecommunications operators associated with the construction of
the Company's inter-city network and the effects of movements in provisions.
Net cash outflow from returns on investments and servicing of finance and from
capital expenditure and financial investment decreased from #89.3 million and
#351.1 million in the three and nine months ended 30 September 2002 to #36.1
million and #129.6 million for the three and nine months ended 30 September
2003.

Free cash flow, the sum of net cash inflow from operating activities less net
cash outflow from returns on investments and servicing of finance and from
capital expenditure and financial investment, improved from #34.2 million and
#238.7 million in the three and nine months ended 30 September 2002 to an inflow
of #9.1 million and an outflow of #16.6 million in the three and nine months
ended 30 September 2003 respectively.

The decrease in net cash outflow was primarily a result of reduced purchases of
tangible fixed assets, which decreased from #89.9 million and #339.7 million for
the three and nine months ended 30 September 2002 to #32.9 million and #108.3
million for the equivalent periods in 2003.

Net cash from financing improved from an outflow of #28.3 million and #97.2
million in the three and nine months ended 30 September 2002 to an inflow of
#0.5 million and an outflow of #23.3 million for the three and nine months ended
30 September 2003. The improvement was primarily a result of reduced bond
purchases, which decreased from #28.3 million and #97.3 million for the three
and nine months ended 30 September 2002 to nil and #23.8 million for the
equivalent periods in 2003. COLT had balances of cash and investments in liquid
resources at 30 September 2003 of #934.4 million compared with #934.9 million at
31 December 2002.

                                           Consolidated Profit and Loss Account

                                              Three months ended 30 September
               ------------------------------------------------------------------------------------------
                      2002        2002        2002           2003        2003        2003        2003
                     Before                   After         Before                   After       After
                   Exceptional Exceptional Exceptional   Exceptional  Exceptional Exceptional Exceptional
                      Items       Items       Items         Items         Items      Items       Items
                      #'000       #'000       #'000          #'000       #'000       #'000       $'000
               ------------------------------------------------------------------------------------------

Turnover           259,032           --      259,032        295,368         --      295,368     490,902

Cost of sales
Interconnect and  (178,824)    (12,640)   (191,464)      (193,322)          --     (193,322)   (321,301)
network
Network            (57,511)   (508,000)   (565,511)       (53,977)          --      (53,977)    (89,709)
depreciation   ------------------------------------------------------------------------------------------
                  (236,355)   (520,640)   (756,975)      (247,299)          --     (247,299)   (411,010)
               ------------------------------------------------------------------------------------------

Gross profit        22,697    (520,640)   (497,943)        48,069           --       48,069      79,892
(loss)

Operating
expenses
Selling, general   (60,818)    (12,360)    (73,178)       (58,790)          --      (58,790)    (97,709)
and
administrative
Other              (12,889)    (43,000)    (55,889)        (9,756)          --       (9,756)    (16,215)
depreciation and
amortisation   ------------------------------------------------------------------------------------------
                   (73,707)    (55,360)   (129,067)       (68,546)          --      (68,546)   (113,924)
               ------------------------------------------------------------------------------------------

Operating loss     (51,010)   (576,000)   (627,010)       (20,477)          --      (20,477)    (34,032)

Other income
(expense)
Interest             9,182          --       9,182          6,010           --        6,010       9,988
receivable
Gain on purchase        --       28,516     28,516             --           --           --          --
of debt
Interest payable   (22,460)         --     (22,460)       (22,139)          --      (22,139)    (36,795)
and similar
charges
Exchange gain        2,459          --        2,459            880          --          880       1,462
(loss)
               ------------------------------------------------------------------------------------------
                   (10,819)     28,516      17,697        (15,249)          --      (15,249)    (25,345)
               ------------------------------------------------------------------------------------------

Profit (loss) on   (61,829)   (547,484)   (609,313)       (35,726)          --      (35,726)    (59,377)
ordinary
activities
before
taxation
Taxation                 --          --          --             --          --          --          --
               ------------------------------------------------------------------------------------------

Loss for           (61,829)   (547,484)   (609,313)       (35,726)  --            (35,726)    (59,377)
period         ==========================================================================================
Basic and           #(0.04)     #(0.36)     #(0.40)        #(0.02)  --             #(0.02)     $(0.04)
diluted loss per
share          ==========================================================================================


There is no difference between the loss on ordinary activities before taxation
and the retained loss for the periods stated above, and their historical cost
equivalents.  All of the Group's activities are continuing. The basis on which
this information has been prepared is described in Note 1 to these financial
statements.

                                             Consolidated Profit and Loss Account

                                                Nine months ended 30 September
               ----------------------------------------------------------------------------------------------
                      2002        2002          2002           2003        2003        2003          2003
                      Before                    After         Before                   After         After
                   Exceptional Exceptional   Exceptional    Exceptional Exceptional Exceptional   Exceptional
                      Items      Items          Items         Items       Items       Items         Items
                     #'000       #'000         #'000          #'000       #'000       #'000         $'000
               ----------------------------------------------------------------------------------------------

Turnover            764,082         --       764,082        860,055          --     860,055      1,429,411

Cost of sales
Interconnect and  (537,916)    (18,320)     (556,236)      (569,265)         --    (569,265)     (946,119)
network
Network           (161,244)   (508,000)     (669,244)      (154,039)         --    (154,039)     (256,012)
depreciation   ----------------------------------------------------------------------------------------------

                  (699,160)   (526,320)   (1,225,480)      (723,304)         --    (723,304)   (1,202,131)
               ----------------------------------------------------------------------------------------------

Gross profit        64,922    (526,320)     (461,398)       136,751          --     136,751       227,280
(loss)

Operating
expenses
Selling, general  (182,280)    (18,934)     (201,214)      (175,589)         --     (175,589)     (291,829)
and
administrative
Other              (40,743)    (43,000)      (83,743)       (29,247)         --      (29,247)      (48,608)
depreciation and
amortisation   ----------------------------------------------------------------------------------------------
                  (223,023)    (61,934)     (284,957)      (204,836)         --     (204,836)     (340,437)
               ----------------------------------------------------------------------------------------------

Operating loss    (158,101)   (588,254)     (746,355)       (68,085)         --      (68,085)     (113,157)

Other income
(expense)
Interest            29,744          --        29,744          20,186         --       20,186        33,549
receivable
Gain on purchase        --      101,668      101,668              --       7,589       7,589        12,613
of debt
Interest payable   (72,706)         --       (72,706)       (67,307)          --     (67,307)     (111,864)
and similar
charges
Exchange gain        9,758       4,844        14,602          4,058   --                4,058         6,744
(loss)         ----------------------------------------------------------------------------------------------
                   (33,204)    106,512        73,308        (43,063)      7,589       (35,474)      (58,958)
               ----------------------------------------------------------------------------------------------

Profit (loss) on  (191,305)   (481,742)     (673,047)      (111,148)      7,589      (103,559)     (172,115)
ordinary
activities
before
taxation
Taxation                 --          --          --               --          --          --              --
               ----------------------------------------------------------------------------------------------
Loss for          (191,305)   (481,742)     (673,047)      (111,148)       7,589    (103,559)       (172,115)
period         ==============================================================================================

Basic and           #(0.13)     #(0.32)       #(0.45)        #(0.07)      #0.00        #(0.07)        $(0.11)
diluted loss 
per share      ==============================================================================================

There is no difference between the loss on ordinary activities before taxation
and the retained loss for the periods stated above, and their historical cost
equivalents.  All of the Group's activities are continuing. The basis on which
this information has been prepared is described in Note 1 to these financial
statements.

                     Consolidated Statement of Total Recognised Gains and Losses

                 Three months ended 30 September       Nine months ended 30 September
              -------------------------------------------------------------------------
                   2002       2003        2003          2002       2003       2003
                  #'000      #'000       $'000          #'000      #'000      $'000
              -------------------------------------------------------------------------

Loss for the    (609,313)   (35,726)     (59,377)    (673,047)   (103,559)    (172,115)
period
Exchange         (25,892)     3,473        5,773       26,280      28,968       48,145
differences   -------------------------------------------------------------------------

Total           (635,205)   (32,253)     (53,604)    (646,767)    (74,591)    (123,970)
recognised
losses        =========================================================================


              Consolidated Reconciliation of Changes in Equity Shareholders' Funds

              Three months ended 30 September      Nine months ended 30 September
              -------------------------------------------------------------------------
                    2002       2003         2003         2002        2003         2003
                   #'000      #'000        $'000        #'000       #'000        $'000
              -------------------------------------------------------------------------

Loss for        (609,313)   (35,726)     (59,377)    (673,047)   (103,559)    (172,115)
period
Issue of              60        610        1,014          170         612        1,017
share
capital
Shares to be         (71)      (117)        (194)        (296)       (229)        (381)
issued
Charges               --           --         --           14           --          --
related to
share
schemes
Exchange         (25,892)     3,473        5,773       26,280      28,968       48,145
difference    -------------------------------------------------------------------------

Net changes     (635,216)   (31,760)     (52,784)    (646,879)    (74,208)    (123,334)
in equity
shareholders'
funds         -------------------------------------------------------------------------

Opening        1,612,696    912,562    1,516,677    1,624,359     955,010    1,587,227
equity
shareholders'
funds         -------------------------------------------------------------------------

Closing          977,480    880,802    1,463,893      977,480     880,802    1,463,893
equity
shareholders'
funds         -------------------------------------------------------------------------


                           Consolidated Balance Sheet


                                    
                                         At 31 December       
                                               2002       At 30 September 2003
                                             #'000         #'000         $'000
                                     ------------------------------------------
Fixed assets
Intangible fixed assets (net)               10,639         9,866        16,397
Tangible fixed assets (cost)             2,695,499     2,909,095     4,834,916
Accumulated depreciation                (1,316,690)   (1,542,621)   (2,563,836)
                                     ------------------------------------------
Tangible fixed assets (net)              1,378,809     1,366,474     2,271,080
Investments in own shares                      206           204           339
                                     ------------------------------------------
Total fixed assets                       1,389,654     1,376,544     2,287,816

Current assets
Trade debtors                              189,788       200,183       332,704
Prepaid expenses and other debtors          74,606        62,870       104,490
Investments in liquid resources            889,590       880,199     1,462,891
Cash at bank and in hand                    45,292        54,205        90,089
                                     ------------------------------------------
Total current assets                     1,199,276     1,197,457     1,990,174
                                     ------------------------------------------
Total assets                             2,588,930     2,574,001     4,277,990
                                     ==========================================

Capital and reserves
Called up share capital                     37,688        37,711        62,676
Share premium                            2,314,335     2,314,792     3,847,184
Merger reserve                              27,227        27,359        45,471
Shares to be issued                            454           225           374
Profit and loss account                 (1,424,694)   (1,499,285)   (2,491,812)
                                     ------------------------------------------
Equity shareholders' funds                 955,010       880,802     1,463,893

Provisions for liabilities and              87,368        71,581       118,968
charges

Creditors
Amounts falling due within one             352,653       367,678       611,081
year
Amounts falling due after more than
one year
Convertible debt                           639,829       689,792     1,146,434
Non-convertible debt                       554,070       564,148       937,614
                                     ------------------------------------------
Total amounts falling due after more     1,193,899     1,253,940     2,084,048
than one year                        ------------------------------------------
Total creditors                          1,546,552     1,621,618     2,695,129
                                     ------------------------------------------
Total liabilities, capital and           2,588,930     2,574,001     4,277,990
reserves                             ------------------------------------------


                                Consolidated Cash Flow Statement

                Three months ended 30 September      Nine months ended 30 September
             ----------------------------------------------------------------------   
                    2002       2003       2003        2002        2003        2003
                   #'000      #'000      $'000       #'000       #'000       $'000
             ----------------------------------------------------------------------   

Net cash inflow   55,084     45,264     75,228     112,381     112,951     187,725
from operating
activities

Returns on
investments and
servicing of
finance
Interest           9,486      6,023     10,010      30,674      20,277      33,700
received
Interest paid,    (8,900)    (9,251)   (15,375)    (46,872)    (41,546)    (69,049)
finance costs
and similar
charges
Gain on               --         --         --        4,844         --          --
cancellation of
forward foreign
currency
contracts    ----------------------------------------------------------------------   

Net cash inflow      586     (3,228)    (5,365)    (11,354)    (21,269)    (35,349)
(outflow) from
returns on
investments and
servicing of
finance

Capital
expenditure and
financial
investment
Purchase of      (89,905)   (32,909)   (54,695)   (339,722)   (108,300)   (179,995)
tangible fixed
assets       ----------------------------------------------------------------------   

Net cash         (89,905)   (32,909)   (54,695)   (339,722)   (108,300)   (179,995)
outflow from
capital
expenditure and
financial
investment

Management of     78,152      3,816      6,343     337,741      46,659      77,547
liquid
resources

Financing
Issue of              --        473        786        110           474        788
ordinary
shares
Issue            (18,782)        --         --     (64,328)    (14,166)    (23,544)
(purchase) of
non-convertible
debt         ----------------------------------------------------------------------   

Issue             (9,563)  --         --           (32,949)     (9,606)    (15,965)
(purchase) of
convertible
debt         ----------------------------------------------------------------------   

Net cash inflow  (28,345)       473        786     (97,167)    (23,298)    (38,721)
(outflow) from
financing    ----------------------------------------------------------------------   

Increase          15,572     13,416     22,297       1,879       6,743      11,207
(decrease) in
cash         ======================================================================

                            Notes to Financial Statements
 
1.  Basis of presentation and principal accounting policies

COLT Telecom Group plc ("COLT" or the "Company"), together with its
subsidiaries, is referred to as the Group.  Consolidated financial statements
have been presented for the Company for the three and nine months ended 30
September 2002 and 2003 and at 31 December 2002 and 30 September 2003.

The financial statements for the three and nine months ended 30 September 2002
and 2003 are unaudited and do not constitute statutory accounts within the
meaning of Section 240 of the Companies Act 1985.  In the opinion of management,
the financial statements for these periods reflect all the adjustments necessary
to present fairly the financial position, results of operations and cash flows
for the periods in conformity with U.K. generally accepted accounting
principles.  All adjustments, with the exception of the separately identified
exceptional items for the three and nine months ended 30 September 2002 and
2003, were of a normal recurring nature.  The Balance Sheet at 31 December 2002
has been extracted from the Group's audited statements for that period and does
not constitute the Group's statutory accounts for that period.

Accounting policies and presentation applied are consistent with those applied
in preparing the Group's financial statements for the year ended 31 December
2002.

Certain British pound amounts in the financial statements have been translated
into U.S. dollars at 30 September 2003 and for the periods then ended at the
rate of $1.6620 to the British pound, which was the noon buying rate in the City
of New York for cable transfers in British pounds as certified for customs
purposes by the Federal Reserve Bank of New York on such date.  Such
translations should not be construed as representations that the British pound
amounts have been or could be converted into U.S. dollars at that or any other
rate.

                            Notes to Financial Statements

2.  Segmental information

North Region comprises Belgium, Denmark, Ireland, The Netherlands, Sweden and
UK. Central Region comprises Austria, Germany and Switzerland.  South Region
comprises France, Italy, Portugal and Spain.

Non-switched turnover in North, Central and South Regions includes managed and
non-managed network services data and bandwidth services.

Wholesale turnover includes services to other telecommunications carriers,
resellers and internet service providers (ISPs).  Corporate turnover includes
services to corporate and government accounts.

For the three months ended 30 September 2002 and 2003, turnover by region was as
follows:

                                Three months ended 30 September 2002
              ----------------------------------------------------------------------                                    
               Corporate   Wholesale        North    Central     South            
                                           Region     Region    Region         Total
                   #'000       #'000        #'000      #'000     #'000         #'000
              ----------------------------------------------------------------------                                    

Switched          76,270      80,892       47,679     71,284    38,199       157,162
Non-Switched      72,375      29,284       36,320     36,527    28,812       101,659
Other                 97         114           12         95       104           211
              ----------------------------------------------------------------------                                    
Total            148,742     110,290       84,011    107,906    67,115       259,032
              ======================================================================


                                 Three months ended 30 September 2003
              ----------------------------------------------------------------------                                    
                                            North    Central     South
               Corporate   Wholesale       Region     Region    Region         Total
                   #'000       #'000        #'000      #'000     #'000         #'000
              ----------------------------------------------------------------------                                    

Switched          85,428      91,469       52,271     82,566    42,060       176,897
Non-Switched      91,202      26,695       41,720     41,594    34,583       117,897
Other                533          41      --             574   --                574
              ----------------------------------------------------------------------                                    
Total            177,163     118,205       93,991    124,734    76,643       295,368
              ======================================================================


For the nine months ended 30 September 2002 and 2003, turnover by region was as
follows:

                                 Nine  months ended 30 September 2002
              ----------------------------------------------------------------------                                    
                                             North    Central      South
               Corporate   Wholesale        Region     Region     Region       Total
                   #'000       #'000         #'000      #'000      #'000       #'000
              ----------------------------------------------------------------------                                    

Switched         218,996     249,310       138,533    216,332    113,441     468,306
Non-Switched     208,464      85,781       104,594    105,331     84,320     294,245
Other                915         616            57      1,168        306       1,531
              ----------------------------------------------------------------------                                    
Total            428,375     335,707       243,184    322,831    198,067     764,082
              ======================================================================


                                    Nine months ended 30 September 2003
              ----------------------------------------------------------------------                                    
                                             North    Central      South
               Corporate   Wholesale        Region     Region     Region       Total
                   #'000       #'000         #'000      #'000      #'000       #'000
              ----------------------------------------------------------------------                                    

Switched         248,796     265,904       155,527    238,255    120,918     514,700
Non-Switched     261,609      82,483       123,944    120,181     99,967     344,092
Other                909         354            79        905        279       1,263
              ----------------------------------------------------------------------                                    
Total            511,314     348,741       279,550    359,341    221,164     860,055
              ======================================================================


                            Notes to Financial Statements

3.  Profit (loss) per share

               Three months ended 30 September        Nine months ended 30 September
           -------------------------------------------------------------------------                                    
               2002         2003         2003         2002         2003         2003
              #'000        #'000        $'000        #'000        #'000        $'000
           -------------------------------------------------------------------------                                    

Profit     (609,313)     (35,726)     (59,377)    (673,047)    (103,559)    (172,115)
(loss)
for
period     =========================================================================

Weighted  1,507,226    1,508,037    1,508,037    1,507,138    1,507,463    1,507,463
average
of
ordinary
shares
('000)
Basic        #(0.40)      #(0.02)      $(0.04)      #(0.45)      #(0.07)      $(0.11)
and diluted
profit (loss)
per share  -------------------------------------------------------------------------                                    



4a.   Net cash inflow from operating activities

              Three months ended 30 September   Nine months ended 30 September
           ----------------------------------------------------------------------                                     
                   2002       2003       2003        2002       2003        2003
                  #'000      #'000      $'000       #'000      #'000       $'000
           ----------------------------------------------------------------------                                     

Operating      (627,010)   (20,477)   (34,032)   (746,355)   (68,085)   (113,157)
loss
Depreciation,   621,400     63,733    105,924     752,987    183,286     304,620
amortisation
of fixed
assets
Exchange           (442)       (19)       (32)        520        123         205
differences
Decrease         14,485     11,206     18,624      48,860     15,020      24,964
(increase) in
debtors
Increase         26,471       (935)    (1,554)     29,977      3,325       5,526
(decrease) in
creditors
Movement in      20,180     (8,244)   (13,702)     26,392    (20,718)    (34,433)
provision for
liabilities
and charges----------------------------------------------------------------------                                     

Net cash         55,084     45,264     75,228     112,381    112,951     187,725
inflow from
operating
activities ======================================================================



4b.  EBITDA reconciliation

                 Three months ended 30 September   Nine months ended 30 September
           ----------------------------------------------------------------------                                     
                   2002       2003       2003       2002       2003       2003
                  #'000      #'000      $'000      #'000      #'000      $'000
           ----------------------------------------------------------------------                                     

Net cash         55,084     45,264     75,228    112,381    112,951    187,725
inflow from
operating
activities
Adjusted for:

Exchange            442         19         32       (520)      (123)      (205)
differences

Movement in     (14,485)   (11,206)   (18,624)   (48,860)   (15,020)   (24,964)
debtors
Movement in     (26,471)       935      1,554    (29,977)    (3,325)    (5,526)
creditors  ----------------------------------------------------------------------                                     

Total working   (40,956)   (10,271)   (17,070)   (78,837)   (18,345)   (30,490)
capital
adjustments

Movement in     (20,180)     8,244     13,702    (26,392)    20,718     34,433
provision
for
liabilities
and charges

Add back
Exceptional      12,640   --         --           18,320   --         --
interconnect
and
Network
charges
Exceptional      12,360   --         --           18,934   --         --
selling and
Administrative
charges    ----------------------------------------------------------------------                                     

EBITDA before    19,390     43,256     71,892     43,886    115,201    191,463
exceptional
items      ======================================================================

                            Notes to Financial Statements

5.  Changes in cash and investments in liquid resources

                  Three months ended 30 September       Nine months ended 30 September
               -----------------------------------------------------------------------                                  
                    2002       2003         2003         2002       2003         2003
                   #'000      #'000        $'000        #'000      #'000        $'000
               -----------------------------------------------------------------------                                  
Beginning of   1,058,150    920,519    1,529,903    1,304,477    934,882    1,553,774
period
Net increase     (78,152)    (3,816)      (6,343)    (337,741)   (46,659)     (77,547)
(decrease) in
investments
in liquid
resources
before
exchange
differences
Effects of       (15,761)     4,715        7,837       14,153     37,268       61,939
exchange
differences
in
investments
in liquid
resources
Net increase      15,572     13,416       22,297        1,879      6,743       11,207
(decrease) in
cash before
exchange
differences
Effects of        (1,715)      (430)        (714)      (4,674)     2,170        3,607
exchange
differences
in cash        -----------------------------------------------------------------------                                  
End of           978,094    934,404    1,552,980      978,094    934,404    1,552,980
period         =======================================================================

6.  Summary of differences between U.K. Generally Accepted Accounting Principles
("U.K. GAAP") and U.S. Generally Accepted Accounting Principles ("U.S. GAAP")


a.       Effects of conforming to U.S. GAAP - impact on net loss

                   Three months ended 30 September        Nine months ended 30 September
             ----------------------------------------------------------------------------   
                   2002         2003         2003         2002         2003         2003
                  #'000        #'000        $'000        #'000        #'000        $'000
             ----------------------------------------------------------------------------   

Loss for       (609,313)     (35,726)     (59,377)    (673,047)    (103,559)    (172,115)
period
Adjustments:

Deferred           (356)        (292)        (485)      (1,617)        (815)      (1,355)
compensation
(i), (ii)
Amortisation        384          544          904          873        1,612        2,679
of
intangibles
(iii)
Capitalised       1,147         (715)      (1,188)       4,726       (2,268)      (3,769)
interest,
net of
depreciation
(iv)
Profit on           262          262          435          784          783        1,301
sale of IRUs
(v)
Warrants           (154)         140          233       (1,377)         127          211
(vi)
Installation     (4,043)         773        1,285          680        2,044        3,397
revenue
(vii)
Direct costs      4,043       (1,401)      (2,329)        (680)      (2,672)      (4,441)
attributable
to
installation
revenue
(vii)
Impairment      107,200       (2,805)      (4,662)     107,200       (8,416)     (13,987)
(viii)       ----------------------------------------------------------------------------   

Loss for       (500,830)     (39,220)     (65,184)    (562,458)    (113,164)    (188,079)
period under
US GAAP      ============================================================================
               
Weighted      1,507,226    1,508,037    1,508,037    1,507,138    1,507,463    1,507,463
average
number of
ordinary
shares
('000)       ============================================================================

Basic and        #(0.33)      #(0.03)      $(0.04)      #(0.37)      #(0.08)      $(0.12)
diluted loss
per share    ============================================================================

(i)  On 3 July 2001 the Company completed the acquisition of Fitec.  A total of
1,518,792 ordinary shares and 4.04 million Euros was paid at completion, with an
additional 1.2 million Euros and 317,784 shares to be earned over the two year
period ending June 2003, subject to certain conditions being met.  The final
payments were made in July 2003.

Under U.K. GAAP, the deferred shares and payments have been included in the
purchase consideration.  The excess purchase consideration over the fair value
of assets and liabilities acquired is attributed to goodwill and is being
amortised over its estimated economic life.
                       

                            Notes to Financial Statements

Under U.S. GAAP, these deferred shares and payments are excluded from the
purchase consideration and recognised as compensation expense in the profit and
loss accounts over the period in which the payments vest.  The total
compensation charge for the three and nine months ended 30 September 2002 was
#0.2 million and #1.0 million respectively and for the three and nine months
ended 30 September 2003 nil and #0.3 million respectively.

(ii) The Company operates an Inland Revenue approved Savings-Related Share
Option Scheme ("SAYE Scheme").  Under this scheme, options may be granted at a
discount of up to 20%. Under U.K. GAAP no charge is taken in relation to the
discount.  Under U.S. GAAP, the difference between the market value of the
shares on the date of grant and the price paid for the shares is charged as a
compensation cost to the profit and loss account over the period over which the
shares are earned.

During 2002 the Company adopted the provisions of EITF 00-23, "Issues Related to
the Accounting for Stock Compensation under APB Opinion No. 25 and FIN 44".  In
accordance with this, an employers offer to enter into a new SAYE contract at a
lower price causes variable accounting for all existing awards subject to the
offer.  Variable accounting commences for all existing awards when the offer is
made, and of those awards that are retained by employees because the offer is
declined, variable accounting continues until the award is exercised, forfeited
or expires unexercised.  New awards are accounted for as variable to the extent
that the previous, higher priced options are cancelled. The adoption of this
guidance has not had a material effect on the compensation charge.

The total expected compensation cost is recorded within equity shareholders'
funds as unearned compensation and additional paid in share capital, with
unearned compensation being charged to the profit and loss account over the
vesting period. The total compensation charge for the three and nine months
ended 30 September 2002 was #0.2 million and #0.6 million respectively and for
the three and nine months ended 30 September 2003 #0.3 million and #0.5 million
respectively.

(iii)  Under U.S. GAAP goodwill with indefinite useful lives is not amortised
but is tested for impairment annually. Under U.K. GAAP goodwill is amortised on
a straight line basis over its useful economic life.

At 30 September 2002, as set out in note (viii), the Company completed an
impairment review of its reporting units. As a result the goodwill and other
intangible assets attributable to Fitec were considered fully impaired and
written off. These were also written off in full for U.K. GAAP purposes.

The Company had unamortised goodwill of #6.6 million at 1 January 2003, which is
no longer amortised under U.S. GAAP but will be assessed for impairment
annually.  Amortisation expense related to goodwill, under U.K. GAAP, was #0.4
million and #0.9 million for the three and nine months ended 30 September 2002
respectively and #0.5 million and #1.6 million for the three and nine months
ended 30 September 2003 respectively.

(iv)  Adjustment to reflect interest amounts capitalised under U.S. GAAP, less
depreciation for the period.

(v)  The Company has concluded a number of infrastructure sales in the form of
20-year indefeasible rights-of-use ("IRU") with characteristics which qualify
the transactions as outright sales under U.K. GAAP.  Under U.S. GAAP, these
sales are treated as 20-year operating leases. The adjustment reflects the
recognition of revenue previously deferred.

(vi)  The Company has received warrants from certain suppliers in the ordinary
course of business.  Under U.K. GAAP, warrants are treated as financial assets
and recorded at the lower of cost or fair value. Hence for U.K. GAAP purposes
the warrants have been recognised at nil.

Under U.S. GAAP, the warrants are recorded at fair value with unrecognised gains
and losses reflected in the profit and loss account.

(vii)  In accordance with SAB 101 "Revenue Recognition in Financial Statements",
for the three and nine months ended 30 September 2002 and 2003, customer
installation revenues together with attributable direct costs are recognised
over the expected customer relationship period. The expected relationship period
for wholesale customers was reduced during the three months ended 30 June 2002.
At 30 September 2003, the cumulative increase in net losses under SAB 101 was
#0.6 million, representing cumulative deferred installation revenues of #55.6
million and costs of #55.0 million.

(viii)  During the quarter ended 30 September 2002, the Company recorded charges
of #443.8 million under U.S. GAAP to reflect the impairment of goodwill (see
note iii), network and non-network fixed assets, resulting in a GAAP difference
of #107.2 million.  For the three and nine months ended 30 September 2003
depreciation in the amount of #2.8 million and #8.4 million respectively was
recorded in respect of the assets which had not been impaired for U.S. GAAP
purposes.

b.      Effects of conforming to U.S. GAAP - impact on net equity

                                                        ----------------------
                                                          At 30 September 2003
                                                        ----------------------
                                                            #'000        $'000
Equity shareholders' funds for the Company                880,802    1,463,893
U.S. GAAP adjustments:
Adjustment for deferred compensation                      (10,569)     (17,565)
Unearned compensation                                      (1,708)      (2,839)
Additional paid in share capital                           12,277       20,404
Own shares held in trust (i)                                 (206)        (342)
Amortisation of intangibles                                 5,512        9,161
Warrants                                                      979        1,627
Impairment                                                 95,974      159,509
Deferred profit on IRUs                                   (17,984)     (29,889)
Capitalised interest, net of depreciation                  38,692       64,305
Deferred profit on installations                             (628)      (1,044)
                                                        ----------------------
Approximate equity shareholders' funds under U.S. GAAP  1,003,141    1,667,220
                                                        ======================

(i) Under U.K. GAAP, shares held by a QUEST, and similar employee share schemes,
are recorded as fixed asset investments at cost less amounts written off. Under
U.S. GAAP, these shares are recorded at historical cost in the balance sheet as
a deduction from shareholders' funds. The adjustment reflects the net impact on
U.S. GAAP equity after U.K. GAAP write-offs.

c.   Effects of conforming to U.S. GAAP - stock options

At September 2003 the Company had certain options outstanding under its Option
Plan.  As permitted by SFAS No.123, "Accounting for Stock-Based Compensation",
the Company elected not to adopt the recognition provisions of the standard and
to continue to apply the provisions of Accounting Principles Board Opinion
No.25, "Accounting for Stock Issued to Employees," in accounting for its stock
options and awards.  Had compensation expense for stock options and awards been
determined in accordance with SFAS No.123, the Company's loss for the three and
nine months ended 30 September 2003 would have been #43.2 million ($71.9
million) and #126.2 million ($209.8 million) respectively.

Forward Looking Statements

This report contains "forward looking statements" including statements
concerning plans, future events or performance and underlying assumptions and
other statements which are other than statements of historical fact.  The
Company wishes to caution readers that any such forward looking statements are
not guarantees of future performance and certain important factors could in the
future affect the Company's actual results and could cause the Company's actual
results for future periods to differ materially from those expressed in any
forward looking statement made by or on behalf of the Company.  These include,
among others, the following: (i) any adverse change in the laws, regulations and
policies governing the ownership of telecommunications licenses, (ii) the
ability of the Company to expand and develop its networks in new markets, (iii)
the Company's ability to manage its growth, (iv) the nature of the competition
that the Company will encounter and (v) unforeseen operational or technical
problems.  The Company undertakes no obligation to release publicly the results
of any revision to these forward looking statements that may be made to reflect
errors or circumstances that occur after the date hereof.

Enquiries:

COLT Telecom Group plc
John Doherty
Director Corporate Communications
Email: jdoherty@colt.net
Tel: +44 (0) 20 7390 3681


                      This information is provided by RNS
            The company news service from the London Stock Exchange

END
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