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28 February 2008

Netia’s guidance for 2008 and medium - term outlook for 2008-2011 (13/2008)

The Management Board of Netia S.A. (hereinafter the “Company” or “Netia”) hereby announces its guidance for the 2008 financial year:

2008 Guidance
Number of broadband service clients
> 400,000
Number of voice service clients (own network and WLR)
> 580,000
Revenues (PLN m)
> 950.0
Unbundled local loop (LLU) nodes
of which regulatory start-up losses for the development of the regulatory access methods (i.e., bitstream access, local loop unbundling, wholesale line rental) and reaching 400,000 broadband subscribers
Investment outlays (excl. M&A) (PLN m)
M&A investment (PLN m)

Furthermore, Management informs that after almost a year of rolling out Netia’s broadband driven growth strategy announced in the current report dated 18 April 2007, sufficient performance data has now been accumulated to provide a medium-term outlook for future development.

Management believes that Netia has now established itself as the leading altnet provider and that further acceleration of broadband customer acquisitions will result from the Company’s investment in advertising and acceleration in market penetration growth. The Company now projects that it will reach its primary strategic target of achieving 1 million broadband subscribers by the end of 2010.

The Company targets continuous sequential quarterly revenue growth and annual growth rates in the mid to high teens for 2008-2010, driven mainly by broadband, double-play with voice service, Netia branded mobile services and transmission services for P4.

Management considers that achieving a recovery in EBITDA above the PLN 220.0m level of 2006 is mainly dependent on deep penetration of double-play services and an extensive and timely roll out of DSL equipment into the TP local loop. Both are primary focus areas for 2008, along with increasing sales efficiency. Management currently expects EBITDA to recover strongly above PLN 220.0m by 2010 and for long run EBITDA margins to settle above 20% by 2011 with a less asset intensive business model.

The first year’s results indicate that the original estimate of PLN 200.0m of start-up losses for broadband growth and PLN 500.0m of capital investments for broadband investment and ethernet network acquisitions to achieve 1 million subscribers remains on track. Of these amounts, PLN 66.0m of operational losses, PLN 81.4m of investments in broadband and PLN 39.0m in acquisitions of ethernet networks were consumed during 2007. Management maintains its objective of free cash flow break-even by 2010. Management’s projections indicate that Netia should return to operating profit by 2010 and net profit by 2011 at the latest.

Netia would also like to announce that it will continue to monitor the possibilities of achieving the forecast results on a quarterly basis. The achievement of the forecast results will be assessed, and any necessary adjustments introduced, after the end of a given quarter of the financial year based on an analysis of sales revenues, investment expenditure and the number of broadband clients.


The information regarding Netia’s strategy contained in this press release does not constitute a forecast of results within the meaning of the Regulation dated 19 October 2005 on Current and Periodic Information to be Disclosed by Issuers of Securities (Polish Journal of Laws (Dz. U.) of 2005, No. 209, item 1744). None of the information contained in this press release is a recommendation to purchase or sell financial instruments within the meaning of the Regulation of the Minister of Finance on information constituting recommendations regarding financial instruments or their issuers, dated 19 October 2005 (Polish Journal of Laws (Dz. U.) of 2005, No. 206, item 1715). For a more detailed description of the risks involved in investing in Netia’s securities, please see Netia’s annual financial report of 28 February, 2008. Subject to the obligations referred to herein, Netia is not required to publicly update or revise any of its forecasts and assumptions of the strategic objectives.

Legal basis: Paragraph 5.25 of the Regulation of the Minister of Finance on current and periodical information to be disclosed by issuers of securities, dated 19 October 2005 (Polish Journal of Laws (Dz. U.) of 2005, No. 209, item 1744).