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25 June 2007

Acquisition of shares in Magma, an Internet service provider (acquisition of assets of substantial value)

WARSAW, Poland – June 25, 2007 – Netia SA (“Netia”) (WSE: NET), Poland’s largest alternative provider of fixed-line telecommunications services, today announced that on June 25, 2007 it purchased from Mr. Piotr Schmidt and Mr. Jacek Pióro (the “Sellers”) 946 shares (473 shares were purchased from each Seller) in Magma Systemy Komputerowe Schmidt i S-ka Sp. z o.o. with its seat in Wrocław (“Magma”) with the total nominal value of PLN 473,000 for all these shares, representing 100% of Magma’s share capital and conferring the right to 100% of the votes at its meeting of shareholders (the “Shares”). The total price of the Shares purchased has been set at PLN 7,941,000.

Magma is a company providing telecommunications activities. It is an operator of an Ethernet network that provides broadband Internet access to residential clients in the city of Wrocław and the town of Jelcz-Laskowice. The company is using FastEthernet technology, which allows for transmission speed of up to 100 Mb/s. Such a high performance network enables the provision of other web-based services, e.g. video on demand or IPTV, with relatively low incremental capital expenditures. The purchase of the Shares will enable Netia to up-sale its own services, such as voice and hosting services, to the customers of Magma. As of June 25, 2007 Magma had 6,328 customers of its broadband Internet access services.

The purchase of the Shares was effected on June 25, 2007 in execution of a preliminary agreement signed by Netia with the Sellers on June 6, 2007 (see Netia’s current report dated June 7, 2007).
Magma was created as a result of transforming Magma Systemy Komputerowe Schmidt i S-ka Spółka Jawna into a limited liability company.
The Shares were classified by Netia as material assets in view of the fact that they represent 100% of Magma’s share capital. The Shares were purchased from Netia’s own resources and constitute an investment of a long-term nature.

Apart from the contractual relations described in this report and Netia’s current report dated June 7, 2007, there exist no other ties between Netia and the persons managing or supervising Netia and the Sellers of the aforementioned Shares.

The acquisition of Magma is in line with the execution of Netia’s growth strategy aimed at acquiring 1 million broadband customers over the next three years.