Refocus of investment on SME market substantially complete. The restructure announced will bring approximately GBP30 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, which is therefore anticipated to occur earlier than previous expectations. 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 9734 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 GBP30 million in the next financial year. With funds available of GBP190 million as at 31 December, including cash set aside to meet certain future interest payments on our high yield debt, and GBP100 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.
