RNS Number:5851X
Atlantic Telecom Group PLC
22 January 2001
ATLANTIC TELECOM GROUP PLC
Atlantic announces restructure leading to #30 million
savings next year
Quarter shows strong growth in SME lines
Agreement reached with Carrier1 for access to German
national network
22 January 2001
Atlantic Telecom Group PLC ('Atlantic') today announces
details of its further development towards being the leading
European provider of broadband, local loop integrated
communication services to SMEs. The Group also announces an
encouraging set of operating statistics for the quarter
ended 31 December 2000.
. Refocus of investment on SME market substantially
complete. Restructure announced today will bring
approximately #30 million of cost savings next financial
year, primarily through reduction in residential sales and
support staff, with an expected loss of 350 jobs in the UK.
. The restructure is expected to accelerate achievement
of positive EBITDA.
. The Board expects that funds available as at 31
December 2000, in addition to vendor financing, are fully
sufficient to fund the company.
. Strong growth in core SME market for quarter to end
December 2000
. Directly connected SME lines in the UK rose 14% over
the quarter to 9,734
. SME penetration increased to 7.0% at the end of the
last quarter
. Indirect business lines increased to 90,485 (at 30
September 2000:85,606)
. German roll out well ahead of schedule with 331 central
offices equipped at 31 December
. Holland DSL roll out launched, with 17 central offices
equipped
. In principle agreement reached with Carrier1, giving
Atlantic access to significant capacity on a national fibre
network across the German market
Atlantic's Executive Chairman, Graham J Duncan, said:
"In June 2000, we announced that Atlantic's future strategy
would be to target more closely the SME business market in
the UK and Germany. At our interim results in November we
outlined that we would be focusing our investment on the SME
market, allowing us to continue to develop our plans on a
modular fully funded basis. This refinement of our strategy
has proved to be successful with the Group achieving record
levels of new lines sold in our SME-focused operations
during the last quarter.
"The significant refocus of our investment towards the
business market has led and will continue to lead to the
reduction in our residential business in the UK. The
restructure will result in a reduction of approximately 350
jobs in the UK. The total number of full-time job losses
will be mitigated in part by the transfer of some areas of
the business to Scotland, and an increase in the number of
staff working on the business focused areas of the company.
"The company has pledged to engage in consultation with the
affected staff, and is putting in place a number of measures
to provide additional support and assistance in securing
alternative employment.
"The restructure will fully align our cost structures with
our business strategy and allow us to achieve cost savings
of approximately #30 million in the next financial year.
With funds available of #190 million as at 31 December,
including cash set aside to meet certain future interest
payments on our high yield debt, and #100 million in unused
vendor finance, the company has the funds to take it through
to being EBITDA positive. The Board anticipates that this
restructure will also bring forward our estimated date for
becoming EBITDA positive."
For further information contact:
Graham J Duncan, Executive Chairman, Atlantic Telecom
020 7638 9571 (today only)
01224 454000 thereafter
Susy Atkinson, Corporate Affairs Manager, Atlantic Telecom
0141 403 4747
07808 397374
Patrick Toyne-Sewell/Sara Thomas, Citigate Dewe Rogerson
020 7638 9571
ATLANTIC TELECOM GROUP PLC
QUARTER ENDED 31 DECEMBER 2000
Atlantic Telecom Group PLC ('Atlantic') today announces
details of its further development towards being the leading
European provider of broadband, local loop integrated
communication services to SMEs. The Group also announces an
encouraging set of operating statistics for the quarter
ended 31 December 2000.
Strategy
The Group's strategy of focusing our investment primarily on
the SME market is now generating strong growth in that
market, both in the UK and Germany.
Our target market, which is worth over #10bn in the UK and
#15bn in Germany, remains a significant opportunity for a
niche operator, with more than 80% still in the hands of the
incumbent operators. In this sector of the market, the
concept of bundled single priced services remains
innovative, and tends to be unavailable from the incumbents,
ensuring that pricing pressure is less evident. This has
been a successful formula in the UK market that has
delivered encouraging penetration and has allowed us to
differentiate our brand in the marketplace.
Atlantic has always focused on providing value-added
services, increasingly using a portfolio of broadband
technologies, and this remains our core operating strategy.
Realignment of cost base
We are vigorously realigning our cost base in line with our
SME strategy. The restructure will result in an overall
decrease of approximately 350 employees out of a total of
around 1,200 employees in the Group. The bulk of these will
result from the closure of residential focused sales
departments, mainly based in London. Other support
departments will be reduced or relocated to the Group's
headquarters in Aberdeen, where the overall number of
employees is expected to increase.
The redundancy of permanent employees will be minimised
where possible by a full review of the use of temporary and
consultant staff. Redundancies and relocation of departments
will take place over the next six months. The company has
allocated consultation periods additional to that set out by
the Department of Trade and Industry, and is putting in
place practical measures to assist those affected in seeking
alternative employment.
Atlantic will continue to increase its investment in the
business market, which will lead to an increase in the
number of job opportunities as we rationalise the business.
Wherever appropriate, employees will be offered retraining
or relocation.
The company is increasing its investment in business
customer acquisition by expanding its sales force,
increasing its marketing and sponsorship budgets aimed at
the business community and developing new partnerships and
new channels to market in all operational areas.
Overall, the restructure will result in substantially fewer
employees in London and Manchester, and a slight increase in
those based in Scotland.
The Board anticipates that the actions being taken to
realign the cost structures will accelerate the company's
progress towards being EBITDA positive, and the Board
reiterates that current funds are sufficient to fully fund
the Group.
Board Changes
Changes are also being made at Board level to reflect the
strategy. Martin Beard, Group Commercial Director will head
up all operations as Chief Operating Officer with immediate
effect.
Mark Daeche, currently Special Projects Director will take
up responsibility for information technology and technical
product development as IT and Development Director.
The Company does not have a majority of non-executive
directors that are regarded as independent for corporate
governance purposes. Paul Salem, who joined the board as
non-executive director on the acquisition of First Telecom,
has agreed to step down from the Board, which leaves a
majority of non-executive directors independent.
UK Operations
Atlantic is an active participant in the local loop
unbundling process in the UK. Although we are still at a
relatively early stage of the process, we are now receiving
more visibility on co-location space and expect that we can
build a good DSL footprint in certain areas. We now expect
to have some co-locations in place prior to 1 July.
Atlantic's range of access technologies, including the
selective use of wireless access enables the company to
develop and expand our SME coverage in conjunction with DSL.
During the quarter to 31 December the company achieved a
strong increase in directly connected business lines which
reached 9,734, an increase of 14% over the last quarter.
SME addressable penetration of our UK markets now stands at
7.0%. Indirect SME business has achieved equally strong
growth with the number of lines now standing at 90,485
across Europe, up nearly 5,000 lines from the last quarter.
In total, we have now reached 100,000 SME lines.
This growth has been supported by a stable churn rate, which
remains within expectations, and showed a marginal drop from
18.95% to 18.65%.
The Group has already taken some measures to re-evaluate the
cost of maintaining certain residential customers. The re-
evaluation has caused additional disconnection of customers
in the quarter, as we seek to remove residential customers
that are the most expensive to service. As at 31 December,
Atlantic had 24,686 direct residential customers (with
49,152 lines) a decrease of 4,326 customers in the quarter.
Churn has increased marginally to 16.76% and remains within
expectations. We have excluded the restructuring numbers
from the churn calculation.
The number of indirect residential customers dropped 13,020
during the quarter, to 236,135 again reflecting the
company's focus away from the residential market.
During the quarter the company activated its UK national
network one-month ahead of schedule, and is now taking steps
to transfer its traffic onto this network. This will
benefit margins going forward.
Atlantic's focus on the business market has brought a
substantial change in overall residential customer numbers
and profile this quarter and will continue to do so over the
coming months as we focus more investment and management
resources on the business market. As indicated, residential
customers are being managed down from the current level, and
residential churn rates are expected to materially increase
as we will not be actively selling and marketing a
residential service. We will however, develop traffic
opportunities, including residential traffic, for our
national network through the use of affinity partners and
will continue to support our higher spending residential
base.
European operations
The rollout of DSL services in Germany has continued to
accelerate ahead of schedule. In November the Board
announced that it expected to have 325 installed exchanges
in Germany by the end of the year, a significant advance on
its original target of 250. However, we are delighted to
report that the German rollout has again exceeded
expectations, with 331 installed exchanges on 31 December,
up from 97 at the end of September. The company remains on
target to complete its DSL build in Germany by this summer,
fully six months ahead of target.
The company has increased the number of its partner ISPs to
24 from 13 at 30 September. At 31 December, DSL equipment
has now been installed in exchanges in a further five German
cities: Bremen, Nuremberg, Mannheim, Ausburg and Cologne.
Atlantic now covers 10 major metropolitan areas with an
addressable market of 500,000 SMEs. The Company launched
retail DSL directly connected SME service in Germany in
September and although it is still early days, indications
are encouraging.
The DSL rollout in Holland commenced during the quarter and
17 exchanges were equipped at 31 December. The Board
expects to launch services in the next quarter.
European networks
Atlantic has reached an in-principle agreement with
Carrier1, a pan European network operator. The agreement
gives Atlantic 2.5 Gbs of capacity on Carrier1's completed
3,000km national fibre network in Germany. In exchange,
Atlantic will provide Carrier1 with similar capacity on the
Group's UK national network with 48 points of presence
covering the majority of the country. The German network
will give Atlantic a significant German national footprint
and will provide19 points of presence mirroring Atlantic's
target metropolitan areas. The network will be used to
connect Atlantic's metropolitan networks and deliver more
cost effective interconnect.
This network, coupled with the already announced transaction
with Metromedia (MFN) which gave us significant metropolitan
area fibre has given Atlantic an excellent national and
local fibre-based footprint in the important German
marketplace.
The deal with Carrier1 also includes 155 Mbs of capacity
from Amsterdam to London and Amsterdam to Frankfurt. Over
the next three financial years, cost savings arising
directly from the transaction are expected to total
approximately #10 million.
Outlook
The benefits from our investment in 2000 will start to come
through this year. SMEs are the vibrant part of the
European economy and we are confident of making further
significant progress. Moreover, the underlying cash flow
position should be much improved.
The Board will continue to ensure that it remains focused on
providing long-term value for shareholders in what remains a
dynamic market.
ATLANTIC TELECOM GROUP PLC
Certain Operating Data
The following table sets forth certain data concerning the
Group's telecommunications operations as of and for the nine-
month period ended 31 December 2000, the six-month period
ended 30 September 2000, and for the three-month period
ended 30 June 2000.
As of and for the periods ended
30 June 30 31
2000 September December
2000 2000
Direct Telecommunications
Business Customer Data (UK)
Estimated business premises
passed (1) (7) 41,332 42,224 43,213
Business customers (2) 2,073 2,533 3,042
Business customer lines (2) 7,813 8,564 9,734
Penetration rate of estimated
business premises passed (3) 5.0% 6.0% 7.0%
Average lines per business
customer (4) 3.77 3.98 3.48
Business customer churn (5) 18.82% 18.95% 18.65%
Residential Customer Data (UK)
Estimated residential homes
passed (1) 716.217 734,479 762,860
Residential customers (2) 25,401 29,013 24,686
Residential customer lines (2) 50,496 57,413 49,152
Penetration rate of estimated
residential homes passed (3) 3.6% 4.0% 3.2%
Average lines per residential
customer (4) 1.99 1.98 1.99
Residential customer churn (5) 14.86% 15.08% 16.76%
(8)
Network Data
Number of active base stations 136 139 142
in UK
Installed co-locations in 7 97 331
Germany
Ready-for Service co-locations 2 26 141
in Germany
Installed co-locations in 0 0 17
Holland
Ready-for -service co- 0 0 1
locations in Holland
Indirect Telecommunications
(UK, Germany, France)
Business customers (2) 11,693 12,307 14,259
Business customer lines (2) 83,839 85,606 90,485
Average lines per business 7.17 6.96 6.35
customer (4)
Residential customers (2) 259,922 249.155 236,135
Residential customer lines (2) 260,027 249,374 237,480
Average lines per residential 1.00 1.00 1.01
customer (4)
TOTAL TELECOMMUNICATIONS LINES 402,175 400,957 386,851
Call by Call
Telecommunications (Germany)
Active customers (6) 149,132 149,317 127,932
(1) Estimated homes passed or estimated business
premises passed is the Company's estimate of the
residential homes or business premises seen by the direct
networks which are capable of connection to a base
station or to a fibre network excluding certain multiple
dwelling units which the Company does not presently
serve.
(2) Residential or business customers or residential or
business customer lines represent the number of customers
or lines which are connected and in service, the number
of customers or lines for which customers, where
applicable, have contracted for service but are not yet
connected and the number of customers or lines where
service has been suspended but the customers or lines
have not yet been disconnected. Suspended customers are
treated as disconnected after a maximum period of 6
months.
(3) Penetration rate of estimated homes or estimated
business premises passed is calculated by dividing the
number of residential customers or business customers on
the given date by the estimated homes or estimated
business premises passed as of such date, expressed as a
percentage.
(4) The average lines per customer is calculated by
dividing the number of lines on a given date by the
number of customers on that date.
(5) Churn is calculated by dividing net disconnections
(total disconnections less the number of disconnected
accounts for which service is later restored and
disconnections for customers moving premises and
reconnecting at their new premises) in a period by the
average number of customers in the period (calculated as
the simple average of the number of customers at the end
of each month during the period.) Churn is expressed on a
rolling twelve-month basis, meaning that the churn is
calculated over the three months ended on 30 June 2000,
30 September 2000 and 31 December 2000.
(6) Customers who use the service on an individual call
basis at some point during the quarter.
(7) The business premises passed figure has been recounted
in the quarter to 31 December and the comparative figures
have been adjusted to reflect the re-evaluation.
(8) Excludes customers disconnected on restructuring.
Aterian (LSE:ATN)
Historical Stock Chart
From Jun 2024 to Jul 2024
Aterian (LSE:ATN)
Historical Stock Chart
From Jul 2023 to Jul 2024
