in the ten months to December 31. The loss is below projections for the start up of the company which began offering long distance services in May this year.

The losses reflect spending on infrastructure during which time the company had no revenue stream from operations. In TBI's prospectus for an initial public offering last year, the company projected it would have registered a loss about $2.9 million in the year to February 28, 1997.

Since the prospectus was issued TBI changed its financial year to end on December 31. The company projected a $1 million loss for the 1998 financial year, and a $5.8 million profit in 1999.

Since it began offering long distance telephone competition to Cable & Wireless in May this year the company has captured about 10 percent of the existing market based on number of connections.

Company director Kenneth Spurling said the company's progress so far was "well ahead'' of projections. The company held its annual general meeting on Friday at which shareholder voted on a number of recommendations, including a share option incentive plan for directors, executives, senior management and senior staff.

A management statement to shareholders also announced the company is set to launch an attack on the European telecommunications market. TBI has reached a joint venture agreement with Rocom Group Ltd., described by TBI as the "largest independent distributor of telecommunications equipment'' in the UK.

"Under this arrangement, TBI will provide the joint venture with the required telecommunications network and operations expertise while Rocom will provide marketing expertise and develop sales channels,'' according to a management statement. "TBI management believes that the proposed joint venture will position TBI for an early entry into Europe in 1998 as voice competition is permitted.'' TBI, which is currently using satellite to connect overseas telephone calls, this year completed a $45 million underwater cable connection to the New Jersey shore.

The company stated the connection will be ready for use by the end of this month with the satellite system kept on as a backup. The company also paid out $2.9 million to build infrastructure on the Island.

The company has 3,493,916 common shares outstanding, of which 22.8 percent are owned by Bermudians. Directors, officers and immediate family together hold 31.2 percent of the company.

Chairman and chief executive officer Michael Kedar holds share purchase options on 45,000 common shares at one cent a share as part compensation for his services since 1995. At a current share price of $7.50, the options are worth $337,500.

Directors Mr. Spurling, Jeffrey Conyers of First Bermuda Securities Ltd., and Ward Young of BDC Ltd. collectively hold options on 205,000 common shares at $3 a share. At the current price the options would net them a gain of $922,500.

Management stated TBI owns 60 percent of the voting stock of TeleBermuda International (UK) Ltd. The other 40 percent is owned by GeoReach International Ltd., a Canadian company. Mr. Kedar and investor Harley Murphy each own 47.5 percent of GeoReach. TBI owns the other five percent. TBI will buy the other 95 percent of GeoReach for $140,000, shareholders were told.

To pay for its US cable connection the company issued $13 million subordinated debentures to IHI Hydro Inc. and Tyco Submarine Systems Ltd. The debentures carry warrants entitling holders to purchase a maximum of about 1.5 million shares at a price ranging from $8.50 to $9.25.

TBI has also arranged for $30 million of senior debt with Dresdner Bank Canada. TBI is in the process of defending an action by Cable & Wireles which seeks to revoke its telecommunications licence. Cable & Wireless alleges the minister lacked jurisdiction to issue the licence allowing the company to compete.

Kenneth Spurling Michael Kedar