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Thursday 01 July, 2004

Colt Telecom Group

Trading Statement

Colt Telecom Group PLC
01 July 2004


1 July 2004

                   TRADING UPDATE FROM COLT TELECOM GROUP PLC

COLT Telecom Group plc (COLT), a leading pan-European provider of business
communications solutions and services reiterated today that market conditions
continued to be challenging. Nevertheless, at constant exchange rates, second
quarter revenues are expected to be ahead of both the second quarter of 2003 and
the first quarter of 2004.

However, COLT also said that since the publication of its first quarter results
on 21 April, the company had experienced tougher than expected trading
conditions. In addition, there has been slower than anticipated uptake of its
data products and the performance of some higher margin voice products has been
disappointing. During Q2, revenue growth has therefore come mainly from the
lower margin segments of the business. As a result, even though costs continue
to be under tight control, overall margins are now under pressure. These trends
are expected to continue throughout 2004 and consequently COLT does not now
believe that it will meet market expectations for the quarter ended 30 June and
the year ending 31 December 2004.

COLT now expects that for the year ending 31 December 2004, reported revenues
will be above last year and that EBITDA will be slightly below or in line with
last year. Operating free cash flow will however show an improvement over 2003
reflecting lower capital expenditure and improvements in working capital.

COLT President and CEO Steve Akin said:

'We are taking action to improve revenues and are continuing to develop new
products, particularly in the higher margin data segments. These initiatives are
expected to have a positive impact in the longer term.

'COLT remains financially strong with cash and liquid resources of close to £800
million and we remain on track to be free cash flow positive on a sustainable
basis during 2005.

'Our strong customer base and industry leading customer service combined with
tight management of costs and strong financial position will continue to allow
us to weather what remains a challenging operating environment.'

SECOND QUARTER RESULTS

COLT's financial results for the quarter ended 30 June 2004 will be published on
21 July.

FORWARD LOOKING STATEMENTS

This trading update contains 'forward looking statements' including statements
concerning plans, future events or performance and underlying assumptions and
other statements which are other than statements of historical fact.  The Group
wishes to caution readers that any such forward looking statements are not
guarantees of future performance and certain important factors could in the
future affect the Group's actual results and could cause the Group's actual
results for future periods to differ materially from those expressed in any
forward looking statement made by or on behalf of the Group.

These include, among others, the following: (i) any adverse change in the laws,
regulations and policies governing the ownership of telecommunications licenses,
(ii) the ability of the Group to expand and develop its networks in new markets,
(iii) the Group's ability to manage its growth, (iv) the nature of the
competition that the Group will encounter and (v) unforeseen operational or
technical problems.  The Group undertakes no obligation to release publicly the
results of any revision to these forward looking statements that may be made to
reflect errors or circumstances that occur after the date hereof.

CONTACT

John Doherty
Director Corporate Communications
Tel: +44 (0) 20 7390 3681

Gill Maclean
Head of Corporate Communications
Tel: +44 (0) 20 7863 5314


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