AMITELO Wireless SL, located in Campanillas-Malaga, a 100% subsidiary of AMITELO AG (Zurich), continues the geographical expansion of its IP-network at the Costa del Sol, Spain. The company provides broadband services to, amongst others, the specific areas of Coin, Ojen and East Marbella. This represents the second implementation phase of the network connection program and services rural areas to the rear region of Marbella and in the city of Malaga itself. The services are also provided in the hinterland.

This is an area of major development and housing expansion with a current total of 300.000 corporate- and private customers, expanding continuously. AMITELO is aiming to capture 10% market share of this market segment. This would reflect a turnover volume of EUR 30 Mio. This expansion is a forward looking base for company growth in the Spanish market.

The IP transmission technology integrates modern voice- and data service and permits the use of continually developing AMITELO end customer products, such as VoIP-services and ADSL-broadband services. Customers of the targeted region are currently obliged to use GSM (global system for mobile communication) and GPRS-technologies (general packet radio station) for using data services in this region. AMITELO Wireless has also completed its own developed 'hotspot' technology to be available to any customer requiring broadband services on the southern Spanish coast, under the coverage of the AMITELO-network on a pre-payment basis. The AMITELO -'hotspot' technology differs from other offerings in that pre-paid credits can be used either for conventional Internet usage or for VoIP-telephony calls, utilising an integrated Softphone on the login page. Typical usage rates for the service are EUR 18.00 per day for the broadband service and VoIP-calling related to consumption and destination. The present network coverage has a market potential of approx. 300.000 potential users for this specific service.

AMITELO is pre-contracted by the local council for the region of Malaga's industrial parks in order to provide broadband services to approximately 100 industrial units each, with average installation prices per unit for broadband ADSL-Services of EUR 590.00 for business customers with monthly recurring revenues of EUR 45.00-EUR 120.00 per business customer, dependent on consumption and required services. Also under this contract are the provision of broadband and associated services to the local council itself, its main offices and remote locations.

Further signed contracts relate to the provision to a national Spanish property developer of broadband and VoIP services to 1200 private dwellings (Housing Units) currently under construction, with further installations to other developments under negotiation. Typical installation prices per dwelling are EUR 149.00, these installations are paid by the constructor prior to customer occupancy, with recurring monthly revenues of EUR 25.00 - EUR 45.00 direct from the customer / subscriber.

Recently a contract with a noted Spanish hotel chain has been signed for AMITELO`s services. Prior to serving the whole hotel chain, a pilot project for two hotels, actually being in the construction phase is planned.

Parallel AMITELO is also involved in consultation for the internal network installations for the hotels, the current budget for the AMITELO installations for the whole communication including the necessary end-units is EUR 70'000 per hotel. AMITELO generates a monthly service fee from each hotel of EUR 500 plus the VoIP-telephone consumption accounts, estimated with 50.000 minutes per calendar month with an average revenue of 0.12c per minute.

After the first weeks with starting network operations of the new parts, several hundred signed contracts arrived at the sales offices of AMITELO. This reflects the high demand for broadband-ADSL-services in the regions, served by AMITELO and is an indicator for the attractive potential for turnover generating with this new services.