For the first quarter ending March 31, the London, UK-based company’s net loss increased to GBP 30.4m ($58m), from a net loss of GBP 21.6m ($41m) a year ago. The increased loss came after the company ran up costs as a result of its expansion in India. Selling, general, and administrative costs climbed 18% to GBP 67.5m ($129m). Sales meanwhile rose 1.4% to GBP 307m ($587m), up from GBP 302.8m ($579m) in the year-ago quarter.

The pan-European provider of business communications solutions plans to offshore 15% of its workforce to India by 2006. Colt is struggling to cope with the UK market’s glut of capacity, which is driving down prices. During the quarter it moved a further 71 positions to India, where it employs about 6% of its 3,900-strong workforce.

Chief executive Jean-Yves Charlier outlined a positive outlook however for the rest of the year. We’ll start to really deliver in the second half of the year whether or not market conditions pick up, he said. Asked whether he’d received any takeover approaches, he said: We as most, if not all, publicly traded companies do not comment on these matters. In fact, 99% of these rumors are completely unfounded.

Colt, which stood for City of London Telecom before it branched out into Europe, has had a torrid time in recent years. In December 2002, it survived an attempt by hedge fund Highberry to force it into administration. Highberry had attempted to show that Colt would become insolvent in the next few years, and would not have the funds necessary to repay or refinance about GBP 1bn ($1.82bn) in bonds due between 2005 and 2009. The claim was vigorously denied by Colt, which said it had cash reserves of GBP 1bn ($1.82bn) at the time.

The action was dismissed by the courts, and the hedge fund is now a shareholder in the company. Yet over the past year, cash and liquid resources have declined dramatically from GBP 786m ($1.50bn) in March last year, to only GBP 349m ($668m) currently.

The carrier was the subject of takeover speculation last June when a UK newspaper said that France Telecom, Europe’s second-largest phone company, and Cable & Wireless, the UK’s number-two provider of phone services, were considering an offer for Colt. Then in early April, shares in the operator rose as speculation increased that the Danish carrier TDC A/S could mount an acquisition bid.

Colt provides telecoms services to its 20,000-kilometer fiber-optic network that connects 10,000 buildings in 13 European countries. The company has long sought to gain more of its revenues from higher-margin telecoms products rather than traditional services, for which the market is highly competitive.

Earlier this month, it started selling advanced internet-based services, which allow voice, data, and video to flow down one line.

Meanwhile, the company announced the appointment of Dr Alireza Mahmoodshahi to the new role of chief technology officer. He joins Colt from KVH Co in Japan where he was CTO and CIO.