TIW Reports First Quarter Results

    News Editors

    MONTREAL--(BUSINESS WIRE)--May 3, 2005--Telesystem International Wireless Inc. (TSX:TIW) (NASDAQ:TIWI) For the quarter ended March 31, 2005. All amounts are in US$ unless otherwise stated.

    - Q1 Service Revenues of $354.7 million, up 34.3% from Q1-2004

    - Q1 Operating Income of $83.9 million, up 67.1% from Q1-2004

    - Q1 Net Income of $34.4 million, up 119.4% from Q1-2004

    Telesystem International Wireless Inc. ("TIW" or the "Company") (TSX:TIW) (NASDAQ:TIWI) today reported its results for the first quarter of 2005.

    Service revenues for the quarter reached $354.7 million compared to $264.2 million for the first quarter of 2004. Consolidated operating income before depreciation and amortization (OIBDA)1 increased to $146.5 million compared to $107.5 million for the first quarter of 2004. Operating income for the quarter reached $83.9 million compared to $50.2 million for the first quarter of 2004. The growth in OIBDA and operating income reflects the rapid expansion of our subscriber base in Romania over the last twelve months and significant subscriber growth and margin expansion in the Czech Republic. Net income for the quarter was $34.4 million, or $0.16 per share on a basic and fully diluted basis, compared to a net income of $15.7 million, or $0.13 per share on a basic and fully diluted basis, for the first quarter 2004.

    On April 19, 2005, we have obtained an interim court order authorizing TIW to hold a special meeting of shareholders on May 19, 2005 to approve a plan of arrangement. The record date for the special meeting was set at April 18, 2005.

    We are seeking approval for a plan of arrangement for the sale of our indirect interest in ClearWave N.V. to Vodafone International Holdings B.V. for approximately US$3.5 billion (subject to adjustments). After execution of the sale, we will proceed with a court-supervised plan for the distribution of the net proceeds from the sale along with other net cash held to our shareholders.

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    (1)We use the term operating income before depreciation and amortization ("OIBDA") and average revenue per user ("ARPU") which may not be comparable to similarly titled measures reported by other companies. We believe that OIBDA, referred to by some other telecommunication operators as EBITDA, provides useful information to investors because it is an indicator of the strength and performance for our ongoing business operations, including our ability to fund discretionary spending such as capital expenditures and other investments and our ability to incur and service debt. While depreciation and amortization are considered operating costs under generally accepted accounting principles, these expenses primarily represent the non-cash current period allocation of costs associated with long-lived assets acquired or constructed in prior periods. Our OIBDA calculation is commonly used as one of the bases for investors, analysts and credit rating agencies to evaluate and compare the periodic and future operating performance and value of companies within the wireless telecommunications industry. We believe that ARPU provides useful information concerning the appeal of our rate plans and service offerings and our performance in attracting and retaining high value customers. ARPU excludes equipment revenues, revenues from other wireless networks' customers roaming on our network and miscellaneous revenues. OIBDA and ARPU should not be considered in isolation or as alternative measures of performance under generally accepted accounting principles ("GAAP"). For the reconciliation of OIBDA to net income and for the reconciliation between service revenues and ARPU refer to the non GAAP measures and operating data section of this release.


    Pursuant to the interim order, the plan of arrangement must be approved by at least two-thirds of the votes cast by the shareholders, present or voting by proxy, at the special meeting.

    The notice of special meeting and the information circular of TIW contain a detailed description of the proposed plan of arrangement and outline the actions to be taken at the special meeting of shareholders. These materials are available by accessing TIW's web site at www.tiw.ca, SEDAR at www.sedar.com or EDGAR at www.sec.gov.

    MANAGEMENT DISCUSSION AND ANALYSIS FOR THE QUARTER ENDED MARCH 31, 2005

    The management's discussion and analysis, dated May 3, 2005, should be read in conjunction with the accompanying unaudited consolidated financial statements of TIW for the three months ended March 31, 2005 and should also be read in conjunction with the audited consolidated financial statements and Operating and Financial Review and Prospects contained in TIW's Annual Report for the year ended December 31, 2004. Additional information relating to TIW, including the Company's annual report on Form 20-F and continuous disclosure documents, is available on SEDAR at www.sedar.com under Telesystem International Wireless Inc. The financial information presented herein has been prepared on the basis of Canadian GAAP. Please refer to Note 17 to our audited consolidated financial statements for the year ended December 31, 2004 for a summary of the differences between Canadian GAAP and United States (U.S.) GAAP.

    Results of Operations

    We recorded net subscriber additions for the first quarter of 173,752 compared to 282,316 in the same period last year. As of March 31, 2005, the total number of subscribers reached 6,915,180, up 30.8% compared to 5,286,109 at the end of the first quarter of 2004. Consolidated service revenues increased 34.3% to $354.7 million compared to $264.2 million for the first quarter of 2004.

    Cost of service revenues increased to $105.3 million for the three months ended March 31, 2005 from $81.6 million for the three months ended March 31, 2004 but, as a percentage of service revenues, decreased to 29.7% compared to 30.9% for the prior year comparative period.

    Equipment revenues rose to $19.5 million for the three months ended March 31, 2005 compared to $14.2 million for the same period in 2004. Cost of equipment correspondingly rose to $31.2 million from $22.3 million for the three months ended March 31, 2005 and March 31, 2004 respectively. Included in the cost of equipment are costs of handsets and accessories sold, including subsidized handsets, as well as the costs of SIM cards, the majority of which are provided to new subscribers as part of the cost of acquiring such new subscribers.

    Selling, general and administrative expenses were $91.2 million, 25.7% of service revenue, in the first quarter of 2005 as compared to $67.0 million, 25.4% of service revenue, in 2004. Included in the expenses for the first quarter of 2005 is a non-cash stock based compensation expense of $4.3 million as compared to $1.5 million in the corresponding period of 2004.

    As a result of the aforementioned, we recorded OIBDA for the first quarter of 2005 of $146.5 million compared to OIBDA of $107.5 million for the same period last year. OIBDA as a percentage of service revenue for the three month period was 41.3% compared to 40.7% in the same period of 2004.

    Depreciation and amortization increased to $62.6 million for the three months ended March 31, 2005, from $57.3 million for the same period in 2004, due primarily to a higher tangible asset base partly offset by write-offs in the amounts of $3.5 million last year versus nil this year. The revenue growth and lower depreciation costs as a percentage of service revenue resulted in an operating income of $83.9 million compared to $50.2 million for the same period last year, an increase of 67.2%.

    Interest expense, net of interest income, for the three months ended March 31, 2005 was $22.8 million compared to $21.3 million for the same quarter of 2004, primarily due to the higher effective cost of debt at Oskar Mobil, partly offset by the repayment of long-term debt at MobiFon S.A. and an increase in financial income from $1.0 million in the first quarter of 2004 to $1.6 million in the first quarter of this year. We recorded a foreign exchange gain of $0.03 million for the three months ended March 31, 2005 compared to a loss of $2.0 million for the same period in 2004. The first quarter 2004 results also included a gain of $11.7 million on disposal of our shares in Hexacom, our former Indian affiliate.

    Income tax expense for the quarter was $14.1 million as compared to $12.8 million for the same quarter in 2004. Income tax expense consists primarily of Romanian income taxes of $12.4 million. The Romanian government further reduced the corporate income tax rate from the 19% previously announced to 16% effective January 1, 2005. The Romanian statutory income tax rate was 25% for 2004. The fair value of Oskar Mobil's tax loss carryforward benefits was not recognized in the purchase price allocation of acquisitions, due to Oskar Mobil's limited history of operating profits. However, an income tax expense has been recognized during the current period of $1.7 million relating to the benefit of such recognized loss tax carryforwards that were utilized in the current quarter and a corresponding amount has been credited to goodwill.

    As a result of the foregoing, net income for the first quarter of 2005 amounted to $34.4 million or $0.16 per share on a basic and fully diluted basis compared to a net income of $15.7 million or $0.13 per share on a basic and fully diluted basis for the first quarter of 2004.

    MobiFon S.A. - Romania

    MobiFon S.A. ("MobiFon" or its trade mark, "Connex"), added 112,590 net subscribers for the first quarter for a total of 5,022,902, compared to net additions of 215,096 in the first quarter of 2004 and total subscribers of 3,672,138 at the end of the same 2004 period. This represents an increase of 36.8% in total number of subscribers over the last 12 months. As of March 31, 2005, we estimate that MobiFon had a 47% share of the cellular market in Romania. Connex's net postpaid subscriber additions during the period represented 56.2% of its overall subscriber additions compared to 22.5% for the same quarter of 2004, reflecting MobiFon's value-driven acquisition strategy. As of March 31, 2005, postpaid subscribers accounted for 34.8% of MobiFon's total subscriber base as compared to 34.3% at the end of 2004.

    The net market growth slowed down in the first quarter of 2005, a normal seasonal trend after the record growth of the last quarter of 2004. During the past 12 months, we estimate cellular telephony market penetration in Romania increased to 49% from 35% at the end of the first quarter of 2004.

    Service revenues reached $197.8 million compared to $147.6 million for the first quarter of 2004. This $50.2 million increase in service revenues translated into a 34.0% year over year growth rate. This growth was largely attributable to a 39.2% increase in average number of subscribers partly offset by a decline in average revenue per user.

    The monthly average revenue per user ("ARPU")1 for the first quarter was $12.29 compared to $12.76 for the same period of last year, with the decrease being primarily the result of the addition of more than 1.3 million subscribers during the last 12 months, of which 70.0% were prepaid users.

    Equipment revenues rose to $11.5 million for the three months ended March 31, 2005 compared to $8.9 million for the same period in 2004 as a result of higher postpaid gross additions. Cost of equipment correspondingly rose to $17.2 million from $14.7 million for the three months ended March 31, 2005 and March 31, 2004 respectively. As a result, the gross negative margin on equipment slightly improved at $5.6 million compared to $5.8 million for the same period.

    Cost of services as a percent of service revenue increased to 22.8% from 21.7% in the first quarter of 2004. This increase is a result of higher interconnection costs associated with a higher proportion of traffic terminating on other operators' networks. Selling, general and administrative expenses increased from 22.0% of service revenues for the three months ended March 31, 2004 to 22.9% for the latest three month period primarily due to higher selling and marketing expenses as a percentage of service revenue. This increase was triggered by greater advertising and commissioning expenses during the quarter as we acquired more postpaid subscriber compared to the same period last year.

    OIBDA increased 31.8% to $101.9 million compared to $77.3 million for the same period last year. OIBDA as a percentage of service revenue decreased to 51.5% compared to 52.4% for the same period last year. Operating income for the quarter rose 49.4% to $71.9 million compared to $48.1 million for the first quarter of 2004.

    Oskar Mobil a.s. (formerly known as Cesky Mobil a.s.)- Czech Republic

    Oskar Mobil a.s. ("Oskar Mobil" or its trade mark "Oskar") added 61,162 subscribers in the first quarter to reach 1,892,278, an increase of 17.2% in total number of subscribers compared to 1,613,971 subscribers at the end of the first quarter of 2004. In the Czech Republic, our focus on postpaid growth continued to be successful with postpaid subscribers representing 84.3% of net additions during the quarter. Although total net subscriber additions in the first quarter of 2005 were 9.0% lower than in the same period of 2004, net additions of postpaid subscribers slightly increased from 51,078 to 51,583 and our postpaid/prepaid mix as of March 31, 2005 was 49.0/51.0 compared to 43.9/56.1 at of March 31, 2004. We estimate we held a 17.3% share of the national cellular subscriber market as of March 31, 2005, compared to a 16.3% share at the same time last year. Also according to our estimate, we had a 21% share of the national cellular service revenue during the first quarter of 2005 compared to 19.5% for the same period in 2004. During the past 12 months, we estimate cellular penetration in the Czech Republic increased to 107% from 97% at the end of March 2004.

    Service revenues increased 34.6% to $156.9 million compared to $116.6 million for the first quarter of 2004 due to a 17.9% increase in average subscribers and a 14.7% increase in the ARPU as expressed in U.S. Dollar. The local currency service revenue for the first quarter reached Czech Koruna 3,592 million, a 17.2% increase versus Czech Koruna 3,064 million for the same period last year. The ARPU was stable at Czech Koruna 623 ($27.22) compared to Czech Koruna 624 ($23.72) for the same period last year. The average exchange rate between the U.S. Dollar and the Czech Koruna during the first quarter of 2004 was 14.7% higher than for the same period in 2004.

    Equipment revenues rose 49.7%, 30.6% when considered in local currency, to $8.0 million for the three months ended March 31, 2005 compared to $5.3 million for the same period in 2004 as a result of a higher number of handsets sold to existing postpaid subscribers. Subsidies associated with such increased sales, as part of our retention program, as well as higher average cost per handset sold to new subscribers, caused the $6.4 million year over year increase in cost of equipment which resulted in the gross negative margin on equipment deteriorating to $6.0 million in the three months ended March 31, 2005 from $2.3 million in the comparable 2004 period.

    Cost of services as a percent of service revenue decreased to 38.4% from 42.6% in the first quarter of 2004. This decrease results from lower average interconnection rates amongst mobile operators, from greater on-net and incoming traffic as a percentage of total traffic and from lower site costs as a percentage of service revenue. Selling, general and administrative expenses decreased to 25.5% of service revenues compared to 26.0% for the same period last year mainly as a result of the growth in revenue more than offsetting incremental costs to expand the sales network and to support business initiatives.

    We recorded OIBDA in the Czech Republic of $50.5 million for the quarter compared to OIBDA of $34.4 million for the same period last year, representing a 47.1% increase. When excluding the positive impact of the appreciation of the Czech Koruna against the U.S. Dollar the OIBDA improvement would be of 27.9%. OIBDA as a percentage of service revenue for the quarter reached 32.2% compared to 29.5% in the first quarter of 2004. This improvement reflects the revenue impact of solid subscriber growth, our focus on postpaid growth and economies of scale realized as fixed costs are spread over a larger subscriber base. We achieved an operating income of $17.9 million in the Czech Republic for the first quarter of 2005, compared to an operating income of $6.2 million for the first quarter of 2004.

    Corporate and Other

    Unallocated expenses for corporate and other activities were $5.9 million for the first quarter of 2005 compared to $4.2 million for the same period last year. Consolidated selling, general and administrative expenses for the first quarter 2005 include stock based compensation cost of $4.3 million of which $2.9 million is included within corporate and other activities, while the corresponding period of 2004 had stock based compensation costs amounting to $1.5 million of which $0.9 million is included within corporate and other activities. On May 4, 2004, TIW's shareholders approved a Restricted Share Unit ("RSU") plan. During the first quarter of 2005 1,056,401 RSUs and 2,043,000 performance based RSUs were granted and the fair value of the RSUs and the expected fair value of the performance RSUs that will vest were included in the determination of stock based compensation.

    Liquidity and Capital Resources

    Operating activities provided cash of $80.7 million for the three month period ended March 31, 2005 compared to $41.4 million for the corresponding 2004 period. The primary factor contributing to the higher operating cash flow was the increase in OIBDA.

    Investing activities used cash of $72.3 million for the quarter ended March 31, 2005 compared to a use of cash of $63.2 million during the same period in 2004. Our investing activities include the acquisition of property, plant, equipment and licenses of $63.4 million for three-month period ended March 31, 2005 compared to $50.8 million for the same period of 2004, consisting mostly of expenditures required to increase the capacity of our networks as well as a $10.5 million payment for our UMTS license in Romania. Investing activities for the first quarter of 2005 also included the use of $6.5 million in connection with the acquisition of the 72.9% of Oskar Holdings N.V. we did not already own and $2.5 million in connection with the acquisition during the third quarter of 2004 of a 15.46% non controlling interest in MobiFon. During the corresponding 2004 period, investing activities included the net proceeds from the sale of our direct investment in Hexacom which amounted to $21.8 million offset by the use of $5.3 million in connection with the acquisition of a 3.62% non controlling interests in Oskar Mobil and the use of $32.1 million in connection with the acquisition of a 13% non controlling interest in ClearWave.

    Financing activities used cash of $35.3 million for the first quarter of 2005 compared to providing cash of $59.9 million for the first quarter of 2004. The uses of cash for financing activities in the three-month period ended March 31, 2005 were $11.3 million of scheduled repayments of MobiFon's senior credit facility, $20.7 million of repayments of Oskar Mobil's new senior credit facility and $3.2 million distributed to minority shareholders of MobiFon. The source of cash provided by financing activities in the corresponding quarter of 2004 was $67.4 million of proceeds from issuances of our common shares partially offset by $7.5 million representing the first scheduled repayment of MobiFon's senior credit facility.

    Cash, cash equivalents and restricted short-term investments totaled $243.8 million as of March 31, 2005, including $111.2 million at the corporate level, which included $27.8 million in restricted short term investments.

    As of March 31, 2005, total consolidated indebtedness was $1.2 billion, of which $224.4 million was at the corporate level, $279.1 million at MobiFon and $695.0 million at Oskar Mobil. As of March 31, 2005 corporate net debt, defined as debt at the corporate level minus cash and short-term investments, at the corporate level was $113.2 million compared to $100.2 million at December 31, 2004.

    In November 2004, we entered into an agreement in principle to acquire from non-controlling shareholders 72.9% of Oskar Holdings in exchange for the issuance of 46.0 million common shares of our treasury stock. We incurred $6.7 million of transaction expenses, of which $6.0 million was paid to, Lazard Freres & Co. LLC, bringing the aggregate value of the transaction to $521.9 million. One of our board members is managing director of an affiliate of Lazard Freres & Co. LLC. Closing occurred on January 12, 2005 and we increased our indirect equity interest in Oskar Holdings and Oskar Mobil to 100.0%. Affiliates of J.P. Morgan Partners, LLC, and AIG Emerging Europe Infrastructure Fund L.P., two of our significant shareholders, were shareholders of Oskar Holdings and received 17.4 million and 7.0 million common shares, respectively. Our existing interest in Oskar Holdings, prior to this acquisition was reflected in our consolidated financial statements on a consolidated basis. The aggregate $521.9 million purchase for the above transaction exceeded the carrying value of the net assets acquired by $432.6 million. This excess was preliminarily allocated to goodwill in the amount of $475.8 million and $43.2 million to other fair value net decrements.

    On March 2005, the shareholders of MobiFon approved dividends amounting to Lei 6.1 trillion ($214.9 million). The dividends do not become payable to shareholders until conditions for shareholder distributions are met under MobiFon's senior loan agreements. As at March 31, 2005, the maximum payable to shareholders based on the conditions of such loan agreements was $66.3 million and accordingly, an amount of $13.9 million is reported as amounts payable to non-controlling interests of which $12.0 million was paid on April 19, 2005.

    In March 2005, MobiFon received one of two UMTS licenses awarded by the Romanian Government. For such license, MobiFon is required to pay a total of $35.0 million to the Romanian Government, of which $10.5 million was paid on March 23, 2005 and the remainder will be paid in five annual installments of $4.9 million, commencing in 2006. MobiFon is also required to honour certain license conditions, including coverage requirements. The license has an initial term of 15 years with the option to renew for an additional 10 years. We recognized an intangible asset of $30.8 million representing the $10.5 million payment made on March 23, 2005 and the discounted value of the future payments. The associated liability has been reported as long-term debt, a portion of which is current.

    On February 23, 2005, the Czech Telecommunications Offices awarded a UMTS license to Oskar Mobil. The UMTS license was awarded for a term of 20 years and requires Oskar to honour certain license conditions, including minimum coverage requirements. The CZK 2 billion ($86.6 million) price for the license is payable in annual instalments from December 2005 through December 2009. We recognized an intangible asset of $78.8 million representing the discounted value of future payments and other acquisition costs. The associated liability has been reported as long-term debt, a portion of which is current.

    We expect to have future capital requirements, particularly in relation to the expansion and the addition of capacity to our cellular networks for the payment of our Romanian and Czech Republic UMTS licenses, the buildout of related UMTS networks and for the servicing of our debt. We intend to finance such future capital requirements mainly from cash and cash equivalents on hand, short-term investments, drawings on Oskar Mobil's New Senior Credit Facility, cash flows from operating activities and through externally generated funds such as the sale of debt and equity securities.

    Selected consolidated financial data

    On June 23, 2003, we amended our share capital to implement a one for five (1:5) consolidation of our common shares. Following the consolidation, the number of issued and outstanding common shares was reduced from 467,171,850 to 93,432,101 while the number of issued and outstanding preferred shares remained unchanged at 35,000,000 but their conversion ratio was changed from 1 common share for each preferred share to 1 common share for 5 preferred shares. On March 25, 2004, the 35,000,000 issued and outstanding preferred shares were converted into 7,000,000 common shares. All share and per share amounts included in the selected consolidated data shown below have been adjusted to reflect the share consolidation.

    The following represents all equity shares, granted stock options and restricted share units outstanding and the number of common shares which the Company's equity subordinated debentures are convertible into as at May 2, 2005 and include 935,277 common shares issuable pursuant to 544 options, 875,571 performance based RSUs and $1.0 million of ESDs which have exercise prices, conditional vesting or conversion prices based on a share price in excess of $16.00:

Common Shares ------------------------------------------------------------------ Common Voting Shares outstanding 215,231,826 Convertible instruments and other: Outstanding granted employees and director's stock options 4,782,264 Outstanding granted employees and director's restricted share units 3,958,738 Convertible equity subordinated debentures 59,162 ------------------------------------------------------------------ 224,031,990 ------------------------------------------------------------------ ------------------------------------------------------------------

The following table contains financial information that is derived from our unaudited interim financial statements for the three month period ended March 31, 2005.

Three months ended March 31, (in thousands of US $, except per share data) 2005 2004 $ $ ------------------------------------------------------------------ ------------------------------------------------------------------

STATEMENTS OF INCOME AND CASH FLOWS DATA: Revenues 374,252 278,420 Operating income 83,922 50,210 Interest expense, net (22,796) (21,324) Foreign exchange gain (loss) 30 (1,978) Net gain on disposal of assets 0 11,658 Net Income 34,412 15,683

Basic and diluted earnings per share 0.16 0.13

As at March 31, As at December 31, 2005 2004 (in thousands of US $) $ $ ------------------------------------------------------------------ ------------------------------------------------------------------

BALANCE SHEET DATA: Cash and cash equivalents, including restricted short-term investments of $27.8 million as of March 31, 2005 and December 31, 2004 243,841 272,102 Total assets 2,851,881 2,340,709 Long-term debt, including current portion 1,198,466 1,147,060 Share capital and additional paid-in -capital 2,446,030 1,926,511 Total shareholders' equity 1,298,789 748,481 ------------------------------------------------------------------

    Summary of quarterly results

    Our operating results are subject to seasonal fluctuations that materially impact quarter-to-quarter operating results. Accordingly, one quarter's operating results are not necessarily indicative of what a subsequent quarter's operating results will be. In particular, this seasonality generally results in usage in the first quarter tending to be lower than in the rest of the year. Also in the first quarter, new customer acquisitions tend to be low which can result in reduced costs. Seasonal fluctuations also typically occur in the third quarter of each year because of higher usage in Romania and more roaming, as a result of the summer holidays, result in higher network revenue and operating profit. Furthermore, the fourth quarter typically has the largest number of subscriber additions and associated subscriber acquisition and activation related expenses, including marketing and promotional expenditures, which result in lower operating profits.

(In thousands of U.S.$, Except Q1 Q4 Q3 Q2 per share data) 2005 2004 2004 2004 $ $ $ $ -------------------------------------------------------------------- --------------------------------------------------------------------

Revenues 374,252 366,816 328,929 301,397

Net income 34,412 4,942 20,674 13,907

-------------------------------------------------------------------- Basic and diluted earnings per share 0.16 0.03 0.14 0.10 --------------------------------------------------------------------

(In thousands of U.S.$, Except Q1 Q4 Q3 Q2 per share data) 2004 2003 2003 2003 $ $ $ $ -------------------------------------------------------------------- --------------------------------------------------------------------

Revenues 278,420 277,787 257,217 232,163

Net income (loss) 15,683 (727) 3,075 6,500

-------------------------------------------------------------------- Basic and diluted earnings (loss) per share 0.13 (0.01) 0.03 0.07 --------------------------------------------------------------------

    Non GAAP measures and operating data

    We believe that OIBDA, referred to by some other telecommunication operators as EBITDA, provides useful information to investors because it is an indicator of the strength and performance for our ongoing business operations, including our ability to fund discretionary spending such as capital expenditures and other investments and our ability to incur and service debt. While depreciation and amortization are considered operating costs under generally accepted accounting principles, these expenses primarily represent the non-cash current period allocation of costs associated with long-lived assets acquired or constructed in prior periods. Our OIBDA calculation is commonly used as one of the bases for investors, analysts and credit rating agencies to evaluate and compare the periodic and future operating performance and value of companies within the wireless telecommunications industry. OIBDA has limitations as an analytical tool, and you should not consider it in isolation from, or as a substitute for, analysis of our results of operations, including our cash flows, as reported under GAAP. Some of the limitations of OIBDA as a measure are:

    - It does not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments;

    - It does not reflect changes in, or cash requirements for, our working capital needs;

    - It does not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on our debt;

    - Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and OIBDA does not reflect any cash requirements for such replacements;

    - It does not reflect foreign exchange gains or losses; and

    - Other companies in our industry may calculate this measure differently than we do, limiting its usefulness as a comparative measure.

    We believe that average revenue per user ("ARPU") provides useful information concerning the appeal of our rate plans and service offerings and our performance in attracting and retaining high value customers. ARPU excludes equipment revenues, revenues from other wireless networks' customers roaming on our network and miscellaneous revenues. OIBDA and ARPU should not be considered in isolation or as alternative measures of performance under GAAP. Average number of subscribers for the period is calculated as the average of each month's average number of subscribers.

    Proportionate financial figures and other operational data represent the combination of our ultimate proportionate ownership at the end of each period presented in each of its investees and are not intended to represent any measure of performance in accordance with generally accepted accounting principles. Equity interest figures represent our direct and indirect ownership interests in our operations. For a reconciliation of proportionate operating income to operating income, refer to the supplementary financial information filed with our interim financial statements.

    The following tables provide a reconciliation between OIBDA and net income:

Non GAAP measures and operating data

Three months ended OPERATING DATA FROM OPERATIONS March 31, (in thousands of U.S.$) 2005 2004 -------------------------------------------------------------------- --------------------------------------------------------------------

Net Income 34,412 15,683 Income taxes 14,118 12,754 Non-controlling interests 12,626 10,129 Net gain on disposal of assets 0 (11,658) Foreign exchange (gain) loss (30) 1,978 Interest expense, net 22,796 21,324 Depreciation and amortization 62,601 57,274 --------------------------------------------------------------------

Consolidated OIBDA 146,523 107,484 -------------------------------------------------------------------- --------------------------------------------------------------------

MobiFon 101,878 77,290 Oskar Mobil 50,520 34,361 Corporate & Others (5,875) (4,167) --------------------------------------------------------------------

Consolidated OIBDA 146,523 107,484 -------------------------------------------------------------------- --------------------------------------------------------------------

The following table provides a reconciliation between service revenues and ARPU for MobiFon and Oskar:

MobiFon Oskar --------------------------------- Three months Three months ended ended March 31, March 31, 2005 2004 2005 2004 --------------------------------------------------------------------- Service revenues for the periods (in $ thousands) 197,812 147,607 156,893 116,587 Average number of subscribers for the period (in millions) 4.98 3.58 1.86 1.58 Average monthly service revenue per subscriber for the period (in $) 13.24 13.57 28.07 24.60 Less: impact of excluding in roaming and miscellaneous revenue (0.95) (0.99) (0.85) (0.87) --------------------------------------------------------------------- ARPU 12.29 12.76 27.22 23.72 ---------------------------------------------------------------------

Other selected operational data:

Start-up Total Date of Licensed Subs- Equity Equity Equity Tech- Operat- POPs criber Inter- POPs Subs- nology ions (millions) (1) est (millions) cribers --------------------------------------------------------------------- Romania GSM 1997 21.7 5,022,902 79.0% 17.1 3,968,093 Czech Repub- lic GSM 2000 10.2 1,892,278 100.0% 10.2 1,892,278 --------------------------------------------------------------------- --------------------------------------------------------------------- Total 31.9 6,915,180 27.3 5,860,371 --------------------------------------------------------------------- ---------------------------------------------------------------------

(1) Subscriber figures include 3,273,187 and 964,147 prepaid subscribers in Romania and Czech Republic, respectively

    Forward-looking Statements

    This news release contains certain forward-looking statements concerning our future operations, economic performances, financial conditions and financing plans. These statements are based on certain assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions and expected future developments as well as other factors we believe are appropriate in the circumstances. However, whether actual results and developments will conform with our expectations and predictions is subject to a number of risks, uncertainties and assumptions. Consequently, all of the forward-looking statements made in news release are qualified by these cautionary statements, and there can be no assurance that the results or developments anticipated by us will be realized or, even if substantially realized, that they will have the expected consequences to or effects on us and our subsidiaries or their businesses or operations. We undertake no obligation and do not intend to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable law.

    For all of these forward-looking statements, we claim the protection of the safe harbour for forward-looking statements contained in the U.S. Private Securities Litigation Reform Act of 1995.

    Conference Call

    The conference call with analysts on the first quarter 2005 results will be made available via an audio web cast from TIW's Internet site. The web cast is scheduled to begin at 9:00 a.m. EST on Wednesday, May 4, 2005 (at www.tiw.ca). A replay of the conference call can also be heard between 2:00 p.m. on May 4 and 11:59 p.m. on June 3. To access the replay facility, dial (416) 695-5800 and you will be instructed to enter the access code: 3148784#.

    About TIW

    TIW is a leading provider of wireless voice, data and short messaging services in Central and Eastern Europe with more than 6.9 million subscribers. TIW operates in Romania through MobiFon S.A. under the brand name Connex and in the Czech Republic through Oskar Mobil a.s. under the brand name Oskar. TIW's shares are listed on Nasdaq ("TIWI") and on the Toronto Stock Exchange ("TIW").



    Telesystem International Wireless Inc. (TSX:TIW) (NASDAQ:TIWI)

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CONTACT: Telesystem International Wireless Inc. Jacques Lacroix Investors (514) 673-8466 jlacroix@tiw.ca Our web site address is: www.tiw.ca

KEYWORD: NEW YORK INTERNATIONAL CANADA INDUSTRY KEYWORD: TELECOMMUNICATIONS EARNINGS SOURCE: Telesystem International Wireless Inc.

Copyright Business Wire 2005