Colt Telecom - which has a large office in Brindleyplace - yesterday said it was comfortable with analysts' expectations for this year despite tough trading conditions.

Its comments came after posting flat first quarter revenues and weaker core earnings.

Colt continued to cut its pretax losses in the first quarter to £7.3 million from £9.8 million but said revenues were flat compared to the fourth quarter at £307.7 million, while earnings before exceptionals (EBITDA) slipped £2 million on the same basis to £47.6 million.

"While we don't believe there will be a substantial improvement in overall conditions current market expectations are in the range of £190 million to £200 million EBITDA and we remain comfortable within those," said Colt's chief executive, Jean-Yves Charlier.

Colt said its increasingly important and higher margin non-switched, or data, revenue rose 1.1 per cent in the quarter to £125.2 million.

While welcoming the firm's cost savings, analysts said the results were weaker than expected and demonstrated Colt faced a tough task if it was to become profitable in the near future.

"Colt's first quarter results were marginally below our expectations," said Bridgewell analyst Dan Gardiner.

"The shortfall is a combination of lower than expected revenue and higher than anticipated SG&A (sales, general and administrative costs) and again there is little evidence of growth in its high margin non-switched revenue," he added.

Colt shares have risen more than a quarter since the start of 2006.

The pan-European corporate telecoms group, which operates in 32 cities across 13 European countries and draws 80 per cent of its business from mainland Europe said it had chosen Luxembourg for its new domicile base as it looks to cut costs. It confirmed it was on track to de-list from the US and raise £300 million in equity to repay debt.

The firm, which is 59 per cent owned by US fund manager Fidelity, has been battling falling prices and over-capacity in recent years, as it competes against the likes of BT, Cable & Wireless and Thus in the savagely competitive business market.

Colt has been rapidly offshoring its services and staff to India in an attempt to drive down costs but prices for voice and data have continued to fall as technology improves and competition increases.

Mr Charlier said Colt would send detailed plans to change the company's domicile to shareholders in early May. The switch should be completed by the end of June.