Jazztel plc Announces Fourth Quarter and Year End 1999 Results.

Business Editors

MADRID, Spain--(BUSINESS WIRE)--March 16, 2000

Jazztel p.l.c. (NASDAQ:JAZZ), a facilities-based telecommunications and Internet services provider that is constructing a fiber-optic telecommunications network to be the first nationwide competitive local exchange carrier (CLEC) in Spain and Portugal, today announced results for the year ended December 31, 1999. Amounts are presented in Euros and in accordance with US GAAP.

Highlights of the year

-- Group revenues at Euro 23.3 million for the year

-- Adjusted EBITDA(1) of negative Euro 85.4 million

-- Total capital expenditure of Euro 142 million

-- First 28 contracts signed for direct service provisioning

-- A team of 35 direct sales representatives in place by year end

-- First metropolitan ring operational in Alcobendas

-- More than 350 km of local access networks built

-- 4,220 km of backbone network built

-- Broadband wireless local loop access license granted in Portugal

-- 283,800 indirect voice customers

-- 507,500 indirect lines in service

-- 165,600 free Internet access customers

-- 10,300 corporate ISP customers

-- 210 million minutes of traffic carried during the year

-- 49 million monthly Internet page views

-- Three data centers in Madrid, Barcelona and Lisbon under development

-- Services provided to 7 hosted ISPs

-- Contracts signed with four different carriers for international traffic
termination into Spain

-- 80% brand awareness in the Spanish market

-- 281 total group employees

-- Euro 1.164 billion of funds raised during the year: Euro 261 million in
Equity, Euro 603 million in High Yield debt and Euro 300 million through a
syndicated loan which Jazztel is not currently utilizing

Summary of operations

By year-end 1999 the Jazztel Group had total revenues of Euro 23.3 million, up from Euro 1 million by year-end 1998. The group had revenues of Euro 12.9 million for the fourth quarter of 1999, representing 55.4% of the total annual revenues and a growth of 67.6% from the Euro 7.7 million revenues in the third quarter of 1999. The Group's gross margin was negative Euro 8.5 million for the year, or minus 36.7% of total revenues. Gross margin for the fourth quarter was negative 19.3% of revenues, improving from a negative 54.6% in the third quarter. Adjusted EBITDA for the year was negative Euro 85.4 million.

Commenting on the results Antonio Carro , Jazztel's CEO said:

"This has been an extremely successful year for Jazztel. We have managed to build the only pan-Iberian alternative carrier, and, through strong execution of our business plan, we are now in an excellent position to become a leading provider of high bandwidth data, Internet and voice services for small and medium size businesses across Spain and Portugal. Our cohesive strategy is driving strong growth as we continue to succeed in launching new services. We have met two key milestones during the quarter: the launching of direct access services and the deployment of our Portuguese operations which enabled us to launch services on January 1, 2000. These achievements, together with the continuing success in the build-out of our backbone and local access network and the strong performance of voice and Internet services in Spain will set the pace for sustained growth of our telecommunications revenues in the quarters to come. In addition, Jazztel Internet Factory S.A., our subsidiary for Internet content development, has established itself as a leading Internet platform in the Spanish market, successfully beginning to generate revenues after the launch of its horizontal portal ya.com and several vertical and e-commerce sites."

"During the last quarter of 1999 we completed our initial public offering and a highly successful high yield transaction, raising additional funds of Euro 595 million which will be primarily used for the deployment of our network in Spain and Portugal. As a result we ended the year with a solid financial position with available cash resources of Euro 417 million" added Mr. Carro.

Fourth quarter operational achievements

Direct Access

Jazztel provided service to the first directly connected customers during December. By year end the Company had already signed contracts with 28 companies. The Group is providing services through its own fiber and through leased lines from other carriers, mainly Telefonica. "The market price of metropolitan leased lines is decreasing rapidly following increased competition and in accordance with recent EU recommendations. This price decrease coupled with our current network reach in terms of backbone and points of interconnect make the connection of direct clients through leased lines an economically viable alternative. We intend to fully benefit from this new opportunity to accelerate direct customer take-up," said Antonio Canton, Chief Operating Officer of Jazztel. "Our priority regarding direct access is to continue to recruit the right sales force for direct access, a scarce resource in the Iberian market. We had 35 top quality sales representatives by year-end 1999 and we plan to have over 100 by the end of the first half of year 2000."

Network Deployment

As of December 31, 1999, Jazztel had 4,220 route km of backbone network built, exceeding initial forecasts of 3,800 km. The Company closed the southern ring as initially anticipated and expanded the initial reach of the northern ring by more than 400 km, to facilitate the planned expansion of the network into Portugal. This backbone infrastructure, together with the continuing progress in the deployment of points of interconnect with the Telefonica network in all provinces in Spain, provides Jazztel with a competitive long distance infrastructure in the Spanish market.

By year-end 1999 Jazztel had deployed in excess of 350 km of local access networks. The first metropolitan ring was operational in Alcobendas four months ahead of schedule. Jazztel is currently building local access infrastructure in Madrid, Barcelona, Valencia, Sevilla, Bilbao, Zaragoza, Malaga, Murcia, Vigo, Cordoba and Almeria.

Jazztel's access strategy, with fiber local loop at its core, will be enhanced by the recent granting by the Spanish Minister of Development to Banda 26, a majority owned Jazztel subsidiary, of a wireless local loop access license in the 26 GHz spectrum for the whole of the Spanish market. Banda 26 is a consortium formed by Jazztel, Teligent, a leading US broadband services provider and Telvent, a Spanish investment company owned by the Abengoa group. This license follows the award in December by the Portuguese regulator of a similar license to operate in the Portuguese market. The deployment of fixed wireless broadband technology in the Iberian market will allow Jazztel to expand the reach of its fiber network and accelerate direct customer take-up in the small and medium sized enterprises, Jazztel's primary target market.

Indirect Access

Indirect voice revenues and customer take-up continued to grow very rapidly during last quarter, by 55% and 88%, respectively. Interconnection margins continued to improve as a result of the further deployment of Jazztel's backbone and interconnect infrastructure. "We are particularly satisfied with the sustained client take-up and brand awareness since our launch in late May", Mr. Canton commented. "We have more than quadrupled our initial customer take-up expectations, and 80% of the Spanish population know our brand". By year-end, Jazztel had 283,800 voice customers and 507.500 lines, 64% of which were corporate. Jazztel carried 128 million voice minutes on its indirect access services in 1999, 63% in the fourth quarter alone.

Carrier's carrier

Jazztel has successfully launched its carrier services and is currently able to provide international traffic termination services in Spain and national long distance wholesale capacity leasing. Before year-end 1999, Jazztel signed contracts with 4 international carriers to terminate international traffic. International long distance voice connectivity is currently provided through leased capacity connecting Madrid to London.

ISP Businesses

As of December 31, 1999, Jazztel had 10,300 customers in Jazznet, its dial-up corporate ISP, up from only 750 at the end of the third quarter of 1999. Jazznet customers can receive four different service packs, all of them including Internet dial-up access, e-mail management or domain maintenance, in exchange for a monthly fee. Jazztel also had 165,000 subscribers in Jazzfree, its free Internet access for residential users, up from 31,000 at the end of the third quarter of 1999. Jazzfree customers were generating over 1 million daily minutes of Internet traffic. During the fourth quarter of 1999, the Company signed the first ADSL agreement with Telefonica and started to deploy the required infrastructure to offer ADSL services in Madrid and Barcelona. Jazztel plans to sell ADSL as a bundled product offering with Jazznet. Jazztel had signed a total of 300 ADSL contracts and currently anticipates connecting the first ADSL customers before the end of the first quarter of 2000.

Jazztel offered wholesale services to seven ISPs by year-end 1999. These services include all stages of the ISP value chain: dial-up access services, IP services, e-mail services, facilities rental, web hosting, subscriber authentication and/or wholesale Internet access. The company is also deploying three data centers in Madrid, Barcelona and Lisbon, and plans to focus aggressively in expanding its web hosting and ASP capabilities, both internally and through acquisitions.

Jazztel Internet Factory

Jazztel Internet Factory successfully launched during the fourth quarter of 1999 its horizontal portal www.ya.com as well as five additional specialized vertical portals to cover the following fields: music (www.radio.ya.com), online shopping mall (viaplus.ya.com), online computer shop (www.tiendapc.com), astrology and horoscopes (www.rappelweb.com) and tourism for German-speaking people (www.spanien.com). The number of free webmail accounts in Mixmail as of December 31, 1999 was up to 1.1 million from 0.9 million at the end of the third quarter. The ya.com network added 67,000 registered users between its launch in October 1999 and December 31, 1999. Page views in the last quarter of 1999 reached 109 million. Advertising revenues reached Euro 387,000, and the first e-commerce revenues were already generated during December 1999. JIF ended 1999 with a complete offer in content, services and products for the Spanish market, including over 40,000 products of the Viaplus catalog and over 14,000 references through its online computer shop. JIF has grown to 75 full-time employees as of December 31, 1999 up from 41 as of September 30, 1999. Through an aggressive branding campaign, JIF has managed to build a strong brand name in a very short period of time.

Financial Information

Miguel Salis, Chief Financial Officer of Jazztel, commented on the end year results. "We have significantly surpassed our revenue projections, maintaining strong growth in the indirect voice business. We are very encouraged by the launch of higher-margin business lines that will be rapidly contributing to our P&L. Internet revenues for the fourth quarter were already 7.2% of total revenues and we have launched our direct access business during December, with revenues from this source expected for the first quarter of 2000".

Total Revenues for year ended December 31, 1999 increased to Euro 23.3 million from approximately Euro 1 million for the comparable period in 1998. These revenues are comprised of Euro 22.4 million telecom revenues and Euro 0.9 million from Internet operations, comprising access, e-commerce and advertising revenues. The increase is primarily a result of the launch of our indirect access service in Spain in late May 1999 and substantial increases in the numbers of customers and lines in service. Revenues during the fourth quarter of 1999 were Euro 12.9 million, representing a 67.6% increase compared with third quarter revenues of Euro 7.7 million. The combined revenues from our ISP and Internet businesses launched during the quarter, Jazzfree, Jazznet and Jazztel Internet Factory, already represented 7.2% of the total revenues for the fourth quarter, or a total of Euro 0.9 million.

Cost of Sales, comprising direct and network costs, were Euro 31.8 million for the year ended December 1999, compared to Euro 5.5 million for year 1998. Cost of sales for the fourth quarter were Euro 15.4 million compared to Euro 11.9 million in the third quarter, or a growth of 29.4%. Gross margin improved from a negative 54.6% in the third quarter to a negative 19.3% in the fourth quarter. This improvement was due to a reduction in interconnect costs resulting from the continuing deployment of our backbone network and points of interconnect as well as the capitalization of long-term backbone leases and other network operating costs.

Selling, General and Administrative for 1999, increased to Euro 76.8 million from approximately Euro 1.7 million for 1998. This increase excludes Euro 48.5 million in non-recurring expenses related to management's share options plan approved in September 1999 and Euro 1.8 million in expenses related to the employee's share options plan. Selling, General and Administrative expenses for the fourth quarter increased 136% to Euro 41.3 million compared with Euro 17.5 million. Part of this growth was explained by the launch during the quarter of Jazztel Internet Factory and Jazztel Portugal, which resulted in an increase in Selling, General and Administrative expenses of Euro 10.4 million.

EBITDA for 1999, excluding the Euro 50.3 million impact of the stock option plan, was negative Euro 85.4 million, compared to negative Euro 6.2 million for 1998. Adjusted EBITDA for the fourth quarter was negative Euro 43.8 million, compared with negative Euro 21.7 million for the third quarter. The increase in EBITDA losses was the result of the rapid growth of our business in Spain, the launch of services from Jazztel Internet Factory and the preparation of the launch of our Portuguese operations.

Depreciation and Amortization Expense was Euro 5.9 million for the period ended December 31, 1999 from Euro 0.13 million for the period ended December 31, 1998. The growth is principally due to increased capital expenditures for the continuing construction of the network in Spain. Depreciation and Amortization expenses for the fourth quarter were Euro 3.8 million compared with Euro 1.5 million for the third quarter.

Net financial expense for the period ended December 31, 1999 was Euro 23.9 million and consisted primarily of accrued interest on our high yield notes issued in April 1999 and December 1999, less interest earned on invested funds.

Net loss for the year ended December 31, 1999 was Euro 164 million and compared with a net loss of Euro 6.3 million for the year ended December 31, 1998.

Financial needs and resources

For the 12 months ended December 31, 1999 total net cash outflows from operations were Euro 56.9 million, compared to Euro 4.5 million for the same period in 1998. Net cash outflows from capital expenditures, financial investments and acquisitions and disposals were Euro 141.6 million for the year 1999 compared to Euro 2.1 million for 1998. Sources of funds for the year ended December 31, 1999 were primarily comprised of funds from the Group's initial public offering closed in December 1999 of Euro 195.5 million, the issuance of notes in April 1999 and December 1999 of Euro 206.8 million and Euro 400 million respectively, and the capital contribution of Euro 63.9 million completed in February 1999. In addition, on August 13, 1999, Jazz Telecom, S.A. entered into a senior secured credit facility with a syndicate of banks to provide up to Euro 300 million which Jazz Telecom S.A. is currently not utilizing.

"Through the raising of Euro 864 million in high yield debt and equity during the year Jazztel has sufficient cash resources to fund its operations until the last quarter of this year without drawing on the bank facility" commented Miguel Salis. "We are currently working on floating our Internet subsidiary, and as our business develops we will continue to evaluate other alternatives to access the capital markets," he concluded.

Jazztel is a leading facilities-based telecommunications and Internet service provider that is constructing a fiber-optic telecommunications network to be the first Iberian competitive local exchange carrier (CLEC). Jazztel already has over 4,200 kilometers of backbone fully operational as well as over 350 km of local access networks. Jazztel has been recently granted a wireless access license in Spain. The Jazztel group is integrated as well by Jazztel Internet Factory, S.A. an Internet content provider (offering the portal ya.com) and by a Portuguese subsidiary, Jazztel Servicoes de Telecomunicacoes S.A., which was recently awarded a wireless access license in Portugal.

Certain statements in this release are forward-looking statements that are subject to material risks and uncertainties. Actual results could differ materially from those stated or implied by such forward-looking statements due to risks and uncertainties associated with its businesses, which include among others, competitive developments, risks associated with the Company's growth, the development of the Company's markets, regulatory risks, dependence on its major customers and their spending patterns and other risks which will be presented in the Company's filings with the Securities and Exchange Commission and certain European regulatory authorities. Additional information or factors that may affect the business and financial results of Jazztel can be found in Jazztel's filings with relevant European government authorities.

--------

1 Adjusted EBITDA excludes Euro 50.3 million in compensation

expenses related to share options issuance

                       STATEMENTS OF OPERATIONS
                 3rd Quarter 1999 and 4th Quarter 1999
                              (In Euros)
----------------------------------------------------------------------
                                           3rd Quarter    4th Quarter
                                               1999           1999
OPERATING REVENUES:

  Telecommunications revenues                7,706,068     12,519,155
  Other revenues                                              394,047
                                           -----------    -----------
      Total operating revenues               7,706,068     12,913,202
OPERATING EXPENSES:

  Cost of sales                            (11,911,273)   (15,406,520)
    Sales, general and                     (66,502,022)   (43,032,005)
  administration
  (inclusive of 50,287,992 in
  compensation expense in 1999 related to
  share options issuance)

  Depreciation and amortization             (1,545,308)    (3,804,625)
                                           -----------    -----------
    Total operating expenses               (79,958,603)   (62,243,150)
                                           -----------    -----------
OPERATING LOSS                             (72,252,535)   (49,329,948)
                                           -----------    -----------
Financial income (expense), net:            (5,653,434)   (14,317,580)

LOSS BEFORE MINORITY
  INTERESTS                                (77,905,969)   (63,647,528)
Minority interests                                          1,494,445
                                           -----------    -----------
NET LOSS                                   (77,905,969)   (62,153,083)
                                           ===========    ===========


                    JAZZTEL p.l.c. AND SUBSIDIARIES
                      CONSOLIDATED BALANCE SHEETS
                              (In Euros)
----------------------------------------------------------------------
                                           December 31,   December 31,
                                               1998           1999
ASSETS

Current assets:

  Cash and cash equivalents                    491,410    417,063,817
  Restricted funds related to Senior Notes        --       73,861,333
  Accounts receivable                        1,209,698     10,140,966
  Prepaid expenses                                --        6,061,092
  Other current assets                           8,012     29,240,061

     Total current assets                    1,709,120    536,367,269

Property and equipment, net                  1,807,078    171,678,114
License costs, net                              16,179      1,530,557
Intangible assets, net                          30,960     25,377,179
Deferred costs, net                               --       29,591,355
Goodwill, net                                  192,870           --
Restricted funds related to Senior Notes          --      144,871,063
Deposits and other assets                       59,431      1,328,161


TOTAL ASSETS                                 3,815,638    910,743,698
                                          ============   ============
LIABILITIES AND SHAREHOLDERS' EQUITY
 (DEFICIT)

Current liabilities:

  Current maturities of long-term debt       4,489,387     11,719,525
  Accrued interest                                --        1,009,699
  Accounts payable                           1,945,531     89,415,814
  Accrued expenses and other current
   liabilities                               1,020,849      3,186,947

    Total current liabilities                7,455,767    105,331,985

Long-term debt                               1,469,668    664,396,964
Other Long - Term  liabilities                   2,096          2,093
Minority interests                             (31,386)    (1,474,446)
Shareholders' equity (deficit):

Common stock, Euro 0.08 par value,
 15,190,356 authorized, issued and
 outstanding shares at December 31,
 1998 and Euro 0.08 par value
 62,500,500 authorized shares and
 53,545,712 shares issued and
 outstanding at December 31, 1999            1,215,228      4,283,657
Non-voting stock, 0,01 pound sterling
 (Euro 0.015) par value at December 31,
 1998 and 1999 5,000,000 shares
 authorized, issued and outstanding             75,127         75,127
Additional paid in capital                        --      305,591,643
Warrants                                          --        2,868,630
Accumulated deficit                         (6,370,862)  (170,331,955)

        Total shareholders' equity
         (deficit)                          (5,080,507)   142,487,102

TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY (DEFICIT)                             3,815,638    910,743,698
                                          ============   ============

                                          ============   ============

                                          ============   ============


                    JAZZTEL p.l.c. AND SUBSIDIARIES
                       STATEMENTS OF OPERATIONS
            For the years ended December 31, 1998 and 1999
                              (In Euros)
----------------------------------------------------------------------
                                           Year Ended     Year Ended
                                           December 31,   December 31,
                                               1998           1999

OPERATING REVENUES:

  Telecommunications revenues                  990,569     22,880,933
  Other revenues                                   457        394,047
      Total operating revenues                 991,026     23,274,980
OPERATING EXPENSES:

  Cost of sales                             (5,456,698)   (31,816,730)
   Sales, general and administration
    (inclusive of 50,287,992 in compensation
    expense in 1999 related to share
    options issuance)                       (1,653,883)  (127,124,431)

  Depreciation and amortization               (126,473)    (5,882,242)
    Total operating expenses                (7,237,054)  (164,823,403)
OPERATING LOSS                              (6,246,028)  (141,548,423)
Other income (expense), net:

  Interest income                               19,225      9,750,644
  Interest expense                             (88,451)   (33,657,759)
  Other expense                                (21,152)          --
    Total other income (expense), net         (90,378)   (23,907,115)
LOSS BEFORE MINORITY
  INTERESTS                                 (6,336,406)  (165,455,538)
Minority interests                              46,411      1,494,445
NET LOSS                                    (6,289,995)  (163,961,093)
                                          ============   ============


                    JAZZTEL p.l.c. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF CASH FLOWS
      For the years ended December 31, 1998 and 1999 (In Euros)
----------------------------------------------------------------------
                                           Year Ended     Year Ended
                                           December 31,   December 31,
                                               1998           1999
OPERATING ACTIVITIES:

Net loss                                    (6,289,995)  (163,961,093)
Adjustments to reconcile net loss to
 net cash (used in) provided by
 operating activities:

  Minority interests                           (31,386)    (1,494,445)
  Amortization of goodwill                      34,036        224,227
  Amortization of deferred costs                  --          313,503
  Other depreciation and amortization           90,034      5,344,512
  License costs written off                       --             --
  Provisions for losses                          1,252      3,774,435
  Non-cash compensation associated with
  issuance of share options and shares in

  Subsidiary to employees                         --       50,287,992
Changes in operating assets and liabilities:
  Accounts receivable                       (1,205,299)   (12,705,703)
  Prepaid expenses and other current assets     (7,785)   (35,293,141)
  Deposits and other assets                    (53,118)    (1,268,730)
  Accounts payable and accruals              2,932,044     89,636,381
  Accrued interest                                --        8,239,837
    Net cash used in operating activities   (4,530,217)   (56,902,225)
INVESTING ACTIVITIES:

  Acquisitions of licenses costs               (10,743)    (1,514,378)
  Purchase of property and equipment        (1,828,947)  (113,422,304)
  Acquisitions, net of cash acquired          (226,906)       (31,357)
   Acquisitions of intangible assets           (31,581)   (26,605,108)
     Net cash used in investing activities  (2,098,177)  (141,573,147)
FINANCING ACTIVITIES:

  Funds held in Escrow                            --     (218,732,396)
  Deferred costs                                  --      (29,591,355)
  Proceeds from exercise of share
   options and Warrants                           --       13,421,638
  Issuance of share capital                    361,360    260,544,938
  Share issuance costs                          (5,889)   (12,725,866)
  Increase in short-term debt, net           4,429,030           --
  Borrowings of long-term debt               1,469,668    603,122,625
  Payments of long-term debt                      --         (991,805)
     Net cash provided by financing
      activities                             6,254,169    615,047,779
INCREASE (DECREASE) IN CASH AND

CASH EQUIVALENTS                              (374,225)   416,572,407
CASH AND CASH EQUIVALENTS AT

  BEGINNING OF PERIOD                          865,635        491,410
CASH AND CASH EQUIVALENTS AT END

OF PERIOD                                      491,410    417,063,817
                                          ============   ============