Colt Telecom hit by profit alert

The UK firm has a presence in 32 cities across 13 countries

Shares in Colt Telecom have plunged by almost a third in value after the company issued a shock profits warning.

The European corporate telecoms company said tough markets meant annual core profits could end up slightly below last year's levels of £163m.

It blamed slower-than-expected sales of its data products and weak performance of some higher margin products.

The industry is still struggling after a three-year slump triggered by the burst of the 1990s technology bubble.

"As a result... overall margins are now under pressure," the company said.

"These trends are expected to continue throughout 2004 and consequently Colt does not now believe that it will meet market expectations for the second quarter...and the year."

Revenues safe

However, Colt, which stood for City of London Telecom before it branched out into Europe, stressed that year-end revenues would be above 2003 levels.

"Revenues are growing, but the problem is that the growth is not coming in the right businesses," said Francois Pierre-Arth, an analyst at Exane-BNP Paribas.

Shrugging off these concerns, Colt said it remained financially strong and was sitting on cash and liquid assets to the tune of £800m.

Shares in Colt Telecom were down 25 pence, or 31%, at 55.25p by 1335 GMT.