Dolphin Telecom Announces Third Quarter 1999 Results

Business Wire, Nov 16, 1999

HIGHLIGHTS

For the third quarter ended September 30, 1999

All amounts are in US$, unless otherwise stated

-- Dolphin launched its UK ESMR service in mid-August 1999 and had

1,300 ESMR subscribers connected to its network at September 30,

1999. The number of connected ESMR subscribers increased to 6,200

at October 31, 1999.

-- A national television and print advertising campaign was launched

in the United Kingdom during September.

-- Consolidated revenues increased to $24.3 million in the third

quarter of 1999 compared to $21.6 million in the corresponding

period in 1998.

-- Operating loss before depreciation and amortization was $22.8

million in the third quarter of 1999 compared to an operating

profit before depreciation and amortization of $1.7 million in

the corresponding period in 1998. The increased losses are mainly

attributable to the continued build-out of the European ESMR

network.

-- Net loss for the third quarter of 1999 was $26.1 million compared

to $11.1 million for the corresponding period in 1998. The

increased losses are mainly attributable to the continued

build-out of the European ESMR network.

-- At September 30 1999, the Company held cash and cash equivalents

of $371.6 million.

-- Completion of a $33.0 million equity investment by Motorola in

Dolphin Germany exchangeable into an equity investment in Dolphin

Telecom plc.

-- A commitment letter was signed with Motorola for a $250 million

credit facility to fund the deployment of the ESMR network in

Germany.

-- A commitment letter was confirmed by Motorola for a $92 million

support credit facility to fund equity investments in Germany.

-- A commitment letter was signed with Chase Manhattan plc and CIBC

World Markets plc for a Euro500 million credit facility. This

will allow Dolphin to refinance the $250 million facility in

Germany.

PRESS RELEASE

For the third quarter ended September 30, 1999

All amounts are in US$, unless otherwise stated

Dolphin Telecom Announces Third Quarter 1999 Results

Telesystem International Wireless Inc. (Nasdaq:TIWI) (ME:TIW) (TSE:TIW) announces that its subsidiary, Dolphin Telecom plc ("Dolphin" or the "Company"), reported today its results for the third quarter and nine months ended September 30, 1999.

The Company launched its Enhanced Specialized Mobile Radio (ESMR) services nationally in the United Kingdom followed, on September 12, 1999, by a national television and print advertising campaign to promote the service. The Company, whose network covers 87% of the population in the United Kingdom, had 1,300 ESMR subscribers connected to its network at September 30. Late deliveries of terminals and accessories contributed to the relatively low number of connected ESMR subscribers at the end of the period. The connection rate subsequently increased, and Dolphin had 6,200 ESMR subscribers at the end of October.

Review of Operations

Quarter ended September 30, 1999 compared to quarter ended September 30, 1998

As a result mainly of business acquisitions, revenues reached $24.3 million in the third quarter of 1999 compared to $21.6 million in the corresponding period of 1998. Subscribers increased to 284,000 at September 30, 1999 from 204,700 at September 30, 1998, primarily as a result of the business acquisitions. The revenues have also been affected adversely by the increased analog subscriber churn and reduced revenue per analog subscriber primarily due to the change in subscriber mix following recent business acquisitions and the competitive nature of the European telecommunications market. The Company's ESMR network in the United Kingdom did not generate significant revenues in the third quarter of 1999. The Company's ESMR networks in France and Germany are still in the pre-operating stage and as such did not generate revenues in 1998 or 1999.

Gross margins before depreciation and amortization were 46.8% in the third quarter of 1999 compared to 66.2% in the corresponding period of 1998. The decrease is mainly attributable to increased analog subscriber churn and reduced revenue per analog subscriber primarily due to the change in subscriber mix following recent business acquisitions in Germany and the acquisitions of smaller entities in other countries, notably Belgium, Portugal and Spain, which are in the early stages of development.

Selling, general and administrative expenses increased by $21.6 million to $34.1 million in the third quarter of 1999 from the corresponding period of 1998, primarily as a result of the development of the Company's ESMR networks in the United Kingdom and France and business acquisitions.

Depreciation and amortization increased by $5.3 million to $20.5 million in the third quarter of 1999 from the corresponding period of 1998, primarily as a result of business acquisitions and the accelerated depreciation and amortization of its Specialized Mobile Radio (SMR) assets in the United Kingdom and France. The Company reviews the SMR asset lives by country and makes adjustment to depreciation, shortening the asset lives to the estimated date of closure of the SMR networks. This adjustment is made only after the issue of an ESMR license, when infrastructure agreements have been signed and the Company has committed funding for the development of an ESMR network.