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27 August 1999

Netia and PLUS GSM sign cooperation agreement

Warsaw, Poland - August 27, 1999

Netia Holdings S.A. (Nasdaq: NTIA), the largest alternative fixed-line telecommunications operator in Poland, today announced a direct interconnection agreement with Polkomtel S.A., one of Poland's two GSM mobile operators.
The contract defines the terms under which both Polkomtel and Netia will connect their networks and start a direct exchange of traffic by the end of 1999. During the first stage of the execution of the contract, direct interconnection points will be constructed and made operational in four major metropolitan areas: Gdansk, Poznan, Katowice and Warsaw.
The interconnection agreement will optimize the traffic exchange structure for both operators, who will no longer necessarily be subject to the availability and cost of TP S.A. connections. This will improve the delivery by both Netia and Plus GSM of quality service to customers. A similar agreement was signed between Netia and Polska Telefonia Cyfrowa (Era GSM) on July 20, 1999. Interconnect Regulation Update Netia welcomes the announcement by Poland's Minister of Communications Maciej Srebro during a press conference on August 18, of a soon-to-be-issued decree stating new rules for interconnect financial settlements between telecom operators.
The decree may lead to re-negotiations of existing interconnection agreements with TP S.A. and lower the interconnection settlements which local operators such as Netia must pay to TP S.A. for interzone calls. The document is expected to be signed within the next two weeks and will come into force a month later, the Minister said. It will regulate the interconnect regime until the Polish Sejm passes a new Telecommunications Law harmonized with European Union regulations. Netia will provide more details on the interconnection decree when and if it is published.
About Netia. Netia is the largest alternative fixed-line telecommunications operator in Poland, with 23 licenses to provide local telecommunications services in territories covering some 13 million people or approximately 33% of the Polish population. Netia has also secured the benefit of a data and IP license to provide data transmission and internet-based services nationally. The Company's local telephone license territories cover five of the country's ten largest urban areas including Krakow, Poznan, Gdansk, Lublin, Katowice and several territories surrounding the city of Warsaw.
At June 30, 1999, the company's digital access network serviced 193,607 subscriber lines in operation, out of which 34,943 lines are servicing business customers. With approximately 39 million people and a 22% fixed-line telephone penetration rate as December 31, 1998, Poland represents an attractive, dynamic market for private fixed-line telephone providers such as Netia.