News Release

Strong Volumes at Stet Hellas Drive 26% Revenue Growth Customer base grows 76%

March 11, 1999

Media Relations:
Deppie Tzimea-Houliarakis
00 301 618-6160

Investor Relations:
George Rallis
00 301 618 6585

ATHENS, Greece — Stet Hellas Telecommunications S. A. (NASDAQ: STHLY; Amsterdam: STHLS), today announced 1998 revenue growth of 26.3% on total revenues of Drs. 118.5 billion compared to Drs. 93.8 billion the previous year.

The 1998 revenue growth was achieved primarily through a 76% increase in the customer base, driving the year-end total to 688,614. Revenues from telecommunications services increased by 32.5% to Drs. 107.4 billion.

The company's earnings before taxes were Drs. 12.2 billion, compared to Drs. 11.4 billion in 1997, an increase of 7%. Net income for 1998 was Drs. 6 billion, an increase of 3.5%. The company said 1998 net income reflected greater than anticipated growth in its customer base offset by increased customer acquisition costs due to increased competition.

The results are based on US Generally Accepted Accounting Principles (GAAP).

"We extended our track record for double-digit customer growth and continued to position the company's Telestet brand to compete in our dynamic marketplace," said Managing Director Giacinto Cicchese. "The good news is that we are building on a strong foundation as service innovator and technology leader in one of the most rapidly developing mobile telephony markets in the world."

The company launched a series of new tariff plans under its Telestet brand in 1998 that advanced its strategy of addressing distinct business and consumer segments. Customer base growth in 1998 primarily reflects increases in the company's B-Free pre-paid services, up by 208,240 net customers. The popular pre-paid products require no service contracts or monthly bills. B-Free customers represent approximately 43.2% of the total customer base.

The company's strategic partnership arrangement with Germanos S.A, Greece's leading telecommunications and electronics retailer, as well as other enhancements to the company's retail distribution network, contributed to a growth surge at the end of the year. In the fourth quarter, the company added 108,212 customers, including 57,751 in December alone.

"Our strategic partnership with Germanos added a formidable new channel for the Telestet brand," Mr. Cicchese said. "The company fully anticipates that this and other enhancements to our retail distribution network will make a significant contribution in 1999 as well." During 1998, the company opened another six company owned and operated "Telestet Exclusive" retail stores for a total of 14.

Total minutes of use increased by 52.7% in 1998 to 675 million minutes, as compared to 442 million minutes for the year 1997. Average traffic per customer decreased during 1998 to 110 minutes per customer, compared with 126 minutes per customer for 1997. This expected decrease in average traffic per customer was due primarily to the increased number of B-free pre-paid customers, who are generally lower volume consumers.

Average monthly service revenues per user decreased in 1998 to Drs. 17,437 as compared to Drs. 23,104 for 1997. This reflects lower traffic volume per customer and lower average monthly fees mainly due to the increase in B-free customers.

The company's churn rate for the year was 20.2%, equal to the previous year. The churn rate includes migrations from tariff plans to B-free.

As a result of increased service revenues and an increased customer base, particularly among pre-paid customers, costs of sales and services provided as a percentage of service revenues decreased to 37.4% compared with 39.8% in 1997. Selling, general and administrative costs as a percentage of service revenues increased to 51.4% as compared to 48.9% for 1997.

EBITDA (which the company calculates as operating profit before depreciation, amortization, bad debt and provisions) grew for 1998 by 19% to Drs. 38 billion while the EBITDA margin (EBITDA over service revenues) decreased, moving to 36% from 40% for 1997. Operating income as a proportion of service revenues declined for 1998 to 20% from 24.7% in 1997.

Roaming revenues rose by 30% to Drs. 9.9 billion. During 1998, the company negotiated 17 new roaming agreements and at year's end had 94 roaming partners in 60 countries.

Expenditure relating to fixed assets totaled Drs. 29.7 billion in 1998. The continuing development of the company's network accounted for Drs. 22.9 billion of fixed asset additions. Fixed asset additions included development of the company's information systems, which for 1998 was Drs. 5.3 billion.

In 1998, the company migrated its contract customer database to BSCS version 4, a new, flexible billing and information system. BSCS will enable development of new products and services, and provides a year 2000 solution for customer care and billing operations. Additionally, it allows on-line and real-time resolution of the most common customer queries.

A significant company milestone in 1998 was the Initial Public Offering on June 3 of 12.1 million ordinary shares under the symbol STHLY on the NASDAQ exchange and as STHLS on the Amsterdam exchange. The offering price was US$27 per share.

Selected Financial Data

  As of December 31st
In millions except per Share amounts 1997 1998 1998
Statement of Operations Data
Operating revenues:
Revenues from telecommunication services Drs.81,061 Drs.107,416 $384
Revenues from sales of handsets and accessories 12,718 11,069 40
Total operating revenues 93,779 118,486 423
Cost of sales and services provided (32,227) (40,202) (144)
Gross profit 61,552 78,284 280
Provision for doubtful accounts (1,907) (1,500) (5)
Selling, general and administrative expenses (39,652) (55,224) (197)
Operating income (loss) 19,993 21,559 77
Interest and other financial income (expense), net (8,556) (9,318) (33)
Income (loss) before income taxes 11,437 12,242 44
Income taxes (provision) benefit (5,630) (6,233) (22)
Net income (loss) 5,807 6,009 21
Earnings per Share Drs. 80 Drs. 83 $0,30

In millions
Balance Sheet Data December 31, 1997 December 31, 1998 December 31, 1998
Non-current assets Drs. 85,779 Drs. 112,750 $ 403
Total assets 111,196 149,510 534
Long-term bank loans, net of current position 55,818 46,499 166
Reserves and other long-term liabilities 122 4,253 15
Total liabilities 89,605 121,910 436
Shareholders' equity 21,591 27,600 99

  At year end
  1997 1998
Net customer additions 179,665 297,278
Customers 391,336 688,614
Contract customers 302,112 391,150
Pre-paid customers 89,224 297,464
Churn (%) 20.2 20.2
Total traffic (millions of minutes) 442 675
Average monthly minutes of use per customer 126 110
Average monthly service revenue per customer 23,104 17,437

The matters discussed in this interim report include forward looking statements that are subject to risks and uncertainties including, but not limited to, economic conditions, the continued maintenance of the capacity of the Company's network, the ability of the Company to resolve certain legal proceedings in a manner favorable to the Company, and other risks indicated in filings with the U.S. Securities and Exchange Commission.

Stet Hellas Telecommunications S.A. is at the forefront of the mobile communications industry in Europe. To its growing base of more than 688,000 customers in Greece, the company's Telestet brand stands for innovative services and the latest in communications technology. The company's shareholders include Stet Mobile Holdings NV, Bell Atlantic and the Interamerican Group. Its stock is publicly traded on the NASDAQ (STHLY) and Amsterdam (STHLS) exchanges. Internet users: For more information, visit the Stet Hellas web site at