ETE Euro.Telecom

RNS Number:5465V
European Telecom PLC
11 December 2000

                             EUROPEAN TELECOM PLC

TRADING STATEMENT



                              11th December 2000





As set out in the Interim Statement released today, results for the six months
ended 30th September 2000 were broadly in line with market expectations.  On
turnover of #146.8m (1999:#112.1m), losses before tax after the Group's share
of losses at Global Telematics amounted to #1.38m (1999:profit before tax #
1.41m).



As pointed out in our AGM statement on 29th August 2000, results in this
business can vary widely on a month by month basis.  October 2000 has been a
very disappointing month.  Because of continuing difficulties encountered in
implementing the ERP system, the UK business suffered at the gross profit line
and was still incurring additional costs such as extra carriage costs and
extra working costs at the warehouse.  In addition, TAG and ET Africa's
performance was significantly below budget.



In November, performance has improved at ET UK.  UK handset sales have
recovered and additional costs attributable to ERP inefficiencies, whilst
still material, have been reduced.



In addition it was announced on 6th December that due to adverse market
conditions, the flotation of Global Telematics was postponed.  We nevertheless
continue to review the options to realise shareholder value.



The half year to March 2001 will be adversely affected by a number of factors
including:-



*         Significant ongoing additional costs associated with the
          difficulties in implementing the ERP system

*         ET's share of Global Telematics losses for the second half year will
          be approximately #300,000 greater than previously expected

*         Losses at Eazypay will be significantly higher than market
          expectations

*         ET Africa will make a loss rather than a previously expected profit
          before tax of #800,000 for the year

*         TAG is performing below budget

*         The slower than anticipated integration of Banner Telecom

*         The costs of the aborted flotation of Global Telematics



The Group is not therefore likely to make a profit in the year ending 31st
March 2001.  It is however expected that the core business will remain
profitable.



The Board has therefore decided in the circumstances to concentrate on the
Group's core business.  This will entail significant rationalisation costs.
European Telecom remains a market leader operating in the growth cellular
communications market.  The rationalisation programme will produce a sound
business with a much reduced cost base capable of generating both future
profits and growth.



We will also continue to examine ways of realising shareholder value from the
underlying assets which are non-core.







For further information, please contact:-





Warren Hardy, European Telecom                Andy Berry / Serra Konuralp,
Cubitt Consulting

Telephone: 01753 808014                       Telephone: 020 7367 5100

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