Portal Revenues Up Sixfold at T-Online, Despite Loss

[London, ENGLAND] German Internet service provider T-Online
increased its portal revenues sixfold in 2000, despite making
a substantial — but less than expected — loss of US $116.5 million.

Like the figures indicated by T-Online’s main shareholder Deutsche
Telekom on Tuesday, those from the German ISP give new meaning to
the term “mixed results.”

Group revenue increased by 86.1 percent to EUR 797.2 million
(US $750 million) and its subscriber base grew 70 percent to
7.9 million. However, the loss compares badly with the EUR 17.6 million
(US $16.5 million) profit achieved in 1999.

The figures given by T-Online International AG are only “initial results”
and have yet to be audited. Full audited results will be issued on
March 29, 2001.

The most promising aspect of the figures is the greatly increased
income from advertising and e-commerce, up six times compared with
the previous year. These portal revenues reached EUR 110 million
(US $104 million) and showed a 75 percent increase in the fourth
quarter over the third quarter.

Overall, the figures appear to be strong, despite the loss — which
T-Online’s management believes can be turned around very quickly.

Deutsche Telekom’s 81.7 percent equity holding in
T-Online has not prevented it from charging a per-minute
rate for carrying the ISP’s Internet traffic across its network.
However, the rules are to change following instructions by the German
telecommunications regulator RegTP which will oblige Deutsche Telekom
to offer all ISPs a flat-rate service starting February 1.

T-Online was the first ISP to offer end-users a flat-rate service
in Germany and to date has attracted over half a million customers
for it. Clearly, it cannot continue to charge a flat-rate while
paying a per-minute rate to its parent.

Although T-Online was very much the dominant player in the European
ISP industry in 2000, the context has changed following Tiscali’s
January agreement to buy Liberty Surf. According to the German
newspaper Boersen-Zeitung on Tuesday, Tiscali has declared its
intention to become larger than T-Online during 2001.

Shares rose 6 percent in T-Online after the figures were announced on
Wednesday morning.