The London, UK-based corporate telecoms company, which provides voice and data services for businesses across Europe, said tough markets meant that its annual core profits could end up slightly below last year’s levels of 163m pounds ($296.7m). It blamed slower-than-expected sales of its data products and weak performance of some higher margin products.
The corporate telecom industry is in the process of recovery after a three-year slump that was triggered by the bursting of the late 1990s technology bubble. Parts of the industry are still plagued by overcapacity, and as a result, overall margins are now under pressure, the company said. These trends are expected to continue throughout 2004 and consequently Colt does not now believe that it will meet market expectations for the second quarter…and the year. Colt said year-end revenues would be above 2003 levels.
Colt’s near-term risk is however offset by its sound liquidity position. As of March 31, it had cash and liquid assets to the tune of 800m pounds ($1.46bn), with gross debt of 1.1bn pounds ($2bn) with the earliest maturity of 109m pounds ($198m) due in August 2005.
Steve Akin, president and chief executive, said Colt is developing new high-margin products in a bid to boost revenues in the longer term.
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 Ltd to force it into administration.
Highberry, which is part of New York-based Elliott Associates, 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 1bn pounds ($1.82bn) in bonds due between 2005 and 2009. The claim was vigorously denied by Colt, which said it had cash reserves of 1bn pounds ($1.82bn) at the time.
The problem for Colt is that it was generally believed to be on the road to recovery. This latest setback could give predators such as Highberry another opening for attack. Colt’s results will be published on July 21.
