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German ISP T-Online Cuts Negative EBITDA

The German ISP T-Online Wednesday reported that in the second quarter of 2001, its negative EBITDA improved by 14 percent compared to the first quarter of 2001. The EBITDA was reduced from minus EUR 66.4 million (US$60.4 million) to minus EUR 56.9 million (US$51.7 million). This is still a tremendous negative amount, but the massive increase in group sales is of particular interest to investors. From Jan. 1 to June 30, 2001, sales amounted to EUR 539.3 million ($490.5 million), an increase of 53 percent compared to same period of time last year.

The company announced that the number of Access customers in Germany increased from June 30, 2000 to June 30, 2001 by around 38 percent to about 7.5 million customers. Group-wide, there was a good 45 percent increase to 9.2 million customers. The foreign subsidiaries contributed to this performance with around 800,000 new customers.

In the Internet access business, T-Online International AG was able to increase its sales from EUR 311.2 million (US$283 million) in the first half-year of 2000 to EUR 459.2 million (US$417 million) in the first half-year of 2001 -- an increase of around 48 percent. The portal business in particular (Internet advertising, e-commerce transactions) managed to buck the trend in this period of time and double to EUR 67.9 million (US$61.7 million).

The new rates concept introduced in March 2001 greatly increased profitability, according to Chief Executive Officer Thomas Holtrop. The replacement of the narrowband flat rate, which was making a loss, proved to be right on target.

"Of the around 500,000 original customers with the narrowband flat rate, 200,000 have already chosen one of the new rate options," Holtrop said. "Our goal is still to break even with the EBITDA for the year 2002 in Germany and for the entire T-Online Group in the year 2003."

In addition to this, the expansion of the portal business is seen as a key factor. Content partnerships already exist with "Bild," the "Motor-Presse Stuttgart," ZDF and DaimlerChrysler. T-Online Travel, an online travel portal, is to be launched in the fourth quarter of 2001. T-Vision, the new broadband portal for chargeable audio and video offers based on T-DSL, will be launched at the start of 2002.