ESPRIT TELECOM COMMENTS ON MARCH QUARTER OPERATIONS.

READING, U.K.--(BUSINESS WIRE)--April 30, 1997--European telecommunications company Esprit Telecom Group plc (Nasdaq:ESPRY; Easdaq:ESPR) commented today that while it expects to report continued strong revenue growth for the second quarter ended 31 March 1997, gross profit and margins for the period are expected to be significantly lower than in the previous quarter ended 31 December 1996.

The Company expects to report revenue of approximately 10.3 million for the second quarter ended 31 March 1997, compared to revenue of approximately 6.0 million for the second quarter ended 31 March 1996 and approximately 8.6 million for the first quarter ended 31 December 1996. Gross profit for the first quarter ended 31 December 1996 was approximately 1.9 million, representing 21.8% of revenue. The Company expects to report final results for the second quarter of 1997 during the week of 19 May.

Walt Anderson, chairman and chief executive officer of Esprit Telecom, indicated that, "while revenue for the quarter increased substantially, the gross margin was adversely affected by a combination of several factors, including a higher proportion of wholesale traffic coupled with severe margin pressure on specific routes, network capacity shortages which caused traffic to overflow to higher cost routes and continued unfavourable foreign currency exchange rate movements. However, lower than anticipated SG&A costs are expected to partially offset the decline in gross profit."

To address the gross margin shortfall, Esprit Telecom has taken several immediate steps, including:

-- Increasing prices for wholesale traffic which will take effect from 1 May on the most affected routes and 1 June on other routes.

-- Imposing a minimum gross margin contribution on wholesale traffic.

-- Implementing additional controls on the pricing and purchasing of traffic.

-- Increasing its effort to build up retail traffic, by hiring new sales representatives.

Esprit Telecom has already made use of its UK International Facilities License by purchasing capacity on international cables on key routes, which will become operational from the middle of calendar 1997.

Anderson added, "As part of its long term expansion plan, Esprit Telecom will continue to build-out its network capacity, which will lower our costs and enhance our competitive position as we move closer to full liberalisation of the European telecommunications market. Additionally, the Company's exposure to foreign currency fluctuations should diminish as the network capacity is expanded, allowing traffic purchases to be spread across multiple European countries."

In a separate statement today, Esprit Telecom announced that it has appointed David Oertle, 51, as CEO effective 5 May.

Esprit Telecom Group plc, a Nasdaq and Easdaq quoted company, trading under the symbols "ESPRY" and "ESPR" respectively, is one of the largest independent European telecommunications service providers. Its network extends to 14 major cities in the United Kingdom, the Netherlands, Spain, France, Germany, Belgium, Italy and Ireland. Esprit Telecom provides high quality, low cost, customised international and national long distance telecommunications services to large and medium-sized businesses. As a market leader of international telecoms services, Esprit Telecom counts among its many customers: governmental organisations, leading financial institutions, travel services organisations, hotels and transport companies.

CONTACT: Esprit Telecom

Margaret McCarthy, 44 (0)118 951 4000