<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 6-K
REPORT OF FOREIGN ISSUER
PURSUANT TO RULE 13A-16 OR 15D-16 OF THE
SECURITIES EXCHANGE ACT OF 1934
THROUGH MARCH 28, 2000
------------------------
PTC INTERNATIONAL PTC INTERNATIONAL POLSKA TELEFONIA
FINANCE II S.A. FINANCE (HOLDING) B.V. CYFROWA SP Z O. O.
(Exact name of (Exact name of (Exact name of
Registrant as specified Registrant as specified Registrant as specified
in its charter) in its charter) in its charter)
41 Avenue de la Gare Strawinskylaan 3705 Al Jerozolimskie 181
L-1611 Luxembourg 1077 ZX Amsterdam 02-222 Warsaw
011 353 485 0501 011 31 406 4444 011 48 22 573 6000
(Address, including zip (Address, including zip (Address, including zip
code, and telephone code, and telephone code, and telephone
number, including area number, including area number, including area
code, of registrant's code, of registrant's code, of registrant's
principal executive principal executive principal executive
offices) offices) offices)
------------------------
Indicate by check mark whether the registrant files
or will file annual reports under cover Form 20-F or Form
40-F.
Form 20-F x Form 40-F
--- ---
Indicate by check mark whether the registrant by
furnishing the information contained in this Form is also
thereby furnishing the information to the Commission pursuant
to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes No x
--- ---
If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b): 82- N/A
---
<PAGE> 2
POLSKA TELEFONIA CYFROWA SP. Z 0.0 (PTC) REPORTS
FOURTH QUARTER AND YEAR END 1999 RESULTS
WARSAW - MARCH 27, 2000 - PTC, (www.eragsm.com.pl) Polish leading wireless
provider, today announced its results for the full fiscal year ended December
31, 2000. Amounts are presented in Polish Zloty and according to International
Accounting Standards.
Background of the release
o Licenses
Formed in December 1995, PTC was awarded a 15-year
non-exclusive GSM 900 License in February 1996 by the Polish
Ministry of Communications. Thereafter, we commenced
construction of the GSM network and, in September 1996,
started offering services to subscribers under the brand name
Era GSM. Since that time, we have experienced rapid growth and
development. In August 1999, we were the only Polish mobile
operator granted a nationwide GSM 1800 License, also on a
15-year non-exclusive basis. The GSM 1800 License will enable
us to substantially enhance call volume capacity, particularly
in major urban centers. We commenced services under the GSM
1800 License on March 1, 2000.
o Subscriber Numbers
As of December 31, 1999, we had approximately 1.75 million
subscribers representing 124% year over year growth. We had
approximately 1.39 million post-paid subscribers and 365,000
pre-paid subscribers. The total subscriber growth gave us
approximately 44.7% of the total wireless market share. By mid
March 2000, we announced the addition of our 2 millionth
subscriber.
o Employee Numbers
As of December 31, 1999, we had 2,606 employees, including
1,523 in sales, marketing and strategy, 667 in network
operations and 416 in finance, administration and director
general. Eleven employees were expatriates seconded from
either DeTeMobil or MediaOne. According to the planned changes
in the shareholders structure on March 1, 2000, Mr. Wojciech
Ploski replaced Mr. Karim Khoja at the position of Director
of Strategy, Marketing and Sales Department and member of
Management Board.
o Headquarters in Warsaw
During year 1999, we completed our transition and
consolidation into our new corporate headquarters' in Warsaw.
o Released total Fiscal Year 1999 results ending December 31, 1999
We sent our total Fiscal Year 1999 results ending December 31,
1999 to Securities and Exchange Commission, Washington, D.C.
on March 27, 2000.
<PAGE> 3
o Shareholders structure
In December 1999, Elektrim S.A. transferred 47.9998% of its
ownership in PTC to Elektrim Telekomunikacja (in which Vivendi
S.A. has 49% ownership). Elektrim S.A. retained 0.0002% of its
direct ownership in PTC. On March 23, 2000, DeTeMobil acquired
the ownership of MediaOne International B.V., a wholly owned
subsidiary of MediaOne (which has 22.5% ownership of PTC).
DeTeMobil has 45% of direct and indirect ownership in PTC.
Operational Highlights for 1999
o Subscriber Growth
The total Polish wireless market grew more than 100% to
approximately 11% penetration, or 3.9 million subscribers, in
1999. During 1999, we more than doubled the number of
subscribers from 780,740 at the end of 1998 to 1,751,475 at
the end of 1999. Our pre-paid subscribers accounted for 20.8%
of the total number of our customers that still showed the
increase in number of TAK TAK customers from 183,158 at the
end of 1998 to 365,155 at the end of 1999. Gaining about 1
million of subscribers during last year placed us at the first
position among telecommunication companies both fixed line and
wireless and put us on the same shelf as TPSA with its almost
1 million new adds. That was the first year when the wireless
sector attracted more subscribers than fixed line companies.
In 2000, we anticipate to attract more than 1 million new
additions.
o NEW TARIFFS AND VALUE-ADDED SERVICES
We introduced new tariffs in 1999 which included Halo, Plain
and Simple, VIP and 1/2 for the post paid subscribers and You
and Me and All Day tariffs for the pre paid subscribers. We
also introduced special business tariffs plans. We introduced
night pricing zone from 11.00 PM to 6.00 AM, with the lowest
per minute price available in all available tariffs.
We also developed additional value-added services through
ERANET, our internet service, combining internet access with
an email address and delivers messages directly to our
subscriber's handset. We were the first to launch the friends
and families service for pre-paid and post-paid and cheaper
minutes packages. Other value-added services introduced in
1999 were fax and data services and conference calling, as
well as number of box products targeted for specific market
segments: VIP, One/Two, and XL box. Additionally, we offered
to our pre-paid subscribers the option to recharge their
accounts at an ATM (automated teller machine) machine.
o LOYALTY PROGRAM
In October 1999, we launched the only points based program
within the Telecommunication sector in Poland. This program
allows for our subscribers to build up points to be redeemed
for benefits such as Era Merchandise, free air-time, or other
awards from our exclusive partners including LOT Polish
Airlines, British Airways, Panasonic and Kodak. By the end of
1999, there were approximately 800,000 subscribers
participating in this program.
o Churn Management
"Churn" refers to disconnected subscriptions, either voluntary
or involuntary. In 1999, 1998 and 1997, the average monthly
churn rate was 2.6%, 2.2% and 2.2%, respectively. Monthly
churn during the year 1999 decreased from 3.7% in January to
less than 1.9% in
<PAGE> 4
December. This result is best in class while comparing
European and US market. The reduction in churn is believed to
be the result of our Loyalty program, new tariff plans, market
segmentation, and value-added services.
o Network Build-out
As of December 31, 1999, we met our license requirements by
covering approximately 84.4% of the geographic area and 95% of
the population in Poland. We continued to build our SDH
microwave backbone and we expect that the initial phase of the
roll-out of this microwave backbone will be completed in the
second quarter of 2000, which will help us to reduce our
dependence on leased lines.
At the end of 1999, the total network investments reached PLN
3,347.3 million. This was for both network assets of PLN
2,237.8 million and licences fees of PLN 1,109.5
o GSM 1800 Award
In August 1999, we were the only operator award a nationwide
GSM 1800 license on a 15 year non-exclusive basis. Both our
competitors, Polkomtel and Centertel, have only license to
operator GSM 1800 in the 10 major cities and 4 transit way in
Poland.
Operational Goals for 2000
o Launch of GSM 1800 service
We launched GSM 1800 service on March 1, 2000. These
additional frequencies give us additional capacity and
bandwidth for both voice and data services. We have and will
continue to provide our services and tariff packages as one
product.
o VoIP
On December 20, 1999 we, were the first Polish
telecommunication operator, to offer to our subscribers, who
have data transmission service, the international voice
transmission over the internet protocol (VoIP). This new
service was viewed as a potential violation of the existing
telecommunication's law, and the GSM 900 and 1800 license
conditions. In the beginning of year 2000 the inspection from
State Telecommunications and Postal Inspection was conduct and
on February 1, 2000, we received a summons from the State
Telecommunications and Postal Inspection (PITiP) as a result
of this inspection. The summons ordered us to cease providing
international telephone service over the Internet network. In
response, we applied for reconsideration of the case, and on
February 10, 2000 we received a decision from the Minister of
Communications, which rendered the summons invalid. It was
determined that we could continue to offer Internet access
services (VoIP) for subscribers who have data transmission
service until May 2000, when it is anticipated that a new
regulation will be prepared by the Ministry of Communications.
We have been invited to take part in the process of preparing
new regulation concerning VoIP.
<PAGE> 5
o New Products
We will continue to create and introduce new products and
services for our subscribers during 2000. We are currently
testing GPRS platforms with 3 major network suppliers and will
choose a platform that will allow us to develop additional
products and value-added services for our subscribers.
Additionally, we are evaluating the impacts of 3G, also known
as UMTS, on our existing business in preparation of any bid by
the government. In 2000, we will develop new services using
WAP and VPN technology, as well as new pre-paid services on an
upgraded platform.
o Network Deployment Costs and Targets
According to our license agreement for GSM 900, we are
required to cover 84.9% of the geography of Poland and 95.6%
of the population. By the July 2004, we are supposed to attain
geographical coverage combined with 900 MHz and 1800 MHz
frequencies of 90%. During 2000, we anticipate to spend US$300
million on meeting our coverage requirements and expanding the
network to meet subscriber growth.
Financial Highlights for 1999
o Revenue Growth
Total revenues for fiscal year 1999 were 2.592 million PLN
(US$ 571,184), an increase of 981,250 PLN (US$ 236,543) or 61%
on those of fiscal year 1998. The main source of revenue is
airtime, which consists primarily of charges for calls that
originate or terminate in the Era GSM network. Other
significant revenue source includes monthly service fee,
service activation fees and revenues from the sale of
telephones and accessories. Airtime tariffs include revenues
from incoming and outgoing calls, "roaming" calls and revenue
from the sale of pre-paid airtime cards. The increase reflects
increased customer number by 124% on the previous year, offset
by a reduction in average monthly revenues per customer (ARPU)
to PLN 154 in the year 1999, from PLN 216 in the year 1998.
We anticipate that, as our network and subscriber base grow
and our business matures in coming years, airtime revenues and
monthly service fees will account for an increasing proportion
of our total revenues, while the proportion of total revenues
derived from sales of handsets and accessories, as well as new
subscriber activation fees, will decrease.
o COS
Total cost of sales was PLN 1,662.9 million during 1999, as
compared with PLN 948.4 million and PLN 511.1 million in 1998
and 1997, respectively. Gross margin was PLN 929.2 million in
1999, as compared with a gross margin of PLN 662.4 million in
1998 and PLN 135.9 million in 1997. As a percentage of net
sales, gross margin represented 35.8%, 41.1% and 20.1% in
1999, 1998 and 1997, respectively.
The decrease in gross margin as a percentage of net sales from
1998 to 1999 of 5.3% is the result of increased gross losses
on sales of telephones and accessories of PLN 332.2 million,
which were more than offset by the increase in gross profit
from service revenues and fees of PLN 599.0 million,
reflecting strong growth in the subscriber base. During 1999,
we increased promotional activities, in particular by selling
telephones and accessories with the subsidy in an effort to
attract subscribers. As a general matter, we do not intend to
achieve positive overall margins on sales of telephones and
accessories. We believe that a significant majority of future
sales and margins will be derived from airtime revenues and
monthly service fees rather than activation fees and the sale
of telephones and accessories, and that discounts on these
latter items will have a decreasing impact upon
<PAGE> 6
financial results of operations.
Cost of sales for services included interconnect costs of PLN
131.6 million for 1999, compared to PLN 77.5 million and PLN
32.4 million for 1998 and 1997, respectively.
o EBITDA Growth
After only nine moths of providing wireless services we
achieved positive EBITDA firstly in 1997 and we kept it
positive till the end of 1999. EBITDA for 1999 was PLN 598
million (US$ 144 million) compared to positive PLN 439 million
and PLN 34 million in 1998 and 1997 respectively. Growth in
EBITDA of 36.2% was significant due to heavy acquisition cost
in 1999 for the 1,751,475 subscribers. The biggest increase in
this ratio was reported in last quarter of 1999 when EBITDA
increased by 56% from PLN 383 million at the end of Q3 to PLN
598 million at the end of Q4, which was accompanied by 26% of
total new adds during 1999.
o ARPU
The average revenue per user (ARPU) in 1999 was PLN 154, PLN
62 or 28% lower than reported at the end of year 1998. The
decrease in ARPU reflects huge growth by 124% in subscribers
base during 1999. According to growth of Polish economy and
wireless market, we realize that mobiles are becoming not only
personal voice telecommunication, but much more with all the
value-added services. We believe that usage of these devices
will have an impact on ARPU.
o FX Exchange
As a result of the depreciation of Zloty in relation to other
major currencies, we have incurred a net foreign exchange loss
of PLN 150.7 million in 1999, as compared to a net foreign
exchange loss of PLN 42.0 million and during 1998. The
unrealized FX loss was PLN 143.6 million and PLN 10.9 million
in 1999 and 1998 respectively. Data shows increase in the
portion of the unrealized FX loss from 26% in 1998 to 95.3% in
1999.
o Net Income
In 1999, the company recorded a net loss of PLN 122.5 m as
compared to a Net Income of PLN 5.5 min 1998 and a Net Loss of
120.4 m in 1997. The Net Loss was due to the increase of
financing costs and foreign exchange exposure despite the
growth in EBITDA. The net loss for 1999 reflects mainly an
increase in net interest and other financial expenses to PLN
398.3 million as compared to PLN 165.8 million and PLN 74.0
million for 1998 and 1997. Although there was an increase in
net operating expenses from PLN 381 million in 1998 to PLN
612.6 million in 1999, this increase was below our operating
plan and inline with subscriber growth.
Effective January 1, 1998 the Company has adopted IAS 12
(revised) "Income Taxes" in accounting for its income taxes.
The resulting change in accounting policy was applied
retrospectively, resulting in a positive adjustment to the
opening balance of retained losses of PLN 23,637 as at January
1, 1997. The resulting adjustment to the opening balance of
retained loss as at January 1, 1998 resulted in a decrease by
PLN 30,748. Additionally, the net loss reported for the year
ended December 31, 1997 was decreased by PLN 7,111.
<PAGE> 7
Financing Information
o Bond Issue in 1999
On November 23, 1999, our financial subsidiary, PTC
International Finance B.V., issued Senior Subordinated
Guaranteed Notes for the aggregate principal amount of Euro
300.0 million and US $150.0 million to fund future network
capital construction and operating growth. The 2009 Notes bear
an interest rate of 11-1/4% with interest due commencing June
1, 2000 and payable each December 1 and June 1 thereafter.
Although the 2009 Notes mature on December 1, 2009, they can
be redeemed up to 35% of the initial aggregate principal
amount prior to December 1, 2002 and either the whole or any
part of the principal amount after December 1, 2004. The 2009
Notes rank equally with the previously issued 2007 Notes,
which are also guaranteed on a senior subordinated basis.
o Refinancing of Senior Debt
As of December 31, 1999 we drew down PLN 1,076.6 million under
the Bank Credit Facility, which consisted of DM 237.7 million
and PLN 570 million. Looking forward to the financing of our
business plan, we would like to replace our Bank Credit
Facility with the new one extended to the approximate amount
of DM 1 billion by Q3 2000. As part of this new facility, we
will seek to increase the Polish Zloty portion to limit our
foreign debt exposure.
o Hedging
In March 2000, we entered into our first hedging transactions
to cover the majority of the next 12 months of committed
payments. Our hedging policy allows for the use of forwards,
swaps and options for minimizing currency and interest rate
risks. As an alternative, we may attempt to structure foreign
currency liabilities to be broadly in line with the currency
basket employed by the National Bank of Poland.
For further information contact:
Malgorzata Zelezinska Brent Muckridge Stanislaw Majewski
Investor Relations Manager Financial Controller Finance Director
(+48) 22 573 3275 (+48) 22 573 4205 (+48) 22 573 6200
(+48) 602 20 3275 (+48) 602 489 415 (+48) 602 20 6200
[email protected] [email protected] [email protected]
<PAGE> 8
ANNEX 1 PROFIT AND LOSS STATEMENT - SUMMARY LEVEL FROM SEC 20F
(INTERNATIONAL ACCOUNTING STANDARDS - IN THOUSANDS OF PLN)
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, 1999 DECEMBER 31, 1998 DECEMBER 31, 1997
----------------- ----------------- -----------------
<S> <C> <C> <C>
NET SALES 2,592,061 1,610,811 647,062
COST OF SALES (1,662,851) (948,414) (511,149)
---------- ---------- ----------
GROSS MARGIN 929,210 662,397 135,913
OPERATING EXPENSES (612,559) (381,275) (186,595)
---------- ---------- ----------
OPERATING PROFIT/(LOSS) 316,651 281,122 (50,682)
NON-OPERATING ITEMS
Interest and other
financial income 58,042 21,398 35,651
Interest and other
financial expenses (456,305) (187,197) (109,652)
---------- ---------- ----------
(LOSS)/INCOME BEFORE TAXATION
(81,612) 115,323 (124,683)
TAXATION (CHARGE)/BENEFIT
(40,891) (109,807) 4,247
---------- ---------- ----------
COMPREHENSIVE NET (LOSS)/INCOME
(122,503) 5,516 (120,436)
========== ========== ==========
</TABLE>
<PAGE> 9
ANNEX 2 BALANCE SHEET - SUMMARY LEVEL FROM SEC 20F
(INTERNATIONAL ACCOUNTING STANDARDS - IN THOUSANDS ON PLN)
<TABLE>
<CAPTION>
AT AT
DECEMBER 31, 1999 DECEMBER 31, 1998
----------------- -----------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents 1,095,509 5,695
Short-term investment 198,468 --
Debtors and prepayments 409,410 253,585
Accounts receivable from
54,835 85,064
State Treasury
Inventory 183,980 75,946
---------- ----------
1,942,202 420,290
DEFERRED TAX ASSET, NET -- 2,766
LONG-TERM ASSETS
Tangible fixed assets, net 2,573,905 1,671,182
Intangible fixed assets, net 1,050,775 629,404
Financial assets 301,829 --
Deferred cost 85,253 30,759
---------- ----------
4,011,762 2,331,345
---------- ----------
TOTAL ASSETS 5,953,964 2,754,401
========== ==========
CURRENT LIABILITIES 1,179,204 571,763
LONG-TERM INTEREST BEARING LIABILITIES 4,578,412 1,890,218
DEFERRED TAX LIABILITY, NET 27,322 --
PROVISIONS FOR LIABILITIES AND CHARGES 1,220 2,111
---------- ----------
TOTAL LIABILITIES 5,786,158 2,464,092
---------- ----------
SHAREHOLDERS' EQUITY
Share capital 471,000 471,000
Accumulated deficit (303,194) (180,691)
---------- ----------
167,806 290,309
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 5,953,964 2,754,401
========== ==========
</TABLE>
<PAGE> 10
ANNEX 3 CASH FLOW - SUMMARY LEVEL FROM SEC 20F
(INTERNATIONAL ACCOUNTING STANDARDS - IN THOUSANDS OF PLN)
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, 1999 DECEMBER 31, 1998 DECEMBER 31, 1997
----------------- ----------------- -----------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C> <C>
NET (LOSS)/INCOME BEFORE TAXATION (81,612) 115,323 (124,683)
ADJUSTMENTS FOR:
Depreciation and amortization 281,697 158,291 76,372
Charge to provision for doubtful debtors 143,890 90,694 43,714
Charge to provision for inventory 4,410 (3,309) 5,009
Other provisions and special funds (891) 835 655
Unrealized foreign exchange losses, net 143,602 10,880 37,806
Loss on disposal of tangibles and intangibles 8,146 983 216
Interest expense, net 255,561 123,770 31,801
Other -- (593) 614
---------- ---------- ----------
OPERATING CASH FLOWS BEFORE WORKING CAPITAL CHANGES 754,803 496,874 71,504
Increase in inventory (110,918) (38,328) (14,271)
Increase in debtors, prepayments and deferred cost (266,196) (219,943) (173,612)
Increase in trade payables and accruals 93,815 86,406 13,072
---------- ---------- ----------
CASH GENERATED FROM / (USED IN) OPERATIONS 471,504 325,009 (103,307)
Interest paid (103,220) (47,526) (10,118)
Income taxes paid (25,549) (113,668) --
---------- ---------- ----------
NET CASH GENERATED FROM / (USED IN) OPERATING ACTIVITIES 342,735 163,815 (113,425)
CASH FLOWS USED IN INVESTING ACTIVITIES:
Purchases of intangible fixed assets (346,019) (52,855) (18,677)
Purchases of tangible fixed assets (985,298) (966,649) (176,272)
Purchases of short-term investments, net (511,603) 5,084 22,934
Proceeds from sale of equipment and intangibles 7,309 894 3,932
Interest received 7,277 8,816 15,422
---------- ---------- ----------
NET CASH USED IN INVESTING ACTIVITIES (1,828,334) (1,004,710) (152,661)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term borrowings 487,972 593,870 --
Proceeds from senior subordinated debt issuance, net 1,843,822 479,785
Proceeds from shareholder's loan 296,756 -- --
Net change in overdraft facility (24,558) 24,558 --
---------- ---------- ----------
NET CASH GENERATED FROM FINANCING ACTIVITIES 2,603,992 618,428 479,785
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 1,118,393 (222,467) 213,699
EFFECT OF FOREIGN EXCHANGE CHANGES ON CASH AND CASH EQUIVALENTS (28,579) 6 11,913
</TABLE>
<PAGE> 11
<TABLE>
<S> <C> <C> <C>
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 5,695 228,156 2,544
---------- ---------- ----------
CASH AND CASH EQUIVALENTS AT END OF YEAR 1,095,509 5,695 228,156
========== ========== ==========
</TABLE>
<PAGE> 12
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: March 28, 2000
POLSKA TELEFONIA CYFROWA Sp. z o o.
(Registrant)
By: /s/ BOGUSLAW KULAKOWSKI
----------------------------
Name: Boguslaw Kulakowski
Title: Director General
By: /s/ WOJCIECH PLOSKI
----------------------------
Name: Wojciech Ploski
Title: Director of Strategy,
Marketing & Sales
