Trading Statement

6 October 2010

Alternative Networks plc

Pre Close Trading Update

Trading for the full year ended 30 September 2010 has continued to be positive, with revenues and profits expected to be in line with current market expectations.

As found in the first half, the following trends have continued in the six months to September 30th 2010

·; organic revenue growth,

·; strong cash flow,

·; resilient margins

·; and stabilised ARPU

Revenues in Mobile and Fixed Line network services, together representing over 80% group revenues, have both continued to show further organic growth. We have seen higher revenues in each product in the six months to September 30th 2010 than were in the first half of the year, which in turn was higher than the second half of 2009.

In addition, sales of IP pbx systems and services have picked up with an increase in both completed installations and new orders in the second half of the year, compared to the first six months. The increased investment in this part of the business, including the new Blue lights team, is beginning to bring the expected returns.

A positive development has been the recent release by the mobile networks to permit accredited service providers to distribute and sell iphones and ipads. The Group's lack of an Apple offering, combined with saturation in the "dongle" market, has previously held back mobile connections growth this year.

AKJ has continued to perform well, in line with expectations, and in August 2010, the Group negotiated and agreed an accelerated earn out at £0.63m. This compared to the interims accounts estimate of £0.56m and a maximum of £0.95m.

Cash flow remains strong. Year-end cash balances were approximately £12m, up from £10.3m at 31 March 2010. This is after paying out the £0.6m AKJ earn out, but before the £7.5m consideration of the Scalable acquisition. The Group remains well funded to pursue further growth through acquisition, and organically through its further investment in the sales teams and in the product offering, particularly the Portal, as previously outlined.

The Board are very pleased to have recently completed the acquisition of Scalable, which is consistent with the Group's strategy, and remain confident in progress for the enlarged group in 2011.

The preliminary results for the year ended 30 September 2010 are expected to be released on December 6th 2010, at which time the Board will provide further information on Scalable.

ENDS

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