Netia and Telia sign agreement for commercial network services on Netia's backbone network
WARSAW, Poland - January 14, 2002 - Netia Holdings S.A. (Nasdaq: NTIA, WSE: NET), Poland's largest alternative fixed-line telecommunications services provider, announced today that its subsidiary, Netia Telekom S.A., has signed an agreement with Prima Communications Sp. z o. o. - a subsidiary of Telia International Carrier Poland Sp. z o.o. which is a company in the Telia group, Netia's strategic partner - on the provision of commercial network services.
Under the terms of the agreement, Netia will lease to Telia two ducts on the route between Warsaw and the Szczecin area for the amount of approximately USD 16 million. The ducts will be leased for a period of fifteen years and shall be made available to Telia International Carrier by June 30, 2002. In addition, during the lease term Netia will offer to Telia, for additional consideration, related services such as cable installation, cable maintenance and co-location services on the route.
The agreement is subject to the fulfillment, by not later than April 15, 2002, of certain conditions precedent, including the delivery by Telia of a corporate guarantee, the execution by the parties of a loan agreement under which Netia will be able to receive the equivalent of the consideration for the ducts as an up-front payment for the whole of the leases' term, and the establishment on behalf of Telia of a registered pledge on the leased ducts securing the aforementioned loan.
The agreement provides for an obligation on the part of Netia to pay up to 8% of the consideration for the ducts as penalties in the event of duct's late delivery to Telia. However, the parties have not provided for Telia to have the right to seek additional compensation exceeding the amount of contractual penalties. The agreement's value in light of the value of Netia's sales for the last four quarters qualifies it as a significant agreement.
The agreement is in line with Netia's strategy to expand its service portfolio with commercial network services such as wholesale capacity and carriers' carrier business, leveraging the value of its national backbone network connecting Poland's twelve largest cities.
Telia International Carrier Poland is a direct subsidiary of Telia AB, responsible for international wholesale IP, capacity and carrier neutral collocation solutions on the Polish market. Telia International Carrier is the leading European carrier of transatlantic IP traffic to the USA. Its wholly owned multi-fibre optic network - the Viking Network - provides high capacity bandwidth and offers end-to-end connectivity round the world.
Netia Holdings is the largest alternative fixed-line telecommunications operator in Poland. Netia has 24 licenses for local telecommunications services in territories, covering some 15 million people or approximately 40% of the Polish population, which include the most economically advanced parts of the country. The Company's existing local telephone license territories cover six of the country's ten largest urban areas including Warsaw, Krakow, Poznan, Gdansk, Lublin and Katowice. In August 2001, Netia launched its domestic long distance services based on indirect access. Netia has also secured the benefit of a nationwide data and IP license to provide data transmission and Internet-based services.
Some of the information contained in this news release contains forward-looking statements. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those in the forward-looking statements as a result of various factors. For a more detailed description of these risks and factors, please see the Company's filings with the Securities and Exchange Commission, including its Annual Report on Form 20-F filed with the Commission on April 30, 2001, its Current Report on Form 6-K filed with the Commission on May 15, 2001, its Current Report on Form 6-K filed with the Commission on August 7, 2001, and its Current Report on Form 6-K filed with the Commission on November 6, 2001. The Company undertakes no obligation to publicly update or revise any forward-looking statements.