Versatel reports fifth straight quarterly loss

13 May 2008

German fixed network operator Versatel has reported its results for the first three months of 2008. Revenues were up 6.3% year-on-year to EUR185.2 million (USD286.4 million), while adjusted EBITDA decreased 12.6% year-on-year to EUR47.3 million, due to tough competition and the associated decline in prices. Consolidated net loss widened almost four-fold compared to a year earlier, from EUR7.9 million in 1Q 2007 to EUR29.9 million in 1Q 2008. Some EUR11.5 million of this comprised provisions for expenditure in connection with Versatel’s current efficiency programme; other factors contributing to the loss included a higher depreciation charge due to the network expansion in 2007, and taxation.

Operationally, Versatel added 30,000 residential DSL customers during the period January to March 2008, reaching a total of 666,000 on 31 March. The customer growth fuelled year-on-year residential revenue growth of 1.6% to EUR89.6 million in the quarter, despite a lower average revenue per user (ARPU). However, the business division fared less well, seeing revenues drop by 7% yearly to EUR49.3 million, caused by a steep decline in prices that could not be offset by an increase in new orders. Versatel nonetheless expects growth in business revenues in the next few months as contracts secured at the end of 2007 start to bear fruit. Versatel’s best performing division was its wholesale business, where first-quarter revenue grew by more than 40% year-on-year to EUR46.4 million

Versatel’s outlook for the full year 2008 is an increase of between 100,000 and 120,000 DSL customers, total revenues of EUR730 million to EUR740 million, and adjusted EBITDA of at least EUR200 million.

Germany, 1&1 Versatel