Focus on profitable sales channels
Marburg, August 9, 2006 – 3U TELECOM AG operates in a market environment which continues to be characterized by price wars and intense predatory competition with declining margins. Unfortunately, this has meant that the company was unable to achieve its target figures in indirect sales in the first half of the year. However, these losses were compensated for by increased sales in the call-by-call sector and by the growth of market share. The Management Board expects tougher competition to make it impossible to market DSL and pre-selection products with sufficient margins for the foreseeable future. The Board has therefore decided to focus on the call-by-call and wholesale sectors in the fixed-line segment. 3U TELECOM AG will continue to concentrate on profitable sales channels, as it has done since the start of the year. Costly indirect sales will not be continued. In connection with this, the number of personnel working in these fields will be reduced by over 40, appr. one third part-time and temporary employees. To strengthen our position as a third-party service partner, the Group-wide technology platform for pre-selection, DSL and VoIP products will be continued and, if necessary, expanded.
Further operational restructuring will streamline our cost structures and contribute to the long-term stability and profitability of the 3U Group. In light of this and the positive sales estimates for the second half of the year in the call-by-call sector, the Management Board is confident that the 3U Group will reach its sales and earnings targets for the entire year (sales of EUR 132 million and EBITDA of EUR 8.5 million).
Despite the difficult market environment, the 3U Group had a successful first six months of 2006. Consolidated sales in the first six months of the current financial year increased by more than 12% to EUR 65.07 million (previous year: EUR 58.01 million). Second-quarter sales came in at EUR 32.92 million (previous year: EUR 31.34 million; Q1/2006: EUR 32.15 million).
Earnings improved considerably. The net loss for the first six months of 2006 was only EUR 1.09 million compared to a net loss of EUR 10.23 million in the same period of last year. This is primarily due to the second quarter with net income of EUR 0.84 million (previous year: net loss of EUR 5.09 million). Extraordinary items played a significant role in this context. The company reached a final agreement with the previous owner of LambdaNet with regard to the mutual offsetting of receivables and payables, which had a one-off positive effect on earnings in the amount of EUR 4.7 million. This was partially offset by an impairment loss of EUR 1.9 million which was recognized on the acquired customer base of LambdaNet due to contract cancellations by a large customer.
EBITDA also showed a marked improvement, more than doubling to EUR 5.14 million in the first six months of 2006 (previous year: EUR 2.46 million). According to the agreed structural adjustments, the Management Board assumes that the company will at least reach the EBITDA target that was announced for the year.
The net loss for the first six months translates to a loss per share of EUR 0.02 (previous year: loss per share of EUR 0.22). The cash and cash equivalents of 3U group as of June 30, 2006 totaled EUR 35.58 million. This is a solid basis for possible acquisitions to strengthen our competitive position. The company’s equity ratio was more than 38%.
The detailed half-year report will be published on August 15, 2006.
3U TELECOM AG
Tel.: +49 (0) 6421 999-1200
Fax: +49 (0) 6421 999-1998