Q1 2005 – ALMOST 1.9 MILLION CUSTOMERS USE OSKAR’S SERVICES
Oskar added 61,162 net subscribers in the first quarter to reach 1,892,278, an increase of 17.2% compared to 1,613,971 subscribers at the end of the first quarter of 2004. Oskar’s focus on postpaid growth met with continued success as postpaid subscribers represented 84.3% of net additions during the quarter and 49% of our total subscriber base at the end of the quarter. “Over 84% of our new customers this quarter activated one of our postpaid tariffs, which shows that we are achieving true business value from the growth in our customer base,” said Karla Stephens, Chief Operating Officer at Oskar.
Oskar added 61,162 net subscribers in the first quarter to reach 1,892,278, an increase of 17.2% compared to 1,613,971 subscribers at the end of the first quarter of 2004. Oskar’s focus on postpaid growth met with continued success as postpaid subscribers represented 84.3% of net additions during the quarter and 49% of our total subscriber base at the end of the quarter.
“Over 84% of our new customers this quarter activated one of our postpaid tariffs, which shows that we are achieving true business value from the growth in our customer base,” said Karla Stephens, Chief Operating Officer at Oskar.
Oskar‘s national cellular subscriber market share has grown to an estimated 17.3% as of March 31, 2005, compared to a 16.3% share at the same time in 2004. During the past 12 months, we estimate that cellular penetration in the Czech Republic has increased to 107% from 97% at the end of March 2004.
Service revenues increased 17.2% to 3.592 billion CZK compared to 3.064 billion CZK for the first quarter of 2004 due to a 17.9% increase in average subscribers; monthly average revenue per user (ARPU) remained stable at Czech Koruna 623 compared to Czech Koruna 624 for the same period last year. Cost of services as a percent of service revenue decreased to 38.4% from 42.6% in the first quarter of 2004 primarily as a result of lower average interconnection rates amongst mobile operators and from greater on-net and incoming traffic as a percentage of total traffic.
As a result, Oskar achieved operating income before depreciation and amortization (OIBDA)* of 1.157 billion CZK, an increase of 27.7% over the 905.7 million CZK achieved in Q1 2004. OIBDA as a percentage of service revenue for the quarter reached 32.2% compared to 29.6% in the first quarter of 2004. This improvement reflects the revenue impact of sold subscriber growth, our focus on postpaid growth and economies of scale realized as fixed costs are spread over a larger subscriber base.
Oskar is a trademark of Oskar Mobil a.s., a subsidiary of Telesystem International Wireless Inc. (“TIW”). TIW is a leading provider of wireless voice, data and short messaging services in Central and Eastern Europe with about 6.9 million subscribers. TIW operates in Romania through MobiFon S.A. under the brand name Connex and in the Czech Republic through Oskar Mobil a.s. under the brand name Oskar. TIW’s shares are listed on NASDAQ (“TIWI”) and on the Toronto Stock Exchange (“TIW”).
This information is taken from the TIW press release dated May 3, 2005 and is available by accessing the TIW web site (www.tiw.ca). Financial results are unaudited and prepared using Canadian generally accepted accounting principles (“GAAP”).
* We use the term operating income before depreciation and amortization (“OIBDA”) and average revenue per user (“ARPU”), which may not be comparable to similarly titled measures reported by other companies. We believe that OIBDA, referred to by some other telecommunication operators as EBITDA, provides useful information to investors because it is an indicator of the strength and performance for our ongoing business operations, including our ability to fund discretionary spending such as capital expenditure and other investments and our ability to incur and service debt. While depreciation and amortization are considered operating costs under generally accepted accounting principles, these expenses primarily represent the non-cash current period allocation of costs associated with long-lived assets acquired or constructed in prior periods. Our OIBDA calculation is commonly used as one of the bases for investors, analysts and credit rating agencies to evaluate and compare the periodic and future operating performance and value of companies within the wireless telecommunications industry. We believe that ARPU provides useful information concerning the appeal of our rate plans and service offerings and our performance in attracting and retaining high value customers. ARPU excludes equipment revenues, revenues from other wireless networks’ customers roaming on our network and miscellaneous revenues. OIBDA and ARPU should not be considered in isolation or as alternatives measures of performance under GAAP. For the reconciliation of OIBDA to net income, in US dollars, and for the reconciliation between service revenues and ARPU, in US Dollars, refer to the non GAAP measures and operating data section of the TIW press release dated May 3, 2005.