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13 January 2011

Main assumptions of Netia’s strategy towards 2020 together with the long-term financial outlook and distribution policy (2/2011)

Warsaw, Poland – January 13, 2011 - Netia SA ("Netia" or the "Company") (WSE: NET), Poland's largest alternative provider of fixed-line telecommunication services, announced today the main assumptions of Netia group’s operational strategy towards year 2020 together with the long-term financial outlook and a newly adopted distribution policy (“Strategy 2020”).

Netia’s current strategy, adopted in 2007 (see Netia’s current report No. 50/2007 dated April 18, 2007), as amended, covers the period until year 2012.

Following our work on the strategy beyond 2012, which was aimed at addressing new opportunities and potential threats resulting from changes in the telecommunications environment, the Company maintains its previously published medium-term guidance until 2012, including the goal of acquiring one million broadband customers (see Netia’s current report No. 33/2010 dated November 4, 2010). In parallel, Netia presents below the assumptions of Strategy 2020, towards the implementation of which, it will be preparing during the next 24 months.


We deliver the world on-line


By 2020 Netia will profitably grow to be Poland's No.1 on-line gateway through:
  • Delivering integrated and easy to use solutions
  • Providing a superior customer experience, and
  • the Drive of passionate employees inspired by our values

Main strategic assumptions

1.Netia to become Poland’s No. 1 on-line gateway, delivering integrated and easy-to-use solutions, providing superior customer experience, driven by passionate employees inspired by the values of the Company;
2.Focus on growing Netia’s customer base and their value through delivery of integrated telecom services and media solutions to end users while providing unique superior customer experience at the same time;
3.Next Generation Infrastructure (NGA) will support us in developing and rendering innovative, high quality and easy-to-use services to our customers;
4.Finalizing LLU roll-out combined with NGA upgrade in select parts of our Copper network as well as implementation of commercial TV services will facilitate integrated product offerings comprising 3play+ driving customer value and enhancing customer experience;
5.Netia will continue to penetrate the market with regulatory access in search of new residential clients while strong focus will be maintained on our traditionally very effective business segments;
6.Netia will focus on opportunities in M&A, including Ethernet networks (ETTH) acquisitions, and transformational value-enhancing transactions in particular;
7.Delivering ‘best-in-class’ financial and operating performance among European peers will be Netia’s key focus over the long term through rising market share and increasing profitability.

Long-term financial outlook

Herewith Netia presents its long-term financial outlook for years 2012-20201:
  • Blended2 fixed line market share to grow from 11.5% to at least 15%;
  • Expected revenue growth above 2% per annum delivers increasing value share;
  • EBITDA margins in 26% - 28% range throughout;
  • Capex to sales ratio to stay below 15% during network upgrade (2011 – 2013) and falling to 10% - 12% thereafter (2014 – 2020);
  • OpFCF margin to sales continuously above 10%.

1 The above guidance excludes impact of potential transformational M&A activities.
2 Average of the fixed voice and fixed broadband market shares in the Polish fixed telecom market.

The guidance is based on Netia’s financial results until now and an analysis of both Polish nd international telecommunications market performed by the Company. The main assumption of the guidance is a complete and timely execution execution of both Netia’s current strategy and the newly adopted Strategy 2020.

Netia announces 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 will be introduced, after the end of a given quarter of the financial year based on an analysis of sales revenues, investment expenditure, number of broadband customers and regulatory conditions on the Polish telecommunications market.

Key elements of Netia’s distribution policy

  • Management intends to propose returning surplus funds above the PLN 300 million ‘acquisition fund’ to shareholders through buy-backs and/or dividends;

  • Should circumstances lead Management to conclude that transformational market consolidating opportunities are no longer feasible, then Management will propose the return of the PLN 300 million ‘acquisition fund’ to shareholders.

The detailed presentation on the adopted Strategy 2020 is enclosed in the attachment.

Conference call on Strategy 2020

Netia senior management will host a conference call at 15:00 (CET) / 14:00 (UK) / 9:00 am (Eastern) on Friday, 14 January 2011 to discuss the Strategy 2020.

The conference call may be accessed by dialing:
Europe: +44 20 3003 2666
USA: +1 212 999 6659

A telephone replay will be available shortly after the call, until Monday, 27 January 2011 at (UK) +44 20 8196 1998, passcode 3667168#.

A replay of the conference call will be available on Netia’s website at www.investor.netia.pl.

In addition, a presentation on the Strategy 2020 is available on Netia’s website at www.investor.netia.pl.

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 February 2009 on current and periodic information to be disclosed by issuers of securities and on conditions under which such information may be recognized as being equivalent to information required by the regulations of law of a state which is not a member state (Polish Journal of Laws (Dz. U.) of 2009, No. 33, item 259 as amended). 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 February 22, 2010. 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.