Investor confidence in Colt Telecom Group Plc appears to be unshakable, despite the huge build out costs of the company’s expanding metropolitan networks. The results from the group’s first full year as a listed company show revenues climbing 133% to 81.5m pounds but losses trebled to 32.5m pounds as Colt continues to invest heavily in its fiber optic infrastructure. Cash outflow in the year from operating activities and network build out came to over 100m pounds, and Colt isn’t expected to break even for at least four years. Against this loss making background, the share price has accelerated away into the stratosphere. Since Colt floated late in 1996 at 275 pence, its steady expansion, aided by rumors of a possible takeover, has seen the shares reach well over 10 pounds, outperforming the FTSE all share index by 125%. Colt is a rare beast in the European telecommunications market, a competitive local exchange carrier which is rapidly building metropolitan fiber optic networks throughout Europe. It supplies high band width connections to high spending corporate customers via the local loop, leaving low margin long distance work to others. Colt now has operational networks in six European cities, with plans to double this to twelve by the end of 1998. And part of its attraction is its unfailing reliability. In a world where construction projects invariably take twice as long as expected and end up costing five times as much, Colt delivers on time. Services in its sixth city, Berlin, came on stream ahead of schedule. As European telecoms deregulation becomes a more tangible reality for investors, Colt looks increasingly like a safe pair of hands.
