Jean-Yves Charlier, chief executive of Colt Telecom, has rejected market rumours that the company is a takeover target and has insisted he has the full support of the single largest shareholder for his three-year strategic plan.

Rumours in recent weeks had linked Denmark's TDC with the company, which has a modern fibre-optic cable network connecting 32 large European cities in 13 countries.

“We are not interested,” Mr Charlier said yesterday, pointing to the 59 per cent stake in Colt held by Fidelity Investments, the Boston-based mutual fund. “The company is fundamentally undervalued [at 50p per share] and our main shareholders have clearly signed up to our strategic plan.”

Mr Charlier insisted that his strategy was on course to meet the first target of turning the company cash flow positive by the end of the year. He said he was “comfortable” with consensus forecasts for operating profit for the full year of £170m, against £153m a year ago, with revenues set to rise from £1.24bn to slightly less than £1.3bn. The shares rose 1¾p to 51p on Thursday.

His comments came as the company reported a jump in first quarter pre-tax losses to £30.5m (£21.7m). Revenues in the three months to March 31 rose to £307.1m (£302.9m).

Colt said the increased losses were largely the result of the decision to move some of its operations to India as part of its restructuring plan. The cost of the move, which Colt has not broken down, also includes the carrying costs of duplicate functions during the transfer.

The company, which focuses purely on business customers in areas such as financial services, is shifting back-office functions, including accounts and IT support, to a new operation in Delhi.

Mr Charlier said slightly more than 300 of the company's 4,000 employees were now based in India and this number could double by the end of 2006.

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