2002-2003 Financial Year Group Results; Avenir Telecom Group Confirms Its Return to Operating Profitability and the Re-Emergence of Growth Prospects for Mobile Telephony Distribution.

Business Editors

MARSEILLE, France--(BUSINESS WIRE)--Oct. 13, 2003

Avenir Telecom Group

-------------------------------------------------- --------- ---------
(EUR millions)                                     2002-2003 2001-2002
                                                   full year full year
-------------------------------------------------- --------- ---------
Group sales                                           478.6     633.7
-------------------------------------------------- --------- ---------
Gross profit margin (%)                                20.7%     18.3%
-------------------------------------------------- --------- ---------
Operating profit/(loss) before non-recurring items      7.7     (30.8)
-------------------------------------------------- --------- ---------
Operating loss                                         (6.6)   (136.7)
-------------------------------------------------- --------- ---------
Net loss                                              (15.7)   (140.1)
-------------------------------------------------- --------- ---------
Net cash from operating activities                     58.7      19.7
-------------------------------------------------- --------- ---------
Gearing ratio (net borrowings to equity ratio)            1      1.52
-------------------------------------------------- --------- ---------

Concentration on Telecom Distribution business begins to yield results

During its financial year ending 30 June 2003, Avenir Telecom Group continued to implement its refocusing strategy, initiated two years ago. This policy, which led to a 24% reduction in Group sales to EUR 478.6 million, enabled the Group to develop its most profitable activities. Controlled distribution, which combines the sales made in the fully-owned store network and the affiliated stores, grew by 8% during the financial year, with the Group's gross profit margin improving to 20.7%, a gain of more than 2 points.

-- French Telecom Distribution activities posted an operating

profit before non-recurring items of EUR 10.5 million, up 69%

over the previous financial year, reflecting the commercial

dynamism of the Internity chain and the effects of

restructuring measures implemented over the past two years.

-- United Kingdom Telecom Distribution activities enjoyed a 11%

increase in sales and an operating profit of EUR 1.1 million,

compared with an operating loss of EUR 583 thousand for the

previous financial year, benefiting from its positioning in

the corporate niche market and the launch of 3G (UMTS).

-- Spanish Telecom Distribution activities posted an operating

profit of EUR 918 thousand, compared with an operating loss of

EUR 1.9 million for 2001-2002, with activities refocused on

controlled (Internity) enjoying a 40% rise in sales activity.

Group Telecom Distribution activities reported a 2.1% operating profit before non-recurring items for 2002-2003.

After-Sales-Service business, significantly affected by market difficulties, is in the process of being restructured

As previously announced, CETELEC, the Group's After-Sales-Service business, has seen its activity significantly deteriorate in France and Spain, due to a reduction in repair volumes (more reliable phones) and strong price pressures exerted by phone manufacturers and network operators. This in turn has resulted in a 17% drop in sales and a drop of 8 points in gross profit margin to 30% for this business for the 2002-2003 financial year. Despite good performances posted in Romania and Morocco, the Group's After-Sales-Service business posted an operating loss before non-recurring items of EUR 2.9 million, which adversely affected Group profitability.

A restructuring plan of the French subsidiary was achieved in September 2003 and led to reduce the workforce by 50%.

Group net loss arises from EUR 16.4 million in non-recurring charges

The Group realised an operating profit before non-recurring items of EUR 7.7 million for its 2002-2003 financial year, compared with an operating loss before non-recurring items of EUR 30.8 million for its previous financial year. Operating expenses decreased by more than 40% during this time. Despite these good performances, the Group incurred a net loss of EUR 15.7 million, compared to a EUR 140.1 million net loss for 2001-2002, primarily due to the following reasons:

-- EUR 6.2 million in restructuring expenses at French and

international subsidiaries, including costs relating to the

redundancy plan recently approved for CETELEC France.

-- EUR 8.1 million in provision charges relating to asset

writedowns and litigation matters identified at various French

and international operations.

-- EUR 2.1 million in exceptional charges relating to the early

exit from the Internity continuity plan.

The Group realised EUR 59 million in net cash from operating activities and lowered its gearing ratio to 1

The Group generated net cash from operating activities of EUR 58.7 million for 2002-2003, significantly better than the EUR 19.7 million posted for 2001-2002, reflecting measures undertaken over many months now, focusing on improving the Group's working capital requirements and business conditions.

As anticipated, this cash flow was used to pursue a rapid debt reduction programme, reflected in the repayment of EUR 49 million in borrowings during the 2002-2003 financial year and leading to reduced borrowings of EUR 63.6 million at 30 June 2003. This, coupled with financial assets of EUR 22.6 million at 30 June 2003, resulted in a significant improvement in the Group's gearing ratio to 1 from 1.52 at 30 June 2002. At the same time, the 5-year financing of a receivable relating to deferred losses extended the overall maturity of Group borrowings.

Outlook

Avenir Telecom is enjoying a good start to the new financial year. Customers are becoming increasingly attracted to new colour screen phones, equipped with a camera or multimedia functions, and which now account for 24% of sales. This trend has been accelerated by the significant drop in prices for top-of-the-range phones and the more dynamic commercial policies of mobile phone network operators.

The GFK Institute forecasts a 15% increase in French mobile phone sales for the 2nd half of 2003, following an 11% drop during the 1st half-year. For many months now, United Kingdom sales have been driven by the commercial aggressiveness of mobile phone network operators and particularly by "3", a new UMTS operator whose services are distributed by Avenir Telecom UK.

In this context, Avenir Telecom forecasts a return to growth for its core distribution activities. This growth will arise primarily from the strengthening of its Internity sales network, with the opening of 60 new stores planned for 2003-2004.

Jean-Daniel Beurnier, Chairman and CEO of Avenir Telecom Group, has issued the following statement on the Group's 2002-2003 performance and its future prospects: "We have returned to operating profitability, although overall profitability was adversely affected by the incurrence of exceptional charges. Our development is now based on strengthening our Internity store networks in France and particularly in Europe, where we have the means to participate actively in the concentration movement in process and gain market share."

About Avenir Telecom

AVENIR TELECOM SA (Euronext List, Next 150 index) is one of Europe's leading distributors of telephony products and services. The Group distributes telephones, subscriptions and accessories directly through a network of 317 own and affiliate stores under the Internity chain (self-distribution), to companies (corporate distribution) and to supermarket chains and independent retailers (indirect distribution).

AVENIR TELECOM SA employs a workforce of nearly 1,700, based in 8 countries: United Kingdom, France, Benelux, Spain, Poland, Romania and Morocco.

ISIN code: FR0000066052 Reuters code: AVOM.LN Bloomberg code: AVTE

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or visit our web site at www.avenir-telecom.com

French residents may also avail themselves of our special shareholder information phone line at 0826-888-666 (EUR 0.15 per minute).