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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 6-K
Report of Foreign Issuer
Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934
FOR THE THREE MONTHS ENDED MARCH 2000
POLSKA TELEFONIA CYFROWA SP. Z O.O.
(Exact Name of Registrant as Specified in Its Charter)
AL. JEROZOLIMSKIE 181, 02-222 WARSAW
(Address of Principal Executive Offices)
POLAND
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
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Indicate by check mark whether the registrant by furnishing the information
contained in the 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
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If "Yes" is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b): N/A
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Press Release [ERA LOGO]
PTC REPORTS FIRST QUARTER 2000 RESULTS
WARSAW - MAY 12, 2000 - Polska Telefonia Cyfrowa Sp. z o.o. (PTC),
(www.eragsm.com.pl) the leading Polish wireless provider of nationwide dual band
GSM 900 & GSM 1800 services, today announced its results for the first quarter
ended March 31, 2000. Figures are presented in Polish Zloty and according to
International Accounting Standards.
OPERATIONAL HIGHLIGHTS
- GSM 1800 Launch
PTC launched its GSM 1800 network on March 1, 2000, the earliest
date allowed by the license conditions. Services and tariff
packages in GSM 900 and 1800 are provided as one product.
- Subscriber Growth
In the first quarter of 2000, the total Polish wireless market
grew more than 10% to 4.3 million subscribers or approximately
11.6% penetration.
During the first quarter of 2000, PTC attracted 381,971 new
subscribers bringing the total customer base to 2.01 million. New
subscribers consist of 288,392 pre-paid subscribers and 93,579 Tak
Tak users. The overall subscriber base at the end of the quarter
increased more than 100% to 2,005,368 from the subscriber base of
937,703 at the end of first quarter of 1999. At the end of the
quarter, pre-paid subscribers were 428,219 and accounted for 21.4%
of all subscribers versus 234,989 at the end of the first quarter
1999. PTC also gained significant growth in the post-paid
subscriber base from 702,714 to 1,577,149 at the end of the first
quarter of 2000.
PTC's subscriber base represents approximately 44.89% of the total
wireless market and places PTC in the premier position among
companies providing wireless services in Poland.
- New tariffs and value-added services
In the first quarter, PTC introduced new tariffs which included
Halo 20, with 20 free minutes included in the monthly fee, which
replaced the Halo tariff, and Between Us, with discounted minutes
for three chosen numbers for post-paid subscribers. PTC also
offered extended bundles of discounted minutes with each existing
tariff plan and discounted connections with ERA Business tariff.
During the quarter, PTC introduced a new Visa credit card
co-sponsored with Citibank. Launched on April 1, 2000,
Citibank-Era credit cards allow service subscribers to take
advantage of discounted and specially offered Citibank and PTC
services such as: daily information on credit card accounts;
discounted, value-added PTC services; a free GSM information
number (from GSM phones); and, additional loyalty program points.
- Loyalty Program
In October 1999, PTC launched the only points based program in the
telecommunications sector. This program allows subscribers to
collect points to be redeemed for benefits such as Era
Merchandise, free air-time, or other awards from PTC's exclusive
partners including, LOT Polish Airlines, British Airways,
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Panasonic and Kodak. By the end of the quarter, there were
approximately 968,000 subscribers participating in this program.
- Churn Management
"Churn" refers to disconnected subscriptions, either voluntary or
involuntary. In the first quarters of 2000 and 1999, the average
monthly churn rates were 1.7% and 3.6%, respectively. This result
is the best of its class when compared to the European and US
markets. The reduction in churn is believed to be attributable to
PTC's Loyalty program, new tariff plans, market segmentation and
value-added services.
- Network Build-out
As of March 31, 2000, PTC had already met its license requirements
for the end of the year 2000 by covering approximately 87% of the
geographic area and 97% of the population in Poland. PTC started
the roll-out of its SDH microwave backbone and is running the
first three connections, to be followed by additional connections
scheduled to be ready by the end of the second quarter.
At the end of the first quarter of 2000, the total network
investment reached PLN 3,541.8 million. This included both network
assets of PLN 2,430.1 million and license fees of PLN 1,111.7
million.
- Supervisory Board Appointments
On April 11, 2000, William A. Norris and Stephen D. Boyd from
MediaOne International B.V. were replaced by Dr. Klaus Tebbe from
DeTeMobil and Dieter Schumacher from Deutsche Telekom AG as
Members of the Supervisory Board.
- Employee Numbers
As of March 31, 2000, PTC had 2,690 employees, including 1,555 in
sales, marketing and strategy, 712 in network operations and 423
in finance, administration and the office of the director general.
Seven employees were seconded from either DeTeMobil or MediaOne.
- Awards
During the first quarter of 2000, PTC was awarded the Byk Sukcesu
(Bull of Success) by Success magazine for "Connecting Poles to
each other and connecting Poland with the rest of the world," the
Zlota Antena (Golden Antenna) conferred by Telecommunication World
for Eranet, the first internet access needs a word program system
link in a wireless system and was honored by Your Mobile magazine
for its information services SMS, Halo tariff and VoIP.
OPERATIONAL GOALS FOR 2000
- VoIP
On December 20, 1999, PTC became the first Polish
telecommunication operator to offer international voice
transmission over the Internet protocol (VoIP) to subscribers with
data transmission service. 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 this year, after an inspection from the State
Telecommunications and Postal Inspection (PITiP), PTC received a
summons ordering it to cease providing international telephone
service over the Internet. In response, PTC applied for
reconsideration of the case, and on February 10, 2000, PTC
received a decision from the Minister of Communications which
rendered the action by PITiP invalid. It was determined that PTC
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. PTC has been invited to take part
in the process of preparing this new regulation. Recent
announcements by the Ministry have stated that all operators will
be allowed to offer VoIP after the approval of the new regulation.
- Network Deployment Costs and Targets
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According to PTC's license agreement for GSM 900, PTC is required
to cover 84.9% of Poland's geographic area and 95.6% of the
population by the end of the year 2000. At the end of the first
quarter, PTC had exceeded this requirement.
By July 2004, PTC is required to attain geographical coverage of
90%, combined, with the 900 MHz and 1800 MHz frequencies. During
2000, PTC plans to spend approximately US$300 million on meeting
these coverage requirements and expanding the network to meet
subscriber growth. In order to fund this expansion, we will use
proceeds from the last issue of High Yield Bonds as well as from
increased Credit Bank Facility.
- New Products
PTC will continue to create and introduce new products and
services for its subscribers during 2000. PTC is currently
testing GPRS platforms which will allow PTC to develop additional
products and value-added services for its subscribers.
Additionally, PTC is evaluating the impacts of 3G, also known as
UMTS, on its existing business in preparation for any bid by the
government. In 2000, PTC will develop new services using WAP and
VPN technology, as well as new pre-paid services on an upgraded
platform.
FINANCIAL HIGHLIGHTS FOR THE FIRST QUARTER OF 2000
- Revenue Growth
Total revenues for the quarter were 795.9 million PLN (US$ 192.1
million), an increase of PLN 306.7 million (US$ 74.04 million) or
62.7% compared with the first quarter of 1999. The main source of
revenue is air-time, which consists of air-time tariffs including
revenues from incoming and outgoing calls, "roaming" charges and
revenue from the sale of pre-paid air-time cards. Other
significant revenue comes from monthly service fees, service
activation fees and revenues from the sale of telephones and
accessories. The increase reflects increased customer numbers of
114% from the previous year, offset by a reduction in average
monthly revenues per customer (ARPU) to PLN 130 in the first
quarter of 2000, from PLN 175 in the same period of 1999.
- COS
Total cost of sales was PLN 529.2 million during the first quarter
of 2000, as compared with PLN 329.1 million for the same period of
1999. Gross margin was PLN 266.7 million in the first quarter of
2000, compared with a gross margin of PLN 160.0 million in the
same period of 1999. As a percentage of net sales, gross margins
were 33.5% and 32.7% in the first quarters of 2000 and 1999,
respectively.
The increase in gross margin as a percentage of net sales from
1999 to 2000 of 0.8% is the result of slightly increased gross
losses on sales of telephones and accessories of PLN 68.0 million,
which were more than offset by the increase in gross profit from
service revenues and fees of PLN 300.5 million. This reflects
strong growth in the subscriber base and in air-time usage from
154 minutes in the first quarter of 1999 to 176 minutes in the
first quarter of 2000.
Cost of sales for services included interconnect costs of PLN 42.3
million for the first quarter of 2000, compared to PLN 22.9
million for the same period of 1999.
- EBITDA Growth
EBITDA for the first quarter of 2000 was PLN 208.3 million (US$
50.2 million) compared to PLN 108.1 million for the same period in
1999. This represents EBITDA growth of 92.7% when compared to
1999, despite acquisition costs for approximately 382,000
subscribers.
- ARPU
The average revenue per user (ARPU) was PLN 130 in the first
quarter of 2000 or 25.7% lower than reported at the end of the
first quarter of 1999. The decrease in ARPU reflects growth of
114% in PTC's subscribers base from April 1999 to April 2000. The
growth in subscriber base was accompanied by an increase in
air-time usage from 154 minutes in the first quarter of 1999, to
176 minutes at the end of the first quarter of 2000. In order to
stimulate this increase in usage, PTC introduced "cheaper minute
packages" and flat rate tariff plans for specific market segments.
PTC believes that over time this will have
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a positive effect on its overall revenue growth. Looking forward,
PTC believes that based on the growth of the Polish economy and
the wireless market, wireless phones will increasingly be used not
only as a mechanism for personal voice communication, but for
internet and other forms of telecommunication as well. PTC
believes that the continued increase in usage of these added
services will have a positive impact on ARPU.
- FX Exchange
The appreciation of Polish Zloty gave PTC a net foreign exchange
profit of PLN 54.0 million in the first quarter of 2000, as
compared to a net foreign exchange loss of PLN 131.7 million at
the end of the first quarter of 1999. The unrealized FX gain was
PLN 87.2 million in the first quarter of 2000, compared to the
unrealized loss of PLN 109.4 million in the same period of 1999.
- Net Income
In the first quarter of 2000, PTC recorded a net income of PLN
31.5 million as compared to a net loss of PLN 124.1 million in the
same period of 1999. This change was driven mainly by a
significant increase in net foreign exchange income and stronger
EBITDA performance during the first quarter 2000.
FINANCING DEVELOPMENTS
- Hedging
In March 2000, PTC entered into its first hedging transaction to
cover the majority of committed payments for the next 12 months.
The hedging policy allows for the use of forwards, swaps and
options for minimizing currency and interest rate risks. PTC
concluded 22 hedging contracts, and the first hedging contracts
matured in March 2000 allowing PTC to decrease its currency risk.
- Refinancing of Senior Debt
As of March 31, 2000 PTC drew down only the Zloty tranche of PLN
570 million under the Bank Credit Facility. Looking forward to the
financing of its business plan, PTC would like to replace its Bank
Credit Facility with a new one extended to the approximate amount
of Euro 650 million by the end of the second quarter 2000, and to
be able to start utilizing the new Bank Credit Facility in the
third quarter 2000. This action is part of PTC's overall financing
plan to limit its foreign debt exposure.
For further information contact:
<TABLE>
<S> <C> <C> <C>
Malgorzata Zelezinska Brent Muckridge Stanis[ ]aw Majewski Alexander Fudukidis
Investor Relations Manager Financial Controller Finance Director Ludgate Communications
(+48) 22 573 3275 (+48) 22 573 4205 (+48) 22 573 6200 (212) 515-0246
(+48) 602 20 3275 (+48) 602 489 415 (+48) 602 20 6200 (212) 688-5213
[email protected] [email protected] [email protected] [email protected]
</TABLE>
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ANNEX 1 PROFIT AND LOSS STATEMENT - SUMMARY LEVEL FROM SEC 6-K
(INTERNATIONAL ACCOUNTING STANDARDS - IN THOUSANDS OF PLN)
<TABLE>
<CAPTION>
QUARTER ENDED QUARTER ENDED
MARCH 31, 2000 MARCH 31, 1999
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<S> <C> <C>
NET SALES 795,895 489,152
COST OF SALES (529,208) (329,149)
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GROSS MARGIN 266,687 160,003
OPERATING EXPENSES (167,202) (103,862)
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OPERATING PROFIT 99,485 56,141
NON-OPERATING ITEMS
Interest and other financial income 124,710 2,064
Interest and other financial expenses (190,804) (185,378)
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INCOME /(LOSS) BEFORE TAXATION 33,391 (127,173)
TAXATION (CHARGE) / BENEFIT (1,847) 3,078
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COMPREHENSIVE NET INCOME/(LOSS) 31,544 (124,095)
======== ========
</TABLE>
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ANNEX 2 BALANCE SHEET - SUMMARY LEVEL FROM SEC 6-K
(INTERNATIONAL ACCOUNTING STANDARDS - IN THOUSANDS ON PLN)
<TABLE>
<CAPTION>
AT AT
MARCH 31, 2000 MARCH 31, 1999
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<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents 228,592 1,095,509
Short-term investment 197,849 198,468
Debtors and prepayments 374,538 409,410
Accounts receivable from
State Treasury 75,991 54,835
Inventory 317,608 183,980
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1,194,578 1,942,202
LONG-TERM ASSETS
Tangible fixed assets, net 2,765,207 2,573,905
Intangible fixed assets, net 1,032,431 1,050,775
Financial assets 291,122 301,829
Deferred cost 84,897 85,253
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4,173,657 4,011,762
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Total assets 5,368,235 5,953,964
========== ==========
CURRENT LIABILITIES 1,362,241 1,179,204
LONG-TERM INTEREST BEARING LIABILITIES 3,776,413 4,578,412
DEFERRED TAX LIABILITY, NET 29,012 27,322
PROVISIONS FOR LIABILITIES AND CHARGES 1,219 1,220
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TOTAL LIABILITIES 5,168,885 5,786,158
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SHAREHOLDERS' EQUITY
Share capital 471,000 471,000
Accumulated deficit (271,650) (303,194)
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199,350 167,806
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 5,368,235 5,953,964
========== ==========
</TABLE>
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ANNEX 3 CASH FLOW - SUMMARY LEVEL FROM SEC 6-K
(INTERNATIONAL ACCOUNTING STANDARDS - IN THOUSANDS OF PLN)
<TABLE>
<CAPTION>
QUARTER ENDED QUARTER ENDED
MARCH 31, 2000 MARCH 31, 1999
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
NET (LOSS)/INCOME BEFORE TAXATION 33,391 (127,173)
ADJUSTMENTS FOR:
Depreciation and amortization 108,518 51,995
Charge to provision for doubtful debtors 37,623 25,416
Charge to provision for inventory 2,044 1,000
Other provisions and special funds (1) (629)
Unrealized foreign exchange losses, net (87,235) 109,399
Loss on disposal of tangibles and intangibles 5,826 (7)
Interest expense, net 120,044 51,614
Other - (2)
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OPERATING CASH FLOWS BEFORE WORKING CAPITAL CHANGES 220,210 111,613
Increase in inventory (135,672) (14,883)
Increase in debtors, prepayments and deferred cost (23,971) (38,210)
Increase in trade payables and accruals 67,630 61,995
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CASH GENERATED FROM / (USED IN) OPERATIONS 128,197 120,515
Interest paid (94,631) (35,557)
Income taxes paid - (25,549)
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NET CASH GENERATED FROM / (USED IN) OPERATING ACTIVITIES 33,566 59,409
CASH FLOWS USED IN INVESTING ACTIVITIES:
Purchases of intangible fixed assets (110,083) (54,772)
Purchases of tangible fixed assets (278,061) (215,721)
Proceeds from sale of equipment and intangibles 144 7
Interest received 7,581 305
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NET CASH USED IN INVESTING ACTIVITIES (380,419) (270,181)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term borrowings (514,802) 220,896
Net change in overdraft facility - (4,163)
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NET CASH GENERATED FROM FINANCING ACTIVITIES (514,802) 216,733
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS (861,655) 5,961
EFFECT OF FOREIGN EXCHANGE CHANGES ON CASH AND CASH EQUIVALENTS (5,262) 59
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 1,095,509 5,695
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CASH AND CASH EQUIVALENTS AT END OF YEAR 228,592 11,715
</TABLE>
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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: May 10, 2000
POLSKA TELEFONIA CYFROWA Sp. z o.o.
(Registrant)
By: /s/ Boguslaw Kulakowski
-----------------------
Boguslaw Kulakowski, Director General
By: /s/ Wilhelm Stuckemann
----------------------
Wilhelm Stuckemann, Director of Network Operations
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