Tricom Revenues Hit by Currency Devaluation

The Dominican Republic's Tricom has published its consolidated unaudited financial results for the third quarter and first nine months of 2003. Operating revenues totaled US$50 million for the 2003 third quarter, a decrease of 23.8% from the 2002 third quarter. Net loss for the 2003 third quarter was US$21.8 million and $61.9 million during the first nine months of the year.

During the 2003 third quarter, the Company's operations continued to be under pressure from the devaluation of the Dominican peso, which reached approximately 90% over the last twelve months. As a result, the Company did not make an approximate US$11.4 million interest payment on its 11-3/8% Senior Notes due 2004, originally scheduled for September 2, 2003. The Company is in active dialogue with its bank lenders as well as an ad hoc committee representing holders of its 11-3/8% Senior Notes due 2004.

The Company has engaged Bear, Stearns & Co. Inc. to assist in evaluating financial and strategic alternatives, and formulate a restructuring plan, which may include the refinancing or restructuring of its existing debt or the sale of all, or a portion, of its assets or business to a third party. The Company is in discussions with a number of strategic and financial investors regarding a potential sale or recapitalization.

The Company's operating results reflect the impact of currency devaluation, which reached approximately 23% in the third quarter and 84% during the first nine months of the year, affecting the translation of Dominican peso-generated revenues into U.S. dollars. The Central Bank of the Dominican Republic reported that the inflation rate was approximately 27% for the nine-month period ended September 30, 2003, compared to approximately 5% for the nine-month period ended September 30, 2002. Despite adverse economic conditions, the Company's peso-denominated revenues increased by approximately 10.6% quarter-over-quarter and 4.1% year-over-year in peso terms primarily due to price increases and the continued efforts to improve the Company's customer mix, prioritizing those with higher added value.

Mobile revenues decreased by 33.3% to US$8 million in the 2003 third quarter and by 24.3% to US$27.2 million for the first nine months of 2003. The decrease in mobile revenues was the result of the devaluation of the Dominican peso combined with a US$1.7 million reclassification of commissions from expenses to revenues during the 2003 second quarter in accordance with Staff Accounting Bulletin (SAB 101) "Revenue Recognition" issued by the Securities and Exchange Commission (SEC). Average revenue per mobile subscriber for the 2003 third quarter increased by approximately 11.2% from the 2003 second quarter primarily as a result of higher interconnection revenues and a greater number of post-paid mobile subscribers. Cellular and PCS subscribers totaled approximately 429,000 at September 30, 2003, a 4.4% increase from September 30, 2002.

Total debt, including capital leases and commercial paper, amounted to US$454.5 million at September 30, 2003"

Posted to the site on 13th November 2003