Carrier1 confident, despite market downturn - Brief Article

EUROPE -- At a recent annual investor meeting in London, Carrier1, a European provider of end-to-end internet, voice, bandwidth, data centre and access solutions, was upbeat about its market opportunity, future objectives and the factors for its perceived 'success'.

Alex Schmid, Carriers1's chief financial officer, claimed that it has been able to ride the present depressed market conditions. Revenues stood at of US$89.6 m ([euro]104.3 m) for the three months ended March 31 2001 -- a 75 per cent increase over the first quarter last year. Even so, EBITDA (earnings before interest, taxes, depreciation, amortisation) stood at a loss for the first quarter 2001 at US$7.4 m ([euro]8.6 m). What's more, this figure excludes a bad debt expense of US$7 m ([euro]8 m).

Stig Johansson, president and CEO of Carrier1's long-term business, said that the company is fully funded, with a solid liquidity and financial position. The company also says that it aims to be EBITDA breakeven for the year (excluding bad debt).

Schmid expressed the view that the results for the first quarter are very good, although the bad debt is disappointing with voice resellers and internet service providers (ISPs) being the main offenders. The company, however, claims that this will not have any overall impact on the business going forward.

Schmid went on to say that net profit will not happen for a number of years but with new services starting to be rolled out, the company is moving in the right direction. However, he admitted that the possibility of bankruptcy is still real. "Viatel said that we could become bankrupt but they were the ones in the end that did. It's true to say that it's still a possibility for us." Johansson stated that he does not consider Carrier1 to be an acquisition target but ultimately it will do what's best for its shareholders.

Apart from financial stability, Carrier1 believes that its 'success' is due to a cost-efficient network built for approximately US$500 m ([euro]582 m) -- paid by an US$800 m ([euro]931 m) initial public offering (IPO).

Other factors which the company trusts is the key to its survival and growth is a high-volume, high-end customer base built on big contracts with large organisations such as AOL, which allows the company to derive most of its revenue from players who are most likely to survive the current industry slump.

COPYRIGHT 2001 Horizon House Publications, Inc.
COPYRIGHT 2001 Gale Group